Amazon. Bank of America. Citigroup. Dick’s Sporting Goods. JP Morgan. Kroger. Meta. Microsoft. Procter & Gamble. Target. Walt Disney Company. These are just a few of the growing list of companies that have offered to cover the costs of employees who may now need to travel out of state to receive abortion care in light of the ruling. the Supreme Court in Dobbs v. Jackson Women’s Health Organization. But companies that seek to further protect the reproductive rights of their employees choose to do so in the face of potential public backlash and uncertain legal risks.
Just days after Citigroup announced it would offer such travel benefits, a Texas state official announced he would introduce a bill prohibiting the bank from underwriting Texas municipal bonds unless she won’t cancel her new employee benefit. America First Legal – the conservative organization founded by former senior Trump adviser Stephen Miller – recently asked the EEOC to open a civil rights investigation into a company offering such benefits, saying it was discriminatory against employees who choose to carry their pregnancies to term. Texas lawmakers have also argued — through “cease and desist” letters sent to Lyft and others — that funding abortion travel constitutes a range of a company’s fiduciary duties to its shareholders. And a group of Texas lawmakers has threatened companies that choose to offer such benefits with potential criminal liability under existing Texas laws and plans to introduce new legislation that would impose additional civil and criminal penalties on Texas employers offering such benefits.
Some of these threats will almost certainly result in litigation. And although Judge Kavanaugh wrote in a concurring opinion in Dobbs that attempts to bar women from traveling to another state where abortions are legal would violate the constitutional right to travel between states, it is far from clear to what extent states can prevent employers from facilitating such trips. Until the courts clarify the matter, companies that want to ensure their employees have equal access to reproductive health benefits, regardless of where they live in the United States, should think about how best to minimize the risks. legal issues related to the provision of these services.
Travel reimbursement as group health insurance
Most employers will want to offer travel reimbursement as part of their existing group health insurance plan to take advantage of the protections offered by ERISA. ERISA prevails over state laws that interfere with the administration of employee benefits covered by ERISA and would likely provide a strong defense against attempts by states to prohibit travel benefits for abortion services. Using an existing group health plan also has the benefit of administrative convenience, as employers can use existing processes and procedures designed to comply with other applicable laws and regulations (such as HIPAA, COBRA or ACA).
However, it is unclear whether ERISA’s preemption protections would protect against state laws that attempt to impose criminal liability on employers for helping their employees obtain out-of-state abortions.
Using an existing group health plan may also not be possible for employers who do not have a self-insured plan but rely solely on a health insurance company to provide these benefits. Using an existing group health plan will also limit the availability of benefits only to employees and their dependents who choose to enroll in the company plan.
Scope and amount of benefits
Employers will also need to consider the scope and amount of benefits offered. Most employers may wish to consider providing coverage for travel necessary to obtain any medical treatment (including mental health or addiction) that is not available near an employee’s home. Expanding the benefit beyond just abortions will help ensure compliance with the Mental Health Parity and Substance Abuse Equity Act, which requires health plans to cover mental health services. and substance abuse services as generously as medical and surgical services and reduce the risk of discrimination claims by employees who do not otherwise enjoy abortion-only benefits.
Although employers can reimburse travel associated with skilled medical care (including abortions) tax-free, the IRS caps this reimbursement at only $50 of accommodation per night or automobile mileage at IRS-approved rates. ‘IRS. Employers who wish to offer more generous benefits will have to declare it as taxable income to their employees. Additionally, for employers using high-deductible health plans, travel reimbursement benefits can only be provided after the plan’s deductible has been satisfied.
Employee Privacy Concerns
Employers and employees are likely to have privacy issues regarding abortion-related health insurance benefits. Although existing laws and regulations, such as the ADA and the HIPAA Privacy Rule, regulate the privacy of employee medical information, the protections may not apply to law enforcement requests or subpoenas. state prosecutors investigating employees who may have obtained an abortion. Employers will want to consider ways to minimize the amount of information they need to obtain from plan beneficiaries or receive from third-party plan administrators when offering such benefits.
A striking aspect of the threats made against companies that choose to provide abortion-related health benefits is their national reach. For example, Texas lawmakers have threatened to treat abortion benefits as a in itself violation of a corporation’s fiduciary duties to its shareholders, removing the protections given to directors and officers under the business judgment rule, for any publicly traded corporation whose shareholders reside in Texas. For many companies, these arguments will contradict the “internal affairs doctrine” – applied in most states, including Texas – which states that the internal affairs of a corporation are governed by the laws of the state. incorporation of the entity. Additionally, the Supreme Court has previously ruled that state laws intended to regulate the internal affairs of nonresident corporations may be unconstitutional under the Commerce Clause. But it remains to be seen how well these doctrines will hold up in the face of concerted efforts to restrict the conduct of all companies doing business with a given state, regardless of their state of incorporation, as well as efforts to raise the Ordinary corporate governance matters into criminal acts.
Using insurance to mitigate legal risk
Regardless of how carefully a company structures its approach to providing reproductive health services, it may be forced to defend its decisions in court. Companies targeted for offering such politically polarizing benefits in alleged violation of state law may be able to turn to their existing insurance coverage to defend against such claims or lawsuits.
- For private companies, coverage may be available under the company’s liability or D&O insurance policy. These policies generally cover the cost of defending claims for alleged wrongdoing by the company or its officers in the course of operating the company’s business. And for public companies, D&O coverage may be available to defend claims made against specific corporate executives. Such allegations, even if they take the form of a threat of criminal prosecution, should be considered covered “wrongdoing” within the meaning of standard D&O policy language.
- Coverage may also be available under a company’s fiduciary liability insurance. Fiduciary liability insurance policies may extend coverage to claims for acts, errors or omissions allegedly committed by an insured in the administration or in his capacity as a “settlor” of employee plan benefits, including the decision of benefits that the plan will provide. Companies would be well advised to double-check to see if their existing fiduciary liability policy includes such “grantholder capacity” coverage.
- Employment practices liability insurance may apply to claims alleging that a company’s reproductive health benefits are provided in a discriminatory manner.
Even if the states do not follow through, their threats to date could give rise to other potential claims, such as shareholder securities lawsuits, which would also trigger D&D coverage. Companies that have received threats of legal action because of their decision to offer travel benefits for out-of-state employee medical care should therefore consider notifying the circumstances as part of their liability insurance policies. D&O, fiduciaries and/or existing employment practices, as such threats can reasonably be expected to give rise to future claims.
In this uncertain legal landscape, carriers may attempt to assert that coverage is prohibited for a variety of reasons, such as exclusions for criminal, intentional or knowing violations of the law or for bodily injury claims. But none of these exclusions should prevent coverage. Mere allegations of criminal misconduct are generally not sufficient to release an insurer from its obligation to pay defense costs. And bodily injury exclusions generally only exclude claims “for” bodily injury, and the lawsuits offered by state officials are for alleged violations of state law, not for bodily injury, regardless of the damage allegedly claimed. Insurers can also try to bolster their substantive case by filing declaratory judgment actions in venues they deem hostile to abortion rights, triggering complex choice-of-law and choice-of-venue disputes. Before providing notice, companies should retain the services of an experienced coverage attorney to ensure their claims are presented in a manner that maximizes potential coverage.