Geduldig v. Aiello - Oral Argument - March 26, 1974

Geduldig v. Aiello

Media for Geduldig v. Aiello

Audio Transcription for Opinion Announcement - June 17, 1974 in Geduldig v. Aiello

Audio Transcription for Oral Argument - March 26, 1974 in Geduldig v. Aiello

Warren E. Burger:

We will hear arguments next in 73-640 Geduldig against Aiello.

Mrs. Condas, you may proceed whenever you’re ready.

Joanne Condas:

Mr. Chief Justice, and may it please the Court.

This case is here brought by California on appeal from the decision of the three-judge Court, holding unconstitutional the exclusion of Section 2626 of the California Unemployment Insurance Code which excludes pregnancy from coverage under the Disability Insurance Program.

The cost impact of this decision is estimated to be a minimum of a $120 million annually, based on the current level of operations of the disability funds.

And the question we present to this Court is whether a state can establish a Disability Insurance Program which compensates wage loss from illness and injury but not for normal pregnancy without violating the Equal Protection or Due Process Clauses of the Constitution, when there is neither discriminatory intent in the creation of the fund nor discriminatory impact in its operation.

In order for the Court to understand how this case arises, I would like just very briefly to describe how the fund was originated and developed.

In 1946, California became the second state to adopt a Disability Insurance Program.

This arose primarily because during the Second World War, enormous surpluses had build up in the unemployment insurance fund in California because there is virtually no unemployment during the war years and the governor proposed that the 1% which employees had to contribute to that fund should be shifted to provide disability insurance instead.

And the governor in his message explained why he thought that 1% should be the figure and why, since it was coming from employees, it should be kept low, and that is that an employer can always pass along whatever is charged to him in terms of the cost of doing of his business in terms of providing a service or cost of goods but to an employee, there is no one else to pass the charge and as to him it amounts to a gross income tax.

It should be borne in mind of course that there is no employer contribution to this particular fund, that was an illustrative example only.

Well, the Disability Insurance Program has been financed within the limits of that 1% and this was accomplished primarily as a result of incorporating certain features in the California plan that were different from the Rhode Island plan which was the only model that California had to go by at that time.

Rhode Island had begun paying benefits in 1943 and by 1946, in the middle of the year, they had gone from a $2.7 billion surplus to a $1.5 million deficit and there were primarily two factors, omissions really from the Rhode Island plan that accounted for this financial problem.

The first was that they had not provided for the prevention of double recovery, it was possible under the Rhode Island plan to recover both workman’s compensation disability and unemployment disability for the same illness, and secondly, they had included pregnancy coverage.

Pregnancy benefits posed a larger problem for Rhode Island and really amounted to more than twice what was paid for the workman’s compensation duplication.

The California plan made changes in both of those features.

Section 2629 of the California Unemployment Insurance Code prevents the double recovery and Section 2626 excluded pregnancy until 28 days after determination of pregnancy.

Now the reason I used that in the past tense is that last year, that section was amended and it now provides for coverage for complications for pregnancy instead of the exclusion.

Potter Stewart:

Mrs. Condas, you told us about the Rhode island experience and the fact that Rhode Island was the first state to have any such plan as this and California the second.

There are now, about a total of five states or six?

Joanne Condas:

Yes Mr. Justice Stewart.

Would you like an explanation of the five states?

Potter Stewart:

Well I just wondered if any of the states now have the plan to provide maternity benefits, currently.

Joanne Condas:

Yes currently, perhaps the best example of the potential problems that we are discussing is the State of Hawaii and Hawaii, in May amended its law to provide coverage for pregnancy.

The situation there is that premiums for men employees have remained $3.25 per employee per month.

The rate for women was always a little higher and this simply is standard in the disability insurance field.

The rate for women was $4.00 per female per month.

Potter Stewart:

It doesn’t go on a percentage out there, it is fixed sum in dollars?

Joanne Condas:

It’s a disability insurance premium charge and as a matter of fact, all but a certain base period as California has a limitation on what the employee can be charged.

Hawaii has a limitation on what the employee can be charged and so the increase in cost in Hawaii will be picked up by a charge to employers but that charge is enormous, as I say in the case of men the rate has not changed.