June 22, 2012
Since 1996, the Defense of Marriage Act (DOMA) has dictated the definition of
“marriage” for all federal laws, including access to and eligibility for spousal
benefits under federal programs such as Social Security or the Federal Employees
Health Benefit Plan. Most employer-sponsored benefit plans that are governed by
the Internal Revenue Code (the Code) or ERISA are also subject to DOMA — unless
the plan sponsor has specifically amended its plans to cover non-DOMA spouses or
partners (e.g., same-sex spouses or opposite-sex domestic partners). In
Massachusetts v. U.S. Department of Health and Human Services, Nos. 10-2204,
10-2207 and 10-2214, 2012 U.S. App. LEXIS 10950 (1st Cir. May 31, 2012, as
amended on June 7, 2012), the U.S. Court of Appeals for the First Circuit held
that Section 3 of DOMA is unconstitutional, becoming the first federal appeals
court to do so.
This article provides a brief overview of DOMA and the First Circuit’s
holding and discusses its impact for employee benefit plan sponsors. At this
point, the impact is mostly academic, even for the plaintiffs in
Massachusetts, since the court of appeals’ holding stays the mandate pending
further review at the district court level. Further, the First Circuit opinion
indicates that final resolution of the constitutionality of DOMA rests with the
U.S. Supreme Court.
Also discussed below are various other recent district court decisions
holding that Section 3 is unconstitutional. Finally, a brief summary of state
laws on same-sex marriage is provided.
Overview of DOMA
DOMA was passed and signed into law in 1996 by President Clinton.
Massachusetts involves the constitutionality of only Section 3 of DOMA,
which defines “marriage” as “only a legal union of one man and one woman as
husband and wife.” Section 2 of DOMA (absolving states from recognizing same-sex
marriages from other jurisdictions) was not at issue in this case.
DOMA does not prohibit states from allowing same-sex marriage or civil
unions. However, DOMA’s pervasive reach across various federal laws results in
adverse consequences for same-sex married couples that impair the rights granted
by a state to married residents.
The Challenge to DOMA in the District Court
In 2010, the United States District Court for the District of Massachusetts
decided two cases involving the constitutionality of Section 3 of DOMA. The
first case involved individual plaintiffs attempting to claim benefits for their
same-sex spouses and asserted that DOMA prohibited equal protection under the
law. (In Goodridge v. Dept. of Public Health, 798 N.E.2d 941 (Mass.
2003), the Massachusetts Supreme Judicial Court had validated same-sex marriage
in the commonwealth.) The individual plaintiffs cited disadvantages from not
being able to file joint federal tax returns or collecting Social Security
survivor benefits.
The second case was brought by the Commonwealth of Massachusetts contesting
Congress’ power to define marriage and thereby interfere with state powers. The
commonwealth brought claims that enforcing its same-sex marriage law would
result in the revocation of federal funding for various commonwealth programs,
including Medicaid programs and veterans’ cemeteries. The arguments in this
second case focused on Congress’ power under the Spending Clause of the
Constitution and the Tenth Amendment.
The district court ruled in both cases that Section 3 of DOMA was
unconstitutional. The two cases were consolidated upon appeal to the First
Circuit.
The First Circuit’s Decision in Massachusetts
The course of the appellate proceedings in Massachusetts was delayed
in part by the change in position by the Department of Justice (DOJ) regarding
DOMA. The DOJ originally filed a brief in the court of appeals defending DOMA
against constitutional claims. After the DOJ’s announcement in February 2011
that it would no longer defend the constitutionality of Section 3 of DOMA, the
defense of DOMA was taken up by the Bipartisan Legal Advisory Group, which
retained counsel and intervened to support upholding the constitutionality of
Section 3.
In Massachusetts, the First Circuit rejected the district court’s
ruling that Section 3 violates the Spending Clause and the Tenth Amendment and
instead addressed the issues presented based on equal protection and federalism
in a de novo review of the consolidated cases presented to the district
court. Citing numerous Supreme Court rulings in support of their position, the
court of appeals held that “Congress’ denial of federal benefits to same-sex
couples lawfully married in Massachusetts has not been adequately supported by
any permissible federal interest.” Therefore, it concluded, Section 3 of DOMA
was unconstitutional.
The court of appeals held that DOMA violates the Equal Protection Clause of
the Constitution even if Congress had a rational basis for enacting it.
Classifications based upon race or national origin cases are considered suspect
and equal protection challenges to such classifications are analyzed under a
“strict-scrutiny” standard. Gender classification cases are analyzed under a
heightened or intermediate standard. Cases not involving suspect classifications
are generally considered using rational-basis scrutiny. Although not conceding
(as plaintiffs contended) that the same intermediate standard used for gender
cases should apply, the court did indicate that in applying rational-basis
scrutiny in its review of DOMA “in areas where state regulation has
traditionally governed, the Court may require that the federal government’s
interest in intervention be shown with special clarity.” As to DOMA, the First
Circuit reasoned, because courts have reason to be concerned about
discrimination against a minority group, the rationale for the legislation must
be examined with a more careful assessment to ensure that the statute does not
deny equal protection under the law to same-sex spouses. In addition, the court
found that federalism concerns also reinforced the need for a closer examination
of DOMA’s justifications because DOMA affects what is traditionally an area
regulated by the states.
The First Circuit’s analysis of DOMA was based on the following conclusions:
- Sexual preference is not a protected class, but homosexuals have
historically been discriminated against.
- DOMA does not prevent same-sex marriage where permitted under state law.
- DOMA does penalize same-sex couples by limiting access to benefits that
are available to opposite-sex couples.
- The rationales offered by the federal government for upholding DOMA
(defending the institution of marriage and traditional notions of morality,
protecting state sovereignty, preserving government resources) were
insufficient.
- DOMA does not explain how denying benefits to same-sex couples would
reinforce heterosexual marriage.
- In Lawrence v. Texas, 539 U.S. 558 (2003), the Supreme Court held
that moral disapproval alone cannot justify legislation discriminating
against homosexuals.
- Cost concerns related to spousal benefits are outweighed when the
legislation negatively impacts a historically disadvantaged group less able
to protect itself through regular political channels.
Impact of Massachusetts on Employee Benefit Plans
The First Circuit stayed its decision, maintaining the district court’s stay
of its injunctive judgment, anticipating that the defendants will seek Supreme
Court review of the decision. Accordingly, benefit plans offering coverage for
same-sex spouses must still address drafting and imputed-tax issues. Benefit
plans that have not addressed coverage for same-sex spouses are not compelled by
federal law to make benefits available.
Cases in Other Jurisdictions
In Windsor v. U.S., 2012 U.S. Dist. LEXIS 79454 (S.D.N.Y. 2012), the
U.S. District Court for the Southern District of New York ruled that Section 3
of DOMA is unconstitutional as applied to the plaintiff, who filed suit to
recoup estate taxes on the assets she inherited from her same-sex spouse in a
marriage recognized by New York state, but for which she was not granted the
spousal deduction by the Internal Revenue Service. The court cited the First
Circuit’s ruling in Massachusetts and found that the plaintiff was denied
equal protection of the laws.
In Golinski v. Office of Personnel Management, 824 F. Supp. 2d 968
(N.D. Cal. 2012), the U.S. District Court for the Northern District of
California ruled that Section 3 of DOMA is unconstitutional, as the statute
discriminates against same-sex married couples. The appeal in Golinski is
pending. Also in the Northern District of California, in the case of
Dragovich v. U. S. Department of the Treasury, No. C 10-01564 CW, 2012 U.S.
Dist. LEXIS 72745 (N.D. Cal. May 24, 2012), the court found Section 3 of DOMA to
be unconstitutional. In Dragovich, the state’s public-employee pension
system refused to allow same-sex spouses to enroll in its federally approved
long-term care insurance program. The plaintiffs in these California cases were
married in 2008, when same-sex marriage was legal in California; those marriages
are still valid.
In Connecticut, the case of Pedersen, et al. v. Office of Personnel Management,
3:10-CV-01750 (D.C. Connecticut, Nov. 9, 2010) seeks to overturn Section 3 of
DOMA on the basis that the plaintiffs, all in legal same-sex marriages in their
states of residence (Connecticut, Vermont, New Hampshire) are denied legal
protections afforded to similarly-situated residents in opposite-sex marriages.
On June 21, 2012, the Bipartisan Legal Advisory Group defending DOMA in Pedersen asked
that the case be put on hold, pending their request that the Supreme Court grant cert in the Massachusetts case.
The State of State Laws
As of this month, six states and the District of Columbia issue marriage
licenses to same-sex couples. Those states are Massachusetts, Connecticut, Iowa,
Vermont, New Hampshire and New York. Maryland’s marriage equality law goes into
effect January 1, 2013. However, the effective date may be delayed if opponents
are able to force a referendum in November 2012. Delaware, Hawaii, Illinois, New
Jersey and Rhode Island allow same-sex civil unions and provide state-level
spousal rights to same-sex couples.
California voters adopted Proposition 8, which amended the state constitution
to eliminate the right of same-sex couples to marry, in November 2008. In a
ruling issues in February 2012, the Ninth Circuit Court of Appeals found that
Proposition 8 was unconstitutional. The Ninth Circuit denied the defendants’
request for an en banc hearing of the case in early June, 2012;
proponents of Proposition 8 are expected to seek Supreme Court review. Although
California has not allowed same-sex marriages to be performed since Proposition
8 was adopted, the same-sex marriages performed in the six months before
Proposition 8 was passed remain valid.
California, Oregon, Nevada and Washington each have statewide laws providing
nearly all state-level spousal rights to unmarried couples who are domestic
partners (this includes both same- and opposite-sex domestic partnerships).
(Washington passed the Marriage Equity Act (MEA), which became law on Feb. 13,
2012. Opponents of the MEA obtained sufficient signatures to require a
referendum this November. Until the results of the referendum are known,
Washington’s 2009 “everything but marriage law” remains in force.)
Court activity at the state level continues. For example, on March 30, 2012,
two cases were filed in Cook County Circuit Court (Lazaro and Matos v. Orr;
Darby v. Orr) challenging the constitutionality of the Illinois law that
prohibits same-sex marriage. The Illinois States Attorney (on behalf of David
Orr, Cook County Clerk) and Illinois Attorney General, Lisa Madigan, have
announced that they agree that the ban is unconstitutional and will therefore
not defend the law. The cases were consolidated on June 21; at this date no
group has yet filed a petition asking to defend the state’s marriage law.
Hawaii, Maine, Wisconsin and the District of Columbia each have comprehensive
laws providing some state-level (or district-level) spousal rights to unmarried
couples who are domestic partners (both same- and opposite-sex couples).
Twenty-five states and Puerto Rico have laws prohibiting same-sex marriage
(often referred to as “mini-DOMAs”); twenty-nine states have constitutional
protections for “traditional marriage”. However, twenty jurisdictions recognize
some level of same-sex relationship, some including same-sex marriages from
other jurisdictions. These state provisions will not be directly affected by the
holding in Massachusetts or the eventual Supreme Court review of the
federal DOMA’s constitutionality. However, proponents of same-sex marriage
equality provisions predict that the number of state challenges will continue to
increase regardless of the status of the federal DOMA.
Conclusion
Given the number of provisions under the Code and the ERISA that address
spousal benefits, the future of DOMA must be carefully monitored. The impact to
employee benefit plans if DOMA is found unconstitutional will be substantial for
those jurisdictions allowing same-sex marriage or civil unions, or where states
must recognize a legal union from another jurisdiction. In addition, states with
mini-DOMA laws can expect further assaults on those statutes. Although the
holding in Massachusetts represents the first appellate decision on the
constitutionality of Section 3 of DOMA, the pending challenges, as well as the
inevitable additional litigation, will keep the issue moving forward toward an
eventual decision by the Supreme Court.
For additional information, please contact the author or any other member of
the McGuireWoods Employee Benefits and Executive Compensation group.