Binghamton GHS Employees Federal Credit Union v. State Division of Human Rights, 77 N.Y.2d 16 (1990)
Excluding disabilities caused by normal pregnancy from an optional credit disability insurance policy offered as part of a loan agreement constitutes unlawful sex discrimination in the terms of credit, violating the New York Human Rights Law.
Summary
Theresa Yadlosky obtained a car loan from Binghamton GHS Employees Federal Credit Union, electing an optional credit disability insurance policy that excluded coverage for disabilities due to normal pregnancy. After her claims for disability benefits related to two pregnancies were denied, she filed complaints with the State Division of Human Rights, alleging sex discrimination. The New York Court of Appeals held that the pregnancy exclusion constituted unlawful sex discrimination in the terms of credit, violating the Human Rights Law, even though the insurance was optional. The court reasoned that the insurance was inextricably intertwined with the loan agreement and offered as a term of credit.
Facts
Theresa Yadlosky obtained a car loan from Binghamton GHS Employees Federal Credit Union, using a combined application and promissory note. The application included an optional credit health and disability insurance policy. Yadlosky elected the insurance, and the premium was included in the loan principal. The insurance policy, administered by Richard J. Katz & Co., excluded coverage for disabilities caused by normal pregnancy. Yadlosky filed claims for disabilities resulting from two pregnancies, which were denied based on the pregnancy exclusion.
Procedural History
Yadlosky filed complaints with the State Division of Human Rights. The Administrative Law Judge ruled in her favor. The Commissioner of the Division of Human Rights affirmed, holding that the insurance policy was a term of credit and violated the Human Rights Law. Binghamton, Katz, and the New York State Insurance Department initiated an Article 78 proceeding to annul the Division’s determination. The Appellate Division initially granted the petition. The New York Court of Appeals reversed the Appellate Division’s order and reinstated the Division of Human Rights’ determination.
Issue(s)
Whether an auto loan agreement violates the Human Rights Law when it contains an option to purchase disability insurance for the duration of the loan that excludes coverage for disabilities caused by normal pregnancy.
Holding
Yes, because the disability insurance exclusion constitutes unlawful sex discrimination in the terms of credit, violating the Human Rights Law, even though the insurance was optional.
Court’s Reasoning
The court determined that the Division of Human Rights has jurisdiction over discrimination matters, including claims that the insurance option was a discriminatory term of credit under the Human Rights Law. The court cited previous holdings that singling out pregnancy for different treatment discriminates on the basis of sex. While the insurance was optional, the court found that it was a “term” of the credit included in the credit agreement. The court emphasized that the insurance was offered in the credit agreement, available with every installment loan, keyed to the loan’s duration, and only available as part of a credit transaction. The insurance premium was incorporated into the loan and the creditor profited from it. The court reasoned that a lender cannot offer a disability benefits policy, whether optional or not, that discriminates on the basis of sex. The court stated, “A lender may not, as a part of its regular loan procedures, offer a disability benefits policy, whether optional or not, that discriminates on the basis of sex (see, Executive Law § 296-a [1] [b]).” Therefore, because women could not obtain the same disability protection as men due to the pregnancy exclusion, the credit agreement violated the statutory proscription against discrimination.