The United States District Court for the Eastern District of Pennsylvania, in Doe v. Independence Blue Cross, declined to dismiss a participant’s lawsuit claiming that a group health plan covered under Section 1557 of the Affordable Care Act (“ACA”) engaged in impermissible discrimination by refusing to cover gender-affirming facial and hair procedures.
Law. ACA Section 1557 directs the U.S. Department of Health and Human Services (“HHS”) to apply existing civil rights laws and regulations to “any health program or activity any part of which is receiving Federal financial assistance.” These laws include Title IX of the Civil Rights Act prohibiting discrimination on the basis of sex. HHS issued regulations that redefined discrimination “on the basis of sex” to include gender identity which it defined as one’s internal sense of being “male, female, neither, or a combination of male and female.”
Facts. A transgender woman, diagnosed with gender dysphoria, requested her employer’s ERISA-governed group health plan to cover facial feminization surgeries. The plan covers “medically necessary” healthcare expenses related to gender-affirming treatment, including: hormone treatments; bilateral mastectomies and breast augmentations; genital reconstructive surgeries; and penile prostheses.
However, the plan excludes “cosmetic surgeries” which are defined as procedures “[w]hich are done to improve the appearance of any portion of the body” and “[f]rom which no improvement in physiologic function can be expected.” Expenses to correct a “condition resulting from an accident” and “[f]unctional impairment which results from a covered disease, injury or congenital birth defect” are not excluded.
The plan denied the participant’s claim for benefits on the basis that the requested surgeries were cosmetic and not medically necessary, as required under the health benefits coverage provided through the plan. The participant sued, claiming the plan’s denial was based on sex, gender identity, gender stereotyping, and her status as a transgender woman with gender dysphoria and, therefore, violated Section 1557 of the ACA.
District Court. When the plan asked the court to dismiss the case, the participant responded that she had demonstrated that her gender dysphoria is a functional impairment necessitating the surgery and the procedures she requested are medically necessary treatments, and not cosmetic, for individuals with gender dysphoria.
The District Court refused to dismiss the case, ruling that “The medical necessity determination must be made considering the insured’s gender identity (how the insured perceived her appearance as incongruent with her female gender identity), not her gender expression.” It noted that the plan had based its medical necessity determination on “markers of gender expression, that is, how she was perceived by others. [The plan] applied societal understandings of what a ‘normal’ woman looks like and compared [the participant’s] appearance to those norms. What matters is how the participant identified herself.”
The court determined that the participant had presented facts sufficient to show that the plan had applied its cosmetic procedure exclusion in a discriminatory manner. It explained that the facts alleged by the participant show that the plan’s denial of coverage for the surgery was based, at least in part, on considerations of gender stereotypes and gender conformity or nonconformity. Therefore, the court concluded that the participant had stated a plausible claim that the plan’s denial of coverage constitutes intentional discrimination based on sex in violation of Title IX of the Civil Rights Act and the ACA.