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Court Holds That Health Plan’s Exclusion of Gender-Conforming Surgery Is Unlawful Sex Discrimination



Boyden v. Conlin, 2018 WL 4473347 (W.D. Wis. 2018)

A federal court has ruled in favor of transgender participants in a health plan covering state employees, holding that the plan’s exclusion of procedures and services related to gender-conforming surgery (GCS) constitutes sex discrimination in violation of Section 1557 of the Affordable Care Act (ACA), Title VII of the Civil Rights Act of 1964, and the Equal Protection Clause of the U.S. Constitution. The exclusion was adopted in 1994 on the basis that GCS was experimental and not medically necessary. In 2016, the state insurance board voted to remove the exclusion to reflect changes made by Section 1557 but almost immediately reinstated it—in part due to the nationwide injunction issued in the Franciscan Alliance case (see our Checkpoint article).

Addressing Title VII and Section 1557, the court ruled that the exclusion unlawfully discriminates by denying coverage for medically necessary surgical procedures based on a patient’s sex at birth. The court noted, for example, that the plan covers many of the procedures and services associated with GCS for conditions other than gender dysphoria. The court also viewed the exclusion as implicating sex stereotyping by limiting the availability of medical transitioning, forcing transgender individuals to maintain the physical characteristics of their sex at birth despite medical and psychological recommendations to the contrary. Rejecting the argument that the exclusion for GCS is nondiscriminatory because the plan excludes cosmetic surgery for all psychological conditions, the court noted that the state had failed to prove that gender dysphoria is medically comparable to other psychological conditions or that cosmetic surgery is appropriate treatment for those conditions. In addition, the court concluded that the state had waived governmental immunity for the Section 1557 claim by accepting federal funds. Regarding the claim under the Equal Protection Clause (which applies only to governmental entities), the court applied heightened scrutiny (justification for state’s action must be “exceedingly persuasive”) and held that the state had failed to establish that cost or efficacy was a genuine reason for the exclusion. The court concluded that as a result of its holdings, the participants may pursue claims for equitable relief, compensatory and punitive damages, and attorney’s fees in a jury trial.

EBIA Comment: Courts are split on whether Section 1557 requires health plans to provide coverage for GCS, with some ruling in favor of employers and others ruling in favor of participants. Meanwhile, HHS is reviewing the portion of the Section 1557 regulations that applies sex-discrimination principles to gender identity. Pending final resolution of these issues, employers should review their health plan provisions and determine (in consultation with their advisors, insurers, and stop-loss carriers) whether changes may be necessary or advisable. For more information, see EBIA’s Group Health Plan Mandates manual at Sections XXI.A (“What Is Title VII, as Amended by the PDA, and Who Must Comply?”) and XXI.D (“Court Decisions Applying Title VII to Health Coverage”). See also EBIA’s Health Care Reform manual at Section XXXIV.A (“Section 1557 Nondiscrimination Provisions: Grounds Prohibited Under Federal Laws”) and EBIA’s Self-Insured Health Plans manual at Section XIII.E (“Coverage Limitations and Exclusions”).

Contributing Editors: EBIA Staff.

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