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Health Plan’s Exclusion of Gender Affirming Care Violates Title VII and U.S. Constitution

EBIA  

EBIA  

Kadel v. Folwell, 2022 WL 2106270 (M.D.N.C. 2022)

Available at https://www.govinfo.gov/content/pkg/USCOURTS-ncmd-1_19-cv-00272/pdf/USCOURTS-ncmd-1_19-cv-00272-3.pdf

Another federal court has ruled in favor of transgender individuals challenging a group health plan’s exclusion of coverage for gender affirming care. A group of current and former state employees sued because the state’s group health plan denied coverage for medically necessary gender affirming care for themselves or their dependents. The employees alleged that the plan’s categorical exclusion of coverage for treatments “leading to or in connection with sex changes or modifications” discriminated on the basis of sex and transgender status. In earlier proceedings, an appellate court rejected the plan’s arguments that it could not be sued because it was entitled to sovereign immunity as a governmental entity (see our Checkpoint article) and sent the case back to the trial court for resolution.

The trial court found that the plan’s exclusion discriminated based on sex and transgender status in violation of the U.S. Constitution’s Equal Protection Clause and because of sex in violation of Title VII of the Civil Rights Act of 1964. The court declined to rule on claims alleged under Affordable Care Act Section 1557, pending the issuance of proposed regulations that are expected to be a “wholesale revision” of the current Section 1557 regulations (see our Checkpoint article). The court permanently barred the plan from enforcing the exclusion and ordered it to provide coverage for “medically necessary services of treatment for gender dysphoria.”

EBIA Comment: Disputes over group health plan coverage of gender affirming care—and findings of plan and employer liability—are becoming increasingly common (for example, see our Checkpoint article). In addition, the Biden administration remains steadfast in its commitment to prohibiting discrimination in health care based on sexual orientation and gender identity (see our Checkpoint article and a June 2022 Executive Order). Plan sponsors, insurers, and TPAs should monitor developments and be mindful of plan provisions that could invite costly legal challenges. For more information, see EBIA’s Group Health Plan Mandates manual at Sections XXI.C (“EEOC’s Position on Title VII and Health Coverage”), XXI.D (“Court Decisions Applying Title VII to Health Coverage”), and XXI.M.1 (“Interaction of Title VII and Section 1557”). See also EBIA’s Health Care Reform manual at Section XXXIV.A (“Section 1557 Nondiscrimination: Grounds Prohibited Under Federal Laws”).

Contributing Editors: EBIA Staff.

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