Skip to content
Benefits

Self-Insured Health Plan’s Exclusion of “Sex Change” Surgery Violates Title VII

EBIA  

EBIA  

Lange v. Houston Cnty., 2022 WL 1812306 (M.D. Ga. 2022)

Available at https://www.govinfo.gov/content/pkg/USCOURTS-gamd-5_19-cv-00392/pdf/USCOURTS-gamd-5_19-cv-00392-3.pdf

A self-insured health plan’s third-party administrator (TPA) informed the employer/plan sponsor in 2016 that it was removing exclusions for gender identity disorder and “sex change” surgery from the plans that it administered, in response to 2016 regulations issued under Affordable Care Act (ACA) Section 1557. (As background, the 2016 regulations broadly prohibited discrimination in certain health programs and activities based on various factors, including gender identity—see our Checkpoint article. Legal actions followed, resulting in comprehensively revised and narrowed regulations in 2020, but the status of those regulations remains in flux—see our Checkpoint article.) The employer concluded that its self-insured plan was not subject to ACA Section 1557 and declined to remove the exclusions from the plan, despite the TPA’s recommendation to do so. A transgender employee seeking coverage for gender-confirming surgery later sued the employer, arguing (among other things) that the plan’s exclusion violated Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the U.S. Constitution’s Equal Protection Clause.

Citing the U.S. Supreme Court’s Bostock ruling (see our Checkpoint article), the court held without a trial that the employer had violated Title VII. The court explained that denying health benefits because of sex unquestionably violates Title VII because health benefits are among the protected “compensation, terms, conditions, or privileges of employment” under that law. Rejecting each argument presented by the employer, the court found that there was no “Bostock workaround”—the exclusion plainly discriminated because of transgender status, which, under Bostock, constitutes discrimination based on sex. The case will continue to trial to determine the appropriate remedy for the Title VII violation and to address disputed issues of fact that are relevant to the employee’s equal protection claim. The court rejected the ADA claim, explaining that the ADA excludes from its definition of disability “gender identity disorders not resulting from physical impairments.”

EBIA Comment: The applicability of Title VII and Section 1557 to gender-identity-related health plan benefits remains unsettled as courts continue to weigh the full implications of the Bostock decision. This case seems like a straightforward interpretation of Title VII and Bostock, but other cases involve more complicated claims for religious exemptions from the nondiscrimination mandates (see, e.g., our Checkpoint article). Until the issues have been sorted out in the courts, plan sponsors, insurers, and TPAs should monitor developments (new proposed regulations under Section 1557 are expected at any time) 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.

More answers