E.S. v. Regence BlueShield, 2024 WL 1173805 (W.D. Wash. 2024)
A federal trial court has allowed a proposed class action lawsuit to proceed against an insurer for its health plans’ exclusion of all hearing aid devices except cochlear implants. The participants alleged “proxy” discrimination under Affordable Care Act (ACA) Section 1557. (Section 1557 prohibits discrimination in certain health programs or activities on the basis of race, color, national origin, sex, age, or disability.) The court previously dismissed the case after concluding that the exclusion did not predominately affect individuals with disabilities—rather, it predominately affected individuals with hearing loss who would not be considered disabled under the Americans with Disabilities Act.
On rehearing, the court reiterated that proxy discrimination results from a policy that “treats individuals differently on the basis of seemingly neutral criteria,” but the excluding criteria are “so closely associated with the disfavored group” that “facial discrimination” can be reasonably inferred. Looking to the policy’s “disproportionate effect on disabled insureds,” along with the exclusion’s historical context and selective enforcement, the court concluded this time that the participants had plausibly alleged that the insurer engaged in proxy discrimination in plan benefit design and allowed the claim to proceed to trial.
EBIA Comment: Employer plan sponsors and their insurers and administrators will want to keep an eye on this case, as a successful proxy discrimination claim could call into question any plan exclusion of hearing aids or other items and services that are closely associated with a disability. For more information, see EBIA’s Health Care Reform manual at Section XXXIV.A (“Section 1557 Nondiscrimination: Grounds Prohibited Under Federal Laws”) and EBIA’s Group Health Plan Mandates manual at Section XXI.M.1 (“Interaction of Title VII and Section 1557”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.D.5 (“Section 1557 Nondiscrimination: Nondiscrimination in Health Programs and Activities”).
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