Blue Cross Trans Care lawsuit tests liability limits of employer plan administrators

Blue Cross Trans Care lawsuit tests liability limits of employer plan administrators

A legal battle between a patient and Blue Cross and Blue Shield of Illinois could significantly increase third-party administrators’ potential liability under the Affordable Care Act’s anti-discrimination provisions.

A federal judge this month certified a class action lawsuit against the nonprofit insurer that alleges its refusal to cover a transgender teen’s gender-affirming care through a self-funded benefits plan. which he administers for Catholic Health Initiatives violates the ACA. Patricia and Nolle Pritchard of Washington state filed the lawsuit two years ago after Blue Cross and Blue Shield of Illinois refused to cover gender-affirming care for their son, identified as CP, according to to corporate policy of Englewood, Colorado, Catholic Health Initiatives. .

If the plaintiffs prevail, the consequences could extend beyond the rights of transgender people to access medical care and significantly alter the relationship between health insurance companies and the employers whose insurance plans they administer. self-funded disease.

This lawsuit could set a legal precedent that would hold third-party administrators who receive federal funds accountable for the coverage policies of their employer clients, said Abigail Coursolle, senior counsel at the National Health Law Program. “This is an evolving area of ​​law, and it really shows how complicated our healthcare system is and how difficult it is to sort out who really makes the decisions about what is covered, how it is is covered and who can be held accountable for those decisions,” she said.

Companies like Blue Cross and Blue Shield of Illinois could find themselves in the position of refusing to enforce their clients’ policies, refusing to do business with employers who have religious objections to certain medical care, paying them these treatments or waive Medicare and Medicaid reimbursements to avoid anti-discrimination rules.

Blue Cross and Blue Shield of Illinois declined to comment on the ongoing litigation. Chicago-based CommonSpirit Health’s Catholic Health Initiatives, which is not a party to the lawsuit, did not respond to a request for an interview.

Under Section 1557, organizations that receive federal funds, such as Medicare and Medicaid payments, cannot discriminate on the basis of gender, which the Department of Health and Human Services says includes medical discrimination against trans people. Religious employers may qualify for exemptions, but Blue Cross and Blue Shield of Illinois and its parent company, Health Care Service Corp., are not faith-based organizations.

Employer exemptions

The Religious Freedom Restoration Act of 1993 was not designed to allow private companies to withhold payment for workers’ health services based on the religious views of their owners. That changed in 2014, when the Supreme Court ruled that the beliefs of Hobby Lobby’s private owners exempted the craft retail chain from covering birth control for its workers. The ruling paved the way for other employers to seek religious exemptions from federal law. Provider groups, including the American Medical Association, have called for an end to payor exclusions for gender-affirming care.

More than half of U.S. residents are covered by self-insured plans, and those insured have little recourse to appeal coverage exclusions from their employers, said Mark Silberman, vice president of the healthcare practice group. of the law firm Benesch Friedlander Coplan & Aronoff.

” It’s difficult. Most employers who have self-insured plans say, “That’s a benefit that we provide, and in the event that you don’t want to participate in that benefit, you don’t have to,” said Silbermann. “The problem becomes: most people don’t have the luxury of choosing their employer cavalierly and casually based on the insurance coverage they offer.”

In court filings, Blue Cross argues that religious exemptions for employers such as Catholic Health Initiatives allow third-party administrators to enforce the claims of their self-insured customers, even those the federal government otherwise calls discriminatory.

Judge Robert Bryan of the U.S. District Court for the Western District of Washington wrote in May 2021 that because Blue Cross is not itself a religious organization, it may be subject to federal anti-discrimination rules. Bryan also noted that the Supreme Court had previously ruled that sex discrimination protections in the Civil Rights Act of 1964 applied to LGBTQ workers, and that it would be “logically inconsistent” for federal law not to categorize discrimination against transgender people as gender bias.

Additionally, wrote Bryan, Blue Cross and Blue Shield of Illinois are already working with some self-funded employers who have transgender coverage exclusions to provide workers with the option of purchasing alternative plans that cover gender-affirming care. The federal government is in the process of determining the legal obligations of third-party administrators under Section 1557.

“Section 1557 builds on these other civil rights laws, and courts have historically interpreted civil rights laws to provide protection, in somewhat analogous cases, in circumstances for gay or transgender people,” said Christine Monahan, a professor at Georgetown University. Center on Health Insurance Reforms. “Even though HHS right now might be back and forth on this, the judge says, ‘I’m going to look at what the courts say and rule based on that. “”

HHS a href=””> unveiled a proposal in June to review liability on a “case-by-case basis,” based on administrators’ engagement in developing coverage exclusions for employer clients Current department policy states that trans people are protected by the ACA’s anti-discrimination rules, which is similar to the position taken by the administration of President Barack Obama but contrary to regulations revised under the administration of President Donald Trump.

Bryan’s decision to allow the trial to continue came as LGBTQ people increasingly took to court to fight coverage denials. “This is an area where we see a lot of litigation and I expect to see more of it, especially as decisions about what healthcare professionals should get become more and more political,” said Coursolle.

The Prichard family

CP, who is now 16, was diagnosed with gender dysphoria before he and his parents sought gender-affirming care. The Pritchards sued Blue Cross and Blue Shield of Illinois for violating CP doctors’ recommendation and denying him hormone therapy and chest reconstruction surgery, according to the original complaint. The family later paid $10,000 for the treatments out of pocket.

The Pritchard family now represents a class of transgender patients who work at more than 370 employers who refuse to cover gender-affirming care and contract with Blue Cross and Blue Shield of Illinois for employee health benefits.

Although policy wording varies from employer to employer, the insurer applies its exclusions consistently by denying all claims that include “gender dysphoria” and “sex reassignment,” Bryan wrote. in its notice this month. If the Pritchards win their case, the insurer will not be able to dismiss claims asserting the gender of a patient enrolled in a self-funded health plan, said Omar Gonzalez-Pagan, attorney and healthcare strategist at Lambda Legal Defense and Education Fund, which represents the Pritchards.

“It’s a question, ‘Can a customer force Blue Cross and Blue Shield of Illinois to discriminate and do something illegal? I think the answer is no,” Gonzalez-Pagan said. “The law doesn’t allow you to circumvent legal liability because a customer told you to.”

In June, federal courts in Georgia and North Carolina ruled in separate class action lawsuits that public employers cannot exclude or deny coverage for gender-affirming care. In August, the Seventh Circuit Court of Appeals ruled that parents of an autistic child could sue their employer – the assisted living company Heart of CarDon – for refusing therapy, which they said violated the ACA Section 1557.

These legal advances contrast with the growing number of enacted and proposed state laws aimed at limiting access to transgender medical care. More than 145 transgender-related bills have been introduced in 34 states so far this year, the Human Rights Campaign, an LBGTQ advocacy organization, wrote this month in a report that cataloged violence against trans people.

The Human Rights Campaign did not specify how many laws targeted transgender patients’ access to health care. But one example comes from Florida, where the Agency for Health Care Administration enacted a rule in August that denies Medicaid coverage for gender-affirming care. A federal judge upheld the rule in October after a group of patients sued under Section 1557.

“There’s going to be more confusion than clarity in the near future,” Silberman said.

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