Jane Doe, a transgender woman with gender dysphoria, sued Independence Blue Cross (IBX) after it denied coverage for facial feminization surgeries (FFS) as cosmetic and not medically necessary. Doe filed sex and disability discrimination claims under the Affordable Care Act (ACA), Section 504 of the Rehabilitation Act (Section 504), the Americans with Disabilities Act (ADA), as well as claims under the Employee Retirement Income Security Act (ERISA) and a Pennsylvania state insurance bad faith law.
IBX moved to dismiss Doe’s claims pursuant to FRCP 12(b)(6). The Court allowed her sex discrimination claim under the ACA to proceed, finding that she plausibly alleged a violation of Title IX of the Education Amendments of 1972. However, the Court dismissed Doe’s remaining claims.
The case is Doe v. Independence Blue Cross, case no. 23-1530, U.S. District Court for the Eastern District of Pennsylvania.
Background Facts
Ms. Doe suffers from gender dysphoria, a diagnosable condition found in the DSM-5. Medical experts recognize FFS and related procedures as medically necessary and part of the standard of care for treating this medical condition. Ms. Doe has experienced numerous instances of harassment and mistreatment because of her transgender status, which has caused her difficulty with social and occupational functioning.
Doe had employer-sponsored health insurance benefits provided by IBX through an ERISA-governed health benefits plan. The policy covers medically necessary healthcare expenses and excludes cosmetic surgeries that improve appearance, but not physical function. IBX specifically covers some treatments for gender dysphoria that it deems medically necessary if certain criteria are met, and considers others cosmetic, such as FFS.
After IBX denied her claim, Dox submitted additional evidence to show that her gender dysphoria was a functional impairment that FFS could help remedy. IBX continued to deny coverage, claiming that FFS was cosmetic, Doe’s facial structure fell within the realm of a biological female, and her perception of herself was a mental rather than a functional or physical impairment.
Discrimination Under the ACA
The ACA specifically incorporates non-discrimination provisions and enforcement mechanisms of Title VII, Title IX, the Age Discrimination Act of 1975, and Section 504 of the Rehabilitation Act for any health program or activity receiving federal financial assistance. Therefore, sex and disability discrimination are actionable under the ACA.
First, Doe alleges sex discrimination under Title IX. Discrimination based on one’s transgender status is sex-based discrimination. Discrimination because of one’s gender dysphoria thus is also sex-based discrimination.
Doe argues that IBX’s denial of coverage for FFS was based on gender stereotypes of what a female’s facial structure should look like. In this case, IBX’s determination of whether FFS was medically necessary relied on these stereotypes and the degree to which Doe conformed to them. Although IBX’s policy was non-discriminatory on its face, it applied the policy to Doe in a discriminatory manner, which caused the Court to allow her sex discrimination claim to proceed.
Next, Doe argues that IBX’s denial of coverage constituted unlawful discrimination based on disability under Section 504. She claims that IBX never covers FFS for individuals with gender dysphoria but covers the same procedure for other disabled individuals. However, Doe had no evidence to support that claim, which led to the Court dismissing her Section 504 claim.
Discrimination Under the ADA
Title III of the ADA applies to discrimination based on disability that occurs in any place of public accommodation. Doe’s allegations relate to an insurance policy, not a physical place, and she cannot prove the required nexus between the IBX insurance policy and a public place. Therefore, the Court dismissed this claim, as well.
Breach of Fiduciary Duty Under ERISA
The Court concluded that Doe seeks reimbursement of her medical expenses for the FFS that IBX refused to cover. Since Doe has this remedy, she cannot seek the same remedy under the relevant ERISA provisions. Therefore, the Court dismissed Doe’s ERISA claim.
State Bad Faith Insurance Claim
Finally, the Court disposed of Doe’s claim stemming from Pennsylvania’s bad faith insurance claim. Bad faith claims that arise from benefits plans governed by ERISA are preempted by ERISA actions. Therefore, Doe could not pursue her state law claim due to ERISA preemption.
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