Ninth Circuit sends case back to district court for additional analysis in light of the U.S. Supreme Court’s ruling in United States v. Skrmetti.
The U.S. Court of Appeals for the Ninth Circuit today issued its decision in a case challenging the administration by Blue Cross Blue Shield of Illinois (BCBSIL) of categorical coverage exclusions for medically necessary gender-affirming care in hundreds of employer-provided ERISA health plans. In its decision, the court affirmed the district court in every respect but one, remanding the case back to the district court to consider its sex discrimination analysis after the U.S. Supreme Court’s decision in U.S. v. Skrmetti.
The court of appeals upheld the district court’s decision in three critical respects:
- First, it held that all operations of a health insurer are covered by Affordable Care Act’s anti-discrimination law (known as Section 1557) when it accepts any federal funding;
- Second, the court affirmed that third-party administrators (TPAs) like BCBSIL are independently liable for their administration of discriminatory health plans and that ERISA fiduciary duties to employers do not override federal discrimination laws; and,
- Third, the court of appeals established that the federal Religious Freedom Restoration Act (RFRA) does not provide a defense in litigation between private parties, nor does it provide a defense to third parties.
The court of appeals then vacated the decision and remanded the case for further proceedings in light of the Supreme Court’s decision in United States v. Skrmetti, which was issued after the district court’s decision. In doing so, the court of appeals laid out two pathways in which plaintiffs could still prevail below even after Skrmetti, including reaffirming that insurers may be liable for proxy discrimination. The ruling came in a lawsuit filed by Lambda Legal and Sirianni Youtz Spoonemore Hamburger PLLC.
“The decision by the court of appeals is wide-ranging and upheld the district court’s reasoning and our arguments in critical respects. Indeed, in all but one respect we prevailed, and the court established a strong precedent about the scope of the Affordable Care Act’s anti-discrimination law, which covers third-party administrators, and the lack of defenses under RFRA in private litigation,” said Omar Gonzalez-Pagan, Senior Counsel and Health Care Strategist, Lambda Legal. “And while the Ninth Circuit determined that the District Court needed to reconsider its sex discrimination analysis in light of the U.S. Supreme Court’s decision this past summer in United States v. Skrmetti, the panel majority laid a clear roadmap of ways in which plaintiffs may prevail even after Skrmetti, reaffirming the longstanding doctrine of proxy discrimination. We believe the categorical exclusions in the BCBSIL-administered plans go far beyond what was at play in Skrmetti and look forward to making that argument before the District Court.”
“The Ninth Circuit confirmed what we knew all along – Third party administrators like BCBSIL cannot just follow orders from employers when those orders result in illegal discrimination” said Eleanor Hamburger of Sirianni Youtz Spoonemore Hamburger. “And we look forward to proving in the trial court that BCBSIL’s categorical exclusions of gender-affirming treatment are illegal discrimination, despite Skrmetti.”
In December 2023, a Federal district judge granted class-wide relief declaring BCBSIL’s administration of gender-affirming health care exclusions as a TPA violates Section 1557 of the ACA, prohibiting BCBSIL from administering such exclusions in the future, and ordering the reprocessing of claims improperly denied based on the exclusions, from November 23, 2016, to the present.
That ruling followed the district court’s November 9, 2022, order certifying a class comprised of individuals who were, are, or will be denied pre-authorization or coverage of gender-affirming care as a result of BCBSIL’s administration of categorical exclusions of such care, as well as December 19, 2022 ruling holding that the administrations of discriminatory exclusions in ERISA health plans by a TPA that receives federal funding violates Section 1557 of the Affordable Care Act.
The decision comes in a class action lawsuit filed by Lambda Legal and Sirianni Youtz Spoonemore Hamburger PLLC challenging BCBSIL’s administration of the discriminatory blanket exclusions on behalf of a then-15-year-old transgender young man, C.P., and his parents; S.L., a 13-year-old transgender girl; and Emmet Jones, a transgender man. The lawsuit, filed in the U.S. District Court for the Western District of Washington, argued that BCBSIL’s administration of the exclusions is in direct violation of the health nondiscrimination law enacted as part of the Affordable Care Act, known as Section 1557.
The case is C.P. v. Blue Cross Blue Shield of Illinois and is being litigated by Senior Counsel and Health Care Strategist Omar Gonzalez-Pagan, Senior Director of Strategic Initiatives and Special Counsel Jennifer C. Pizer, and Interim Deputy Legal Director for Litigation Karen Loewy for Lambda Legal, and Eleanor Hamburger and Daniel Gross of Sirianni Youtz Spoonemore Hamburger PLLC, in Seattle, Washington.
Read the Ninth Circuit ruling here.
Learn more about the case here: https://www.lambdalegal.org/in-court/cases/cp-v-bcbsil