Summary
The Ninth Circuit vacated the district court’s summary judgment for plaintiffs in a class action alleging that Blue Cross Blue Shield of Illinois violated Section 1557 of the Affordable Care Act by administering employer-sponsored health plan exclusions for gender-affirming care. The court held that BCBSIL was subject to Section 1557, could be liable for implementing employer-selected plan terms, and had no RFRA defense on the record presented. In light of the Supreme Court’s intervening decision in United States v. Skrmetti, the court remanded for reconsideration of whether the exclusions constituted sex-based discrimination.
Topics
Practice areas
Questions Presented
- Whether BCBSIL's provision of health insurance constitutes a health program or activity subject to Section 1557 when some of its operations receive federal financial assistance.
- Whether Section 1557 applies to BCBSIL's third-party-administrator activities even when BCBSIL did not receive federal assistance for those particular activities.
- Whether ERISA requires or permits a third-party administrator to administer plan terms that violate Section 1557.
- Whether BCBSIL forfeited its arguments concerning Spending Clause notice, discriminatory intent, and agency principles.
- Whether the Religious Freedom Restoration Act provides BCBSIL a defense to a private Section 1557 action when BCBSIL's own religious exercise was not burdened.
- Whether the district court correctly concluded that exclusions for treatment of gender dysphoria or gender-affirming care discriminate based on sex after United States v. Skrmetti.
Holdings
- BCBSIL's provision of health insurance is a health program or activity, and because BCBSIL receives federal financial assistance for some of its operations, Section 1557 applies to all of its operations in this case rather than only to particular funded plans.
- BCBSIL waived its Spending Clause notice argument by raising it for the first time in its reply brief and forfeited it by failing to raise it in the district court.
- A third-party administrator may be liable under Section 1557 even when implementing plan terms drafted or selected by an employer sponsor; ERISA does not require a third-party administrator to administer unlawful plan terms.
- BCBSIL forfeited its argument that plaintiffs failed to prove discriminatory intent. Even absent forfeiture, facial discrimination is intentional discrimination, and an administrator may be liable for intentionally applying allegedly sex-based rules regardless of the plan sponsor's motivation.
- BCBSIL cannot invoke RFRA because it did not establish that its own religious exercise was burdened, and RFRA does not provide a defense in an action between private parties without a governmental defendant.
- The district court's reasoning that exclusions for treatment of gender dysphoria necessarily discriminate based on sex cannot stand in light of United States v. Skrmetti. The Ninth Circuit did not decide whether plaintiffs ultimately can prevail under theories involving an additional qualifying diagnosis or pretext/proxy discrimination.
Key quotations
“We therefore vacate the summary judgment against BCBSIL and remand so the district court may consider the implications of that authority.” (14)
“Thus, a third-party administrator’s duties under ERISA cannot entitle it to violate another federal law; to hold otherwise would “alter,” “impair,” or “supersede” that other law.” (23-25)
“Thus, only people whose religious exercise has been burdened can raise a defense under RFRA.” (32-33)
“For the foregoing reasons, the district court’s summary- judgment decision cannot stand. Although we agree that BCBSIL is bound by Section 1557 and cannot use the employers’ instructions or RFRA as defenses, we cannot square the summary-judgment ruling against BCBSIL with Skrmetti. We therefore vacate that ruling.” (46-47)
Factual background
BCBSIL operates as an insurer and as a third-party administrator for employer-sponsored health plans. It receives federal financial assistance for several insurance products, but administers self-funded plans whose sponsors may exclude gender-affirming care. Plaintiffs were transgender individuals, including minors, whose claims for puberty blockers, hormones, or gender-affirming surgery were denied under plan exclusions administered by BCBSIL. At least one plaintiff, S.L., allegedly had precocious puberty in addition to gender dysphoria and was denied treatment despite the additional diagnosis.
Procedural history
C.P. and Patricia Pritchard filed suit in 2020. The district court denied BCBSIL's motion to dismiss, permitted amendment to assert class claims, certified the class, and on December 19, 2022, granted plaintiffs' motion for summary judgment while denying BCBSIL's cross-motion. The district court later entered class-wide relief prohibiting administration or enforcement of the exclusions and requiring reprocessing of certain claims, but stayed the injunction pending appeal. The Ninth Circuit vacated the summary judgment and remanded for reconsideration in light of United States v. Skrmetti.
Remand instructions
The district court must reconsider the Section 1557 sex-discrimination issue in light of United States v. Skrmetti, including the alleged treatment denial despite a diagnosis other than gender dysphoria and plaintiffs' pretext/proxy theory. The district court may address forfeiture, additional discovery, class-wide treatment of the proxy issue, and whether a trial is necessary. Proceedings must otherwise be consistent with the opinion.