Baker v. Aetna Life Ins. Co.

• Decision Date: 13 January 2017
• Docket Number: Civil Action No. 3:15–CV–3679–D
• Parties: Charlize Marie BAKER, Plaintiff, v. AETNA LIFE INSURANCE CO., et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

228 F.Supp.3d 764

Charlize Marie BAKER, Plaintiff,

v.AETNA LIFE INSURANCE CO., et al., Defendants.

Civil Action No. 3:15–CV–3679–D

United States District Court, N.D. Texas, Dallas Division.

Signed January 13, 2017

Michael J. Hindman, Kasey Cathryn Krummel, Hindman/Bynum PC, Dallas, TX, for Plaintiff.

Stephen E. Fox, Robert J. Garrey, Polsinelli PC, Earl Bowen Austin, Jennifer M. Trulock, John Benjamin Lawrence, Baker Botts, Dallas, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

SIDNEY A. FITZWATER, UNITED STATES DISTRICT JUDGE

Plaintiff Charlize Marie Baker ("Baker")—who alleges that she "has a well-documented history of suffering from Gender Dysphoria

," Compl. at 4, "formerly referred to as Gender Identity Disorder," id. at 4 n.2—brings this action against defendants Aetna Life Insurance Company ("Aetna") and L–3 Communications Integrated Systems, LP ("L–3"),¹ arising from the denial of coverage of the costs of her breast augmentation surgery solely on the basis of her male birth gender, and of her corresponding claim for short-term disability benefits on the basis that surgery to treat Gender Dysphoria does not qualify as an illness. Baker alleges that Aetna and L–3 discriminated against her on the basis of gender identity, in violation of § 1557 of the Patient Protection and Affordable Care Act ("ACA"), and on the basis of sex/gender, in violation of Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e et seq. , and that Aetna wrongfully denied her claim for benefits under an ERISA plan offered by L–3, in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 –1461. Aetna moves under Fed. R. Civ. P. 12(b)(6) to dismiss Baker's ACA and Title VII claims and for partial dismissal of her ERISA claim to the extent it asserts a claim for discrimination. L–3 moves under Rule 12(b)(6) to dismiss Baker's discrimination claims under the ACA and Title VII.² For the reasons that follow, the court grants Aetna's motion to dismiss, and it grants in part and denies in part L–3's motion to dismiss.

I

Baker is an employee of L–3³ and a participant in the company's ERISA-qualified health benefits plan ("Health Plan") and short-term disability benefits plan ("STD Plan").⁴ Aetna is the third-party administrator of the Health Plan and the claim fiduciary and administrator of the STD Plan.

In 2011 Baker began the process of gender transition

from male to female. She legally changed her name,⁵ and she changed her gender designation from male to female on all government-issued documents. In 2015, after consulting a healthcare professional who determined that breast implants were medically necessary to treat her Gender Dysphoria, she scheduled breast implant surgery. Baker sought benefits under the STD Plan to cover her post-surgery recovery. Baker alleges that coverage under the Health Plan was denied because the plan does not cover breast implants for individuals with a male birth gender designation who are transitioning to the female gender, although the plan covers individuals with a female birth gender designation who are transitioning to the male gender and seeking a mastectomy. She asserts that benefits under the STD Plan were denied on the basis that surgery to treat Gender Dysphoria does not qualify as treatment of an illness.

Baker filed this lawsuit against Aetna and L–3, seeking to recover on three claims. In count one, she alleges that Aetna and L–3 discriminated against her based on her gender identity, in violation of § 1557 of the ACA, 42 U.S.C. § 18116. In count two, she asserts that Aetna wrongfully denied benefits to her under the STD Plan, in violation of ERISA. She also pleads in the alternative a claim for a good faith extension of existing law, alleging that the court should hold that Aetna's denial of benefits under the STD Plan was an act of discrimination based on gender identity, in violation of ERISA. And in count three, Baker avers that Aetna and L–3 discriminated against her based on her sex/gender, in violation of Title VII.

Aetna and L–3 move under Rule 12(b)(6) to dismiss Baker's discrimination claims alleged in counts one and three, and Aetna moves to dismiss count two to the extent that count asserts a discrimination claim. Baker opposes both motions.

II

Under Rule 12(b)(6), the court evaluates the pleadings by "accept[ing] ‘all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.’ " In re Katrina Canal Breaches Litig. , 495 F.3d 191, 205 (5th Cir. 2007) (quoting Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit , 369 F.3d 464, 467 (5th Cir. 2004) ). To survive defendants' motion, Baker's pleadings must allege enough facts "to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ); see also Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ("Factual allegations must be enough to raise a right to relief above the speculative level[.]"). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘shown’—‘that the pleader is entitled to relief.’ " Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 (alteration omitted) (quoting Rule 8(a)(2)). Furthermore, under Rule 8(a)(2), a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Although "the pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ " it demands more than " ‘labels and conclusions.’ " Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). And " ‘a formulaic recitation of the elements of a cause of action will not do.’ " Id. (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).

III

Aetna and L–3 both move to dismiss count one, in which Baker alleges that they discriminated against her on the basis of her gender identity, in violation of § 1557 of the ACA.

Baker alleges that Aetna, as agent of L–3, denied her healthcare benefits solely on the basis of her gender identity. She asserts that Aetna and L–3 violated § 1557 of the ACA, which is made applicable to federal contractors and subcontractors by Executive Order 13672. Section 1557 provides:

Except as otherwise provided for in this title (or an amendment made by this title), an individual shall not, on the ground prohibited under title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq. ), title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq. ), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq. ), or section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794 ), be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any health program or activity, any part of which is receiving Federal financial assistance, including credits, subsidies, or contracts of insurance, or under any program or activity that is administered by an Executive Agency or any entity established under this title (or amendments). The enforcement mechanisms provided for and available under such title VI, title IX, section 504, or such Age Discrimination Act shall apply for purposes of violations of this subsection.

42 U.S.C. § 18116(a).

Aetna and L–3 move to dismiss this claim on several grounds, but the court may assume arguendo that none has merit except one: that § 1557 does not confer a claim for gender identity discrimination.

Baker is unable to point to any controlling precedent that recognizes a cause of action under § 1557 for discrimination based on gender identity. Baker relies on a Notice of Proposed Rulemaking that would prohibit denial of health services on the basis of gender identity or gender assigned at birth. See P. 2/26/16 Resp. to Aetna Partial Mot. to Dis. 11 (citing Nondiscrimination in Health Programs and Activities , 80 Fed. Reg. 54,204 (Sept. 8, 2015) (to be codified at 45 C.F.R. pt. 92)). But the effective date of part 92 is either July 18, 2016 or January 1, 2017, depending on what the part requires. See45 C.F.R. § 92.1 (2017). Part 92 therefore does not apply to Baker's claim.

Baker alleges in her complaint that Executive Order 13672 prohibits federal contractors and subcontractors from discriminating on the basis of gender identity, and she asserts that Aetna and L–3 are federal contractors. In her responses to defendants' motions, however, she attempts to refute defendants' contention that she is relying too heavily on the Executive Order by contending that "Section 1557's prohibition on gender identity discrimination is not reliant on EO 13672." P. 2/26/16 Resp. to Aetna Partial Mot. to Dis. 13. She maintains that when the ACA was enacted in 2010, gender stereotyping had long been held to be unlawful under Title VII (citing Price Waterhouse v. Hopkins , 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989) ). And she posits that "[t]he ‘effect’ of E.O. 13672 seems to be little more than to clarify the issue left somewhat ambiguous in Section 1557 that discrimination against transgender persons under this law is prohibited." P. 2/26/16 Resp. to Aetna Partial Mot. to Dis. 14.

There are two fallacies with this position. First, the Fifth Circuit has not extended Hopkins ' Title VII reasoning to apply to any statute referenced in § 1557. See Texas v. United States , 201 F.Supp.3d 810, 831–33 (N.D. Tex.2016) (O'Connor, J.) (rejecting proposition that "Title IX and Title VII...