C. P. v. Blue Cross Blue Shield of Ill.

• Decision Date: 19 December 2022
• Docket Number: 3:20-cv-06145-RJB
• Parties: C. P., by and through his parents, Patricia Pritchard and Nolle Pritchard, individually and on behalf of others similarly situated; and PATRICIA PRITCHARD, Plaintiff, v. BLUE CROSS BLUE SHIELD OF ILLINOIS, Defendant.
• Court: U.S. District Court — Western District of Washington

1

C. P., by and through his parents, Patricia Pritchard and Nolle Pritchard, individually and on behalf of others similarly situated; and PATRICIA PRITCHARD, Plaintiff, v. BLUE CROSS BLUE SHIELD OF ILLINOIS, Defendant.

No. 3:20-cv-06145-RJB

United States District Court, W.D. Washington, Tacoma

December 19, 2022

ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

ROBERT J. BRYAN, United States District Judge

This matter comes before the Court on the Defendant Blue Cross Blue Shield of Illinois' (“Blue Cross”) Motion for Summary Judgment (Dkt. 87), and the Plaintiffs' Cross Motion for Summary Judgment (Dkt. 96) and Plaintiffs' motion to strike (Dkt. 126). The Court has considered the pleadings filed in support of and in opposition to the motions, oral argument heard on 12 December 2022, and the file herein.

In this case, Plaintiffs C.P., a transgender male, and his mother Patricia Pritchard, claim that Blue Cross violated the anti-discrimination provision of the Affordable Care Act (“ACA”), 42 U.S.C. § 18116 when it administered discriminatory exclusions of gender-affirming care in a self-funded health care plans governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). Dkt. 1. The Plaintiffs' motion to certify a class of similarly situated people was granted on November 9, 2022 (Dkt. 113) and amended on December 12, 2022 (Dkt. 143).

Blue Cross moves for summary judgment on Plaintiffs C.P. and Ms Pritchard's claims. Dkt. 87. Plaintiffs C.P. and Ms. Pritchard cross move for summary judgment on their claims as well as the class claims. Dkt. 96. For the reasons provided below, Blue Cross's Motion for Summary Judgment (Dkt. 87) should be denied and Plaintiffs' Motion for Summary Judgment (Dkt. 96) and motion to strike (Dkt. 126) should be granted.

I. RELEVANT FACTS, PROCEDURAL HISTORY, AND STATUTORY BACKGROUND

A. FACTS

Named Plaintiffs are C.P., a boy of seventeen, and his mother, Ms. Pritchard. Dkt. 38. C.P. is a transgender male, which means that he has a male gender identity even though the sex assigned to him at birth was female. Id. C.P. has been living as a male since around 2015. Dkt. 94-1 at 135.

Ms. Pritchard receives health care coverage through her employer under the Catholic Health Initiatives (“CHI”) Medical Plan (“the Plan”) and C.P. is enrolled in that Plan as her dependent. Dkts. 81; 97-12 at 8. The Plan is “self-funded” - Ms. Pritchard's employer directly assumes financial responsibility for employees and their dependents' health care costs. Dkt. 881 at 11.

Defendant, Blue Cross, acts as the third-party claims administrator for the Plan. Dkt. 8510. As a third-party administrator, it “assemble[s] a network of providers, process[es] claims, and handle[s] provider billing.” Dkt. 88-1 at 11. Blue Cross is a division of Health Care Services Corporation and is one of the largest administrators of insured and self-funded health plans in the nation. Id. at 206. It does not receive Federal financial assistance for its administration of self-funded plans, but does receives Federal financial assistance for other of its “products, such as Medicare supplemental coverage, Medicaid, Medicare Advantage and Prescription Drug insurance coverage, and Medicare/Medicaid dual eligibility.” Id.

C.P. has gender dysphoria. Dkts. 38; 97-3 at 2. Gender dysphoria is a feeling of clinically significant stress and discomfort that can result from being transgender, or, more specifically, from having an incongruence between one's gender identity and the sex assigned to that person at birth. Dkt. 38. The American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition recognizes gender dysphoria as a medical condition that can be extremely serious, resulting in anxiety, depression, or even death. Dkt. 38 at 6.

C.P. sought coverage for his first Vantas Implant (hormone therapy) in 2016. Dkt. 94-1 at 139. Blue Cross initially approved the treatment but later informed C.P.'s mother that it had made a mistake; it stated that the treatment was not covered under the Plan. Dkt. 94-1 at 137. Blue Cross paid for the treatment however, but indicated that later claims would be denied. Id. at 139. A few years later, in 2019, C.P. filed a claim for a second Vantas Implant and for chest reconstruction surgery; his claim was denied by Blue Cross because “[t]ransgender services [were] not covered under the terms of the Plan.” Id.; 88-1 at 197; 94-3 at 2-10.

The relevant exclusionary language in the Plan in 2019 provided: “Transgender Reassignment Surgery Not Covered: Benefits shall not be provided for treatment, drugs, therapy, counseling services and supplies for, or leading to, gender reassignment surgery” (“Exclusion”). Dkt. 88-1 at 120. The Plan generally covers care for hormone treatments, mastectomies and chest reconstruction if that care is considered medically necessary for diagnosis other than for gender affirming care (like for breast cancer). Dkt. 85-8 at 12-13. The condition that triggers Blue Cross to apply the Exclusion is the diagnosis of gender dysphoria. Id. at 14.

After his claim was denied, C.P. received treatment - Ms. Pritchard paid $12,122.50 for the uncovered chest surgery and Vantas Implant. Dkt. 88-1 at 299.

B. PROCEDURAL HISTORY

Plaintiffs, including the class, bring a claims for violation of the antidiscrimination provision of the ACA. Dkt. 38. This provision is referred to in the case law and HHS regulations as “Section 1557” (although codified as 42 U.S.C. § 18116(a)), and this order will refer to it in the same manner. All Plaintiffs seek a declaration that Blue Cross violated Plaintiffs' rights under Section 1557 when it administered the Exclusion and other similar exclusions in other plans. Dkt. 38 at 21. They seek an order enjoining Blue Cross from “administering or enforcing health benefit plans that exclude coverage for gender-affirming health care, including applying or enforcing the Plan's Exclusion of services ‘for, or leading to, gender reassignment surgery,' and other similar exclusions . . . during the class period, now and in the future.” Id. at 21-22. The Plaintiffs seek an order requiring Blue Cross to reprocess, “and when medically necessary and meeting the other terms and conditions under the relevant plans, provide coverage (payment) for all denied pre-authorizations and denied claims” that were based solely upon exclusions for gender affirming care. Id. at 22.

Ms. Pritchard brings a claim for financial harm. Id. C.P. and Ms. Pritchard bring claims for emotional distress damages, attorneys' fees, costs and expenses. Id.

In the December 12, 2022 Amended Order Certifying the Class, the class was certified as:

All individuals who:

(1) have been, are, or will be participants or beneficiaries in an ERISA self-funded “group health plan” (as defined in 29 U.S.C. § 1167(1)) administered by [Blue Cross] during the Class Period and that contains a categorical exclusion of some or all Gender-Affirming Health Care services; and

(2) were, are, or will be denied pre-authorization or coverage of treatment with excluded Gender Affirming Health Care services

DEFINITIONS:

“Class Period” means November 23, 2016 through the termination of the litigation.

“Gender-Affirming Health Care” means any health care service- physical, mental, or otherwise-administered or prescribed for the treatment of gender dysphoria; related diagnoses such as gender identity disorder, gender incongruence, or transsexualism; or gender transition. This includes but is not limited to the administration of puberty delaying medication (such as gonadotropin-releasing hormone (GnRH) analogues); exogenous endocrine agents to induce feminizing or masculinizing changes (“hormone replacement therapy”); gender-affirming or “sexreassignment” surgery or procedures; and other medical services or preventative medical care provided to treat gender dysphoria and/or related diagnoses, as outlined in World Professional Association for Transgender Health, Standards of Care for the Health of Transsexual, Transgender, and Gender Nonconforming People, 7th Version (2012).

The class asserts claims that Blue Cross Blue Shield of Illinois violated the antidiscrimination provision of the Affordable Care Act, 42 U.S.C. § 18116, when it administered discriminatory exclusions of gender-affirming care in a self-funded health care plans governed by the Employee Retirement Income Security Act of 1974.

The class seeks declaratory relief. They seek an order enjoining Blue Cross Blue Shield of Illinois from administering or enforcing health benefit plans that exclude coverage for gender-affirming health care, including applying or enforcing the plans' exclusions of services for, or leading to, gender reassignment surgery,' and other similar exclusions during the class period, now and in the future. The class seeks an order requiring Blue Cross Blue Shield of Illinois to reprocess denied pre-authorizations and claims for gender affirming care under the relevant self-funded health care plans without applying the discriminatory exclusions, and when medically necessary and meeting the other terms and conditions of the relevant plans, provide coverage (payment) for those denied preauthorizations and claims that were based solely on exclusions for gender affirming care.

Blue Cross Blue Shield of Illinois raises several defenses, including that the antidiscrimination provision of the Affordable Care Act, 42 U.S.C. § 18116 does not apply to it, and even if it did, its third-party administration of the exclusions was not discriminatory. Blue Cross Blue Shield also contends that it is protected by the Religious Freedom Restoration Act.

Dkt. 143.

C. SECTION 1557, REGULATIONS AND LITIGATION BACKGROUND

This...