T.S. v. Heart of Cardon, LLC, 21-2495

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Manion, Circuit Judge.
• Citation: 43 F.4th 737
• Parties: T.S., BY AND THROUGH his parents and guardians, T.M.S. and M.S., individually and derivatively on behalf of the Heart of CarDon, LLC Employee Benefit Plan, Plaintiff-Appellee, v. HEART OF CARDON, LLC & Heart of CarDon, LLC Employee Benefit Plan, Defendants-Appellants.
• Docket Number: 21-2495
• Decision Date: 05 August 2022

43 F.4th 737

T.S., BY AND THROUGH his parents and guardians, T.M.S. and M.S., individually and derivatively on behalf of the Heart of CarDon, LLC Employee Benefit Plan, Plaintiff-Appellee,
v.
HEART OF CARDON, LLC & Heart of CarDon, LLC Employee Benefit Plan, Defendants-Appellants.

No. 21-2495

United States Court of Appeals, Seventh Circuit.

Argued February 10, 2022
Decided August 5, 2022

Blythe H. Chandler, Attorney, Terrell Marshall Law Group PLLC, Seattle, WA, Eleanor Hamburger, Attorney, Sirianni Youtz Spoonemore Hamburger PLLC, Seattle, WA, for Plaintiff-Appellee.

Andrew Morgan McNeil, Esq., Attorney, Bose Mckinney & Evans, LLP, Indianapolis, IN, for Defendants-Appellants.

John Joseph Barber, Attorney, Latham & Watkins LLP, Chicago, IL, Amici Curiae.

Before Manion, Kanne^* , and Jackson-Akiwumi, Circuit Judges.

Manion, Circuit Judge.

This interlocutory appeal concerns section 1557 of the Patient Protection and Affordable Care Act, which prohibits a healthcare entity from discriminating against an individual based on disability, among other grounds, if that entity receives federal financial assistance.

Heart of CarDon, LLC (CarDon) is a healthcare provider and is reimbursed by Medicare and Medicaid for its services. Through the self-funded Heart of CarDon, LLC Employee Benefit Plan (Plan), CarDon also provides health insurance to its employees and their dependents. T.S. is such a dependent and has autism. He sued CarDon, alleging that the Plan's exclusion of coverage for autism treatment violates section 1557.

The merits of that question are not before us. CarDon moved for judgment on the pleadings on the theory that T.S.’s suit does not fall within the zone of interests protected by the statute. In CarDon's view, only a person who is an intended beneficiary of the federal dollars it gets—that is, a recipient of CarDon's healthcare services—is a permissible plaintiff under

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section 1557. The district court denied the motion but allowed CarDon to seek immediate review in this court.

We affirm. T.S.’s suit jibes with section 1557's text and purpose and thus falls within the zone of interests that provision is meant to protect. What's more, the intended-beneficiary limitation CarDon advocates is based on precedent that Congress has effectively abrogated. Because T.S. is a proper plaintiff under section 1557, this litigation may continue.

I. Background

A.

Enacted in 2010, the Patient Protection and Affordable Care Act (ACA), Pub. L. No. 111-148, 124 Stat. 119, brought about the most extensive changes to the U.S. healthcare system in decades. It aimed "to increase the number of Americans covered by health insurance and decrease the cost of health care." Nat'l Fed'n of Indep. Bus. v. Sebelius , 567 U.S. 519, 538, 132 S.Ct. 2566, 183 L.Ed.2d 450 (2012). Usually, legislation with such sweeping goals will be voluminous. And the ACA is no exception. Its text covers over 900 pages.

Fortunately, the ACA provision directly at issue here has fewer than 200 words. Titled "Nondiscrimination," section 1557 states that "an individual shall not, on the ground prohibited under" any of four specified federal statutes, "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." 42 U.S.C. § 18116(a).

The specified statute relevant to this case is the Rehabilitation Act of 1973, section 504 of which states that an individual shall not, "solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance." 29 U.S.C. § 794(a). The other three statutes supplying the grounds on which section 1557 prohibits discrimination are: Title VI of the Civil Rights Act of 1964 (race, color, and national origin), Title IX of the Education Amendments of 1972 (sex), and the Age Discrimination Act of 1975 (age).

In addition to prohibiting discrimination based on these grounds, section 1557 directs that "enforcement mechanisms provided for and available under" the specified statutes "shall apply for purposes of violations of this subsection." 42 U.S.C. § 18116(a).

B.

Because this matter comes to us at a preliminary stage of proceedings, we accept the following factual allegations as true. See Taylor v. JPMorgan Chase Bank, N.A. , 958 F.3d 556, 562 (7th Cir. 2020). CarDon operates a skilled-nursing and assisted-living facility and is therefore principally in the business of providing healthcare to its patients and residents. (We'll refer to both groups simply as CarDon's "patients" from now on.) Medicare and Medicaid reimburse CarDon for some of its patient services. CarDon also sponsors the Plan, a self-funded group health plan, for its employees and their dependents. The Plan, designed by CarDon, provides a range of medical, surgical, and mental-health benefits.

T.S. is the minor child of one of CarDon's employees and is enrolled as a beneficiary of the Plan. At a young age, T.S. was diagnosed with Autism Spectrum Disorder, a neurological condition "characterized by persistent deficits in social communication and social interaction across multiple contexts," as well as "restricted,

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repetitive patterns of behavior, interests, or activities." His diagnosing physician recommended that T.S. undergo Applied Behavioral Analysis (ABA) therapy. Widely used to treat autistic children, ABA therapy involves "repetitive, task-and-reward-based activities designed to teach ... skills such as imitating others, making eye contact, listening, and appropriately answering questions." T.S.’s physician thought the therapy would help maintain and advance his motor, speech, and communication skills. The Plan's third-party administrator at the time authorized six months of ABA therapy, and T.S. began treatment.

But a new Plan administrator soon took over. T.S. had received only a few months’ treatment when continued coverage for ABA therapy was denied. The administrator cited the Plan's "Behavioral Health" section, which specifically excludes "Charges for services, supplies, or treatment for Autism, Asperger's and Pervasive Development Disorders" and "Charges for [ABA therapy]." Because his parents could not afford to pay for treatment out-of-pocket, T.S. did not receive ABA therapy from February 2019 through March 2020. (Beginning in March 2020, T.S. was able to receive ABA therapy with coverage through Indiana's Medicaid waiver program, but in the interim his development suffered.)

Through his parents, T.S. sued, alleging CarDon intentionally discriminated against him on the basis of his disability by designing and (through its administrator) enforcing the Plan, which categorically excludes coverage for autism and the ABA therapy used to treat it.

CarDon moved for judgment on the pleadings, but the district court rejected the argument that T.S. wasn't in a class of plaintiffs authorized to sue under section 1557.¹ Rather, the court concluded that his claim fell within the zone of interests protected by the ACA provision. The court declined to reconsider its ruling but certified the order denying CarDon's motion for interlocutory appeal. Proceedings below are stayed pending resolution of this matter.

II. Analysis

Although the district court has not yet entered a final judgment in this case, we have jurisdiction under 28 U.S.C. § 1292(b) because the court certified its denial order as to the ACA claim for interlocutory review, and we granted the petition to appeal. In this posture, we do not resolve the legal merits of T.S.’s discrimination claim, only his right to bring suit under section 1557.

For purposes of this appeal, CarDon does not dispute that its primary business is providing healthcare, that it receives federal financial assistance (in the form of Medicare and Medicaid payments), or that it sponsors the self-funded group health Plan. But CarDon does argue that T.S. is outside the zone of interests protected by section 1557 because, under that provision, only an intended beneficiary of the federal funds CarDon receives in connection with patient care is a proper plaintiff. This conclusion, CarDon continues, is also compelled by our precedent.

A.

The zone-of-interests inquiry has sometimes been identified as an aspect of "prudential standing," but that is inaccurate.

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Lexmark Int'l, Inc. v. Static Control Components, Inc. , 572 U.S. 118, 125, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014). "Just as a court cannot apply its independent policy judgment to recognize a cause of action that Congress has denied," so "it cannot limit a cause of action that Congress has created merely because ‘prudence’ dictates." Id. at 128, 134 S.Ct. 1377. Properly understood, the zone-of-interests analysis asks whether a "particular class of persons has a right to sue under" a specific "substantive statute." Id. at 127, 134 S.Ct. 1377 (brackets omitted). A court,...