Gender Reassignment Coverage Dispute Dismissed

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By Jacklyn Wille

May 12 — A woman seeking coverage for her teenage son's gender reassignment surgery lost a federal court battle when a judge dismissed her claims for sex discrimination and violations of the Affordable Care Act.

In particular, the judge barred nurse practitioner Brittany R. Tovar from asserting federal and state sex discrimination claims against her employer, reasoning that Tovar wasn't the one personally injured by her employer health plan's former exclusion for gender reassignment benefits.

The judge also dismissed Tovar's claim under the ACA's nondiscrimination rule, finding that she sued the wrong legal entity.

Sam Schwartz-Fenwick, a partner in Seyfarth Shaw's Chicago office who focuses on employee benefits and LGBT issues, told Bloomberg BNA May 12 that this decision undercuts the expansive view of federal anti-discrimination laws being advanced by the Obama administration.

ACA Nondiscrimination

This ruling is noteworthy for being one of the first substantive decisions addressing transgender discrimination under Section 1557 of the ACA. That section bans health-care discrimination based on sex and is the subject of a 2015 proposed rule from the Department of Health and Human Services.

Earlier this year, Assistant Labor Secretary Phyllis C. Borzi called this rule a “trap for the unwary,” because its expansive scope meant that any health plan in receipt of federal funds would have to comply with its prohibitions on sex-based discrimination (31 DLR B-1, 2/17/16).

The ruling here—entered May 11 by Judge Richard H. Kyle of the U.S. District Court for the District of Minnesota—appears to undercut Borzi's expansive reading of Section 1557.

Specifically, Kyle dismissed Tovar's ACA claim because she sued an entity that was related to, but legally distinct from, the third-party administrator of her health plan.

Importantly, Kyle noted that Tovar's ACA claim would fail even if the defendant entity was involved in administering Tovar's health plan. That's because TPAs have a legal duty under the Employee Retirement Income Security Act to follow the terms created by the health plan sponsor, Kyle wrote.

‘Traditional ERISA Analysis.'

Schwartz-Fenwick called this reasoning a “traditional ERISA analysis” of a plan administrator's duties to abide by the terms of the plan, and one that he found “100 percent correct.”

“If you violate the terms of the plan, you potentially engage in a fiduciary breach, so I think it was almost untenable the position that plaintiffs were putting third-party administrators in,” he said.

Teresa Renaker, an ERISA attorney with Renaker Hasselman in San Francisco, had a different take on this portion of the decision.

“There is dicta in the decision that suggests that even if a plan term discriminated in violation of the ACA, the plan administrator would be under a fiduciary duty to enforce that term,” Renaker told Bloomberg BNA May 12. “This dicta is overstated. ERISA does not give plan administrators a free pass to enforce unlawful plan terms.”

Schwartz-Fenwick said that this ruling on Tovar's ACA claim may have turned out differently if she had named different defendants, but that she may have made a “conscious decision” based on which entities likely were subject to Section 1557's requirements.

No Sex Discrimination

In dismissing Tovar's claims under Title VII of the Civil Rights Act of 1964 and the Minnesota Human Rights Act, the court focused on the fact that it was her son—and not Tovar herself—who was harmed by the health plan's coverage exclusion.

Although Tovar claimed she suffered “emotional and economical harms” because of the coverage denial, the court said these alleged harms didn't give her standing to challenge a decision that affected her son.

Schwartz-Fenwick called this ruling a setback both for the Obama administration's expansive view of Title VII protections and for the growing number of parents bringing discrimination claims on behalf of their transgender children.

“This case says that just because you're a parent, you don't have standing to sue under Title VII,” he said. “It really shows the limits of Title VII as a force to create the type of societal change that the administration is pushing and underscores that new laws are needed if the administration really wants to change the facts on the ground.”

Asaf Orr, an attorney with the National Center for Lesbian Rights in San Francisco and its Transgender Youth Project, told Bloomberg BNA May 12 that the court’s decision was an “outlier” in terms of how the federal government has looked at health coverage for transgender care.

Orr said that medical care related to a person’s gender transition is “medically necessary,” adding that a growing number of states and insurers now require transition-related services to be covered.

“This judge is out of step with the way the law is developing and the way insurance is changing,” Orr said.

For her part, Renaker took issue with the court's finding that Tovar hadn't been denied any benefits.

“From an employee benefits perspective, it is clear that participants have standing to vindicate the benefits rights of their beneficiaries,” Renaker said.

The judge dismissed Tovar's Title VII and state law claims—which she brought against her employer, Essentia Health—with prejudice. Kyle also dismissed without prejudice Tovar's ACA claim against HealthPartners Inc.

Christy L. Hall, Jill R. Gaulding and Lisa C. Stratton of Gender Justice in St. Paul, Minn., represented Tovar. Lisa Edison-Smith of Vogel Law Firm in Fargo, N.D., represented Essentia. David M. Wilk and Stephanie L. Chandler of Larson King LLP in St. Paul, Minn., represented HealthPartners.

Schwartz-Fenwick, Renaker and Orr weren't involved in the litigation.

To contact the reporter on this story: Jacklyn Wille in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

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