Court Says BCBSIL Cannot Exclude Coverage of Gender-Affirming Care

A United States district court has ruled against Blue Cross Blue Shield of Illinois (BCBSIL), stating that the payer cannot exclude coverage for medically necessary gender-affirming care in its employer-sponsored ERISA health plans.

Lambda Legal and Sirianni Youtz Spoonemore Hamburger PLLC filed a class action lawsuit against BCBSIL on behalf of a 17-year-old transgender man, CP, and his parents. According to the lawsuit, the payer administered discriminatory exclusions of gender-affirming care, violating the anti-discrimination of the Affordable Care Act (ACA), known as Section 1557.

The class action follows a class certification by the US District Court for the Western District of Washington on November 9, 2022, comprised of individuals who were, are, or will be denied pre-authorization or coverage of gender-affirming care as a result of BCBSIL’s categorical exclusions.

CP’s mother receives healthcare coverage through her employer under the Catholic Health Initiatives (CHI) Medical Plan, and CP is enrolled in the plan as her dependent. BCBSIL acts as the third-party claims administrator for the self-funded health plan.

CP sought gender-affirming care, including hormone therapy and chest reconstruction surgery, on the recommendation of his healthcare providers. However, BCBSIL denied the claims for the services on the exclusion that the care was “for or leading to gender reassignment surgery.”

The payer generally covers similar care and medical interventions for cisgender patients, according to the lawsuit. But the claim denials led CP’s family to pay out-of-pocket for the gender-affirming care, resulting in unnecessary financial stress.

BCBSIL motioned for summary judgment on the claims, while the plaintiffs cross-motioned for summary judgment on their claims and the class claims. The court has denied the payer’s motion for summary judgment and granted the plaintiffs’ cross-motion.

The court determined that BCBSIL is a “health program or activity” that receives federal funds and thus cannot discriminate based on race, national origin, sex, age, or disability in its role in administering ERISA health plans.

This includes the CHI health plan provided by St. Michael Medical Center in Bremerton, Washington, which is part of CommonSpirit Health, formerly the Catholic Health Initiatives Franciscan Health System.

“The court’s decision not only establishes that categorical exclusions for coverage of gender-affirming care are unlawful discrimination, but it also concludes that health insurers who receive federal funds and act as third-party administrators have an independent duty to not administer discriminatory ERISA health plans,” Omar Gonzalez-Pagan, counsel and health Care strategist for Lambda Legal, said in the press release.

“This is a victory not only for CP and his parents, but also for the hundreds of transgender people who were, are, or were likely to be denied medically necessary gender-affirming care because of BCBSIL’s administration of approximately 400 ERISA health plans with these unlawful exclusions. The court’s decision sends a clear message that third-party administrators that accept federal funds cannot discriminate when administering employer-sponsored health plans.”

Recently, a nonprofit organization sued the state of Georgia for denying coverage of transgender-related healthcare for members of the Georgia State Health Benefit Plan (SHBP). The lawsuit followed an earlier win in June 2022 in which a Georgia federal district court ruled that an employer cannot exclude or deny coverage for transition-related medical treatments from its employee health insurance plan.