Federal District Court Certifies Transgender Discrimination Class Action Against Third-Party Administrator Under the Affordable Care Act

The ACA’s anti-discrimination provision prohibits the denial of the benefits of, or discrimination under, a health plan governed by ERISA, in a way that would violate the Civil Rights Act of 1964. In 2019, the Supreme Court of the United States held, in Bostock v. Clayton County, that individuals who are transgender are entitled to protection under the Civil Rights Act. As a result, the ACA effectively prohibits discrimination against individuals who are transgender in the administration of ERISA health plans.

In this case, the plaintiffs are comprised of a class of individuals who meet two criteria. First, the class members have been, are, or will be participants in an ERISA self-funded health plan, which is both administered by BCBSIL and contains a categorical exclusion for gender-affirming care. Second, the class members were, are, or will be denied preauthorization or coverage for excluded gender-affirming care because of BCBSIL’s administration of the exclusion.

After addressing some of BCBSIL’s definitional objections to the scope of the class, the Court turned to whether the class satisfied Rule 23(a)’s prerequisites for class certification: numerosity, commonality, typicality, and adequacy of representation. Of these prerequisites, the Court focused its discussion on commonality and typicality. 

Commonality generally requires that the class members have a common claim. BCBSIL’s claimed that the class lacked commonality for a variety of reasons, none of which persuaded the Court. BCBSIL’s first objection was that variations in plan language defeated commonality. But the Court pointed out that BCBSIL’s own witness testified that it administered the gender-affirming care exclusions consistently. BCBSIL’s next objection was that some employers also offered plans without gender-affirming care exclusions. Here, the Court noted that anti-discrimination law “does not permit defendants to get a ‘free pass’ on discrimination” merely because the class members “could have obtained coverage elsewhere.” BSBSIL then argued that some of the plans had not actually denied the claims at issue. But this, the Court explained, would be resolved by limiting the class (consistent with the criterion above) to those actually denied preauthorization or coverage. BCBSIL also claimed that class treatment would require an individualized assessment of each class member’s medical treatment. On the contrary, the Court observed, the harm at issue was the “alleged discriminatory conduct in the processing of their claims,” which was “common to all the class members.” Finally, BCBSIL asserted that the plans had different possible defenses, pointing out that some of the plans may have defenses under the Religious Freedom Restoration Act (RFRA). Initially, the Court noted its skepticism as to the application of RFRA; but in any event, the Court held, any defenses could “be raised if and when they are ripe for decision” without impacting “commonality for class purposes.”

With respect to typicality, the Court reached the same result. Typicality means that the class representative’s claim is typical of the class members, e.g., has the same or similar injury, is based on the same or similar conduct. BCBSIL again argued that variation in the plan language and potential defenses defeated typicality. Like with commonality, the Court rejected this argument, emphasizing that the class representative suffered the same harm (denial of coverage) from the same conduct (BCBSIL’s administration of the exclusion) as the other class members.

After ruling that the four prerequisites for certification had been met, the Court held that the case justified class treatment under Rule 23(b). The Court noted that multiple suits risked inconsistent results and incompatible standards of conduct for BCBSIL, this suit would be dispositive of the interests of other similarly situated members who were not parties, and the class members generally sought declaratory and injunctive relief against BCBSIL’s practice of exclusion (which would not require individualized inquiries). Accordingly, the Court granted the motion for class certification.

Although this is a noteworthy result for the class, the case is far from over. Initially, BCBSIL could try to appeal the Court’s ruling under Rule 23(f)—although the Ninth Circuit would need to exercise its discretion to hear the appeal. Alternatively, BCBSIL’s motion for summary judgment remains pending. Given the nature of the issues in the case, all those in the managed care space (including providers, plans, and administrators) would do well to pay attention, as the result could very well signal ramifications for cases arising in a variety of other contexts.