In a category motion lawsuit introduced by a transgender particular person and his father or mother, a federal trial court docket has held that an insurer, appearing as a third-party claims administrator (TPA) for self-insured well being plans, violated Inexpensive Care Act (ACA) Part 1557 when it administered discriminatory plan exclusions of protection for gender-affirming care. As background, Part 1557 prohibits discrimination in sure well being applications and actions on the idea of race, colour, nationwide origin, intercourse, age, or incapacity. HHS rules issued in 2016 interpreted Part 1557 as making use of to all operations of well being insurers that obtain federal monetary help. Laws issued in 2020, nonetheless, repealed vital parts of the 2016 rules and narrowed their scope in order that entities not “principally engaged within the enterprise of offering healthcare” (akin to most well being insurers) are regulated “solely to the extent” that they obtain federal monetary help (see our Checkpoint article). The insurer on this case doesn’t obtain federal monetary help for its administration of self-insured plans however does obtain such help in reference to different merchandise (e.g., Medicare supplemental protection).

The court docket held that below the plain language of Part 1557, the insurer’s TPA actions represent the operation of a well being program or exercise. It defined that Part 1557’s phrase “any well being program or exercise, any a part of which is receiving federal monetary help” contains “all of the operations of a enterprise” principally engaged in offering well being applications and actions. The court docket concluded that the insurer’s administration of the gender-affirming care exclusions was discrimination “on the idea of intercourse” opposite to Part 1557. The insurer argued that below the 2020 rules, Part 1557 doesn’t apply to its TPA actions as a result of these actions usually are not “healthcare actions” and since it doesn’t obtain any federal monetary help for them, however the court docket rejected these arguments, explaining that the 2020 rules are clearly opposite to the statute and look like arbitrary, capricious, and opposite to legislation. Different arguments have been additionally rejected, together with that the insurer was obligated below ERISA to manage the exclusion as written and that it was not topic to Part 1557 when administering a plan of a spiritual group exempt from the principles below the Non secular Freedom Restoration Act.

EBIA Remark: Courtroom selections proceed to show the uncertainty surrounding Part 1557’s software to employer-sponsored well being plans. As we look ahead to rules proposed in 2022 to be finalized (see our Checkpoint article), it’s fascinating that this court docket has already rejected the 2020 rules based mostly on a plain studying of the statute’s textual content. For extra info, see EBIA’s Well being Care Reform guide at Part XXXIV.A (“Part 1557 Nondiscrimination: Grounds Prohibited Beneath Federal Legal guidelines”) and EBIA’s Group Well being Plan Mandates guide at Part XXI.M.1 (“Interplay of Title VII and Part 1557”). See additionally EBIA’s Self-Insured Well being Plans guide at Part XIII.D.5 (“Part 1557 Nondiscrimination: Nondiscrimination in Well being Applications and Actions”).

Contributing Editors: EBIA Workers