PHILADELPHIA – A federal court has determined that while Independence Blue Cross did not violate Title VII of the Civil Rights Act of 1964 and the Philadelphia Fair Practices Ordinance, claims that it may have violated the Affordable Care Act when it blocked a transgender firefighter from receiving insurance to pay for gender-affirmation surgery will remain in the case.
Jane Doe first filed suit in the U.S. District Court for the Eastern District of Pennsylvania on Jan. 31 versus the City of Philadelphia, Independence Blue Cross and entities comprising the Philadelphia Firefighters’ & Paramedics’ Union, I.A.F.F., Local 22. All parties are of Philadelphia.
(An amended version of the complaint filed on March 12 would officially list the union as a defendant, and dismiss entities referring to it which were named in the original version.)
The plaintiff is a Battalion Chief who has worked for the City of Philadelphia for nearly three decades, and alleges that she has been intentionally discriminated against on the basis of her transgender identity.
The complaint claimed that the defendants operate a categorical plan exclusion for gender-affirming care and treatment. This includes facial feminization surgery (FFS), for transgender women suffering from gender dysphoria.
Despite previous lawsuits and a federal district court decision stating that such procedures should be considered medically necessary and covered services, Independence Blue Cross refused to provide coverage for Doe’s FFS. The plaintiff alleged that this refusal was based on societal norms, rather than her self-identified gender.
Doe further claimed that she was forced to face unnecessary obstacles to secure coverage for her medically-necessary gender-affirming care and treatment. As a result of not being able to undergo FFS, Doe said she experienced difficulty functioning at work and in public due to being constantly misgendered. She also contemplated suicide, according to the suit.
The City motioned to dismiss the case on April 9, alleging that Doe’s claims were not properly pled, among other arguments.
“Plaintiff’s amended complaint is intentionally vague. Rather than properly alleging the conduct that occurred, plaintiff uses the collective term ‘defendants’ throughout her amended complaint in order to prevent a clear understanding of which defendant participated in the conduct described in the amended complaint. The amended complaint asserts claims against three separate defendants: the City, the Union and IBC. Each of these defendants is a separate entity with different roles and obligations to plaintiff. Notwithstanding this fact, plaintiff improperly lumps them together as ‘defendants’ and pleads virtually all of their material allegations and claims against them collectively, in ‘group’ fashion, without differentiating among them in any way, or properly pleading the acts or omissions each party is claimed to have committed,” per the dismissal motion, in part.
“In an effort to muddy waters, the plaintiff intentionally fails to distinguish which defendant performed what conduct in order to bring employment discrimination claims against an insurance company and in order to bring ACA claims against an employer. The actual conduct alleged against the City specifically is fairly minimal. In the ‘Material Facts’ section of the amended complaint, after stating that plaintiff is employed by the City and came out as a transgender woman while working for the City, the only other factual averment about the City is that it provides healthcare benefits to plaintiff. Almost every other allegation in the material facts section of the amended complaint refers to the ‘defendants’ – a collective group. Importantly, plaintiff does not allege that these ‘defendants’ were acting jointly or in tandem. Indeed, in certain instances, based on an appreciation that no one at the City or the Union would hold the title, ‘claims representative’, it is clear the use of ‘defendants’ actually refers only to IBC. In one paragraph, plaintiff switches back and forth in a single paragraph regarding whether she is referencing a particular defendant or the entire group of defendants. Plaintiff fails to meet the requirement to describe the ‘personal involvement of any defendant’ in such instance even where it is clear from the allegations in the amended complaint that information to differentiate between defendants is available.”
On May 15, U.S. District Court for the Eastern District of Pennsylvania Judge Wendy Beetlestone granted the City’s dismissal motion without prejudice, in a memorandum opinion.
A second amended complaint was then filed on May 18.
UPDATE
When Independence Blue Cross motioned to dismiss the second amended complaint on June 3, it argued that the plaintiff’s claims for sex and gender identity discrimination under Title VII of the Civil Rights Act of 1964 and the Philadelphia Fair Practices Ordinance fail because “it is not and never has been her employer or an agent of her employer, the City of Philadelphia.”
The company’s motion once again came before Beetlestone – who granted it in part, and denied it in part.
“Doe argues that IBX is akin to the Pennsylvania Employees Benefit Trust Fund in that it, like PEBTF, ‘underwrote and administered the subject plan.’ But PEBTF did far more than that. It received legal authority from – and was funded and partially governed by – the Commonwealth of Pennsylvania, the plaintiff’s own employer. That made it ‘so closely intertwined with’ [the Commonwealth] that it [could] be held liable’ under Title VII. Doe’s allegations here instead look like those that the same District Court held could not give rise to Title VII liability against the plaintiff’s insurance company, Highmark Health Insurance. In an earlier opinion, the District Court dismissed his claims under Title VII against Highmark, because merely alleging that a third party ‘was involved in’ and ‘had control over’ a benefit of his employment’ was insufficient to plausibly allege an employment relationship under Nationwide Mutual Insurance Company v. Darden. That is what IBX is alleged to have done here. Therefore, as alleged in her second amended complaint, IBX cannot be considered Doe’s ‘employer’ under Title VII. Her claims against IBX under that statute will be dismissed with prejudice in that amendment would be futile,” Beetlestone said.
However, the judge would not find likewise with Doe’s other claims.
Independence Blue Cross argued that Doe “has failed to plead facts to state sex discrimination under” either Title VII or Title IX…because Doe requested coverage for procedures that were not covered ‘for any person, regardless of gender or gender identity’ absent a functional impairment, its conduct was not discriminatory.”
“IBX’s argument fails. True, its policy of not paying for ‘potentially cosmetic’ services like FFS absent ‘medical necessity demonstrating a functional impairment’ is facially neutral, unlike the exclusions implicated by some other cases, which expressly denied coverage for procedures only when ‘associated with gender reassignment. Rather, at least as currently alleged, IBX’s application of its ‘functional impairment’ requirement to Doe’s request for ‘potentially cosmetic’ procedures plausibly discriminated against her on the basis of sex. IBX’s policy allows coverage when a customer demonstrates a ‘functional impairment which results from a covered disease,’ and IBX does consider some treatments for gender dysphoria medically necessary. In theory, then, gender dysphoria can lift the limitation on coverage for ‘potentially cosmetic’ treatments. Doe alleges, however, that in practice, IBX ‘required her to state a physical deformity, disfigurement, abnormality or impairment,’ instead of a ‘social [or] occupational’ one like she did, to demonstrate a recognized ‘functional impairment,” Beetlestone stated.
“Taking that allegation as true, as the Court must at this stage, that means that individuals like Doe who have been diagnosed with gender dysphoria—as defined in IBX’s Policy Bulletin, ‘the distress that may accompany the incongruence between one’s experienced/expressed gender and one’s assigned gender (gender at birth or natal gender)’ – cannot access the ‘potentially cosmetic’ treatments IBX has identified as treatment for their gender dysphoria. ‘By,’ in practice, ‘drawing a line between gender-affirming surgery and other operations,’ the way in which Doe alleges that the functional impairment policy is applied prevented her from doing so and thus ‘intentionally carved out an exclusion based on one’s transgender status.’ It therefore discriminated against her, as a transgender person, on the basis of sex. It did so intentionally, as any adverse action based on one’s transgender status ‘necessarily and intentionally discriminates against that individual in part because of sex.’ Doe has stated a claim for sex discrimination under Title IX, and thus under the Affordable Care Act, and IBX’s motion to dismiss will be denied with respect to this count of the second amended complaint.”
Beetlestone found the plaintiff’s disability discrimination claim under Section 504 of the Rehabilitation Act was valid for similar reasons.
“Section 504 of the Rehabilitation Act provides that no qualified individual with a disability in the United States ‘shall, 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…’ To state a claim under Section 504, Doe must plausibly allege that she ‘is a qualified individual with a disability, who was precluded from participating in a program, service or activity, or otherwise was subject to discrimination, by reason of [her] disability.’ Whether gender dysphoria is a disability under federal disability statutes has divided courts, but IBX proceeds assuming arguendo that Doe is a qualified individual with a disability, so the only question here is whether the second amended complaint plausibly alleges that her diagnosis was ‘the sole cause’ of IBX’s denial of coverage,” Beetlestone said.
“IBX’s argument in favor of dismissing Doe’s disability-based discrimination claim is similar to its argument on her sex-discrimination claim: Because IBX ‘covers many procedures for the treatment of [gender dysphoria] and excludes coverage for cosmetic procedures for all members…absent certain functional impairments,’ it does not discriminate in the provision of healthcare coverage. That argument fails here as well. As alleged in the second amended complaint, IBX applied its ‘functional impairment’ exception to its exclusion for cosmetic procedures in a way that discriminates against diagnoses of gender dysphoria. Doe thus plausibly has alleged that she was discriminated against solely because of that diagnosis. IBX’s motion to dismiss will be denied with respect to this count of her second amended complaint.”
For counts of violating the Americans with Disabilities Act of 1990, the Affordable Care Act, Section 504 of the Rehabilitation Act and the Employee Retirement Income Security Act, the plaintiff is seeking compensatory and punitive damages against the defendants as well as coverage for future medical expenses related to FFS, hair transplant, and other related procedures.
The plaintiff is represented by Justin F. Robinette in Philadelphia.
Defendant City of Philadelphia is represented by Claire Blewitt, Margaret Spitzer and Marjorie M. Obod of Dilworth Paxson and Nicole S. Morris of the City of Philadelphia Solicitor’s Office, defendant Independence Blue Cross is represented by Joe H. Tucker Jr. and Nancy Fisher of Tucker Law Group and defendant Philadelphia Firefighters’ & Paramedics’ Union, I.A.F.F., Local 22 is represented by John R. Bielski, Joseph Salamon and Louise F. Pongracz of Willig Williams & Davidson, all in Philadelphia.
U.S. District Court for the Eastern District of Pennsylvania case 2:24-cv-00468
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com