Labor & Employment Law Daily Alaska state employee denied medically necessary gender transition-related surgery gets partial SJ on Title VII claim
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Friday, March 13, 2020

Alaska state employee denied medically necessary gender transition-related surgery gets partial SJ on Title VII claim

By Kathleen Kapusta, J.D.

The court found that the state treats natal males differently than natal females with it comes to providing coverage for certain medically necessary surgeries.

A transgender employee was entitled to summary judgment on her claim that the State of Alaska violated her rights under Title VII when, based on a blanket exclusion in its healthcare plan, it denied her coverage for gender transition-related surgery. Alaska’s “policy of excluding coverage for medically necessary surgery such as vaginoplasty and mammoplasty for employees, such as plaintiff, whose natal sex is male while providing coverage for such medically necessary surgery for employees whose natal sex is female is discriminatory on its face and is direct evidence of sex discrimination,” said a federal district court in Alaska. Because there was no showing of any bona fide occupational qualification for the disparate treatment, the court granted the employee’s partial motion for summary judgment and denied the state’s cross-motion (Fletcher v. State of Alaska, March 6, 2020, Holland, H.R.).

Two years after the legislative librarian began working for the state, she was diagnosed with gender dysphoria. During her employment, she was enrolled in Alaska’s self-funded healthcare plan, AlaskaCare, which was administered by Aetna Life Insurance Company. After her 2014 diagnosis, she started hormone therapy, but by 2016, she “knew that surgery was essential for [her] treatment and well-being.” However, when she contacted Aetna in November 2016, she was told the state’s health plan excluded coverage for gender transition-related surgery and would continue to do so in 2017. In June 2017, the employee underwent vaginoplasty and mammoplasty surgery in Thailand.

Excluded? While neither surgery was specifically excluded under AlaskaCare, the state admitted that one or both procedures could be considered gender transition-related surgery. According to the employee, “denial of coverage forced [her] to pay thousands of dollars out-of-pocket, diverting funds that I would otherwise have used to continue paying off my student loans and other debt.”

Because of sex. Suing under Title VII, the employee alleged that the state discriminated against her because of sex, which she argued includes “discrimination on the basis of gender nonconformity, gender identity, transgender status, and gender transition.” In addition to compensatory and consequential damages, she sought a declaration that the state violated her Title VII rights when it denied her coverage for gender transition-related surgery and “that AlaskaCare’s blanket exclusion of [gender] transition-related surgical treatment on its face discriminates against transgender employees because of sex in violation of Title VII.”

Facially neutral or facially discriminatory? The denial of coverage for the employee’s surgery, the state argued, was not motivated by her sex because the policy’s blanket exclusion of gender transition-related surgery was facially neutral, not facially discriminatory, as it applied equally to both men and women. According to the state, “[t]he critical issue, Title VII’s text indicates, is whether members of one sex are exposed to disadvantageous terms or conditions of employment to which members of the other sex are not exposed.” Because AlaskaCare excluded gender transition-related surgery for all employees regardless of their sex, the state continued, the exclusion was neutral on its face and the employee had no viable disparate treatment claim.

Focus is on the individual. Rejecting this assertion, the court found that the state “adopted and relied upon a formal, facially discriminatory policy.” Title VII, it pointed out, makes it unlawful to “discriminate against any individual” because of the “individual’s race, color, religion, sex, or national origin. “The statute’s focus on the individual is unambiguous,” the court observed, and thus its focus was on how the employee was treated under the health plan’s provisions. And as “to that issue, the material facts are not in dispute.”

Treated differently. Finding that the employee was treated differently because of her natal sex, the court pointed out that under AlaskaCare’s provisions, if the employee’s “natal sex were female and it was medically necessary for her to have a vaginoplasty to correct a congenital defect, coverage would have been available under AlaskaCare. But, because plaintiff’s natal sex is male and she was seeking to transition to a female, coverage was not available.” Thus, the court stated, she was treated differently because of her sex, “irrespective of whether ‘sex’ includes gender identity.”

As to the state’s assertion that this conclusion resulted in preferential treatment for transgender individuals, the court, disagreeing, found instead that it results in all AlaskaCare participants being treated equally regardless of their sex. Pointing out that it was comparing how natal females are treated as to how natal males are treated, not how transgender women are treated compared to non-transgender women, the court found that “Such a comparison shows that natal males are treated differently than natal females when it comes to providing coverage for certain medically necessary surgeries.”

No BFOQ. Noting that such disparate treatment is permissible under Title VII only if justified as a bona fide occupational qualification (BFOQ), the court pointed out that the state did not, and could not, argue that there was any BFOQ for the disparate treatment at issue here. Accordingly, the employee was entitled to summary judgment that the state violated her Title VII rights.

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