By Brandi O. Brown, J.D.
In a lawsuit brought by transgender employees of the State of Wisconsin, a federal district court has granted in part their motion for summary judgment, concluding that the state employer’s actions in excluding coverage of gender reassignment procedures constituted sex discrimination under Title VII and the Affordable Care Act. The employer’s actions also failed to survive heightened scrutiny under the Equal Protection Clause. However, the court also ruled that the individual defendants enjoyed qualified immunity from damages based on violations of the Equal Protection Clause (Boyden v. Conlin, September 18, 2018, Conley, W.).
Coverage denied. The plaintiffs, both transgender women, asserted various claims for excluding gender transition care from coverage under the group health insurance plan for state employees. The women worked for the University of Wisconsin system and both were denied coverage for gender confirming surgery (GCS), in this case vaginoplasty. The Wisconsin Department of Employee Trust Funds (ETF), a statutorily created executive branch department, administers group health insurance for state employees, but the terms of the policy are set by the Wisconsin Group Insurance Board (GIB), which is an autonomous entity within ETF that sets policy and oversees administration of the insurance plans for employees and retirees. GIB made the decision to exclude gender transition-related care and ETF was bound by the decision.
In addition to those defendants, the lawsuit also named the Secretary of the ETF and other individuals involved in adopted a specific exclusion to the Uniform Benefits that excluded from coverage the “[p]rocedures, services, and supplies related to surgery and sex hormones associated with gender reassignment.” That exclusion had existed since 1994, with a language modification made in 2015, but in 2016 there was a brief period in which it appeared that the GIB would change its position and, in fact, it voted unanimously to amend the uniform benefits to remove the Exclusion, effective on the first day of 2017. However, just before the end of 2016 the GIB reconsidered that decision and voted to reinstate the Exclusion, if certain contingencies were met. The following month the ETF Secretary determined those contingencies had been satisfied and reinstated the Exclusion, effective February 1, 2017.
The estimated cost for removing the exclusion, based on expert testimony presented by the parties, would have ranged between $140,000 and $300,000 per year, which would have resulted in a per member per month health care cost of 10 cents or less, which represented less than 0.1 percent of the overall costs of medical care.
Title VII and ACA. Although the defendants challenged the employees’ theory that the coverage exclusion constituted sex discrimination, the court was not persuaded. It explained that it had recently considered a similar argument to that made by the defendants regarding a similar exclusion for Wisconsin Medicaid recipients, in Flack v. Wis. Dep’t of Health Servs., and had rejected it. As in that case, the exclusion here “denies coverage for medically necessary surgical procedures based on a patient’s natal sex” because it differentiates between a natal female born without a vagina and a natal male. The former was covered, whereas the latter was not. “As such,” the court explained, “this is a ‘straightforward case of sex discrimination.’” And no reasonable jury could credit the defendants’ argument that the exclusion was nondiscriminatory because benefits exclude coverage for all cosmetic treatments related to psychological conditions.
‘Entrenches’ beliefs. There was also no support for the comparison the defendants attempted to make between gender dysphoria and depression related to attributes such as breast size. There was also no merit to the argument that it was not discriminatory because not all transgender individuals have gender dysphoria. The Seventh Circuit already explained that “there is no requirement that every girl or every boy, be subjected to the same sex stereotyping.” The exclusion implicates sex stereotyping, the court explained, because it limits the availability of medical transitioning and, in some cases, makes it economically infeasible, therefore requiring transgender individuals to maintain the physical characteristics of their natal sex. “In other words,” the court explained, “the Exclusion entrenches the belief that transgender individuals must preserve the genitalia and other physical attributes of their natal sex over not just personal preference, but specific medical and psychological recommendations to the contrary.”
Private right of action exists. The court also explained that private rights of action are available under the ACA, noting that the statute expressly provides that enforcement mechanisms available under Title VI, Title IX, Section 504, and the Age Discrimination Act were applicable. This language indicated that Congress intended to provide a private right of action for enforcement of the ACA’s anti-discrimination provision. Moreover, the GIB and ETF were not immune under the Eleventh Amendment from liability because those entities receive federal financial assistance. It also was not possible to believe that the state would have turned down millions of dollars in federal funding to avoid funding procedures that cost no more than $300,000 per year.
Equal Protection. The standard of review applicable to sex-based classifications is a heightened one, the court explained, and to pass muster the defendants’ justification had to be “exceedingly persuasive.” However, the defendants’ purported reasons for the exclusion—the cost of providing coverage and the safety/effectiveness of GCS and hormone therapy—did not meet that standard. With regard to the costs, there appeared to be no dispute that the cost of coverage was immaterial, even under the defendants’ cost estimation, and, more importantly, the evidence in the record contradicted the defendants’ assertion that the GIB actually considered that cost in reinstating the Exclusion. Regarding the second reason—the safety and efficacy of GCS—there was little to no evidence that it was considered at the time. The evidence was also overwhelming that the actual reason for reinstating the exclusion had to do with the belief, based on the guidance of DOJ attorneys, that a Texas court’s issuance of an injunction related to the ACA absolved it of any legal obligation to provide such coverage. However, this did not create a genuine issue of material fact because the defendants expressly disavowed this justification in a motion filed with the court, arguing against being compelled to turn over the DOJ memo in question.
Relief. The court also concluded that a reasonable jury could find that the ETF Secretary was personally involved and could be held liable for the Equal Protection violation. However, GIB board members who were named individually were entitled to qualified immunity. Finally, based on its determination of liability on the employees’ Title VII and ACA claims, the court explained that they have the right to pursue equitable relief, compensatory and punitive damages, and attorneys’ fees and costs. With regard to their Equal Protection claim, they are entitled to equitable relief and attorneys’ fees. The defendants demanded, and will receive, a jury trial regarding the claims for compensatory and/or punitive damages.
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