Health Reform WK-EDGE Transgender discrimination claim dismissed, as employee sues wrong entity
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Friday, May 20, 2016

Transgender discrimination claim dismissed, as employee sues wrong entity

By Lorene D. Park, J.D.

In an employment discrimination suit stemming from the denial of health benefits for gender reassignment services deemed medically necessary for an employee’s son, the employee did not claim she was subjected to an adverse action, and her alleged injuries vicariously arose from the denial of benefits to her transgender son—the “true target” of the alleged discrimination. Because her injuries were vicarious, she was not an “aggrieved” individual and lacked Article III standing to assert her Title VII and state law sex discrimination claims against her employer. The employee’s Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) claim against another entity was also dismissed because that entity was not the administrator of the plan (Tovar v. Essentia Health, May 11, 2016, Kyle, R.).

The nurse practitioner received health insurance through Essentia’s medical plan, which was sponsored by the employer and allegedly administered by HealthPartners. Her teenage son, who had become a beneficiary under the plan in 2014, was subsequently diagnosed with gender dysphoria—a condition in which an individual’s gender identity differs from the gender assigned at birth.

Exclusion under 2015 plan. Assigned as female at birth, the employee’s son was denied insurance coverage for certain medications and surgery under the 2015 version of the plan, which barred coverage for “services and/or surgery for gender reassignment.” For example, he was denied coverage for a prescription for Androderm®, a form of testosterone “for use by males only,” and was denied gender reassignment surgery. The employee claimed that, because her son could not obtain these necessary medical services, she suffered stress, anger, sleeplessness, and increased migraines, and ultimately reduced her work hours.

Lawsuit. Effective January 1, 2016, the plan was amended and the exclusion for gender-reassignment services was removed. However, the employee filed suit against the employer claiming that excluding coverage under the 2015 medical plan for general reassignment services or surgery violated Title VII and the Minnesota Human Rights Act (MHRA). She also asserted a claim against HealthPartners for administering the employer’s plan and enforcing the exclusion in violation of section 1557 of the ACA. She sought compensatory damages for economic and emotional harm due to the alleged “discrimination,” as well as declaratory and injunctive relief.

No standing to sue HealthPartners. Dismissing the ACA claim against HealthPartners, the court found that the employee lacked standing to sue the company because it was not the administrator of the plan at issue, so her alleged injuries were not “fairly traceable” to its conduct. Even if HealthPartners had been involved in administering the plan, the claims would fail because plan administrators have fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) (P.L. 93–406) to follow the terms of the plan or be subject to legal action, and it was the employer that decided on those terms; the employer also retained “all powers and discretion” to change the plan. Moreover, the employee claimed the plan itself was discriminatory, but she did not sue the plan itself and did not allege discriminatory acts on the part of HealthPartners, nor did she claim that HealthPartners gave her a different plan or fewer benefitsbecause she has a transgender child.

Claims against employer fail too. As for the employee’s sex discrimination claims under Title VII and the MHRA, the defense argued that she lacked standing because she was not an “aggrieved person.” Specifically, Title VII and the MHRA protect an employee against discrimination but she did not claim that she, as an employee, was discriminated against based on her gender or gender identity. Thus, the claims did not fall within the protected zone of interests.

Employee was not “true target” of discrimination. The court explained that, regardless of whether the exclusion discriminates against transgender individuals, the employee’s claim that the exclusion was used against her was unsupported. She did not allege that she was transgender or was denied benefits, let alone denied benefits because of her sex. Instead, she assumed the discrimination against her son was also discrimination against her. This assumption, said the court “confuses the true target” of the discrimination—a non-employee and non-party.

This was not associational discrimination. Though the employee likened her situation to cases where employees were targeted for discrimination because of their association with an individual in a protected class, those cases were distinguishable because the employee here alleged no discriminatory conduct or adverse action taken by the employer against her. There was no claim, for example, that she was personally denied the benefits or privileges of employment. Instead, she made policy-based arguments that were better addressed by the legislature.

Injuries vicarious. Moreover, the emotional and financial injuries the employee claimed were the effects of discrimination against her son, not her. Because her alleged injuries were vicarious in nature and did not make her an aggrieved person, her Title VII and MHRA claims failed.

The case is No. 16-100 (RHK/LIB).

Attorneys: Christy L. Hall (Gender Justice) for Brittany R. Tovar. Lisa Edison-Smith (Vogel Law Firm) for Essential Health and Innovis Health, LLC dba Essentia Health West. David M. Wilk (Larson King) for Health Partners, Inc.

Companies: Essential Health; Innovis Health, LLC; Health Partners, Inc.

Cases: CaseDecisions AccessNews DependentCoverageNews EmployerMandateNews InsurerNews

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