By Pension and Benefits Editorial Staff
A Xerox employee and his wife failed to revive their claim that the third-party administrator of the employer’s health plan, discriminated against them on the basis of sex in violation of Section 1557 of the Affordable Care Act by interpreting the plan to exclude the wife’s off-label use of fentanyl to treat her rare illness that only afflicted women. Denying the couple’s bid to reconsider the previous dismissal of their claim with prejudice, a federal district court in New York ruled that there was no error in the prior determination that Section 1557 does not allow disparate impact claims, but even if did, the couple failed to present any statistical evidence to support such a claim. And under the proper disparate treatment standard, they failed to plausibly allege that the administrator intentionally discriminated against them or that such discrimination was a substantial motivating factor in its decision to rescind the prior administrator’s authorization for fentanyl to treat the wife’s disease.
Authorization for fentanyl rescinded. The employee worked for a former subsidiary of Xerox Corporation and participated in his employer’s ERISA-covered health plan. His wife, a beneficiary of the plan, suffered from a rare disease known as global diffuse adenomysis (GDA) that causes excruciating and constant pain. After Caremark assumed administration of the health plan, it allegedly rescinded an authorization made by the prior plan administrator for certain forms of fentanyl to treat the wife’s GDA. Its explanation was that fentanyl drugs were not approved for plan beneficiaries who suffered from non-cancer illnesses. Also, because the U.S. Food and Drug Administration has not labeled fentanyl as effective to treat GDA to do so is an off-label use.
Sex-discrimination claim dismissed. The employee and his wife filed this lawsuit asserting a myriad of claims which the previously assigned district court dismissed with prejudice. At issue now was their motion to reconsider only the dismissal of their clam against Caremark for sex discrimination under Section 1557 of the Affordable Care Act. They claimed that Caremark’s interpretation of the plan to exclude coverage of fentanyl-based treatments for the wife discriminated against females who, unlike males, suffer from GDA. They argued that this interpretation resulted in a plan exclusion that was specific to females and resulted in coverage for women that was inferior to the coverage provided for men under the plan.
The couple further contended that in dismissing their claim, the judge applied the wrong legal standard because she overlooked the fact that Section 1557 authorizes a private right of action for disparate impact sex discrimination claims, a legal conclusion that was allegedly confirmed by the federal agency charged with interpreting Section 1557—the Department of Health and Human Services. However, the district court disagreed, ruling that the judge did not overlook any controlling law in her well-reasoned opinion, nor did the couple now point to any intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.
Intentional discrimination standard. First, the weight of authority establishes that Section 1557 incorporates the standards of Title IX for health discrimination claims. As a result, the couple could not bring a Section 1557 claim for sex discrimination under a disparate impact theory. Rather, they could only allege intentional discrimination under the Title IX standard.
This controlling interpretation of Section 1557 derives from the "plain and unambiguous language" of the statute which expressly incorporates Title IX’s standards governing sex discrimination claims in the educational setting into Section 1557. Therefore, the couple’s citations to the Department of Health and Human Services Office of Civil Rights rule prohibiting "methods of administration that have the effect of subjecting individuals to discrimination on the basis of sex," and to the Supreme Court’s 1984 decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council were misplaced.
No plausible claim of disparate impact. In any event, the employee and his wife failed to plausibly allege that Caremark’s actions had a disparate impact on the basis of sex. They did not claim that there were disparate impacts felt by females in general as a result of the plan’s guidelines, as interpreted and applied by Caremark. They also failed to introduce any statistical evidence that would support a disparate impact claim.
Rather, the couple alleged only that the wife herself was denied the use of fentanyl by Caremark for her GDA. They did not claim that fentanyl was prescribed more for men than for women, or that women who sought fentanyl for off-label uses—like the wife—were less likely to receive fentanyl than men.
No disparate treatment. Finally, the employee and his wife failed to demonstrate that the court improperly dismissed their claim under the proper Section 1557 sex-discrimination standard. They did not plausibly allege that Caremark intentionally discriminated against them or that such discrimination was a substantial motivating factor in its decision to rescind the authorization for fentanyl-based treatments for the off-label use of treating the wife’s GDA. For instance, there were no allegations that Caremark intended to interpret and apply the plan guidelines in such a way that would discriminate on the basis of sex.
SOURCE: Weinreb v. Xerox Business Services, (S.D.N.Y.), No. 1:16-cv-06823-JGK, July 27, 2020.
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