Tovar v. Essentia Health

Background

Brittany R. Tovar was employed by Essentia Health and received health insurance through the Essentia Health Employee Medical Plan. Her son, Reid Olson, became a beneficiary of the plan. After Olson was diagnosed with gender dysphoria, health professionals determined that counseling, medication, and other treatments were medically necessary. The plan excluded coverage for services and surgery for gender reassignment, and the defendants denied coverage for Olson’s treatment and medications. The plan administrator later reimbursed Tovar for her out-of-pocket expenses for Androderm and removed the exclusion beginning January 1, 2016.

Tovar and Olson sued under Section 1557 of the Affordable Care Act, which prohibits discrimination in certain federally funded health programs. They alleged that the plan’s categorical exclusion discriminated against Olson based on gender identity. HealthPartners and Essentia separately moved to dismiss, and both defendants also sought to stay, or pause, the case.

Section 1557 and Gender-Identity Discrimination

The court concluded that Section 1557 prohibits discrimination based on gender identity. Section 1557 incorporates Title IX’s prohibition on discrimination “on the basis of sex,” and the court relied on decisions recognizing that sex discrimination includes discrimination based on gender identity and sex stereotypes. The court also rejected the defendants’ argument that they lacked adequate notice that accepting federal funding could expose them to liability for gender-identity discrimination.

The court further held that the plaintiffs had alleged enough to show that the defendants knew about the plan’s facially discriminatory exclusion. It rejected the argument that damages were unavailable because the defendants lacked notice or were not deliberately indifferent. At the motion-to-dismiss stage, the court accepted the complaint’s factual allegations as true while assessing whether they plausibly stated a claim.

HealthPartners as Plan Administrator

HealthPartners argued that it could not be liable because it was a third-party administrator and Essentia controlled the plan’s terms. The court rejected that argument. It reasoned that the Employee Retirement Income Security Act did not override other federal laws and that Section 1557 contains no exemption for third-party administrators. HealthPartners therefore could potentially be held liable under Section 1557.

Standing

The court dismissed Tovar’s claim against HealthPartners because she lacked Article III standing, meaning she had not shown the concrete injury required to invoke federal-court jurisdiction. The court determined that her only legally cognizable injury was her out-of-pocket expense, which had been reimbursed. It held that her remaining emotional and other non-economic injuries related to the alleged violation of her son’s rights did not establish standing for her own claim.

The court concluded that Olson had both Article III standing and statutory standing. His alleged denial and delayed receipt of medically necessary care were concrete injuries connected to the challenged plan provisions. His interest in being free from gender-identity discrimination fell within the interests protected by Section 1557.

Motions to Stay

The defendants asked the court to stay the action while another case involving Section 1557 and federal regulations was resolved. The court denied the requests. It stated that its conclusion rested on Section 1557’s plain language, not on the validity of the Department of Health and Human Services regulation at issue in the other case, so that case’s resolution would not affect this action.

Disposition

The court granted HealthPartners’ motion to dismiss and to stay discovery insofar as it sought dismissal of Tovar’s claim and denied it in all other respects. It denied Essentia’s motion to dismiss or, alternatively, to stay. Count I was dismissed with prejudice insofar as it was brought by Tovar. Olson’s claim against HealthPartners remained, and Essentia’s motion was denied, so the opinion did not dismiss Olson’s claim against Essentia.