Court Allows ACA Discrimination Claim Challenging Plan Infertility Policy and Seeking Nationwide Injunction to Proceed

On February 29, 2024, a plan participant representing a putative class of similarly situated individuals and represented by the National Women's Law Center received a favorable court decision on a motion to dismiss in a case alleging the terms of the participant's employer-sponsored benefits coverage were discriminatory in violation of section 1557 of the Affordable Care Act (ACA). Berton v. Aetna, Inc., No. 23-cv-01849-HSG (N.D. Cal. Feb. 29, 2024). That ACA statutory provision, 42 U.S.C. § 18116, prohibits a covered "health program or activity" receiving federal financial assistance from discriminating on the basis of sex, among other protected categories. Insurers and group health plans offering health benefits and receiving federal funding are generally covered by the prohibition. This case illustrates how class action litigants are bypassing the remedial provisions in ERISA and pursing section 1557 discrimination claims to recover damages resulting from benefits denials and to obtain nationwide injunctive relief barring implementation of plan provisions that are alleged to discriminate on the basis of a protected status. 

The plaintiff, who had been denied coverage for infertility treatment under her ERISA-covered health plan, sued Aetna, Inc., and Aetna Life Insurance Company (collectively, Aetna) alleging the plan's Infertility Policy discriminated on the basis of sex by placing additional burdens on couples in same-sex partnerships. The Infertility Policy required a determination of infertility as a condition for receiving coverage for fertility treatments, such as intrauterine insemination. As stated in the decision, the plaintiff asserted the policy was discriminatory because it imposed "different and more onerous barriers to fertility treatment access" on "LGBTQ members" compared to "heterosexual couples." According to the complaint, whereas the latter could establish infertility in two different ways, including representing they had frequent intercourse for a period of months that varied by age without conceiving, same-sex couples unable to demonstrate infertility through intercourse were limited to proving infertility through only the second option provided for under the plan – 12 monthly cycles of unsuccessful artificial insemination, which the plaintiff argued was costly and intrusive. Aetna, which served as the third-party administrator of the self-funded plan at issue, moved to dismiss the complaint, arguing plaintiff had failed to state a claim and failed to join an indispensable party – Encore, Inc. (Encore), the plan sponsor.

The district court denied Aetna's motion to dismiss in its entirety, holding that the complaint pled sufficient facts to state a claim of discrimination. According to the court: 

"The face of the Policy allows individuals in heterosexual partnerships to show infertility without incurring any out-of-pocket costs, because they have the option of doing so through 'frequent sexual intercourse.' To make this showing, heterosexual couples are not required to 'provide any form of documentation,' nor do they have to satisfy 'further requirements with respect to timing, frequency, or effectiveness of intercourse'" But same-sex partners have only one way to demonstrate infertility: they must go through expensive cycles of donor insemination, for which they are required to provide verifiable proof. Plaintiff plausibly alleges that this differential treatment on the basis of sexual orientation is facially discriminatory because it imposes an unequal burden on same-sex couples as compared to opposite-sex couples." (internal citations omitted).

The court found Aetna's argument that the complaint did not faithfully characterize the actual language in the Infertility Policy unpersuasive, and instead focused on the policy's "real-world effect" in reaching its decision.

The court also rejected Aetna's arguments that Aetna, Inc. was not a proper party to the case and should be dismissed because it is a holding company not involved in administering Aetna health insurance plans, and that Encore, whom it alleged could not be added as defendant due to a lack of personal jurisdiction over it by the court, was an indispensable party whose absence from the case further warranted dismissal. On the latter issue, Aetna asserted that the court could not grant some of the relief the plaintiff was seeking – an injunction prohibiting Aetna from implementing and enforcing the Infertility Policy – without Encore as a party because Encore, not Aetna, decides which benefits to offer under its plan. Noting that it could award damages against Aetna, the court held that it could not say as a matter of law at this stage of the case that complete relief could not be awarded to the plaintiff without Encore as a party but left open the possibility of revisiting that holding later. 

Aetna argued in its motion to dismiss that plaintiff's section 1557 ACA claim should be dismissed because ERISA's civil enforcement provisions provide the exclusive remedy for the award of benefits plaintiff was seeking under her plan. In a footnote to the decision, the court stated: "Plaintiff's opposition makes clear that she 'does not contend that [Defendants] incorrectly administered the Plan, nor is Plaintiff seeking to recover benefits' under the Plan. Given this clarification, Defendants appear to abandon their third argument and no longer seek to dismiss Plaintiff's claim under this theory since 'Plaintiff is not seeking ERISA benefits'" (internal citations omitted).

Plan Administrator Must Re-Do Review of Disability Claims to Ensure Appeal Is "Full and Fair"

Under the "full and fair review" requirement of ERISA § 503, plan administrators must "engage" in a "meaningful dialogue" with plan participants. In several recent cases (for example, see here and here), courts have held that plan administrators failed to satisfy this standard in conducting a "full and fair review" of participants' claims. In Black v. Unum Life Ins. of Am., No. 22-cv-2116 (N.D. Tex. Feb. 29, 2024), the district court added Unum Life Insurance Company of America (Unum) to the list.

For many years, plaintiff Catherine Black had received ERISA-governed disability benefits through a plan administered and insured by Unum. In September 2021, Unum determined that Black was no longer disabled and denied her claim. In its denial letter, Unum said it considered Black's own reports, updated medical records, and input from her treating physicians. After receiving the denial letter, Black filed an administrative appeal, during which Unum employee registered nurse Amanda Abbott (Nurse Abbott) reviewed Black's records from her treating physicians. Based on Nurse Abbott's determination that there was no medical disagreement among Black's physicians regarding her functionality, Unum denied Black's appeal and subsequently declined to reconsider that denial. Black then sued Unum in federal district court, alleging that although Unum denied her claim based on a medical judgment, it failed to consult with a qualified health professional on appeal.

Under ERISA's implementing regulations, see 29 C.F.R. § 2560.503-1(h)(3)(iii) and (v), a claimant is not provided a reasonable opportunity for a full and fair review of an adverse benefit determination unless several procedural requirements are met. One such requirement is that, when an adverse benefit determination is based in whole or in part on a medical judgment, the appeal must include consultation "with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment." Further, the healthcare professional consulted in an appeal may not be the same individual who was consulted in connection with the original determination. 

The court granted Black's motion for partial summary judgment. The court first addressed whether Unum's denial was based on a medical judgment. Unum attempted to distinguish binding Fifth Circuit caselaw, claiming that it did not deny her claim based on a medical judgment but rather because she did not have any restrictions preventing sedentary work. The district court found that Unum's position "just splits hairs." 

The court then concluded that for either of two reasons, Unum failed to consult with a healthcare professional who had "appropriate training and experience in the field of medicine" when deciding Black's administrative appeal:

• First, the court found that Nurse Abbott's review was improper because it "essentially gave deference to the initial denial of Black's claim." Although Nurse Abbott reviewed the medical opinions of Black's treating physicians, instead of using the opinions to make her own medical determination, she instead summarized them "and found no indication that Black could not perform sedentary work within those opinions." According to the court, this was equivalent to relying on the same physicians to initially deny Black's claim and to deny her appeal. 
• Second, the court concluded that "Nurse Abbott was not a qualified health care professional to perform the consultation." Unum argued that Nurse Abbott only needed to be able to summarize the opinions of Black's treating physicians, nothing more. The court reiterated that ERISA required Unum to consult a different physician on appeal and stated that "even if Nurse Abbott's review was Unum's attempt to satisfy this procedural requirement, Nurse Abbott was not qualified to do so." Although ERISA does not require a reviewing physician to have the exact same specialty as the claimant's treating physician, "Nurse Abbott is not a physician, and Unum does not contend that she has the appropriate training and experience." 

Because there was "no indication that Unum's procedural violations were flagrant," the court remanded to Unum "to conduct a full and fair review of Black's disability claim consistent with ERISA's procedural requirements."

Upcoming Speaking Engagements and Events

This afternoon, Joanne will present the webinar "Are You Ready For It? Health Plan Fee Litigation (ERIC's Version)" in partnership with The ERISA Industry Committee (ERIC). 

On April 12, Joanne and Anthony will serve as facilitators for the workshop "Case Law Updates" at the 2024 NOPLG Conference in Seattle, WA.

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