By Ty Hyderally, Esq and Lorena Meza

September 23, 2024

In the case of Baker v. Aetna Life Insurance Co. et al., Charlize Marie Baker’s struggle for justice demonstrates the never-ending fight between health insurance and gender identity discrimination. This New York case raises awareness of the complexities of Title VII and the Employee Retirement Income Security Act (ERISA) when it comes to gender dysphoria and health benefits. It provides an understanding of how corporations, healthcare plans, and legal systems work, and, how the legal system in place may not be well equipped to handle certain types of discrete discrimination.

Baker, a worker at L–3 Communications Integrated Systems, LP which is a subsidiary of L–3 Communications Corporation (“L-3”), began gender reassignment from male to female in 2011. Baker changed her name on official documents and went through the transformation. During her transformation, a healthcare provider certified that breast implants were essential for the treatment of her Gender Dysphoria, formerly known as Gender Identity Disorder. Baker had a long history of being diagnosed with Gender Dysphoria. However, L-3’s health insurance provider, Aetna, declined to pay for the surgery, arguing that her policy did not permit coverage of breast implants for transgender women, under the Health Benefits Plan. Worse still, her application for short-term disability benefits, under the Short Term Disability Benefits Plan, for post-surgery recovery was also rejected, with Aetna claiming that surgery for gender dysphoria did not count as an illness.

Baker sued due to the actions above. Baker v. Aetna Life Insurance Co. et al. primarily revolves around two federal laws:  In the law suit, Baker alleged that the defendants discriminated against her on the basis of gender identity.  Baker contended that their acts violated § 1557 of the Patient Protection and Affordable Care Act (“ACA”).  Baker also contended that Defendants engaged in sex/gender discrimination in violation of Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e et seq.  Title VII addresses employment discrimination based on sex, while ACA aims to eradicate discrimination in the provision of health care. Baker claimed that Aetna discriminated against her by denying her coverage, and that Aetna’s actions violated Title VII and the ACA. Further, she also complained that L-3 Communications was equally involved in discrimination by permitting Aetna to manage its health plans. Baker had a related claim under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 –1461, as their was a denial of benefits under an ERISA covered plan.

The Court first analyzed Baker’s claim as it pertained to Title VII.  The major issue of contention was whether Aetna’s power to approve or deny claims brought Aetna within the definition of an employer.  The Court ruled that Aetna was solely a third-party actor that served as a health plan administrator. The Court further ruled that this action did not make it an employer.  Accordingly, the Court ruled that Baker could not pursue Aetna for a Title VII violation as Title VII was to protect employee’s from the unscrupulous acts of employers.

The Court then turned its attention to ACA. The Court ruled that the denial of short-term disability benefits was not protected under a ACA theory of liability as the surgery was not a treatment for an illness covered under the insurance policy. Although Baker’s surgery was considered medically necessary, Aetna was allowed to escape having to cover the surgery due to its contention that gender dysphoria for transgender was not a covered condition.

This ruling highlights a major weakness of the current legal systems in dealing with such issues as gender dysphoria in the provision of health care services. Although Title VII of the Civil Rights Act of 1964 protects people from discrimination based on their sex, it was found not to be applicable to third-party administrators such as Aetna. And although ACA protects people from discrimination in the provision of health care, it was not seen as applicable in this fact pattern.

The Texas District court did reject the motion to dismiss claim by L-3 with regard to Baker’s Title VII claim. L-3 contended that Baker did not suffer an adverse employment action.  However, the court ruled that the denial of employment benefits could be an adverse employment action. The court took note of a 2014 5^th Circuit Court opinion, Thompson v. City of Waco, Tex., which broadly defined an adverse employment action as one that went beyond hiring or firing, but rather included demoting, promoting, granting leave, and compensating. The Court ruled that the denial of employment benefits could pertain to compensating.

Unfortunately, numerous transgender patients receive inadequate medical care because they experience discrimination in the provision of covered health care services.  Title VII and ACA require amendment to address this reality.  Doing so will extend gender identity protection under Title VII and under the ACA that will ensure that no individuals are denied the appropriate medical treatment they require, because of their gender identity.

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