And v. Essentia Health, 342 F. Supp. 3d 947

Background

Brittany Tovar was an Essentia Health employee whose employer-sponsored Plan (sponsored by Essentia and administered by HealthPartners) covered her son, Reid Olson, starting October 2014.
Olson was diagnosed with gender dysphoria and clinicians prescribed treatments (mental health care, hormones, surgery); the Plan contained a categorical exclusion for "services and/or surgery for gender reassignment."
HealthPartners denied coverage and Tovar's administrative appeal; Tovar paid out-of-pocket for one medication (later reimbursed) and did not purchase another medication because it was denied.
Essentia requested removal of the exclusion effective January 1, 2016; the exclusion was removed; Tovar’s employment ended July 29, 2016 but coverage continued through October 31, 2016.
Plaintiffs sued under Section 1557 (ACA) alleging gender-identity discrimination; HealthPartners and Essentia moved to dismiss; court grants in part and denies in part.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does §1557 (via Title IX) prohibit discrimination based on gender identity?	§1557’s incorporation of Title IX bars sex discrimination that includes gender-identity/sex-stereotyping.	§1557 does not reach gender-identity discrimination.	Court: §1557 covers gender-identity discrimination—relying on Price Waterhouse, Oncale, Title VII/IX analogies, and persuasive authority.
Were defendants on notice under the Spending Clause that §1557 covered gender identity?	Plaintiffs: plain statutory language and precedents put defendants on notice.	Defendants: lacked notice of liability until HHS regulation; Spending Clause requires clear notice.	Court: defendants had notice from statute and controlling precedent; Spending Clause argument fails.
Must plaintiffs allege actual notice to funding recipient and deliberate indifference under Title IX to recover damages?	Plaintiffs: Plan was facially discriminatory so defendants had actual notice.	Defendants: Title IX requires notice and deliberate indifference (Gebser/Grandson).	Court: facially discriminatory plan provided actual notice; plaintiffs pleaded sufficient facts—claim survives this theory.
Can HealthPartners (a TPA) be liable for a self-funded plan it administered?	Plaintiffs: TPAs are not exempt; ERISA does not displace other federal laws.	HealthPartners: as TPA it must administer plan according to plan terms and cannot be liable for employer-controlled terms.	Court: ERISA does not shield TPAs from §1557; HealthPartners may be liable under §1557.
Does plaintiff Tovar have Article III and statutory standing?	Tovar: denied insurance benefit and incurred out-of-pocket costs; emotional/financial injury.	HealthPartners: Tovar was reimbursed and non-economic parental harms do not confer standing; also challenges statutory standing.	Court: Tovar lacks Article III standing (non-economic parental harms insufficient; reimbursed expenses moot) — her §1557 claim dismissed with prejudice; Olson has Article III and statutory standing.

Key Cases Cited

Price Waterhouse v. Hopkins, 490 U.S. 228 (recognizes sex stereotyping as sex discrimination)
Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75 (statutory prohibitions may reach harms beyond principal concerns)
Whitaker v. Kenosha Unified Sch. Dist. No. 1 Bd. of Educ., 858 F.3d 1034 (Title IX/Title VII analysis supports protections for transgender individuals)
Glenn v. Brumby, 663 F.3d 1312 (gender nonconformity is sex-stereotyping)
Gebser v. Lago Vista Indep. Sch. Dist., 524 U.S. 274 (Title IX damages standard requires notice and deliberate indifference in certain contexts)
Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (zone-of-interests and proximate-cause tests for statutory standing)
Twombly v. Bell Atlantic Corp., 550 U.S. 544 (pleading standard: plausibility)
Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (injury-in-fact requirements for Article III standing)
Jackson v. Birmingham Bd. of Educ., 544 U.S. 167 (broad construction of discrimination under Title IX)