Pritchard v. Blue Cross Blue Shield of Ill., __ F.4th __, 2025 WL 3202338 (9th Cir. Nov. 17, 2025)
Class action plaintiffs sued Blue Cross alleging it violated section 1557 of the Affordable Care Act, which prohibits sex-based discrimination, by denying coverage for gender dysphoria treatment pursuant to exclusions in certain employer sponsored health plans. A federal district court granted summary judgment for Plaintiffs, ruling that section 1557 applied to Blue Cross, that Blue Cross was not shielded from liability by the Religious Freedom Restoration Act (RFRA), and that gender dysphoria exclusions discriminated based on sex under Bostock v. Clayton County, 590 U.S. 644 (2020). Blue Cross appealed.
The Ninth Circuit vacated the district court’s judgment and remanded for further proceedings. The court first held that section 1557 applies to entities (not merely to plans) if any part of the entity receives federal funds, even if the plans at issue are not federally funded. Accordingly, Blue Cross was governed by section 1557. Next, the Ninth Circuit affirmed the district court’s conclusion that third-party administrators can be liable for violating section 1557 when implementing plan terms drafted by a plan sponsor, because ERISA does not permit administrators to violate federal law. In addition, Blue Cross could not invoke RFRA as a defense because (1) a RFRA defense applies only to government action, not disputes between private parties; and (2) Blue Cross is a secular entity.
Finally, the Ninth Circuit held that the district court’s Bostock-based decision addressing the gender dysphoria exclusion “ran afoul of” United States v. Skrmetti, 145 S. Ct. 1816 (2025), but Plaintiffs could still potentially prevail on remand. The court explained that mere reference to “sex” in the policy exclusions, without more, is insufficient to establish that sex was a “but for” cause of the coverage denial since dysphoria treatment coverage was denied for all patients regardless of their sex. But some of the class plaintiffs alleged diagnoses other than gender dysphoria that would entitle them to treatment Blue Cross had refused to cover. Also, plaintiffs may claim that Blue Cross’s categorical gender dysphoria coverage exclusion was a pretext for proxy-discrimination against transgender individuals, since Blue Cross admitted that such treatments are sometimes medically necessary. The Ninth Circuit remanded for the district court to assess these arguments.
