Doe v. City of Philadelphia

1

JANE DOE, Plaintiff, v. CITY OF PHILADELPHIA, INDEPENDENCE BLUE CROSS, PHILADELPHIA FIREFIGHTERS' & PARAMDEICS UNION, I.A.F.F., LOCAL 22 Defendants.

Civil Action No. 24-0468

United States District Court, E.D. Pennsylvania

August 2, 2024

OPINION

Wendy Beetlestone, J.

Defendant Independence Blue Cross (“IBX”) moves, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss Plaintiff Jane Doe's Second Amended Complaint, in which she alleges that IBX, along with her employer and union discriminated against her on the basis of sex and disability in denying insurance coverage for certain gender-affirming care procedures in violation of: (1) Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq.; (2) the Philadelphia Fair Practices Ordinance (“PFPO”), Phila. Code § 9-1101 et seq.; and, (3) Section 1557 of the Affordable Care Act (“ACA”), 42 U.S.C. § 18116 (premised on violations of Title IX of the Education Amendments of 1972 20 U.S.C. § 1681, and Section 504 of the Rehabilitation Act, 29 U.S.C. § 794). For the reasons stated below IBX's Motion will be granted in part and denied in part.

I. BACKGROUND

According to her operative Complaint, well-pleaded allegations from which are taken as true, Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009), Doe is a longtime firefighter who has been employed by the City of Philadelphia for almost three decades. She is a member of her union, Defendant Philadelphia Firefighters' & Paramedics' Union, I.A.F.F., Local 22 (“Local 22”). She receives health insurance through a self-funded employer-sponsored health plan, underwritten and administered by IBX.

Doe is a transgender woman. She has been diagnosed with gender dysphoria, a medical condition recognized in the Diagnostic and Statistical Manual of Mental Disorders 5. The World Professional Association for Transgender Health (“WPATH”), which publishes “widely accepted standards of care for the treatment of gender dysphoria,” notes that “medically necessary treatment for gender dysphoria may require facial feminization surgery” (“FFS”). “[I]n an attempt to alleviate [her] gender dysphoria,” Doe sought-but IBX denied her request- preauthorization for insurance coverage from IBX for a series of FFS procedures, including “a rhinoplasty, septoplasty, septorhinoplasty, dermabrasion for rhinophyma, forehead reduction, [and] repair of brow ptosis (supraciliary, mid-forehead or coronal approach).” On top of these, Doe “will need hair transplant procedures.”

IBX attached a copy of its Medical Policy Bulletin and Personal Choice Health Benefits Program to its Motion to Dismiss, which can be considered alongside Doe's Second Amended Complaint because it is “explicitly relied upon” by that pleading. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). That document, whose authenticity Doe does not dispute, serves as a basis for “mak[ing] decisions on coverage.” It divides gender-affirming care into multiple categories, including: (1) medically necessary (e.g., bilateral mastectomy); (2) medically necessary, gender-specific (e.g., mammograms); (3) not medically necessary; and, (4) potentially cosmetic. Procedures in this last category, which includes FFS, “may be performed in combination with other surgeries for the treatment of gender dysphoria and are considered cosmetic or potentially cosmetic services, unless medical necessity demonstrating a functional impairment can be identified.” IBX denied Doe's request, concluding that she did not have a “functional impairment” that would allow for reimbursement for the procedures.

Doe alleges that IBX misapplied the “functional impairment” exception to the exclusion, “requiring [her] to state a physical deformity, disfigurement, abnormality, or impairment, when [she] had demonstrated functional impairments in social and occupational functioning.” IBX also denied Doe's appeals of that decision. As a result of these denials, Doe “was forced to expend time and effort, and unnecessary expense, appealing the decision and gathering documentation in support of her claim” and suffered severe distress, including suicidal ideation.

Doe seeks damages and an injunction that, among other things, would order IBX to: (1) “perform a reevaluation of [her] claim, providing that [she] is covered for all FFS and related procedures wrongfully denied, and providing that [she] will be covered for FFS surgeries, procedures, and medical benefits, and that all benefits will be paid moving forward;” (2) hold LGBT sensitivity training; and, (3) “adopt and enforce a written policy that the preferred name that is consistent with the claimant's gender identity will be used to refer to the claimant throughout the claims process.”

II. LEGAL STANDARD

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. When analyzing a motion to dismiss, the complaint must be construed “in the light most favorable to the plaintiff,” with the question being “whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Fowler, 578 F.3d at 210.

Where, as here, an amended pleading already has been filed, further amendment may be allowed “only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). That means that “leave to amend generally must be granted unless the amendment would not cure the deficiency.” Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000); accord Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008).

III. DISCUSSION

A. Doe's Employment-Based Discrimination Claims

IBX argues that Plaintiff's claims for sex and gender identity discrimination under Title VII and the PFPO fail because it is not and never has been her employer or an agent of her employer, the City of Philadelphia. Title VII applies only to “an employer['s]” discriminatory practices “because of [an] individual's . . . sex.” 42 U.S.C. § 2000e-2(a).^[1]IBX, a third-party claims administrator, argues that it does not count as Doe's “employer”-“a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year, and any agent of such a person,” id. § 2000e(b)-and therefore cannot be sued by Doe under that statute.

“In order to state a Title VII claim,” a plaintiff “must allege an employment relationship with the defendant[].” Covington v. Int'l Ass'n of Approved Basketball Offs., 710 F.3d 114, 119 (3d Cir. 2013). The statute's plain text reaches employers' agents too. Doe v. Pennsylvania, 582 F.Supp.3d 206, 213 (M.D. Pa. 2022) (citing City of L.A., Dep't of Water and Power v. Manhart, 435 U.S. 702, 717 n.33 (1978)). Whether an employment relationship exists under Title VII depends on a multifactor analysis set out by the United States Supreme Court in Nationwide Mutual Insurance Company v. Darden, 503 U.S. 318 (1992). Faush v. Tuesday Morning, Inc., 808 F.3d 208, 213 (3d Cir. 2015). Darden pointed courts to several non-exhaustive factors, including:

the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.

Id. at 214 (quoting Darden, 503 U.S. at 323-24).

Doe argues that IBX can be sued under Title VII because, as the insurance plan's third-party administrator, it “had control over the subject benefits-and the City and Union did not,” and “an employer may not delegate the provision of employer-sponsored health benefits to a separate corporate entity, and thereby escape liability for a discriminatory benefit plan.” She also points out that the City and the Union “have disclaimed any involvement in the denial of benefits alleged,” which “would leave [IBX] . . . responsible for the provision of health insurance benefits.”

In making this argument, Doe relies heavily on a case from the Middle District of Pennsylvania that also involved the denial of insurance coverage for gender-affirming care. Doe, 582 F.Supp.3d at 208. In that case, the plaintiff, an employee of Pennsylvania's Department of Human Services, sought and was denied coverage for a bilateral mastectomy, which the plaintiff's doctor had concluded was medically necessary. Id. at 209. He sued, among other defendants, the Pennsylvania Employees Benefit Trust Fund (“PEBTF”), which was “governed by a board of trustees comprised of at least 14 members . . . appointed by either a union or by the Commonwealth's governor” and, according to the complaint, “act[ed] on behalf of the Commonwealth of Pennsylvania to provide, administer, and set policy for health insurance that it provides to state employees. Id. The district court rejected the plaintiff's argument...