The Richard C. Lee United States Courthouse in New Haven, Connecticut. Credit: Center for Historic Buildings/General Services Administration
When a patient sues the administrator of a self-insured health plan for coverage of a procedure, the administrator faces no risk of financial loss and is not entitled to a security bond from a patient who gets a preliminary court ruling requiring the plan to cover the procedure, according to a new federal court decision.
U.S. District Judge Victor Bolden looked at whether health plan third-party administrators facing preliminary injunctions can get security bonds from the patients in a ruling on Gordon et al v. Aetna Life Insurance Company.
Aetna said in a statement that it has a strong track record as a proud ally of the LGBTQ+ community and is committed to meeting the health care needs of all of its members.
"As a third-party administrator for self-funded plan sponsors, our role is to administer benefits in accordance with the specific terms set forth by each plan," the company said. "Many employer benefit plans may include customized coverage for gender affirming procedures. We work closely with our plan sponsors to meet their unique needs and preferences while complying with all applicable regulations and legal requirements. We strongly disagree with the allegations in this lawsuit and will defend ourselves vigorously."
The case: The plaintiffs in the case are enrollees in self-insured employer health plans that use Aetna as the TPA. The employers have not adopted their own coverage policies for gender-related care.
Aetna classifies some types of care related to people's gender as medically necessary, but it has issued a clinical policy bulletin that classifies gender-related face surgery as cosmetic in nature and not medically necessary.
The plaintiffs are suing Aetna for coverage for gender-related face surgery.
Two of the plaintiffs, Jamie Homnick and Gennifer Herley, asked the court for a preliminary injunction that would keep Aetna from applying the clinical policy bulletin.
Aetna, a subsidiary of CVS Health, asked the court to dismiss the suit and to provide a security bond to protect the employer plans' interests in case the court did issue a preliminary injunction or a temporary restraining order in favor of the patients.
Homnick and Herley asked for a waiver from the security bond requirement, arguing that they could not afford to provide a security bond.
The ruling: The judge denied Aetna's motion to dismiss, finding that a categorical exclusion for coverage for gender-related face surgery could violate anti-discrimination provisions in section 1557 of the Affordable Care Act.
The judge did not require Aetna to cover the face procedures proposed by Homnick and Herley, but he ruled that Aetna must make individualized coverage determinations, on the basis of medical necessity, rather than categorically excluding coverage for their claims.
The judge also denied Aetna's request for a security bond.
Federal court procedural rules give a trial court judge discretion over the amount of any security bond, the judge wrote in the ruling.
"Aetna responds that the bond requirement should not be waived because of the potential harm to the plan sponsors' funds," the judge wrote. "In reply, the plaintiffs argue that 'Aetna — the party — would suffer no financial loss and is not entitled to a security bond on behalf of the plan sponsors."
The judge agreed with Homnick and Herley.
"Given the likelihood of the plaintiffs' success on the merits, and the lack of proof that Aetna will be harmed from issuance of this injunction, the court will not require the issuance of a bond," the judge wrote.
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