Recent Cases Highlight Section 1557 Discrimination in Fertility Treatments

Section 1557 of the Affordable Care Act (§1557) requires “covered entities” to comply with specific rules on nondiscrimination, which, among other things, prohibit denying or limiting coverage or imposing additional cost-sharing in health insurance and other health-related coverage based on race, color, national origin, sex, age, or disability. Proposed rules issued in July 2022 interpret the term “covered entities” to include organizations that receive federal funding and are principally engaged in providing health programs or activities. Insurance carriers, third-party administrators (TPAs), and employers in the medical field may be considered covered entities, but most other employers are not. Further, employer-sponsored group health plans generally do not receive federal funding. However, insurance carriers and TPAs may only be permitted to issue and administer plans that comply with §1557 nondiscrimination rules.

The definition of “sex” for §1557 purposes has been in flux since the first nondiscrimination rules implementing §1557 were released in 2016.

However, in accordance with the 2020 Supreme Court of the United States’ (SCOTUS’s) decision in Bostock v. Clayton County, the recently proposed rules interpret the term “sex” to include sexual orientation and gender identity. Two recent court cases highlight §1557’s reach. These cases hinge on fertility benefits and discrimination against individuals in the LGBTQ+ community. Employer plan sponsors should monitor developments with these cases in the event they may need to make changes to plan coverage.

Berton v. Aetna, Inc.

In a 2024 case out of the Northern District of California, Berton v. Aetna, Inc., the Plaintiff, Mara Berton, a participant in a self-insured health plan, filed a class action lawsuit against Aetna, the plan’s third-party claims administrator under §1557. The complaint alleged that the plan discriminated against her, her wife, and similarly situated participants based on their sexual orientation by denying them equal access to fertility treatments. The Plaintiff alleges “that the Infertility Policy (the “Policy”) discriminates on the basis of sexual orientation by placing additional burdens on couples.”

Prior to being amended in January 2023, the fertility coverage under the Plaintiff’s health plan stated:

“For purposes of this policy, a member is considered infertile if he or she is unable to conceive or produce conception after 1 year of frequent, unprotected heterosexual sexual intercourse, or 6 months of frequent, unprotected heterosexual intercourse if the female partner is 35 years of age or older. Alternately, a woman without a male partner may be considered infertile if she is unable to conceive or produce conception after at least 12 cycles of donor insemination (6 cycles for women 35 years of age or older).”

After the plan’s amendment, a plan participant’s infertility determination was based on “egg-sperm contact” rather than intercourse or insemination, with the definition applicable to “all individuals regardless of sexual orientation or the presence/availability of a reproductive partner.” The Plaintiff claims that, even as amended, the plan discriminated against LGBTQ+ participants by imposing different and more onerous prerequisites for fertility treatment access than those applicable to heterosexual couples.

Following the amendment, the Plaintiff claims that the policy is still discriminatory, stating:

“The Infertility Policy continues to discriminate against LGBTQ members by imposing on them different and more onerous barriers to fertility treatment access than apply to heterosexual couples. According to Plaintiff, Defendants’ Policy does not impose out-of-pocket costs on heterosexual couples because they can demonstrate infertility by simply representing that they have had 12 months of frequent intercourse. But because same-sex couples cannot demonstrate infertility through intercourse, they must do so through proof that they have gone through 12 cycles of donor insemination. Plaintiff alleges that each cycle ‘costs at least hundreds of dollars’ and requires the patient to undergo intrusive procedures.”

Aetna argued that the case should be dismissed because the participant had failed to state a claim of intentional discrimination under §1557, and the participant had not named the employer plan sponsor in the lawsuit.

The court in the Northern District of California did not dismiss the case. Instead, it concluded that the participant had adequately alleged that, on its face, the plan imposed an unequal burden on same-sex couples by requiring them to incur out-of-pocket costs and provide verifiable proof of multiple cycles of donor insemination, while heterosexual couples could show infertility without cost or documentation, and that the employer was not a necessary party to the litigation despite the administration company’s argument that the employer had the final say on the benefits offered by the plan.

Murphy v. Health Care Serv. Corp.

In 2023, a health plan participant, Kelsey Murphy, the Plaintiff, filed a class action suit against her health plan’s insurer, Blue Cross Blue Shield of Illinois (BCBS IL), alleging discrimination under §1557 by denying her and similarly situated plan participants equal access to fertility treatments.

The policy covered such treatments for participants who (1) attested to their inability to conceive after one year of unprotected sexual intercourse, (2) were diagnosed with a condition affecting fertility, or (3) were unable to attain or maintain a viable pregnancy.

The Plaintiff alleges that the Blue Cross policy discriminates against individuals based on their sexual orientation or gender identity in violation of §1557 because it “requires them to pay out-of-pocket for fertility treatments as a prerequisite to receiving coverage for such services.” The Plaintiff further alleges that these are costs imposed on LGBTQ+ participants that heterosexual participants did not have to pay. Specifically, because the Plaintiff could only conceive a child through costly fertility treatments that heterosexual plan participants did not have to incur before qualifying for fertility benefits.

The Defendant, BCBS IL, argued that the case should be dismissed because the participant did not allege the intentional discrimination required to state a claim under §1557.

The court concluded that the Plaintiff adequately alleged discrimination based on sexual orientation, stating, “the policy is written such that a significant portion of the LGBTQ+ community – women who are healthy and could attain, maintain, and sustain a pregnancy – cannot meet the definition of infertility without incurring out-of-pocket costs, whereas their straight counterparts can.”

Next Steps for Plan Sponsors

Case law on discrimination under §1557 will continue to develop, and plan sponsors should monitor these cases closely and be ready to amend fertility coverage. In light of these cases, plan sponsors can review their coverage with ERISA (Employee Retirement Income Security Act) counsel now and be proactive about making amendments that are inclusive to all plan participants.

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