Ninth Circuit Orders Reconsideration of ACA Challenge to Gender-Affirming Care Exclusions

In Pritchard on behalf of C.P. v. Blue Cross Blue Shield of Illinois, No. 23-4331, —F.4th—-, 2025 WL 3202338 (9th Cir. Nov. 17, 2025), the Ninth Circuit vacated the district court’s grant of summary judgment in favor of a class of transgender plan participants who alleged that Blue Cross Blue Shield of Illinois (“BCBSIL”) violated Section 1557 of the Affordable Care Act by enforcing categorical exclusions for gender-affirming care in self-funded ERISA plans it administered. Although the panel agreed that BCBSIL is subject to Section 1557 and rejected its arguments premised on ERISA and RFRA, it concluded that the district court’s discrimination analysis—grounded in Bostock v. Clayton County—could not be reconciled with the Supreme Court’s intervening decision in United States v. Skrmetti. The court remanded for further proceedings under the proper standard.

BCBSIL provides both fully insured coverage and third-party administrative services for self-funded ERISA plans. Its fully insured products cover gender-affirming care, which BCBSIL has deemed medically necessary for adolescents with gender dysphoria. As a TPA, however, BCBSIL allows employer-sponsors to select exclusions for gender-affirming treatment and supplies “standard language” for doing so. Nearly 400 employers adopted such exclusions, including the plans covering the transgender minors in this case. BCBSIL processes claims by reviewing diagnosis and procedure codes and denies claims when they fall within an employer-chosen exclusion.

Three transgender participants—C.P., S.L., and Emmett Jones—were denied coverage for puberty-delaying medication or gender-affirming chest surgery based on these exclusions. After the district court certified a class, both sides moved for summary judgment. The district court ruled for plaintiffs, holding that BCBSIL’s enforcement of the exclusions constituted sex discrimination under Bostock and enjoining BCBSIL from administering such exclusions going forward.

The Ninth Circuit agreed with the district court that BCBSIL qualifies as a covered entity under Section 1557 because it receives federal financial assistance for aspects of its insurance business, and Section 1557 operates at the entity level rather than on a plan-by-plan basis. The court also affirmed that BCBSIL cannot rely on ERISA’s requirements or RFRA to avoid liability. Section 1557 applies to health insurers and TPAs when they receive federal funds, and RFRA does not furnish a defense in litigation between private parties.

The panel parted ways with the district court, however, on the discrimination analysis. The lower court treated the gender-affirming care exclusions as inherently discriminatory under Bostock, but the Ninth Circuit concluded that this reasoning is foreclosed by the Supreme Court’s subsequent decision in Skrmetti. In Skrmetti, the Court held that restrictions on gender-affirming medical care do not necessarily constitute discrimination “because of sex,” and it rejected the view that Bostock compels such a conclusion. Because the district court applied an approach that Skrmetti explicitly curtailed, its summary judgment ruling could not stand.

Still, the Ninth Circuit emphasized that Skrmetti does not definitively resolve all theories plaintiffs may pursue. It noted that plaintiffs may still be able to show facial discrimination or proxy discrimination if BCBSIL’s practices target transgender status or if exclusions for gender-dysphoria treatment operate as a stand-in for prohibited sex-based classifications. These issues, the court held, must be evaluated by the district court in the first instance.

Judge Rawlinson concurred in the judgment but criticized the majority for offering extensive guidance on issues that should be left for remand. She also highlighted that BCBSIL should be permitted to develop its Spending Clause notice arguments on remand.

The Ninth Circuit vacated the district court’s summary judgment and remanded for reconsideration of plaintiffs’ Section 1557 claims under Skrmetti. Although BCBSIL remains a covered entity under Section 1557 and cannot rely on ERISA or RFRA defenses, the district court must reassess whether plaintiffs can establish sex discrimination under the appropriate legal standard.