The panel vacated the district court’s summary judgment against Blue Cross Blue Shield of Illinois (BCBSIL), and remanded, in a class action alleging that BCBSIL, a third-party administrator for certain employer-sponsored health insurance plans, violated Section 1557 of the Affordable Care Act by refusing to cover treatment for gender dysphoria, citing plan exclusions put in place at the insistence of the employer sponsors.

The panel joined the district court in rejecting BCBSIL’s arguments that it was not liable pursuant to Section 1557, which bars sex-based discrimination, because (1) its plans were not funded by the federal government, (2) it was acting at the direction of the employers, and (3) it was shielded by the Religious Freedom Restoration Act (RFRA). First, employing an entity-level analysis, rather than a plan-level analysis, BCBSIL’s provision of health insurance was a health program or activity, part of which was receiving Federal financial assistance. BCBSIL waived its argument that it had insufficient notice, as required by the Spending Clause, that it would be subject to Section 1557 for its third-party administrator activities. Second, a third-party administrator such as BCBSIL can be liable for violating Section 1557, even when implementing plan terms drafted by a plan sponsor. The Employee Retirement Income Security Act does not require third-party administrators to implement unlawful plan terms. BCBSIL forfeited its argument regarding intent, and even absent forfeiture, its argument failed because intentional discrimination based on sex violates Section 1557, even if intended only to comply with the terms selected by the plan sponsor. Third, RFRA does not apply because BCBSIL’s religious exercise was not burdened. And even if RFRA provides a defense to those whose religious exercise is not burdened, it does not provide a defense against claims brought by a private party.

The district court also rejected BCBSIL’s argument that its exclusions did not discriminate based on sex. The panel concluded, however, that the district court’s analysis was undercut by intervening Supreme Court authority in United States v. Skrmetti, 145 S. Ct. 1816 (2025). The panel therefore vacated the district court’s summary judgment against BCBSIL and remanded for the district court to consider the implications of Skrmetti. The panel explained that, although the district court’s reasoning failed in light of Skrmetti, this case is potentially different from Skrmetti in two respects. First, some Plaintiffs allegedly had diagnoses other than gender dysphoria that entitled them to hormones or other treatment, but BCBSIL still would not treat them. Second, Skrmetti left open the argument that BCBSIL’s justifications for its actions were a pretext for invidious discrimination. The panel expressed no view about the appropriate outcome on remand.

Concurring in the judgment, Judge Rawlinson wrote that she agreed in large part with the majority opinion but wrote separately because it was improvident to opine on issues that the panel was remanding to the district court in light of intervening Supreme Court precedent—specifically, how the district court could potentially distinguish Skrmetti.

https://cdn.ca9.uscourts.gov/datastore/opinions/2025/11/17/23-4331.pdf