Schmitt v. Kaiser Foundation Health Plan of Washington, No. 18-35846 (9th Cir. 2020)
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Plaintiffs, who have hearing loss severe enough to qualify them as disabled, filed suit claiming that Kaiser's health insurance plan's categorical exclusion of most hearing loss treatment discriminates against hearing disabled people in violation of Section 1557 of the Patient Protection and Affordable Care Act (ACA). The district court ruled that Kaiser's plans do not exclude benefits based on disability because the plans treat individuals with hearing loss alike, regardless of whether their hearing loss is disabling.
The Ninth Circuit agreed with the district court that plaintiffs have failed to state a plausible discrimination claim. The panel explained that the ACA specifically prohibits discrimination in plan benefit design, and a categorical exclusion of treatment for hearing loss would raise an inference of discrimination against hearing disabled people notwithstanding that it would also adversely affect individuals with non-disabling hearing loss. However, the exclusion in this case is not categorical. The panel stated that, while Kaiser's coverage of cochlear implants is inadequate to serve plaintiffs' health needs, it may adequately serve the needs of hearing disabled people as a group. Therefore, the panel affirmed the district court's dismissal of the second amended complaint. The panel reversed the district court's dismissal without leave to amend and remanded.
Court Description: Patient Protection and Affordable Care Act The panel affirmed in part and reversed in part the district court’s dismissal without leave to amend of an action alleging that a health insurer violated the Patient Protection and Affordable Care Act’s nondiscrimination mandate by excluding coverage of all hearing loss treatment except cochlear implants. Plaintiffs claimed that the insurer’s plans discriminated against hearing disabled people in violation of section 1557 of the ACA, which incorporates by reference the grounds protected by four earlier nondiscrimination statutes, including the Rehabilitation Act, and prohibits discrimination on those grounds in the health care system, including in health care contracts. The panel agreed with the district court that plaintiffs failed to state a plausible discrimination claim. The panel held that the ADA specifically prohibits discrimination in plan benefit design, and a categorical exclusion of treatment for hearing loss * The Honorable Gregory A. Presnell, United States District Judge for the Middle District of Florida, sitting by designation. SCHMITT V. KAISER FOUND. HEALTH PLAN 3 would raise an inference of discrimination against hearing disabled people notwithstanding that it would also adversely affect individuals with nondisabling hearing loss. But the exclusion here was not categorical. The panel held that while the insurer’s coverage of cochlear implants was inadequate to serve plaintiffs’ health needs, it might adequately serve the needs of hearing disabled people as a group. Because amendment might not be futile, the panel reversed the district court’s dismissal without leave to amend and remanded.