Sex Change Not Covered Under Health Plan

January 13, 2003 ( - The Second Court of Appeals has found a plan administrator who denied a participant's claim for sex change surgery reimbursement, did so in accordance with the plan.

In Mario v P&C Food Markets the court found that the plan administratorhad conducted a “meaningful investigation” in determining that sex changes in general are not medically necessary. Given that determination, the court found that the participant had an obligation to provide evidence that his case was out of the ordinary. Because he had failed to do so, the court upheld the lower court.

Operation Charges

Marc Mario, formerly Margo Mario,underwent a sex-change operation and sought reimbursement from his employers’ self-funded ERISA health plan for the surgery and related hormone therapy. His employer denied the claims for lack of “medical necessity.”

Upon denial, Mario brought suit claiming the denial of benefits violated ERISA and constituted sex discrimination under Title VII. The trial court granted judgment in favor of P&C, leading to an appeal by Mario.

On appeal, the Second Circuit noted, “the term ‘medical necessity’ must refer to what is medically necessary for a particular patient, and hence entails an individual assessment rather than a general determination of what works in the ordinary case.”

Regarding the Title VII claim, and without deciding whether discrimination on the basis of transsexualism or gender stereotype would violate Title VII, the court also upheld the lower court because it found that the employer had identified a nondiscriminatory reason for the denial of benefits, which the participant had failed to show was pretextual.