In 2015, Ms. Baker underwent breast augmentation surgery, for which she sought benefits from Aetna under the STD Plan for her post-surgery recovery.

Aetna denied Ms. Baker's STD claim on the ground that her surgery had not been caused by an illness, injury, or pregnancy-related condition, as required for coverage under the STD Plan.

After a series of appeals through Aetna, Ms. Baker sued Aetna and L-3. After much litigation, her only remaining claim was for sex/gender discrimination against L-3 under Title VII of the Civil Rights Act of 1964 for the denial of coverage for her breast augmentation surgery, based solely on her male birth gender. Ms. Baker alleged that L-3 was liable for the facially discriminatory Health Plan of its agent and plan administrator, Aetna. She contended that, because the Health Plan offered coverage for female-to-male mastectomies but not for male-to-female breast augmentation, it denied her a medically necessary procedure based solely on her sex/gender.

L-3 moved for summary judgment. It maintained that Ms. Baker had produced no direct evidence of sex discrimination because the Health Plan was not discriminatory on its face. L-3 contended that, regardless of the sex of the transgender patient, the Health Plan offered coverage for medically necessary procedures and excluded from coverage cosmetic procedures.

For her part, Ms. Baker asserted that the exclusion in Aetna's "Gender Reassignment Surgery" policy ("GRS Policy") of breast augmentation from coverage denied male-to-female transgender patients a medically necessary procedure to reconstruct their chests. She posited that, because mastectomies were covered, female-to-male transgender patients received a benefit based entirely on their status as biological females.

The Health Plan

The Health Plan covered transgender reassignment surgery:

when considered medically necessary, as outlined in Aetna's clinical guidelines, and [it] must be pre-certified by Aetna. 

It excluded from coverage:

plastic surgery, reconstructive surgery, cosmetic surgery or other services and supplies that improve, alter or enhance appearance[.] 

A note to Aetna's "Gender Reassignment Surgery" policy ("GRS Policy"), which specified criteria that must be met for Aetna to find a mastectomy for female-to-male patients to be medically necessary, stated that:

breast augmentation . . . which [has] been used in feminization, [is] considered cosmetic. 

The Health Plan also provided that reconstructive surgery:

is considered a covered expense when the procedure is to correct conditions, functional problems or deformities that result from accidental injuries, traumatic scars, disease or congenital anomalies. Surgery necessary to correct deformities due to malignancy is also covered, as is surgery to reconstruct a breast after a medically necessary mastectomy. Mastectomy expenses include reconstruction of the breast on which a mastectomy has been performed; surgery and reconstruction of the other breast to produce a symmetrical appearance; prostheses; and treatment of physical complications of all stages of mastectomy, including lymphedemas. (Surgery performed primarily for cosmetic or beautifying purposes, as determined by Aetna, is not covered.) 

The district court granted L-3's motion.

In its decision, the district court explained that the Health Plan and GRS Policy covered an alternative method for the addition of breasts in male-to-female transgender patients: hormone replacement therapy. Indeed, the district court continued, Ms. Baker's hormone replacement therapy for the addition of breasts was covered.

The district court then added that Ms. Baker had provided "no authority or argument" for why denial of a "surgical method in particular" was discriminatory when hormone replacement therapy was available.

Moreover, the district court observed, the Health Plan included a reconstructive surgery provision "with broad language that could plausibly encompass surgical procedures to add breasts in male-to-female transgender patients," provided the surgery was "not performed primarily for cosmetic or beautifying purposes." This provision, the district court said, permitted Aetna to cover breast reconstructive surgeries that corrected a lack of breast tissue in a person with Gender Dysphoria, for example, where hormone replacement therapy was unsuccessful.

The district court then held that the Health Plan and GRS Policy on their face did "not categorically deny coverage of all surgical procedures to add breasts in male-to-female transgender patients" but, rather, allowed Aetna the discretion to determine the line between what was a cosmetic and what was a medically necessary breast procedure.

In sum, the district court concluded, "female-to-male transgender patients may receive coverage to remove breasts (through medically necessary mastectomies), while male-to-female transgender patients may receive coverage to add them (through hormone therapy for breast enhancement, and, where medically necessary, through breast reconstruction)." Because the Health Plan and GRS Policy were not discriminatory on its face, the district court held that the Aetna policy itself was not direct evidence of discrimination.

The case is Baker v. Aetna Life Ins. Co., No. 3:15-CV-3679-D (N.D. Tex. Jan. 26, 2018). Attorneys involved include: For Charlize Marie Baker, Plaintiff: Michael J Hindman, LEAD ATTORNEY, Kasey Cathryn Krummel, Hindman/Bynum PC, Dallas, TX. For L-3 Communications Corp, Defendant: Stephen E Fox, LEAD ATTORNEY, Robert J Garrey, Polsinelli PC, Dallas, TX. For Aetna Life Insurance Company, Defendant: Earl Bowen Austin, LEAD ATTORNEY, John Benjamin Lawrence, Baker Botts, Dallas, TX; Jennifer M Trulock, Baker Botts – Dallas, Dallas, TX.