(Bloomberg Law) -- An Illinois-based Catholic hospital system that employs more than 24,000 people will only cover fertility treatment for workers in opposite-sex marriages, a policy some lawyers say could run afoul of federal discrimination laws.

Many health plans that cover fertility treatment services use the Centers for Disease Control and Prevention definition of infertility, which refers to a person being unable to get pregnant after at least a year of unprotected sex.

Under the policy it transferred this year to a new third-party administrator, OSF HealthCare, which operates 15 hospitals and 132 other facilities in Illinois and Michigan, narrows that definition to “the inability for a married couple of opposite sex spouses to conceive” and said its coverage aimed to assist “married opposite sex spouses” in their bid to have a child, according to documents reviewed by Bloomberg Law.

By limiting benefits to opposite-sex spouses, the OSF policy reflects one of the first instances of an employer explicitly excluding workers from coverage not because of objections to the treatment they are seeking but because of their sexual orientation, nearly a dozen lawyers and advocates told Bloomberg Law.

Peter Romer-Friedman, an attorney at Gupta Wessler PLLC who is representing a same-sex couple that filed a complaint against New York City for fertility treatment coverage discrimination, called such language a “pretty clear violation” of federal workplace discrimination law, as well as the 2020 US Supreme Court decision in Bostock v. Clayton County. In that case, the justices ruled that Title 7 of the Civil Rights Act protects LGBTQ employees from discrimination.

Allison Tanner, senior litigation counsel for the National Women’s Law Center, said some older state laws still had such “blatantly discriminatory definitions,” but to see it in an employee benefit plan in 2022 was “deeply troubling.”

Noel León, an attorney with Emery Celli Brinckerhoff Abady Ward & Maazel LLP who is representing LGBTQ patients suingAetna Inc. over fertility coverage, said she had not heard of policy language being “so explicit” as to exclude same-sex couples.

León said established law does allow exemptions for religious-school employees, but arguing the same for religiously affiliated hospitals is new ground and could be “a tricky area.”

OSF is owned and operated by the Sisters of the Third Order of St. Francis, a religious order based in Peoria. Representatives did not respond to more than a dozen phone and email requests by Bloomberg Law to discuss the policy. A spokesperson for its new plan administrator, BlueCross BlueShield of Illinois, declined to comment.

A lawyer for Alliance Defending Freedom, a Christian legal advocacy group, said the hospital network has a right to tailor employee coverage policies to its own standards.

“The government cannot force religious health care providers to violate their beliefs,” senior counsel Matt Bowman said in a statement to Bloomberg Law. “Even if government officials disagree with the beliefs of a Catholic health care entity, the organization still has the freedom to provide insurance policies and health care services consistent with its convictions.”

No OSF employees have publicly challenged the provisions of the benefits plan, which doesn’t fall under Illinois law because it is funded by the health system. The OSF provision that coverage must be for married spouses is also less material, lawyers said, because marital status is not addressed under federal discrimination law and states cannot regulate self-funded health plans.

It’s also unclearif the plan could be challenged as discriminatory under the Affordable Care Act. Bloomberg Law reported in May that the Biden administration is considering a requirement that some health plans cover fertility treatment for policyholders regardless of their sexual orientation or gender identity.

In the Courts

Legal battles over who should be eligible for in vitro fertilization coverage aren’t new.

The lawsuit against Aetna argues the definition of infertility it used—"the failure to establish a clinical pregnancy after 12 months of regular, unprotected sexual intercourse or therapeutic donor insemination"—is discriminatory under the Affordable Care Act. Aetna has denied the allegation and in a statement said it has “a history of strong support for the LGBTQ+ community.”

In April, a former New York City municipal worker and his husband filed a charge with the Equal Employment Opportunity Commission alleging the city’s health plan was discriminatory for denying IVF coverage benefits to male couples. A city spokesperson at the time said the Adams administration supports the rights of LGBTQ New Yorkers to access health care but that its lawyers were reviewing the claim.

Neither of those cases involve faith-based institutions.

The high court has generally ruled in favor of religious institutions but hasn’t done so with a broad brush. However, the court has been reluctant to put any standards on claiming a sincerely held religious belief, the requirement used in the Religious Freedom and Restoration Act, enacted in 1993.

A defense based on RFRA will be difficult, attorneys said, as the argument typically used is that the institution has a religious objection to the procedure on the whole. In this case, the policy doesn’t ban the procedure, just dictates who can seek it.

One argument OSF HealthCare could make is that it doesn’t recognize same-sex marriages as legitimate and contend its religious beliefs outweigh civil rights law, said Phyllis Borzi, former Labor Department assistant secretary for employee benefits security during the Obama administration.

It would be difficult for any non-religious entity to overcome such a clear case of discrimination, Borzi said.

Lawyers questioned whether BlueCross BlueShield of Illinois might also face legal exposure as the plan administrator. That can depend on its involvement in setting a plan’s policy, said Joseph Wardenski, an attorney at Wardenski PC and another attorney representing the plaintiffs in the NYC case.

In a Minnesota case over whether an employer insurance policy can exclude gender-affirming care, a judge ruled that the plan administrator was liable even though it claimed the employer alone set the terms of coverage.

Jennifer Pizer, acting chief legal officer of Lambda Legal, the LGBTQ civil rights advocacy group, said the language in the OSF policy was unusual, but said that kind of discrimination was “not a new problem.”

“There are many faith-based institutions that provide services to the public supported by taxpayer funding, and yet wish to discriminate against some of the people they hire and some of the people that they serve,” Pizer said.

To contact the reporter on this story: Shira Stein in Washington at sstein@bloomberglaw.com

To contact the editors responsible for this story: John Martin at jmartin@bloombergindustry.com; Brent Bierman at bbierman@bloomberglaw.com; Cheryl Saenz at csaenz@bloombergindustry.com

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