District Court Denies Motion to Dismiss ACA Section 1557 Claim for Hearing Aid Exclusion

On March 19, 2024, a federal trial court held that the hearing-impaired mother and daughter stated a sufficient claim of “proxy” discrimination under ACA Section 1557 against Regence BlueShield, a health insurer, for its plans’ exclusion of all hearing devices except cochlear implants to proceed to trial.

ACA section 1557 prohibits discrimination in certain health programs or activities based on race, color, national origin, sex, age, or disability. “Proxy” discrimination can result from (in the court’s words) a “policy that treats individuals differently on the basis of seemingly neutral criteria” where excluding criteria is “so closely associated with the disfavored group,” that “facial discrimination” against that group is reasonably inferred. For example, gray hair might be used as a proxy to exclude individuals over a certain age from coverage.

Here, the plaintiffs alleged that individuals requiring hearing aids were proxies for discrimination by the plan on the basis of disability. Because hearing aids are generally prescribed when there is an objective diagnosis of hearing impairment, together with the subjective impact on daily life, nearly all individuals who are prescribed hearing aids (and who are therefore adversely affected by the exclusion) are “disabled” under federal law. Anyone requiring a hearing aid is, therefore, by proxy, a person with a hearing disability, and by barring coverage for all hearing devices but cochlear implants, the Regence plans intentionally discriminated against hearing-disabled individuals.

Finding that the plaintiffs provided enough support (which also included historical enactment and targeted enforcement data) to show that “all or very nearly all individuals who obtain prescription hearing aids are ‘disabled’ under federal law” because they “experience a substantial impact of their hearing loss in their daily lives,” and that only a “small minority” of those would qualify for cochlear implants, the court denied the insurer’s motion to dismiss the plaintiffs’ claim, allowing the case to go forward to a trial on the merits.

Employers and plan sponsors should closely monitor the developments in this case in terms of its potential effects on plan exclusions so closely related to particular disabilities that they could give rise to a plausible proxy discrimination claim against the plan in instances where there are enough facts to support such a claim.

E.S., et al. v. Regence BlueShield, et al. »