Pritchard v. Blue Cross Blue Shield of Illinois

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PATRICIA PRITCHARD, as parent No. 23-4331

on behalf of minor C.P.; NOLLE

D.C. No.

PRITCHARD, as parent on behalf of

3:20-cv-06145-

minor C.P.; S.R.; R.L., as parent on

RJB

behalf of minor S.L.; EMMETT

JONES,

Plaintiffs - Appellees, OPINION

v.

BLUE CROSS BLUE SHIELD OF

ILLINOIS,

Defendant - Appellant.

Appeal from the United States District Court

for the Western District of Washington

Robert J. Bryan, District Judge, Presiding

Argued and Submitted January 15, 2025

Pasadena, California

Filed November 17, 2025

2 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

Before: JOHNNIE B. RAWLINSON and MILAN D.

SMITH, JR., Circuit Judges, and JED S. RAKOFF, District

Judge. *

Opinion by Judge Milan D. Smith, Jr.;

Concurrence by Judge Johnnie B. Rawlinson

SUMMARY **

Affordable Care Act / Sex-Based Discrimination

The panel vacated the district court’s summary judgment

against Blue Cross Blue Shield of Illinois (BCBSIL), and

remanded, in a class action alleging that BCBSIL, a third-

party administrator for certain employer-sponsored health

insurance plans, violated Section 1557 of the Affordable

Care Act by refusing to cover treatment for gender

dysphoria, citing plan exclusions put in place at the

insistence of the employer sponsors.

The panel joined the district court in rejecting BCBSIL’s

arguments that it was not liable pursuant to Section 1557,

which bars sex-based discrimination, because (1) its plans

were not funded by the federal government, (2) it was acting

at the direction of the employers, and (3) it was shielded by

the Religious Freedom Restoration Act (RFRA). First,

*

The Honorable Jed S. Rakoff, United States District Judge for the

Southern District of New York, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 3

employing an entity-level analysis, rather than a plan-level

analysis, BCBSIL’s provision of health insurance was a

health program or activity, part of which was receiving

Federal financial assistance. BCBSIL waived its argument

that it had insufficient notice, as required by the Spending

Clause, that it would be subject to Section 1557 for its third-

party administrator activities. Second, a third-party

administrator such as BCBSIL can be liable for violating

Section 1557, even when implementing plan terms drafted

by a plan sponsor. The Employee Retirement Income

Security Act does not require third-party administrators to

implement unlawful plan terms. BCBSIL forfeited its

argument regarding intent, and even absent forfeiture, its

argument failed because intentional discrimination based on

sex violates Section 1557, even if intended only to comply

with the terms selected by the plan sponsor. Third, RFRA

does not apply because BCBSIL’s religious exercise was not

burdened. And even if RFRA provides a defense to those

whose religious exercise is not burdened, it does not provide

a defense against claims brought by a private party.

The district court also rejected BCBSIL’s argument that

its exclusions did not discriminate based on sex. The panel

concluded, however, that the district court’s analysis was

undercut by intervening Supreme Court authority in United

States v. Skrmetti, 145 S. Ct. 1816 (2025). The panel

therefore vacated the district court’s summary judgment

against BCBSIL and remanded for the district court to

consider the implications of Skrmetti. The panel explained

that, although the district court’s reasoning failed in light of

Skrmetti, this case is potentially different from Skrmetti in

two respects. First, some Plaintiffs allegedly had diagnoses

other than gender dysphoria that entitled them to hormones

or other treatment, but BCBSIL still would not treat

4 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

them. Second, Skrmetti left open the argument that

BCBSIL’s justifications for its actions were a pretext for

invidious discrimination. The panel expressed no view

about the appropriate outcome on remand.

Concurring in the judgment, Judge Rawlinson wrote that

she agreed in large part with the majority opinion but wrote

separately because it was improvident to opine on issues that

the panel was remanding to the district court in light of

intervening Supreme Court precedent—specifically, how

the district court could potentially distinguish Skrmetti.

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 5

COUNSEL

Omar Gonzalez-Pagan (argued), Lambda Legal Defense &

Education Fund Inc., New York, New York; Karen L.

Loewy, Lambda Legal Defense & Education Fund Inc.,

Washington, D.C.; Jennifer C. Pizer, Lambda Legal Defense

& Education Fund Inc., Los Angeles, California; Eleanor

Hamburger, Sirianni Youtz Spoonemore Hamburger PLLC,

Seattle, Washington; for Plaintiffs-Appellees.

Robert N. Hochman (argued) and Sam Gorsche, Sidley

Austin LLP, Chicago, Illinois; Jeremy D. Rozansky and

Kwaku A. Akowuah, Sidley Austin LLP, Washington, D.C.;

Gwendolyn C. Payton and John R. Neeleman, Kilpatrick

Townsend & Stockton LLP, Seattle, Washington; Stephanie

Bedard, Kilpatrick Townsend & Stockton LLP, Atlanta,

Georgia; Adam H. Charnes, Kilpatrick Townsend &

Stockton LLP, Dallas, Texas; for Defendant-Appellant.

Jonathan A. Scruggs, Alliance Defending Freedom,

Scottsdale, Arizona; John J. Bursch and Andrea Dill,

Alliance Defending Freedom, Washington, D.C.; for

Amicus Curiae Christian Employers Alliance.

Andrew Nussbaum and L. Martin Nussbaum, First &

Fourteenth PLLC, Colorado Springs, Colorado, for Amicus

Curiae the Catholic Benefits Association.

Joanne Roskey and Anthony F. Shelley, Miller & Chevalier

Chartered, Washington, D.C., for Amici Curiae the ERISA

Industry Committee and America’s Health Insurance Plans

Inc..

Eric N. Kniffin and Mary R. Hasson, Ethics & Public Policy

Center, Washington, D.C., for Amicus Curiae Ethics and

Public Policy Center.

6 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

Joshua A. Block, American Civil Liberties Union

Foundation, Washington, D.C.; Susannah P. Lake,

American Civil Liberties Union of Washington Foundation,

Seattle, Washington; for Amici Curiae American Civil

Liberties Union and American Civil Liberties Union of

Washington Foundation.

Richard B. Katskee, Joshua Britt, Margaret K. Kruzner, and

Jake Sherman, Duke University School of Law, Durham,

North Carolina, for Amici Curiae Religion-Law Scholars.

Caroline E. Reynolds and David A. Reiser, Zuckerman

Spaeder LLP, Washington, D.C.; Abigail K. Coursolle and

Elizabeth Edwards, National Health Law Program, Los

Angeles, California; for Amici Curiae The National Health

Law Program, et al..

Barbara J. Chisholm, Connie K. Chan, and Robin S. Tholin,

Altshuler Berzon LLP, San Francisco, California; Alison

Tanner and Michelle Banker, National Women's Law

Center, Washington, D.C.; for Amici Curiae National

Women’s Law Center, Autistic Self Advocacy Network,

Autistic Women & Nonbinary Network, Campaign for

Southern Equality, Disability Rights Education & Defense

Fund, Equality California, GLBTQ Legal Advocates &

Defenders, National Partnership for Women & Families,

Positive Women’s Network-USA, Service Employees

International Union, and Transgender Legal Defense &

Education Fund.

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 7

OPINION

M. SMITH, Circuit Judge:

Plaintiffs, who represent a similarly situated class, sued

Defendant Blue Cross Blue Shield of Illinois (BCBSIL), for

its actions as a third-party administrator for certain

employer-sponsored health insurance plans. BCBSIL

refuses to cover treatment for gender dysphoria, citing plan

exclusions put in place at the insistence of the employer

sponsors. Plaintiffs sued pursuant to Section 1557 of the

Affordable Care Act, 42 U.S.C. § 18116, which bars sex-

based discrimination, to compel BCBSIL to cover this

treatment. BCBSIL counters with four arguments, arguing

it is not liable pursuant to Section 1557 because: its plans are

not funded by the federal government; it was acting at the

direction of the employers; it is shielded by the Religious

Freedom Restoration Act (RFRA); and its exclusions do not

discriminate based on sex.

The district court rejected each of BCBSIL’s arguments,

awarding summary judgment to the class. We join the

district court in rejecting BCBSIL’s first three arguments.

But the district court’s analysis of the fourth argument is

undercut by intervening Supreme Court authority in United

States v. Skrmetti, 145 S. Ct. 1816 (2025). We therefore

vacate the summary judgment against BCBSIL and remand

so the district court may consider the implications of that

authority.

FACTUAL AND PROCEDURAL BACKGROUND

I. Gender Dysphoria

Someone’s gender identity is their “inner sense of

belonging to a particular sex, like male or female.” Most

8 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

people are cisgender, and their “actual sex” matches the sex

they “are assigned . . . based solely on the appearance of

their external genitalia.” For transgender people, however,

their gender identity and sex do not match.

As the American Psychiatric Association has

recognized, this “gender incongruence, in and of itself, does

not constitute a mental disorder.” However, a transgender

person can suffer from gender dysphoria if the “marked

incongruence between [their] experienced/expressed gender

and assigned gender” causes “clinically significant distress

or impairment in social, occupational, or other important

areas of functioning.” Without treatment, gender dysphoria

can lead to anxiety, depression, suicide, and other mental

health problems.

Healthcare providers can treat gender dysphoria using

counseling, hormone therapy, surgery, and other forms of

gender-affirming care. Providers adapt the treatments used

to the medical needs of each patient; not all patients need

each treatment. When doctors provide gender-affirming

hormone therapy, they seek to decrease hormones associated

with the person’s birth sex and increase hormones associated

with their actual sex. Likewise, when transgender women

receive surgery, they undergo procedures like chest

reconstruction, hysterectomy, or phalloplasty to eliminate or

reduce the physical features reflecting their birth sex.

Transgender men, when they receive surgery, undergo

procedures like vaginoplasty, breast reduction, and

orchiectomy for the same purpose. Sometimes, doctors give

transgender adolescents medication to delay puberty and

prevent the development of characteristics associated with

the individual’s sex at birth.

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 9

II. Third-Party Administrators

Most people obtain health insurance on the group market

from their employer or a family member’s employer.

Employers sponsor plans for their workers in two ways.

First, “fully insured” employers purchase insurance on their

employees’ behalf from an insurer. Second, “self-insured”

employers assume responsibility for their employees’

healthcare costs but retain a third-party administrator to

perform tasks like assembling a provider network, billing

those providers, and processing claims. This group of plan

sponsors decides which healthcare costs they will cover for

employees.

These employer-sponsored plans can exclude services

for many reasons. Plans generally exclude services that are

not medically necessary. Plan sponsors often exclude

certain classes of treatment, like dental coverage, Lasik eye

surgery, and weight loss prescription drugs. Sometimes,

sponsors exclude treatments like contraceptives for religious

reasons.

Some plans exclude services to treat gender dysphoria.

These plans may exclude all such services, exclude only

some forms of gender-affirming care, or exclude gender-

affirming care only in specific situations. Others exclude

from coverage only the reversal of gender reassignment

surgery.

III. Blue Cross Blue Shield of Illinois

BCBSIL is a health care services company that sells

health insurance coverage and operates as a third-party

administrator for various health plans. BCBSIL is not a

religious entity.

10 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

BCBSIL receives federal funds for several products,

including Medicare supplemental coverage, Medicaid,

Medicare Advantage and Prescription Drug insurance

coverage, and Medicare/Medicaid dual eligibility. It does

not receive assistance for acting as a third-party

administrator. To receive these funds, BCBSIL promised to

comply with Section 1557’s non-discrimination

obligations. 1

For fully insured plans, BCBSIL covers gender-

affirming care. BCBSIL considers these treatments to be

medically necessary for treating adolescents with gender

dysphoria.

When BCBSIL is a third-party administrator, it permits

its employer-clients to “add or remove any benefits that they

wish.” Thus, it lets plan sponsors exclude gender-affirming

care. 398 of its sponsors have chosen to do so. BCBSIL

offers “standard language” to employers who want to

exclude gender-affirming care. 378 of the 398 sponsors use

that language.

BCBSIL never asks employers for a justification or

reason when they exclude gender-affirming care. It does not

require a medical, scientific, or religious reason for the

exclusions. It would administer the exclusion even if the

employer wanted the exclusion for discriminatory purposes.

The plans here have gender-affirming care exclusions,

which exclude treatment for gender dysphoria. For these

1

BCBSIL’s parent, Health Care Services Corporation (HCSC), signed

an agreement stating it would abide by Section 1557. Neither party

argues that only HCSC is bound by Section 1557. Indeed, BCBSIL says

it, not just HCSC, “receives Federal financial assistance for” various

insurance plans.

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 11

plans, BCBSIL determines whether to approve or deny

claims based on the patient’s diagnosis and the procedure at

issue.

IV. Plaintiffs and Their Treatment

C.P. is a young transgender man diagnosed with gender

dysphoria. He was enrolled in a BCBSIL-administered

health plan. That plan excluded “[b]enefits . . . for treatment,

drugs, medicines, therapy, counseling services and supplies

for, or leading to, gender reassignment surgery.” The plan

sponsor, Catholic Health Initiatives (“CHI”), requested that

exclusion for religious reasons.

C.P.’s doctor prescribed puberty-delaying medication,

distributed through a Vantas implant. BCBSIL initially

covered the implant. BCBSIL later said its coverage

decision was erroneous because of the plan exclusion. C.P.’s

family appealed, and the appeal was denied. Later, when

C.P. was prescribed a second Vantas implant, BCBSIL

denied coverage.

C.P.’s doctor also recommended gender-affirming chest

surgery. BCBSIL denied coverage based on the exclusion.

A BCBSIL representative stated that the surgery was

necessary.

S.L. is a transgender girl who has been diagnosed with

gender dysphoria and precocious puberty. 2 She is enrolled

in a self-funded health benefit plan administered by

BCBSIL. Her healthcare provider prescribed puberty-

delaying hormones. BCBSIL denied coverage, citing an

exclusion in the plan. That provision excludes “[g]ender

2

Precocious puberty is a condition where puberty begins at an

abnormally young age.

12 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

reassignment surgery (also referred to as transsexual

Surgery, sex reassignment Surgery or intersex Surgery),

including related services and supplies.” S.L.’s mother

appealed, but BCBSIL denied the appeal.

Emmett Jones is a transgender man diagnosed with

gender dysphoria. He is enrolled in the same plan as

C.P. Jones’s providers recommended gender-affirming

chest surgery. Jones paid out-of-pocket and sought

reimbursement, which BCBSIL denied.

V. This Action

C.P. and his mother, Patricia Pritchard, filed this lawsuit

on November 23, 2020. They alleged that BCBSIL violated

Section 1557 by administering the exclusion in their policy.

BCBSIL moved to dismiss, but the district court denied that

motion. On September 10, 2021, C.P. and Patricia Pritchard

moved to file an amended complaint on behalf of a class.

The district court granted this motion.

After discovery, Plaintiffs moved to certify the class, and

both sides moved for summary judgment. On November 9,

2022, the district court certified the class, with later

amendments in December 2022 and December 2023. Now,

the class consists of:

[A]ll individuals who: (1) have been, are, or

will be participants or beneficiaries in an

ERISA self-funded ‘group health plan’ (as

defined in 29 U.S.C. § 1167(1)) administered

by Blue Cross Blue Shield of Illinois during

the Class Period and that contains a

categorical exclusion of some or all Gender-

Affirming Health Care services; and (2) were

denied pre-authorization or coverage of

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 13

treatment solely based on an exclusion of

some or all Gender Affirming Health Care

services; and/or (3) are or will be denied pre-

authorization or coverage of treatment solely

based on an exclusion of some or all Gender

Affirming Health Care services.

The class period is November 23, 2016, to the present.

On December 19, 2022, the district court granted

Plaintiffs’ motion for summary judgment and denied

BCBSIL’s analogous motion. In doing so, the district court

made four principal rulings. First, it rejected the argument

that BCBSIL was exempt from Section 1557 because its

third-party administrator activities were “not ‘healthcare

activities’” and because it “does not receive any federal

financial assistance for [those] activities.” The district court

also held that “ERISA’s requirement that Blue Cross follow

the Exclusion’s language is no defense.” Next, the district

court rejected BCBSIL’s RFRA arguments because this is

an action between private parties. Finally, the district court

held that BCBSIL’s “denial of benefits under the Plaintiffs’

plans based on their transgender status was discrimination

on the basis of sex.”

After the summary-judgment ruling, Plaintiffs sought

class-wide relief. While that motion was pending, Plaintiffs

added S.L. and Emmett Jones. The district court prohibited

BCBSIL from administering or enforcing exclusions for

gender-affirming health care and required it to re-process

class members’ claims if denied during the class period.

BCBSIL timely appealed. The district court stayed its

injunction pending this appeal.

14 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

JURISDICTION AND STANDARD OF REVIEW

Because Plaintiffs raise claims pursuant to Section 1557

of the Affordable Care Act, 42 U.S.C. § 18116, the district

court had subject-matter jurisdiction pursuant to 28 U.S.C.

§ 1331. In turn, we have subject-matter jurisdiction pursuant

to 28 U.S.C. § 1292(a)(1).

“The district court’s ruling on cross-motions for

summary judgment is reviewed de novo.” Hartstein v. Hyatt

Corp., 82 F.4th 825, 828 (9th Cir. 2023).

ANALYSIS

We reject BCBSIL’s first three defenses. BCBSIL is

bound by Section 1557 because its provision of health

insurance is a health program or activity, part of which is

receiving Federal financial assistance. BCBSIL can be

liable for violating Section 1557 even when implementing

plan terms drafted by a plan sponsor. BCBSIL also has no

RFRA defense here.

BCBSIL’s fourth defense, however, presents a far more

difficult question. The district court’s application of Bostock

v. Clayton Cnty., 590 U.S. 644 (2020), cannot stand in light

of United States v. Skrmetti, 145 S. Ct. 1816 (2025). Even

so, there is some possibility that Skrmetti may not

necessarily foreclose Plaintiffs’ Section 1557 claim. Thus,

we vacate the summary judgment against BCBSIL and

remand for the district court to reconsider this issue in light

of Skrmetti.

I. The district court reached the correct result in

concluding that BCBSIL’s provision of health

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 15

insurance is a health program or activity, part of

which is receiving Federal financial assistance.

Pursuant to Section 1557 of the Affordable Care Act, “an

individual shall not [on certain grounds] be excluded from

participation in, be denied the benefits of, or be subjected to

discrimination under, any health program or activity, any

part of which is receiving Federal financial assistance,

including credits, subsidies, or contracts of insurance[.]” 42

U.S.C. § 18116(a). BCBSIL does not deny that “health

program or activity” includes health insurance, 3 but it argues

Section 1557 only governs the plans receiving funding, not

its entire health insurance program.

A. The district court’s analysis of “health program

or activity” was erroneous.

The district court concluded that providing contracts of

insurance is a single “health program or activity” because

Section 1557 covers “any health program or activity, any

part of which is receiving Federal financial assistance,

including credits, subsidies, or contracts of insurance[.]” 42

U.S.C. § 18116(a). The district court, and Plaintiffs, read

providing “credits, subsidies, or contracts of insurance” as

examples of health programs or activities, while BCBSIL

reads them as forms of financial assistance.

We agree with BCBSIL. Typically, “qualifying phrases

are to be applied to the words or phrase immediately

preceding the qualifier and are not to be construed as

3

Even if BCBSIL had disputed this point, we have held that “Section

1557 . . . prohibits discrimination on th[e enumerated] grounds . . . in

health insurance contracts.” Schmitt v. Kaiser Found. Health Plan of

Wash., 965 F.3d 945, 951 (9th Cir. 2020). Indeed, Section 1557 was part

of the Affordable Care Act, and it would be anomalous to read it to

exclude health insurance.

16 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

modifying more remote phrases.” Am. Fed’n of Gov’t

Emps., AFL-CIO Loc. 2152 v. Principi, 464 F.3d 1049, 1055

(9th Cir. 2006). Thus, “credits, subsidies, and contracts of

insurance” modifies “Federal financial assistance.”

Moreover, “[w]hen a word appears in a list of similar

terms, each term should be read in light of characteristics

shared by the entire list[.]” Maner v. Dignity Health, 9 F.4th

1114, 1123 (9th Cir. 2021). “Credits” and “subsidies” are

always forms of financial assistance, but they need not have

anything to do with health. Because the statute treats

“contracts of insurance” like “credits” and “subsidies,” it

treats “contracts of insurance” as a form of financial

assistance.

Plaintiffs respond that the statute includes “contracts of

insurance” to distinguish other civil rights statutes that

exempted “contracts of insurance.”. Even in the other

context Plaintiffs cite, however, contracts of insurance are a

form of federal financial assistance, not a type of health

program or activity. See 45 C.F.R. § 84.10 (defining

“Federal financial assistance [as] any grant, cooperative

agreement, loan, contract (other than a direct Federal

procurement contract or a contract of insurance or guaranty),

subgrant, contract under a grant or any other arrangement”

meeting certain conditions).

Nor would reading “contracts of insurance” as a form of

financial assistance render this part of the statute a nullity.

Health programs and activities sometimes receive

government aid via contracts of insurance. For example,

pursuant to the National Flood Insurance Program, the

government organizes a pool of insurers to provide flood

coverage to businesses. See 42 U.S.C. §§ 4051, 4071; see

also 42 U.S.C. § 4012(a) (making insurance available to

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 17

cover business properties). Some of those businesses are

presumably engaged in health programs or activities.

The district court responds that the ACA was enacted “to

increase access to services and insurance coverage.”

However, that purpose describes the entire ACA and not

Section 1557. It does not illuminate whether “contracts of

insurance” are a form of financial assistance or whether

“health program or activity” is defined at the entity or plan

level. 4 We turn to that question now.

B. Notwithstanding the district court’s error,

BCBSIL is subject to Section 1557 because courts

must analyze “health program or activity” at the

entity level, not the plan level.

BCBSIL claims it is not subject to Section 1557 based

on a plan-level analysis: BCBSIL received no federal

funding for the plans that exclude gender-affirming care, so

those plans are not “health program[s] or activit[ies], any

part of which is receiving Federal financial assistance” and

therefore are not covered by Section 1557. Plaintiffs

disagree, employing an entity-level analysis: BCBSIL

received federal funding, so all of its operations are covered.

Section 1557’s text forecloses BCBSIL’s position that

“insurers have been subject [to] Section 1557 only as far as

‘Federal financial assistance is extended.’” Section 1557

only requires that some “part” of the health program or

4

In the same vein, Plaintiffs also rely on the legislative history of Section

1557. That section’s sponsors expressed a desire “that all Americans

[be] able to reap the benefits of health insurance reform equally, without

discrimination.” 156 Cong. Rec. S1821, 1842 (daily ed. Mar. 23, 2010).

Although that statement underscores Section 1557’s importance, it does

not help understand the appropriate level of analysis for “health program

or activity.”

18 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

activity receive funding. 42 U.S.C. § 18116(a). If “health

program or activity” was already limited to the part receiving

funding, it would not make sense to say that only part of the

“health program or activity” needed to receive funding.

Additionally, the structure of the Affordable Care Act

undercuts the view that “health program or activity” refers

to the individual insurance plan, rather than the entity

providing health insurance. The Affordable Care Act uses

“health program” again in 42 U.S.C. § 18051, where it

authorizes states to establish “basic health programs.” In one

of those “health programs,” “a State may enter into contracts

to offer 1 or more standard health plans,” which is

inconsistent with the position that each plan is its own

separate health program. See 42 U.S.C. § 18051(a)(1).

BCBSIL argues that each health plan is just a type of health

program. The statute does not treat health plans that way.

For example, 42 U.S.C. § 18051(c)(1) states that “[a] State

basic health program shall establish a competitive process

for entering into contracts with standard health plans[.]” As

before, there is only one health program, and it offers

multiple health plans. This section suggests “health program

or activity” is not defined at the plan level.

The related term “program or activity,” 5 as used in other

statutes, often requires an entity-level analysis, and it is

never limited to the specific operation receiving federal

funds. The Civil Rights Restoration Act (CRRA), for

5

When interpreting a term, it is appropriate to consider related terms

used in similar contexts. After all, “‘statutes addressing the same subject

matter’ generally should be interpreted consistently with each other,”

especially when “the language in an earlier act is the same as, or similar

to, the language in the later act.” Advanced Integrative Med. Sci. Inst.,

PLLC v. Garland, 24 F.4th 1249, 1256 (9th Cir. 2022) (quoting

Wachovia Bank v. Schmidt, 546 U.S. 303, 305 (2006)).

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 19

example, provides that “program or activity” means, among

other things, “all of the operations of . . . (A) an entire

corporation, partnership, or other private organization, or an

entire sole proprietorship—(i) if assistance is extended to

such corporation, partnership, private organization, or sole

proprietorship as a whole; or (ii) which is principally

engaged in the business of providing education, health care,

housing, social services, or parks and recreation; or (B) the

entire plant or other comparable, geographically separate

facility to which Federal financial assistance is extended, in

the case of any other corporation, partnership, private

organization, or sole proprietorship; . . . any part of which is

extended Federal financial assistance[.]” 20 U.S.C.

§ 1687(3). 6 Under this definition, “program or activity” is

either defined with respect to an entire entity or, at the

smallest, a “geographically separate facility to which Federal

financial assistance is extended.”

This definition of “program or activity” provides further

support for our conclusion that Congress generally treats that

phrase as directing an entity-level analysis. Indeed, the only

instance in which that definition reaches a unit smaller than

an “entire corporation” is in the case of a “geographically

separate facility.” Even in that instance, the entire facility

constitutes a “program or activity” without regard to the

different operations or activities provided therein.

Accordingly, both parts of the definition of “program or

activity” set forth entity-level tests, suggesting that “health

program or activity,” as used in Section 1557, directs the

same. And because the funding BCBSIL received cannot be

cabined to a single “plant or other comparable,

6

Other statutes use the same definition. See, e.g., 42 U.S.C. § 6107(4);

42 U.S.C. § 2000d-4a(3).

20 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

geographically separate facility,” even the narrower of these

two tests provides no basis for treating “health program or

activity” as referring solely to a subset of BCBSIL’s

operations, no less to a specific insurance plan.

Applying an entity-level test is also consistent with

Supreme Court precedent. The Supreme Court noted that

Section 1557 “outlaws discrimination on [various] grounds

. . . by healthcare entities receiving federal funds.”

Cummings v. Premier Rehab Keller, P.L.L.C., 596 U.S. 212,

218 (2022), reh’g denied, 142 S. Ct. 2853 (2022) (emphasis

added); see id. at 217 (Section 1557 “appl[ies] to entities that

receive federal financial assistance” (emphasis added)). To

be sure, Cummings did not consider BCBSIL’s argument.

But if BCBSIL were right, we think the Supreme Court

would have written that Section 1557 applies to healthcare

plans or healthcare options, not “healthcare entities.” Id. at

218.

To avoid this conclusion, BCBSIL relies on the 2020

Rule, a regulation that defined “health program or activity”

for the purposes of Section 1557. See Nondiscrimination in

Health and Health Education Programs or Activities, 85 Fed.

Reg. 37,160 (June 19, 2020). However, the 2020 Rule does

not control. Even if Section 1557 were ambiguous, “courts

need not and under the APA may not defer to an agency

interpretation of the law simply because a statute is

ambiguous.” Loper Bright Enters. v. Raimondo, 603 U.S.

369, 413 (2024). It is true that an agency interpretation may

have “power to persuade” “depend[ing] upon the

thoroughness evident in its consideration, the validity of its

reasoning, its consistency with earlier and later

pronouncements, and” other factors. Id. at 388 (quoting

Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)). All the

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 21

same, we find that the 2020 Rule used invalid reasoning. 7

We also note that the 2020 Rule is inconsistent with at least

one later pronouncement. 8 Accordingly, we do not decide

7

The 2020 Rule defined “health program or activity” to include “all the

operations of entities principally engaged in the business of providing

healthcare,” and, for any other entity, to include “such entity’s operations

only to the extent that any such operation received Federal financial

assistance.” 85 Fed. Reg. at 37, 244. The 2020 Rule further provided

that an entity “principally engaged in the business of providing

healthcare” does not include an entity “engaged in the business of

providing health insurance.” Id. at 37, 244-45. This definition is

inconsistent with the statutory text for two reasons. First, it introduces a

distinction between entities that provide “healthcare” and those

performing other health functions, even though the language of Section

1557 refers to “health” programs or activities in general. Second, to the

extent the 2020 Rule extends “health program or activity” to entities

other than “healthcare” entities, it does so only “to the extent” of the

federal financial assistance received. But, as explained above, the text

of Section 1557 expressly forecloses this interpretation as it requires only

that “any part” of the health program or activity receive funding for

Section 1557 to apply. Finally, the fact that the 2020 Rule purported to

adopt a definition “align[ed] . . . with the standard articulated in the [Civil

Rights Restoration Act]” does not save the Rule because the CRRA does

not support the definition adopted. Id. at 37,171. As discussed above,

the CRRA defined “program or activity” to require an entity-level or

geographically-separate-facility-level analysis. It provides no support

for the portion of the 2020 Rule extending Section 1557 “only to the

extent [an individual] operation receives Federal financial assistance.”

Id. at 37,244. Likewise, nothing in the CRRA, which defines “program

or activity,” not “health program or activity,” explains or requires the

2020 Rule’s further limitation to “healthcare” entities.

8

The 2020 Rule has now been superseded by the 2024 Rule. Pursuant

to the 2024 Rule, “health program or activity” includes “[a]ny project,

enterprise, venture, or undertaking to: . . . [p]rovide or administer health-

related services, health insurance coverage, or other health-related

coverage[,]” as well as “[a]ll of the operations of any entity principally

engaged in the provision or administration of” the aforementioned

projects, enterprises, ventures, or undertakings, “including, but not

22 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

whether BCBSIL is “principally engaged in the business of

providing healthcare,” as the 2020 Rule would require.

Nondiscrimination in Health and Health Education

Programs or Activities, 85 Fed. Reg. 37,160, 37,244 (June

19, 2020).

We also do not decide whether Section 1557 always

requires an entity-level analysis. The related term “program

or activity” suggests that a geographically-separate-facility-

level analysis might be appropriate in some cases. Here,

however, the assistance was not tied to a particular facility,

yielding the same result as an entity-level analysis. Because

BCBSIL receives federal financial assistance, it is subject to

Section 1557 for all of its operations.

C. BCBSIL did not preserve its Spending Clause

argument.

For the first time in its reply brief, BCBSIL argues that

it had insufficient notice, as required by the Spending

Clause, that it would be subject to Section 1557 for its third-

party administrator activities. BCBSIL waived this

argument by failing to raise it in its opening brief. BCBSIL

also forfeited this argument by failing to make it to the

district court.

BCBSIL could have raised this argument before.

BCBSIL knew Plaintiffs were arguing that Section 1557

covered its activities, and the regulation that allegedly

provided insufficient notice was promulgated years ago. See

Nondiscrimination in Health and Health Education

Programs or Activities, 85 Fed. Reg. 37,160, 37,172–73,

37,244–45 (June 19, 2020). Although the 2020 Rule was

limited to, a . . . health insurance issuer[.]” Nondiscrimination in Health

Programs and Activities, 89 Fed. Reg. 37,522, 37,694 (May 6, 2024).

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 23

superseded by the 2024 Rule, which was finalized after

BCBSIL filed its opening brief, a proposed rule making the

same change was promulgated two years ago. See

Nondiscrimination in Health Programs and Activities, 89

Fed. Reg. 37,522, 37,694 (May 6, 2024); Nondiscrimination

in Health Programs and Activities, 87 Fed. Reg. 47,824,

47,912 (Aug. 4, 2022). Moreover, BCBSIL’s Spending

Clause argument only relies on the 2020 Rule, not the new

one. We see nothing that precluded BCBSIL from raising

the Spending Clause before now.

II. The district court correctly held that third-party

administrators can be liable for violating Section

1557, even when implementing plan terms drafted by

a plan sponsor.

BCBSIL concedes that it is not immune from Section

1557 liability if it discriminates “without instruction from

the plan.” However, it contends that it cannot be liable for

administering and enforcing a discriminatory plan term

designed by the plan sponsor.

A. ERISA does not require third-party

administrators to implement unlawful plan

terms.

BCBSIL claims two aspects of ERISA permit it to

administer discriminatory plan terms without incurring

Section 1557 liability. First, ERISA requires third-party

administrators and other fiduciaries to “discharge [their]

duties with respect to a plan . . . in accordance with the

documents and instruments governing the plan.” 29 U.S.C.

§ 1104(a)(1)(D). This rule means “that contractual

limitations provisions ordinarily should be enforced as

written,” which “is especially appropriate when enforcing an

ERISA plan.” Heimeshoff v. Hartford Life & Acc. Ins. Co.,

24 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

571 U.S. 99, 108 (2013) (emphasis added). Second,

“[e]mployers have large leeway to design disability and

other welfare plans as they see fit.” Id. (quoting Black &

Decker Disability Plan v. Nord, 538 U.S. 822, 833 (2003)).

They, “are generally free . . . for any reason at any time, to

adopt, modify, or terminate welfare plans.” Curtiss-Wright

Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995).

However, neither of these authorities suggests that

BCBSIL must, or can, administer unlawful plan terms. First,

contractual provisions are ordinarily enforced (but not

always), and plan sponsors have large leeway to design their

plans (but not absolute discretion). Second, even Section

1104(a)(1)(D) only requires administrators to enforce the

plan “insofar as such documents and instruments are

consistent with the provisions of this subchapter and

subchapter III.” 29 U.S.C. § 1104(a)(1)(D). Thus, Section

1104(a)(1)(D) recognizes that plan terms conflicting with at

least some laws may not be enforced.

BCBSIL responds that Section 1557 is in neither of the

subchapters mentioned in Section 1104(a)(1)(D). We do not

think Section 1104(a)(1)(D) licenses third-party

administrators to violate any federal law other than those

listed, just because a plan sponsor commanded it. Fiduciary

duties, such as “the duty of prudence, under ERISA as under

the common law of trusts, do[] not require a fiduciary to

break the law.” Fifth Third Bancorp v. Dudenhoeffer, 573

U.S. 409, 428 (2014). If Congress intended a different result

for the fiduciary duty to follow the plan terms, it would be

clear about that result. Section 1104(a)(1)(D) is not.

The statutory structure confirms this intuition.

Elsewhere in the same subchapter, ERISA states that

“[n]othing in this subchapter shall be construed to alter,

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 25

amend, modify, invalidate, impair, or supersede any law of

the United States . . . or any rule or regulation issued under

any such law.” 29 U.S.C. § 1144(d). Thus, a third-party

administrator’s duties under ERISA cannot entitle it to

violate another federal law; to hold otherwise would “alter,”

“impair,” or “supersede” that other law.

BCBSIL criticizes the district court’s reading of Section

1144(d), contending it makes ERISA “a sort of second-class

federal policy, one that yields at the first sign of conflict with

any other federal statutory requirement.” Hyperbole aside,

the district court was correct that, if a plan sponsor tells a

third-party administrator to discriminate, the law prohibiting

discrimination and the law requiring administrators to obey

plan sponsors conflict. When two laws conflict, one must

yield. And Section 1144(d) shows that ERISA is the law that

yields. The district court did not err by ruling accordingly.

BCBSIL argues that ERISA cannot yield because

ERISA’s commands are express, and Plaintiffs’ Section

1557 right of action is implied. This is fallacious. The

conflict is not between ERISA and Section 1557’s implied

right of action but between ERISA and Section 1557’s

express prohibition against discrimination. And Section

1144(d)’s express command that ERISA does not supersede

other federal law provides a clear outcome in the face of this

conflict.

Nor does BCBSIL point to any cases supporting its

position. To the contrary, although no circuit has expressly

addressed a third-party administrator’s duties when ERISA

and another federal law conflict, the Third Circuit has held

that “[a]n administrator who strictly adheres to the lawful

terms of an employee benefit plan may not be found to have

acted arbitrarily and capriciously.” Vitale v. Latrobe Area

26 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

Hosp., 420 F.3d 278, 284 (3d Cir. 2005) (emphasis added)

(quoting Hlinka v. Bethlehem Steel Corp., 863 F.2d 279, 286

(3d Cir. 1988)). If administrators could violate the law at the

command of a plan sponsor, the limitation to “lawful” terms

in Vitale would make little sense.

BCBSIL does rely on regulations promulgated by the

Department of Health and Human Services (HHS). But the

regulations make clear that ERISA “explicitly preserves the

independent operation of civil rights laws” and therefore

“the fact that third party administrators are governed by . . .

ERISA is not a reason to exempt them from Section 1557.”

Nondiscrimination in Health Programs and Activities, 81

Fed. Reg. 31,376, 31,432 (May 18, 2016); see also

Nondiscrimination in Health Programs and Activities, 89

Fed. Reg. 37,522, 37,549 (May 6, 2024) (similar). The final

rule did “not exclude[e]” third party administrators,” but

merely “adopt[ed] specific procedures to govern the

processing of complaints against [them].” 81 Fed. Reg. at

31,432. Specifically, HHS decided to “adjust[] the way in

which it will process claims that involve alleged

discrimination in self-insured group health plans

administered by third party administrators that are covered

entities.” Id. “Where . . . the alleged discrimination relates

to the benefit design of a self-insured plan—for example,

where a plan excludes coverage for all health services related

to gender transition . . . [HHS] will typically address the

complaint against that employer.” Id. (emphasis added).

HHS did not suggest that third-party administrators were not

liable for implementing plans with discriminatory benefit

designs. Instead, it explained how it would use its

enforcement discretion to target the party most responsible

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 27

for the discrimination. 9 The 2016 and 2024 Rules are

consistent with our holding and do not support BCBSIL’s

position. 10

As BCBSIL observes, our holding leaves it in a dilemma

when there is doubt about whether a plan exclusion is

unlawful. If it enforces an unlawful term, it faces liability to

participants whose care was denied; but if it ignores a lawful

term, it faces liability to the plan sponsor. This is a risk

BCBSIL accepted when it assumed fiduciary duties to the

plan. Every fiduciary faces the same dilemma when there is

doubt about the legality of an action it feels compelled to

take. BCBSIL could have refused to administer plans for

employers requesting potentially illegal plan exclusions, or

it could have paid for the excluded care out of its own pocket,

which would satisfy its potential duty to the participant

without risking an ERISA violation by using the plan’s

money. BCBSIL may also have been able to seek a

declaratory judgment to avoid the tension it now faces. See

28 U.S.C. § 2201(a). BCBSIL’s policy argument gives us

no reason to depart from the text and structure of ERISA,

9

The other cited regulation followed the same approach. HHS agreed

“that a third party administrator should not be held responsible for

discriminatory plan design features over which the third party

administrator exercised no control.” Nondiscrimination in Health

Programs and Activities, 89 Fed. Reg. 37,522, 37,626 (May 6, 2024). It

did so to explain why it “will take into account the party responsible for

the alleged discriminatory conduct” and why it did “not intend to enforce

this rule against a third party administrator for a plan design that it did

not design and over which it has no control.” Id.

10

To the extent these regulations suggest third-party administrators are

immune from Section 1557 liability when acting at the direction of a plan

sponsor, we disagree.

28 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

which do not allow third-party administrators to flout the law

on behalf of their employer-customers.

B. BCBSIL’s remaining arguments are

unpersuasive.

According to BCBSIL, even if the plan terms violate

Section 1557, there is no conflict with its duty to follow the

plan terms because Section 1557 penalizes only intentional

discrimination, and it had no discriminatory intent in

administering those plan terms. These arguments do not

persuade.

At the outset, BCBSIL failed to preserve its position that

Plaintiffs’ claims fail because they have not shown

discriminatory intent. See In re Am. W. Airlines, Inc., 217

F.3d 1161, 1165 (9th Cir. 2000) (“Absent exceptional

circumstances, we generally will not consider arguments

raised for the first time on appeal, although we have

discretion to do so.”). In its summary-judgment briefing,

BCBSIL denied that a third-party administrator could be

liable for plan features it did not design, but it never raised

its present defense that Plaintiffs failed to show it acted with

discriminatory intent. BCBSIL cites our prior holding (in a

different context) that “it is claims that are deemed waived

or forfeited, not arguments.” United States v. Pallares-

Galan, 359 F.3d 1088, 1095 (9th Cir. 2004). Although

BCBSIL is right that parties have leeway to present their

appeals, “[f]ailure to argue a point in a motion for summary

judgment qualifies as failing to raise that issue below” when

“the argument was not raised sufficiently for the trial court

to rule on it.” Villanueva v. California, 986 F.3d 1158, 1164

n.4 (9th Cir. 2021) (quoting In re Mercury Interactive Corp.

Secs. Litig., 618 F.3d 988, 992 (9th Cir. 2010)). There is

considerable daylight between whether BCBSIL intended to

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 29

discriminate and whether the policy exclusions at issue

originated with BCBSIL. Accordingly, we find BCBSIL

forfeited its intent argument.

Even absent forfeiture, Plaintiffs’ claim is that BCBSIL

facially discriminated. “[B]y its very terms, facial

discrimination is ‘intentional.’” Lovell v. Chandler, 303

F.3d 1039, 1057 (9th Cir. 2002). If Plaintiffs succeed in

proving facial discrimination, “no greater proof of mental

state [is] necessary” because “intentional discrimination” is

“synonymous with discrimination resulting in ‘disparate

treatment,’” as opposed to “disparate impact.” Id. (quoting

Pandazides v. Va. Bd. of Educ., 13 F.3d 823, 830 n.9 (4th

Cir. 1994)). The contrary authorities BCBSIL relies on

involve various types of non-facial discrimination. See, e.g.,

Comm. Concerning Cmty. Improvement v. City of Modesto,

583 F.3d 690, 703 (9th Cir. 2009); Karasek v. Regents of

Univ. of Cal., 956 F.3d 1093, 1105 (9th Cir. 2020). 11

BCBSIL’s response that its intention was to comply with

the plan terms, not discriminate, does not alter the analysis.

“[I]ntentional discrimination based on sex violates Title VII,

even if it is intended only as a means to achieving the

11

This part of our analysis is unchanged by Skrmetti. As we explain

below, on remand, the district court will consider two arguments:

whether BCBSIL adopted a policy that looked to class members’

transgender status rather than their gender-dysphoria diagnoses and

whether BCBSIL discriminated based on gender-dysphoria treatment as

a pretext/proxy for anti-transgender discrimination. See infra Section

IV. The former is arguably a facial-discrimination theory. Arguably,

the latter is also because “[p]roxy discrimination is a form of facial

discrimination.” Pac. Shores Props., LLC v. City of Newport Beach, 730

F.3d 1142, 1160 n.23 (9th Cir. 2013); see also Skrmetti, 145 S. Ct. at 182

(requiring a showing of “invidious discriminatory purpose” only “where

a law’s classifications are neither covertly nor overtly based on” a

protected characteristic).

30 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

employer’s ultimate goal of discriminating against

homosexual or transgender employees.” Bostock v. Clayton

Cnty., 590 U.S. 644, 661 (2020). This is because

“[r]eframing the additional causes” for the employer’s

decision does nothing “to insulate the employers from

liability.” Id. After all, “[i]ntentionally burning down a

neighbor’s house is arson, even if the perpetrator’s ultimate

intention (or motivation) is only to improve the view.” Id.

For the same reason, intentional discrimination based on sex

violates Section 1557, even if intended only to comply with

the terms selected by the plan sponsor.

As a backup, BCBSIL argues that there is no conflict

between Section 1557 and ERISA because Plaintiffs are

seeking to use “agency principles” to hold it liable rather

than seeking to hold it liable for its own actions. BCBSIL’s

agency argument suffers from the same forfeiture problem

as its intent argument. Setting that aside, BCBSIL’s position

is unpersuasive. If Plaintiffs only sought to hold BCBSIL

liable because plan sponsors insisted on the exclusions at

issue, BCBSIL might have a point about agency.

Instead, BCBSIL’s own undisputed conduct 12 —

agreeing to apply the exclusions at issue and applying them

to deny coverage to Plaintiffs—is the kind of conduct that

could violate Section 1557. “[A]ll Title VII has ever

demanded to establish liability” is that the defendant

“necessarily and intentionally discriminates against [the

12

BCBSIL is correct that the district court found there was a genuine

dispute of material fact as to whether BCBSIL designed the exclusions

at issue, which Plaintiffs have not challenged. Thus, we do not affirm

on the basis that BCBSIL is liable for designing the exclusions. If

Plaintiffs do not succeed on their present theory, the district court may

need to revisit this issue. It will have the opportunity to do so on remand.

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 31

plaintiff] in part because of sex.” Bostock, 590 U.S. at 665. 13

In turn, someone “intentionally discriminate[s] based on

sex” who “necessarily and intentionally applies sex-based

rules.” Id. at 667 (emphasis omitted). The key word is

“applies.”

Here, BCBSIL applied the allegedly sex-based rules.

BCBSIL’s corporate representative testified that BCBSIL is

responsible for “determin[ing] whether [the care] falls under

that particular exclusion.” BCBSIL had a “standard

practice” for these claims: “look at the diagnosis and service

code to determine if it’s gender reassignment, and if it is then

it is denied[.]” It is BCBSIL that “looks at the diagnostic

code and the service code to figure out if [the claim is] for

gender reassignment” and “then looks at the service code in

particular to figure out if it is related to surgery.” The

excluded claims are “denied within [BCBSIL’s] system and

the member receives an Explanation of Benefits with that

denial.” This was no mechanical task: BCBSIL had to

review the claims, including the diagnosis and procedure

codes, and assess whether the claim fell within the exclusion.

Although plan sponsors chose the rules, BCBSIL applied

them. 14

13

We interpret Title VII and Title IX consistently, Doe v. Snyder, 28

F.4th 103, 114 (9th Cir. 2022), and the “grounds” of discrimination

prohibited by Title IX are incorporated into Section 1557. Thus, the legal

standard for Title VII and Section 1557 claims is the same.

14

The parties argue about whether Tovar v. Essentia Health, 857 F.3d

771, 778–79 (8th Cir. 2017), suggests that third party administrators can

be liable under Section 1557 for administering discriminatory plan

terms. However, Tovar is not binding, and Tovar merely decided the

plaintiff had Article III standing. It expressly declined to decide Section

1557’s scope.

32 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

III. The district court correctly concluded that BCBSIL

could not invoke a RFRA defense.

The Religious Freedom Restoration Act (RFRA)

requires that “[g]overnment shall not substantially burden a

person’s exercise of religion even if the burden results from

a rule of general applicability[.]” 42 U.S.C. § 2000bb-1(a).

However, the “[g]overnment may substantially burden a

person’s exercise of religion only if it demonstrates that

application of the burden to the person—(1) is in furtherance

of a compelling governmental interest; and (2) is the least

restrictive means of furthering that compelling

governmental interest.” Id. § 2000bb-1(b). “A person

whose religious exercise has been burdened in violation of

this section may assert that violation as a claim or defense in

a judicial proceeding and obtain appropriate relief against a

government.” Id. § 2000bb-1(c).

BCBSIL contends that enforcing Section 1557 here

would infringe the religious exercise of its employer-

customers. However, the district court rejected this

argument, primarily because “RFRA provides relief against

the government and does not apply to disputes between

private parties” and also because BCBSIL “is not an entity

with a ‘sincerely-held religious belief.’” The district court

was correct on both counts.

A. RFRA does not provide a defense to those whose

religious exercise is not burdened.

RFRA has a judicial-relief provision stating that it

provides a claim or defense to “[a] person whose religious

exercise has been burdened in violation” of that statute. 42

U.S.C. § 2000bb-1(c). That provision would be superfluous

if RFRA’s other provisions implicitly created a defense for

everyone, whether their religious exercise has been burdened

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 33

or not. Thus, only people whose religious exercise has been

burdened can raise a defense under RFRA.

BCBSIL responds that it is not seeking to raise a defense.

It argues that “RFRA informs the interpretation and

application of existing laws even when no party invokes the

RFRA” in support of a claim or defense. Yet this view

would render RFRA’s judicial-relief provision equally

superfluous. If RFRA already “requires an exception” to

laws like Section 1557 as a matter of statutory construction,

no person whose religious exercise has been burdened would

ever need to go further and assert a RFRA defense.

BCBSIL has not argued that its religious exercise, or that

of its employees, officers, or shareholders, was affected by

providing the care at issue. Although RFRA sometimes

protects “a for-profit closely held corporation,” BCBSIL

does not meet that criterion, nor does this case implicate “the

religious liberty of the humans who own and control”

BCBSIL. Burwell v. Hobby Lobby Stores, Inc., 573 U.S.

682, 707, 719 (2014). Indeed, BCBSIL is a secular

company. Moreover, BCBSIL does provide gender-

affirming care for non-self-funded plans.

B. Even if RFRA provides a defense to those whose

religious exercise is not burdened, it does not

provide a defense against claims brought by a

private party.

Our sister circuits are divided over whether RFRA

applies in actions where the government is not a party. The

Second Circuit has held that “RFRA applies to an action by

a private party seeking relief under a federal statute against

another private party who claims that the federal statute

substantially burdens his or her exercise of religion,” at least

with respect to federal laws also enforceable by the

34 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

government. Hankins v. Lyght, 441 F.3d 96, 103 (2d Cir.

2006). On the other hand, the Sixth and Seventh Circuits

have held that “RFRA is not applicable in cases where the

government is not a party.” Listecki v. Off. Comm. of

Unsecured Creditors, 780 F.3d 731, 736 (7th Cir. 2015);

accord Gen. Conf. Corp. of Seventh-Day Adventists v.

McGill, 617 F.3d 402, 410–12 (6th Cir. 2010). 15

We have not squarely addressed the question. First, in

dicta, we found it “seems unlikely that the government

action Congress envisioned in adopting RFRA included”

private suits for copyright infringement. Worldwide Church

of God v. Phil. Church of God, Inc., 227 F.3d 1110, 1121

(9th Cir. 2000). Second, we held that RFRA claims

generally require a government defendant because the

statute on its face applies only to government actors, and

“governmental compulsion in the form of a general statute,

without more, is [in]sufficient to transform every private

entity that follows the statute into a governmental actor.”

Sutton v. Providence St. Joseph Med. Ctr., 192 F.3d 826, 839

(9th Cir. 1999). When RFRA claims against a private

defendant were permitted, “there was some additional nexus

that made it fair to deem the private entity a governmental

15

The parties have cited several other cases allegedly bearing on this

issue. However, none of them considered whether RFRA affects actions

between private parties, and many involved a governmental party. See

United States v. Bauer, 84 F.3d 1549, 1558–59 (9th Cir. 1996) (criminal

prosecution); EEOC v. Cath. Univ. of Am., 83 F.3d 455, 470 (D.C. Cir.

1996) (EEOC); In re Young, 141 F.3d 854, 861 (8th Cir. 1998)

(bankruptcy trustee); In re Grand Jury Empaneling of Special Grand

Jury, 171 F.3d 826, 835 (3d Cir. 1999) (grand jury subpoena); cf. Whole

Woman’s Health v. Smith, 896 F.3d 362, 371 (5th Cir. 2018), as revised

(July 17, 2018) (addressing court-ordered discovery in a private dispute,

but without addressing RFRA’s “government” burden requirement).

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 35

actor in the circumstances.” Id. However, Sutton addressed

RFRA claims, not RFRA defenses.

We now extend Sutton to RFRA defenses because no

part of Sutton’s reasoning is affected by the distinction

between claims and defenses. Whenever RFRA discusses

“claims,” it discusses “defenses” in the same breath. See 42

U.S.C. § 2000bb(b)(2); 42 U.S.C. § 2000bb-1(c). Next,

Sutton decided RFRA claims could not target private

defendants because, “[w]hen Congress has intended to

regulate private employers . . . it has done so explicitly,” but

“Congress chose not to include similar wording in RFRA.”

Sutton, 192 F.3d at 834. This logic applies to both claims

and defenses: if Congress intended to shield private parties

from federal law, it would do so explicitly, and it has not

done so here. Finally, Sutton noted that RFRA applies when

the “government” acts, and RFRA defines the “government”

to “include[] parts of government and agents acting on

behalf of government, not purely private entities.” Id. This

definition applies to both RFRA claims and RFRA defenses

because the statute draws no distinction between the two.

In addition, the arguments considered by some of our

sister circuits persuade us that RFRA does not apply to suits

between private parties.

First, RFRA’s main provisions describe a process of

burden shifting between a government and a person whose

religious exercise is substantially burdened. Even assuming

a substantial burden, the government “may substantially

burden [that] person’s exercise of religion . . . if it

demonstrates that application of the burden” is justified by

strict scrutiny. 42 U.S.C. § 2000bb-1(b). RFRA defines

“demonstrates” to mean “meets the burdens of going

forward with the evidence and of persuasion.” 42 U.S.C.

36 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

§ 2000bb-2(3). Because the statute requires the government

to present evidence and meet a burden of proof, it suggests

the government must be a party. If the government was not

part of the case, it would not be able to present evidence, and

it would make little sense to speak of the government’s

burden of proof. Likewise, even if a private party presented

evidence about the government’s interest, it would not be the

government that demonstrated that interest. 16

Second, RFRA’s judicial-relief provision states that “[a]

person whose religious exercise has been burdened in

violation of this section may assert that violation as a claim

or defense in a judicial proceeding and obtain appropriate

relief against a government.” 42 U.S.C. § 2000bb-1(c).

Thus, the only form of relief provided by RFRA is “against

a government.” Conversely, absent a governmental party,

RFRA provides no relief.

The drafting history of the judicial-relief provision

supports this view. Earlier drafts authorized relief from both

governments and private parties, stating that “[a] party

aggrieved by a violation of this section may obtain

appropriate relief (including relief against a government) in

a civil action.” Religious Freedom Restoration Act, H.R.

5377, 101st Cong. § 2(c) (1990). Ultimately, Congress

16

BCBSIL responds to this argument by framing it as an argument that

courts sometimes lack sufficient information to identify the state interest

that may justify the law. This misunderstands Plaintiffs’ argument.

Plaintiffs are pointing out not only the practical difficulties of obtaining

information about the relevant state interest without the government’s

participation but also the statute’s requirement that the government

demonstrate the state interest, not a private party.

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 37

chose to enact a narrower provision, providing relief only

against a government. 17

The legislative history suggests RFRA requires a

governmental party. As then-Judge Sotomayor noted, “[a]ll

of the examples cited in the Senate and House Reports on

RFRA involve actual or hypothetical lawsuits in which the

government is a party.” Hankins, 441 F.3d at 115 n.9

(Sotomayor, J., dissenting) (citing S. Rep. No. 103-111

(1993); H.R. Rep. 103-88 (1993)). 18

BCBSIL points to RFRA’s purposes section, which

explains RFRA was intended “to restore the compelling

interest test . . . and to guarantee its application in all cases

where free exercise of religion is substantially burdened.”

17

At least one author contends that the clause authorizing relief against

a government was introduced to abrogate sovereign immunity and

signifies “an additional right upon which a litigant may rely,” rather than

“limit[ing] the set of cases in which a ‘claim or defense’ may be raised

in a judicial proceeding[.]” Shruti Chaganti, Why the Religious Freedom

Restoration Act Provides a Defense in Suits by Private Plaintiffs, 99 Va.

L. Rev. 343, 344, 348–55 (2013). This author contends that the

“ambiguity” leading courts to believe RFRA requires the government to

be a party “arose incidentally as a result of the restructuring of the

section.” Id. at 353. Perhaps that is a plausible reading of the drafting

history, but in cases of doubt, courts are bound to implement the text

Congress enacted, not the one it might have enacted.

18

A footnote in each committee report cited the testimony of

Prof. Douglas Laycock, part of which mentioned lawsuits between

private parties. However, the cited portion of the testimony covered

only lawsuits to which the government was a party. Compare H.R.

Rep. No. 103-88 at 2 n.2, and S. Rep. No. 103-111 at 4 n.3, with

Douglas Laycock, Statement to House Civil and

Constitutional Rights Subcommittee 2–5 (May 14, 1992),

https://www.justice.gov/sites/default/files/jmd/legacy/2014/07/13/hear-

99-1992.pdf at 331–34.

38 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

42 U.S.C. § 2000bb(b)(1). BCBSIL argues that the free

exercise of religion may be substantially burdened in cases

where the government is not a party. But though purpose

may help us interpret text, we cannot adopt atextual

interpretations simply because they advance a statute’s

purpose. We do not think BCBSIL’s argument outweighs

the textual considerations we have discussed.

BCBSIL also observes that some statutes can be

enforced by the government or a private party. If RFRA only

applies when the government is involved, it creates an

inconsistency, limiting claims by the government but not by

private parties. This is a reasonable policy concern, but

ultimately, we must follow the text Congress enacted, even

if there is some reason to believe that text is inconsistent or

unwise.

Next, BCBSIL notes that RFRA applies to “all Federal

law, and the implementation of that law, whether statutory

or otherwise[.]” 42 U.S.C. § 2000bb-3(a). Although RFRA

certainly applies to all laws, that does not mean it applies in

all cases. The provision cited by BCBSIL only addresses the

former. 42 U.S.C. § 2000bb(a)(5), which finds that “the

compelling interest test as set forth in prior Federal court

rulings is a workable test for striking sensible balances,” is

irrelevant because it defines the test courts use when RFRA

applies, not when RFRA applies.

BCBSIL argues that, even if RFRA cannot provide a

claim or defense in a suit between private parties, it governs

Section 1557’s interpretation to provide BCBSIL with an

exception to liability. This is simply a defense by another

name. Also, the authorities BCBSIL relies on do not stretch

that far. The Supreme Court has held that “RFRA operates

as a kind of super statute, displacing the normal operation of

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 39

other federal laws, [and] might supersede Title VII’s

commands in appropriate cases.” Bostock v. Clayton Cnty.,

590 U.S. 644, 682 (2020); accord Apache Stronghold v.

United States, 101 F.4th 1036, 1058 (9th Cir. 2024) (quoting

Bostock and calling RFRA a “framework statute”). That is

certainly true. But Bostock explained the effect RFRA has

when it applies—namely, it precludes liability for a

defendant who would otherwise be in violation of federal

law—and not the circumstances when it applies. Indeed,

Bostock expressly declined to decide when, or even whether,

RFRA would permit a business to violate the statute at issue.

590 U.S. at 682 (noting that RFRA “might” supersede Title

VII “in appropriate cases” and that “how these doctrines

protecting religious liberty interact with Title VII are

questions for future cases”). Even if RFRA might supersede

Section 1557 in appropriate cases, this is not one of them:

the plaintiff is not a governmental party, and the defendant’s

religious exercise was not burdened.

IV. When the district court found that BCBSIL’s

gender-dysphoria exclusion discriminated based on

sex, it ran afoul of Skrmetti.

Pursuant to Section 1557, “an individual shall not, on the

ground prohibited under . . . title IX of the Education

Amendments of 1972 (20 U.S.C. 1681 et seq.) . . . be

excluded from participation in, be denied the benefits of, or

be subjected to discrimination under, any health program or

activity[.]” 42 U.S.C. § 18116(a). The “ground” prohibited

by Title IX is “sex.” 20 U.S.C. § 1681(a).

Certainly, “discrimination based on . . . transgender

status necessarily entails discrimination based on sex.”

Bostock, 590 U.S. at 669. For example, “[a]n employer who

fires an individual for being . . . transgender fires that person

40 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

for traits or actions it would not have questioned in members

of a different sex.” Id. at 651–52. That is still true. See

United States v. Skrmetti, 145 S. Ct. 1816, 1834 (2025).

Here, BCBSIL acknowledges that it excludes treatment

for “gender dysphoria” and “transgender services.”

However, BCBSIL denies violating Section 1557 because

the exclusions it administers only cover health care

“administered or prescribed for the treatment of gender

dysphoria,” and discrimination against treatment for gender

dysphoria is not discrimination based on transgender status

or discrimination based on sex. The district court rejected

this defense, holding “[g]ender dysphoria cannot be

understood without referencing sex or a synonym.”

The district court’s reasoning fails, but there are arguably

two potential avenues for relief that remain open to

Plaintiffs. We remand for the district court to consider those

issues.

A. The district court’s reasoning fails in light of

Skrmetti.

First, Skrmetti rejected the district court’s reasoning.

The statute in Skrmetti “remove[d] one set of diagnoses,”

including “gender dysphoria,” “from the range of treatable

conditions.” 145 S. Ct. at 1833. Even so, “sex is simply not

a but-for cause of [the] operation” of that statute. Id. at 1835.

Thus, Bostock did not apply. Id. at 1834. Likewise, by

excluding treatment for gender dysphoria, BCBSIL removed

that diagnosis from the range of conditions its insurance

plans cover. Without more, sex is not a but-for cause of the

exclusions’ operation, and Bostock does not apply.

Second, the district court erred in focusing on whether

the plans referenced sex or a synonym. The Supreme Court

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 41

“has never suggested that [a statute’s] mere reference to sex

is sufficient to trigger heightened scrutiny” by showing that

the statute discriminates based on sex. Id. at 1829.

Particularly “[i]n the medical context, the mere use of sex-

based language does not sweep a statute within the reach of

heightened scrutiny.” Id. at 1830. Here, we are in the

medical context. Though BCBSIL’s exclusions reference

sex, and though that reference may be relevant, it is not

sufficient to trigger Bostock’s application.

Third, the district court relied on the district court’s

vacated decision in Kadel v. Folwell. No. 1:19CV272, 2022

WL 11166311, at *4 (M.D.N.C. Oct. 19, 2022). Similarly,

Plaintiffs rely repeatedly on the Fourth Circuit’s affirmance

in Kadel. 100 F.4th 122 (4th Cir. 2024). But when the

Supreme Court handed down Skrmetti, it held Kadel was no

longer good law. See Folwell v. Kadel, No. 24-99, 2025 WL

1787687 (U.S. June 30, 2025).

Plaintiffs try to distinguish Skrmetti, cabining it to the

constitutional context. Though Skrmetti was a constitutional

case, its logic reaches more broadly. Skrmetti applied the

Bostock test, which arose in “the Title VII context,” not the

constitutional context. 145 S. Ct. at 1834. Skrmetti did not

decide “whether Bostock’s reasoning reaches” constitutional

claims. Id. Even “[u]nder the reasoning of Bostock,”

however, the statute did not discriminate based on sex. Id.

Thus, Plaintiffs may be right that sex discrimination works

differently in constitutional and statutory cases. But because

Skrmetti assumed without deciding that the standards were

identical, Skrmetti’s gloss on Bostock applies to statutory

cases like this one.

In the same vein, Plaintiffs argue that Skrmetti does not

apply to Section 1557 cases because Skrmetti relied on

42 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

Geduldig v. Aiello, 417 U.S. 484 (1974). Skrmetti did rely

on Geduldig, but that does not make Skrmetti

distinguishable. In Geduldig, the Supreme Court interpreted

the Constitution not to bar discrimination based on

pregnancy. 417 U.S. at 492, 494, 496 n.20. The Supreme

Court later expanded that rule into Title VII. Gen. Elec. Co.

v. Gilbert, 429 U.S. 125, 136 (1976). Congress amended

Title VII to “unambiguously” reject “the holding and the

reasoning” of Gilbert. Newport News Shipbuilding & Dry

Dock Co. v. EEOC, 462 U.S. 669, 678 (1983). Because this

court “construe[s] Title IX’s protections consistently with

those of Title VII,” Doe v. Snyder, 28 F.4th 103, 114 (9th

Cir. 2022), that rule flows into Title IX and thus into Section

1557. But when Congress amended Title VII, it created a

rule that does not help Plaintiffs. Congress defined “because

of sex” to incorporate “pregnancy, childbirth, or related

medical conditions,” 42 U.S.C. § 2000e(k), but it changed

nothing about gender dysphoria or gender reassignment.

Thus, Section 1557 bars discrimination against treatment for

pregnancy and childbirth but not treatment for gender

dysphoria.

Plaintiffs also argue that Skrmetti is different because the

exclusions here make “direct references to transgender

status.” But as noted, Skrmetti does not focus on whether

anyone refers to transgender status or, equivalently, sex. 145

S. Ct. at 1829–30. Indeed, the statute in Skrmetti bristled

with references to sex. See, e.g., Tenn. Code Ann. §§ 68-33-

101(b), (c), (m), (n), 68-33-102(1), (9), 68-33-103(a)(1),

(b)(4), (c)(2).

Next, Plaintiffs argue that BCBSIL does not just

discriminate against “a particular medical condition but

rather whether the care leads to ‘gender reassignment’

which, of course, equates with transgender status.” But the

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 43

statute in Skrmetti also targets care leading to gender

reassignment. It bars “a medical procedure if the

performance or administration of the procedure is for the

purpose of,” among other things, “[e]nabling a minor to

identify with, or live as, a purported identity inconsistent

with the minor’s sex.” Tenn. Code Ann. § 68-33-103(a)(1).

We cannot distinguish Skrmetti this way.

B. This case is potentially different from Skrmetti in

two respects.

First, some of these Plaintiffs allegedly had diagnoses

(other than gender dysphoria) that entitled them to hormones

or other treatment—but BCBSIL still would not treat them.

In Skrmetti, “changing a minor’s sex or transgender status

d[id] not alter the application of” the statute. 145 S. Ct. at

1834. As an example, the Supreme Court envisioned “a

transgender boy seek[ing] testosterone to treat his gender

dysphoria.” Id. “The transgender boy could receive

testosterone only if he had” “a qualifying diagnosis for the

testosterone” like “a congenital defect, precocious puberty,

disease, or physical injury.” Id. “And, if he had such a

diagnosis, he could obtain the testosterone regardless of his

sex or transgender status.” Id. It was for this reason that the

Supreme Court distinguished Bostock. See id.

Here, one of the Plaintiffs has a different story to tell.

S.L. was diagnosed with both gender dysphoria and

precocious puberty. She sought puberty blockers to block

her precocious puberty. BCBSIL denied coverage. During

the appeal process, her mother “was told by BCBSIL

membership services that, had S.L. been diagnosed only with

early-onset puberty (i.e., not gender dysphoria AND early-

onset puberty), BCBSIL would have likely covered the

puberty blocker.” Unlike the example patient from Skrmetti,

44 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

S.L. has a qualifying diagnosis other than gender dysphoria,

but she still cannot get the puberty blocker. If S.L. had been

born a girl instead of a boy, she would not be transgender

and would not have gender dysphoria—because only

transgender people can have gender dysphoria. But she

would still have precocious puberty, and she could have

gotten puberty blockers. Because changing her sex, and thus

her transgender status, does “alter the application of”

BCBSIL’s exclusion, sex is a but-for cause of the

exclusion’s operation. For S.L. and those like her, Skrmetti

is arguably distinguishable.

Second, Skrmetti left Plaintiffs another potential

opportunity. It noted that no party had “argued that [the

statute’s] prohibitions are mere pretexts designed to effect

an invidious discrimination against transgender

individuals.” 145 S. Ct. at 1833. It “decline[d] to find” that

the statute discriminated against transgender individuals for

that reason. Id. at 1833–34. Here, however, Plaintiffs argue

that BCBSIL’s justifications for its actions “are a pretext for

‘invidious discrimination.’” Their argument is based on a

proxy-discrimination theory. Cf. Coal. for TJ v. Fairfax

Cnty. Sch. Bd., 68 F.4th 864, 886 (4th Cir. 2023) (identifying

“proxies” as a way to prove “an invidious discriminatory

intent”), cert. denied, No. 23-170, 2024 WL 674659 (U.S.

Feb. 20, 2024); Hearne v. Bd. of Educ., 185 F.3d 770, 776

(7th Cir. 1999) (distinguishing a case where an “ostensibly

neutral classification” was “such a good proxy for [the

protected characteristic] that [it] is ‘an obvious pretext for

. . . discrimination.’” (quoting Pers. Adm’r of Mass. v.

Feeney, 442 U.S. 256, 272 (1979))).

BCBSIL responds that Skrmetti forecloses Plaintiffs’

proxy theory because it held “there is a ‘lack of identity’

between transgender status and the excluded medical

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 45

diagnoses.” 145 S. Ct. at 1833. But while a “lack of

identity” weakens a proxy-discrimination theory, it is not

fatal. “Notably, proxy discrimination does not require an

exact match between the proxy category and the racial

classification for which it is a proxy.” Davis v. Guam, 932

F.3d 822, 838 (9th Cir. 2019). Instead, “the crucial question

is whether the proxy’s ‘fit’ is ‘sufficiently close’ to make a

discriminatory inference plausible.” Schmitt v. Kaiser

Found. Health Plan of Wash., 965 F.3d 945, 959 (9th Cir.

2020) (quoting Davis, 932 F.3d at 838).

BCBSIL counters that no such inference is plausible. At

this stage, we do not necessarily agree. The fit between

transgender people and people suffering from gender

dysphoria is strong. Only transgender people can suffer

from gender dysphoria: gender dysphoria comes from

“marked incongruence between [the patient’s]

experienced/expressed gender and assigned gender.” Also,

BCBSIL made a key concession that strengthens Plaintiffs’

pretext/proxy argument. BCBSIL’s policy admits that the

treatments Plaintiffs seek can be medically necessary for

treating adolescents with gender dysphoria. Even so, in

many of the health plans at issue, BCBSIL categorically

excludes those treatments. Because BCBSIL admits those

treatments are sometimes necessary, it cannot justify its

categorical exclusion by citing medical necessity.

Something else may be afoot, and that something may be

invidious discrimination against transgender people.

Make no mistake: we are not holding that Skrmetti favors

Plaintiffs. We are explaining which questions Skrmetti

potentially left open and, thus, why remand would not be

futile. We express no view about the appropriate outcome

on remand.

46 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

C. The appropriate course is to remand.

For several reasons, we remand for the district court to

reconsider its ruling in light of Skrmetti.

First, we are “a court of review, not of first view.” Cutter

v. Wilkinson, 544 U.S. 709, 718 n.7 (2005). The district

court did not rely on the discrimination allegedly suffered by

S.L. or Plaintiffs’ pretext/proxy argument. It should have

the first opportunity to assess those arguments. Also, the

parties did not have the opportunity to fully brief those

arguments. The case would benefit from further

development before the district court.

Second, the district court is familiar with the full record.

It may be necessary to decide whether Plaintiffs or BCBSIL

forfeited any of their arguments (or whether any forfeiture

should be excused by Skrmetti). It may also be necessary to

decide whether either party should be allowed to take

additional discovery and, if so, what additional discovery is

appropriate. And it may be necessary to decide whether the

pretext/proxy issue can be addressed class-wide. All of these

issues are best resolved by a district court, not an appellate

court.

Third, it may not be possible to decide whether S.L. and

others suffered anti-transgender discrimination, or whether

BCBSIL’s exclusions are a pretext or proxy for invidious

discrimination, at summary judgment. If so, the district

court will need to hold a trial.

CONCLUSION

For the foregoing reasons, the district court’s summary-

judgment decision cannot stand. Although we agree that

BCBSIL is bound by Section 1557 and cannot use the

employers’ instructions or RFRA as defenses, we cannot

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 47

square the summary-judgment ruling against BCBSIL with

Skrmetti. We therefore vacate that ruling. On remand, the

district court will have the opportunity to consider the issues

potentially left open by Skrmetti and to conduct further

proceedings consistent with our opinion.

VACATED AND REMANDED.

Each side to bear its own costs on appeal.

Rawlinson, Circuit Judge, concurring in the judgment:

I agree in large part with the majority opinion. I write

separately only because of my perspective that it is

improvident to opine on issues that we have remanded to the

district court to consider in light of intervening Supreme

Court precedent. As the majority acknowledges in the

portion of the opinion stating that “[t]he appropriate course

is to remand,” we are not a court of “first view.” Majority

Opinion, p. 46. Rather, “we are a court of review.” Id.

(quoting Cutter v. Wilkinson, 544 U.S. 709, 718 n.7 (2005)).

Nevertheless, the majority goes on to articulate its “first

view,” id., of how the district could potentially distinguish

the intervening Supreme Court case of United States v.

Skrmetti, 145 S. Ct. 1816 (2025). See Majority Opinion, pp.

43-45.

In discussing one of the plaintiffs, the majority theorizes

that Skrmetti is “arguably distinguishable” because

“changing [the plaintiff’s] sex, and thus her transgender

status does alter the application of [Blue Cross/Blue

Shield’s] exclusion, [and] sex is a but-for cause of the

exclusion’s operation.” Majority Opinion, p. 44 (internal

quotation marks omitted). But in Skrmetti, the Supreme

48 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

Court discussed its prior decision in Bostock v. Clayton

County, 590 U.S. 644 (2020), and concluded that its analysis

in Skrmetti of the statute prohibiting gender-affirming

medical treatment was not altered by its prior decision in

Bostock. See Skrmetti, 145 S. Ct. at 1834.

In Bostock, the Supreme Court “held that an employer

who fires an employee for being gay or transgender violates

Title VII’s prohibition on discharging an individual because

of their sex.” Id. (citing Bostock, 590 U.S. at 650-52, 654-

59) (internal quotation marks omitted). However, the logic

underpinning Bostock was not followed by the Supreme

Court in Skrmetti. Rather, the Supreme Court explained that

the application of the statute in Skrmetti prohibiting gender-

affirming care was not altered by changing the sex or

transgender status of the minor seeking gender-affirming

treatment. See id.

The Supreme Court provided the following example:

If a transgender boy seeks testosterone to

treat his gender dysphoria, [the statute]

prevents a healthcare provider from

administering it to him. If you change his

biological sex from female to male, [the

statute] would still not permit him the

hormones he seeks because he would lack a

qualifying diagnosis for the testosterone —

such as a congenital defect, precocious

puberty, disease, or physical injury. The

transgender boy could receive testosterone

only if he had one of those permissible

diagnoses. And if he had such a diagnosis, he

could obtain the testosterone regardless of his

sex or transgender status. Under the

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 49

reasoning of Bostock, neither his sex nor his

transgender status is the but-for cause of his

inability to obtain testosterone.

Id. (emphasis added).

The same reasoning could be applied to this case. Some

Blue Cross/Blue Shield plan exclusions preclude coverage

for “Gender [R]eassignment Surgery,” “treatment of gender

identity disorders,” and “Gender Identity Disorder

Treatment.” Using the example provided by the Supreme

Court, if a transgender boy or man seeks coverage for gender

reassignment surgery, treatment of a gender identity disorder

or gender identity disorder treatment, the exclusion

precludes coverage for that treatment. If “you change his

biological sex from female to male, [the exclusion] would

still not permit” coverage for the treatment. Skrmetti, 145 S.

Ct. at 1834. According to the Supreme Court’s apparent

reading of Bostock, “neither [the] sex nor [the] transgender

status” of the individual “is the but-for cause of [the]

inability” to obtain coverage for the treatment. Id.

In my view, the majority’s conclusion that “[b]ecause

changing [the plaintiff’s] sex, and thus her transgender status

does alter the application of [Blue Cross/Blue Shield’s]

exclusion, sex is a but-for cause of the exclusion’s

operation,” Majority Opinion, p. 44, is in direct conflict with

the Supreme Court’s discussion of its holding in Bostock,

which included an example that almost mirrors the facts of

this case. See Skrmetti, 145 S. Ct. at 1834. It would be

unfortunate if the district court adopted an erroneous

interpretation of Skrmetti as suggested by the majority when

we could easily leave the district court to reach its own

conclusions regarding how Skrmetti affects its prior ruling.

50 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

The same can be said of the majority’s foray into what

conduct by Blue Cross/Blue Shield “is the kind of conduct

that could violate Section 1557.” Majority Opinion, p. 30.

The majority recounts that Blue Cross/Blue Shield is

“responsible for determining whether the care falls under

[one of the gender affirming treatment exclusions].” Id., p.

31 (alterations and internal quotation marks omitted).

According to the majority, Blue Cross/Blue Shield has

developed a “standard practice for these claims: look at the

diagnosis and service code to determine if it’s gender

reassignment, and if it is then it is denied.” Id. (alteration

and internal quotation marks omitted). The majority

observes that Blue Cross/Blue Shield “looks at the

diagnostic code and the service code to figure out if the claim

is for gender reassignment and then looks at the service code

in particular to figure out if it is related to surgery.” Id.

(alteration and internal quotation marks omitted). The

majority notes that “[t]he excluded claims are denied within

[Blue Cross/Blue Shield’s] system and the member receives

an Explanation of Benefits with that denial.” Id. (internal

quotation marks omitted). The majority characterizes this

processing by Blue Cross/Blue Shield as “no mechanical

task [because Blue Cross/Blue Shield] had to review the

claims, including the diagnosis and procedure codes, and

assess whether the claim fell within the [gender-affirming

care] exclusion. Although plan sponsors chose the rules

[Blue Cross/Blue Shield] applied them.” Id. The majority

acknowledges that the district court relied on these described

procedures to conclude that Blue Cross/Blue Shield applied

“sex-based rules” in violation of Section 1557 of the

Affordable Care Act, see id., see also id. pp. 40-41. The

majority also recognizes, as it must, that the district court’s

“sex-based rules” analysis “ran afoul of Skrmetti.” Id. pp.

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 51

30-31, 39. Curiously, in the majority’s suggestion to the

district court that the district court distinguish “Skrmetti in

two respects,” id. p. 43, the majority does not explain how

the district court will pivot from its analysis that Blue

Cross/Blue Shield violated § 1557 through its application of

“sex-based rules” to a different theory of liability that was

not developed during the prior proceedings in the district

court.

At a minimum, surely the majority should not continue

to insist that Blue Cross/Blue Shield failed to “preserve its

Spending Clause argument.” Id. p. 22. In its Reply Brief,

Blue Cross/Blue Shield made the argument that it “lacked

the requisite notice” of the “scope and nature of the

obligations” incurred by accepting the federal funds for other

activities engaged in by Blue Cross/Blue Shield. Blue

Cross/Blue Shield relied on several Supreme Court cases in

support of its argument that it “lacked the requisite notice”

of the “scope and nature of the obligations” incurred by

accepting federal funds for activities other than its actions in

the role of a third-party administrator of health insurance

plans.

In Cummings v. Premier Rehab Keller, P.L.L.C., 596

U.S. 212, 216 (2022), the United States Supreme Court

discussed Congress’s “broad power under the Spending

Clause of the Constitution to set the terms on which it

disburses federal funds.” Legislation enacted under

Congress’s Spending Clause authority “is much in the nature

of a contract: in return for federal funds, the recipients agree

to comply with federally imposed conditions. Id. (alteration

omitted) (quoting Pennhurst State School and Hospital v.

Halderman, 451 U.S. 1, 17 (1981)). There is no dispute that

Section 1157 was enacted pursuant to Congress’s Spending

52 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

Clause authority. See Majority Opinion, p. 20 (discussing

Blue Cross/Blue Shield’s Spending Clause argument).

In Pennhurst, the Supreme Court addressed Congress’s

“power under the Spending Clause to place conditions on the

grant of federal funds.” 451 U.S. at 15. Noting, as it did in

Cummings, that “legislation enacted pursuant to the

spending power is much in the nature of a contract,” id. at

17, the Court reasoned that due to the contractual nature of

legislation enacted under the Spending Clause, “[t]he

legitimacy of Congress’s power to legislate under the

spending power . . . rests on whether [the recipient of the

federal funds] voluntarily and knowingly accepts the terms

of the ‘contract.’” Id. (citations omitted). The Court

explained that “[t]here can, of course, be no knowing

acceptance if a [recipient of federal funds] is unaware of the

conditions or is unable to ascertain what is expected of it.”

Id. Therefore, “if Congress intends to impose a condition on

the grant of federal moneys, it must do so unambiguously.”

Id. (citations and footnote reference omitted) (emphasis

added).

This same reasoning is articulated in Arlington Central

School District Board of Education v. Murphy, 548 U.S. 291

(2006). That case involved the Individuals with Disabilities

Education Act (IDEA). The parents of a disabled student

brought an action to require the school district to pay for their

son’s private school tuition. See id. at 294. After prevailing,

the parents sought “fees for the services of an educational

consultant . . . who assisted [them] throughout the IDEA

proceedings.” Id. The Supreme Court “granted certiorari to

resolve the conflict among the Circuits with respect to

whether Congress authorized the compensation of expert

fees to prevailing parents in IDEA actions.” Id. at 295

(citations omitted).

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 53

The Supreme Court began its analysis with the

observation that its “resolution of the question presented . . .

is guided by the fact that Congress enacted the IDEA

pursuant to the Spending Clause.” Id. (citations omitted).

Importantly, “the IDEA provides federal funds to assist state

and local agencies in educating children with disabilities,”

but “conditions such funding upon a State’s compliance with

extensive goals and procedures.” Id. (citations omitted).

The Court determined that when deciding whether a

recipient of federal funds had adequate notice of the

conditions attached to the federal funding, a court must view

the legislative enactment “from the perspective of” the

recipient of federal funding. Id. at 296. The question a court

must ask itself is whether the recipient of the federal funds

“would clearly understand . . . the obligations of” the funding

legislation. The Supreme Court stated, “[i]n other words, [a

court] must ask whether the [legislative enactment] furnishes

clear notice regarding the liability at issue.” Id.

Applied to the facts of this case, Blue Cross/Blue Shield

asserts that as the “recipient[] of federal funding,” Section

1557 did not “furnish[] clear notice” to it that, as a third-

party administrator it would be liable for discrimination

based on its application of exclusion decisions made by

insurers whose policies Blue Cross/Blue Shield

administered. Id. It is undisputed that the text of Section

1557 does not address third-party administrators. See id.

(confirming that when deciding whether a statute “provides

clear notice, we begin with the text”). Indeed, a considerable

portion of the majority opinion is devoted to the question of

whether Blue Cross/Blue Shield as a third-party

administrator is covered under Section 1557. See Majority

Opinion, pp. 14-22.

54 PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL

In the absence of express language in the statute applying

the discrimination provisions to it, Blue Cross/Blue Shield

contends that it lacked “clear notice regarding the liability”

for discrimination in administering health insurance

contracts. Arlington Cent. Sch. Dist., 548 U.S. at 296.

Notably, Blue Cross/Blue Shield points to the varying

regulations promulgated by the federal government

addressing this issue. Compare Nondiscrimination in

Health and Health Education Programs or Activities,

Delegation of Authority, 85 Fed. Reg. 37,160, 37,244 (June

19, 2020) (“[T]his part applies to (1) Any health program or

activity . . . principally engaged in the business of providing

healthcare that receive Federal financial assistance . . .); with

Nondiscrimination in Health Programs and Activities, 81

Fed. Reg. 31,376, 31,432 (May 18, 2016) (“[I]f an issuer that

receives Federal financial assistance is principally engaged

in providing health insurance and also provides third party

administrator services, there is no principled basis on which

to exclude the law’s application to the third party

administrator services . . .”); and Nondiscrimination in

Health Programs and Activities, 89 Fed. Reg. 37,522,

37,627 (May 6, 2024) (“[The Office for Civil Rights] does

not intend to enforce this rule against a third party

administrator for a plan design that it did not design and over

which it has no control. . . .”).

Blue Cross/Blue Shield contends that the vagaries in the

various regulations promulgated over different

administrations resulted in a lack of the “unambiguous[]”

notice of a “condition on the grant of federal moneys”

required by the Supreme Court. Pennhurst, 451 U.S. at 17,

see also Arlington, 548 U.S. at 296 (noting that, considering

the perspective of the recipient of federal funding, a court

must inquire whether the recipient of the federal funds

PRITCHARD V. BLUE CROSS BLUE SHIELD OF IL 55

“would clearly understand . . . the obligations” set forth in

the conditions of the legislation).

I am not prepared to say that Blue Cross/Blue Shield’s

argument is a winning one. I am prepared to say that Blue

Cross/Blue Shield should have the opportunity to present

this argument to the district court in light of the majority’s

suggested arguments to the plaintiff on remand that were not

previously made to the district court. See Majority Opinion,

pp. 43-48. Allowing Blue Cross/Blue Shield to also make

its arguments that were not previously made to the district

court would level the playing field, a fundamental tenet of

our justice system. See Yamada v. Nobel Biocare Hldg. AG,

825 F.3d 536, 544 (9th Cir. 2016), as amended, (stating that

[o]ur adversarial system of justice is premised on the well-

tested principle that truth—as well as fairness—is best

discovered by powerful statements on both sides of the

question) (citation and internal quotation marks omitted).

To summarize, I concur only in the judgment because I

part company with the majority’s analysis that goes beyond

a discussion of the Supreme Court’s holding in Skrmetti and

a remand for the district court to apply Skrmetti in the first

instance. I see the majority’s analysis as exceeding a remand

and conducting a “first view” rather than a “review.” Cutter,

544 U.S. at 718 n.7. But, as the majority has ventured to

suggest its “first view” of the case for the plaintiffs to pursue

on remand, it certainly should not preclude Blue Cross/Blue

Shield from pursuing any available defenses on remand. See

Majority Opinion, p. 22 (concluding that Blue Cross/Blue

Shield “did not preserve its Spending Clause argument.”).

See Yamada, 825 F.3d at 544.