Insurer fined for failure to cover gender reassignment

State regulators have issued $200,000 in penalties against the health insurer Health Net for violating antidiscrimination laws by denying coverage to several patients who sought gender reassignment surgery.

It is the first time the California Department of Managed Health Care, which regulates HMO plans in the state, has issued an enforcement action against an insurer for violating the Insurance Gender Nondiscrimination Act, a department spokesman said. The state law, which took effect in 2012, prohibits health plans from discriminating against people based on gender identity or expression.

The agency in late July found that Health Net and its medical groups denied attempts by seven people who sought medical services related to gender reassignment surgery between 2013 and 2015, according to a letter of agreement signed by a Health Net executive and the agency’s office of enforcement. Those services included testosterone injections, gender reassignment surgery, bilateral mastectomy and facial feminization surgery.

In three of the seven cases, Health Net denied coverage because it considered the services cosmetic in nature. In at least three of the cases, the insurer based its denial on exclusions

Health Net denied coverage in three cases because it considered them cosmetic.

or limitations in the patients’ plan based on their transgender status, the agency said.

California is one of 15 states that have laws or regulations prohibiting health insurers from excluding transition-related care from coverage, according to the Transgender Law Center, the Oakland civil rights organization. In 2013, the Department of Managed Health Care ordered health plans to remove exclusions of coverage and limitations related to gender transition.

Health Net has agreed to take corrective actions by Sept. 30, including submitting written confirmation that its health plans comply with state antidiscrimination laws. It will also evaluate whether to reimburse the out-of-pocket expenses that the seven affected patients incurred as a result of the procedures not being covered by insurance. The Department of Managed Health Care declined to identify the seven individuals, citing patient confidentiality.

A Health Net spokesman did not immediately return a request for comment Wednesday.

The Department of Managed Health Care has taken three previous enforcement actions against health plans over their handling of diagnoses and services for individuals with gender dysphoria, in which people feel emotionally and psychologically different from their biological sex.

The American Medical Association does not take a position on specific treatment options for gender dysphoria, such as hormone therapy or surgery, but has indicated that insurers should cover treatment as long as the patient and his or her physician have determined it is the most appropriate option.

Catherine Ho is a San Francisco Chronicle staff writer. Email: cho@sfchronicle.com Twitter: @Cat_Ho