Eleventh Circuit Sitting En Banc Holds Gender-Affirming Care Policy Exclusion Does Not Violate Title VII 

On September 9, 2025, the U.S. Court of Appeals for the Eleventh Circuit, sitting en banc in Lange v. Houston County, Ga., No. 22-13626, found that a county health plan did not facially violate Title VII of the Civil Rights Act of 1964 (Title VII) on the basis of sex by covering medically necessary treatments for certain diagnoses but barring coverage for the plaintiff's gender affirming surgery. The full court departed with a previous Eleventh Circuit panel which had affirmed the district court decision granting plaintiff's motion for summary judgment and permanently enjoining the exclusion of gender affirming surgery from the county's insurance policy. 

As previously discussed, the plaintiff in this case is an employee of Houston County, Georgia diagnosed with gender dysphoria seeking gender-affirming surgery. Certain of this care was excluded by the plaintiff's health insurance plan, to include "[d]rugs," "[s]ervices[,] and supplies for a sex change and/or the reversal of a sex change." The plaintiff relied on the holding in Bostock v. Clayton County, 590 U.S. 644 (2020), that "discrimination based on homosexuality or transgender status necessarily entails discrimination based on sex," and argued that the policy violates Title VII because it reflects a "formal, facially discriminatory policy requiring adverse treatment of transgender employees based on sex," citing Hazen Paper Co. v. Biggins, 507 U.S. 604, 610 (1993). 

The en banc court relied heavily on the Supreme Court's recent decision in United States v. Skrmetti, 145 S. Ct. 1816 (2025), which extended the reasoning of Bostock outside of the Title VII context, but rejected the idea that there was discrimination on the basis of sex or transgender status as applied to state law prohibitions regarding coverage of gender-affirming care for minors. In applying the Skrmetti analysis to Lange, the court reasoned: "[T]he County's plan would cover the procedures that make up a sex change for other purposes, such as treatment for cancer or reconstructive surgery following a car accident, whether or not the employee who needed those procedures was transgender." This holding is a departure from the three-judge (split) panel, which previously found that the policy exclusion violates Title VII because it "denies health care coverage based on transgender status" and "transgender persons are the only plan participants who qualify for gender-affirming surgery." 

The en banc court also rejected the plaintiff's claim that the policy violates Title VII because it discriminates based on transgender status, finding that "[n]either the Supreme Court nor this Court has held that transgender status is separately protected under Title VII apart from sex." The court also rejected the plaintiff's argument that the exclusion discriminated based on sex stereotypes, reasoning that, if this were true, the plan "would presumably cover procedures to align a participant's physical characteristics with those of his or her biological sex," as well as the argument that the exclusion facially violates Title VII because it penalizes a person for transitioning as a "mischaracterization of the plan's function" because "[t]he fact that the plan excludes coverage for one treatment for gender dysphoria is not a penalty in any sense of the word."

The bulk of the September 9th decision is comprised of multiple concurring opinions and dissents. Judge Kevin C. Newsom wrote separately "simply to emphasize that [he doesn't] take either Skrmetti or today's en banc opinion to collapse the separate analyses that apply to claims under Title VII and the Fourteenth Amendment's Equal Protection Clause." Judge Robin S. Rosenbaum concurred on the application of Skrmetti to this case, even though Skrmetti was an Equal Protection Clause case, because "the first step in both Title VII and Equal Protection Clause cases requires us to determine whether the law or program at issue classifies on the basis of a protected status." According to Judge Rosenbaum, "[t]hough Title VII and Equal Protection Clause analyses don't always use the same understandings of discriminatory classifications to determine the answer to that first step, Skrmetti says it applied both understandings of discriminatory classifications and arrived at the same answer." But, Judge Rosenbaum reached this conclusion "with deep regret" because "the record compellingly reveals that Houston County precludes sex-affirming surgeries for discriminatory reasons," and because "Skrmetti incorrectly applies Bostock's test, so it wrongly determines that the Skrmetti law does not classify by sex" and improperly "imports the reasoning of Geduldig v. Aiello, 417 U.S. 484 (1974), into Title VII jurisprudence," when Title VII was amended to reject the same. 

The dissenting opinions argued, among other things, that the majority erred by "import[ing] equal protection reasoning into a Title VII case," including by relying on Skrmetti's application of Bostock when Bostock, standing alone, requires a finding that the plan terms here discriminate on the basis of sex under Title VII. The majority grappled with the dissent's treatment of Bostock, commenting that: "It is passing strange that our dissenting colleagues rely extensively on Bostock, and, at the same time, reject the Supreme Court's own explanation of what Bostock means ... Skrmetti's holding about the meaning of Bostock is binding on us unless and until the Supreme Court says otherwise. As lower court judges, we cannot shut our ears when the Supreme Court tells us how to apply its precedents."

The Eleventh Circuit now joins the Eighth and Tenth Circuits in applying Skrmetti to constitutional challenges to restrictions on gender-affirming care. While this en banc decision in Lange involves a Title VII claim and not an Equal Protection claim like the ones that went before the Eighth and Tenth Circuits, the Eleventh Circuit sitting en banc rejected this distinction as dispositive to resolution of the claim, finding: "The Supreme Court's reasoning in Skrmetti applies equally here. The County's policy does not pay for a sex change operation for anyone regardless of their biological sex." 

Husband and Wife State Viable ERISA Retaliation Claim Following Termination

On September 3, 2025, the U.S. District Court for the Western District of Pennsylvania issued a decision and order denying an ERISA plan sponsor's motion to dismiss ERISA retaliation claims filed against it by a couple who were allegedly terminated after the plan sponsor failed to timely remit employee contributions to the company's 401(k) plan. Myers v. Preston Management, Inc., No. 1:25-CV-00028-RAL (W.D. Pa. Sept. 3, 2025). In its decision, the court addressed whether the plaintiffs had statutory standing to proceed with their claims, as well as whether the allegations in the complaint stated viable retaliation claims under ERISA section 510, 29 U.S.C. § 1140.

According to the decision, plaintiff Jennifer Myers (Mrs. Myers), who served as Controller of the defendant, Preston Management, Inc. (Preston), was terminated after complaining to Preston's chief financial officer and its general manager about late remittances of participant contributions to the 401(k) plan and lost earnings on those late remittances. Her husband, plaintiff Roger Myers (Mr. Myers), who was employed as Preston's Sales Manager, was allegedly terminated the same day. The complaint asserts that Preston's stated reasons for the terminations, occurring three days after Mrs. Myers' complaint to the general manager, were false and that the actual reason both were let go was Mrs. Myers' complaints and "insistence as Controller on compliance" with Preston's legal obligation to make timely participant contributions.

The court rejected Preston's contention that Mr. Myers lacked statutory standing to assert an ERISA claim. The court first analyzed his claim for equitable relief in the form of reinstatement and backpay under ERISA section 502(a)(3). It concluded that "Mr. Myers had a right under the Plan and applicable regulations to timely deposits of his 401(k) contributions, and the Complaint supports a plausible inference that Preston terminated his employment with the specific intent, at least in part, to frustrate this right." According to the court, Mr. Myers asserts that because of the alleged unlawful action, he lost his employment and associated income and benefits, which was sufficient to support standing under section 502(a)(3). 

The court further concluded that Mr. Myers had standing to bring a claim under section 510, rejecting the defendant's assertion that Mr. Myers was impermissibly basing his retaliation claim on complaints allegedly made by Mrs. Myers. According to the court, Mr. Myers is not relying on his wife's exercise of rights to support his standing but bases his standing on his own status as a participant in Preston's plan and his termination that he claims was undertaken with "the specific intent to defeat his right to timely remittance of his 401(k) contributions." 

As to the merits of the plaintiffs' claims, the court explained that section 510 prohibits two types of retaliation: (1) adverse action for exercising any right to which a participant is entitled under an employee benefit plan or for the purpose of interfering with the attainment of such right; and (2) adverse action against any person because they have given information or testified in an inquiry or proceeding related to ERISA. The defendant argued that Mrs. Myers' internal complaints did not meet the Third Circuit's legal standards for an "inquiry or proceedings" under the second type of retaliation and, hence, the allegations failed to state a viable claim. The court, however, concluded that the plaintiffs stated a claim under both subparts of the first prong, which "prohibits employers from taking adverse employment action with a 'benefits-defeating' motive." The terminations both "eliminated [the plaintiffs'] rights to timely remittances of 401(k) plan contributions withheld from their paychecks" and "removed Mrs. Myers from a position from which she could monitor and insist on the company's compliance" with its obligation under the plan and applicable ERISA regulation.

The defendant was ordered to file an answer and the case is expected to proceed to discovery.

DOL Advisory Opinion States that Deferred Incentive Compensation Program Is Not an ERISA Plan

On September 9, 2025, the U.S. Department of Labor (DOL) issued an advisory opinion to Morgan Stanley Smith Barney (Morgan Stanley) that addressed whether the company's deferred incentive compensation program was an ERISA-covered plan. Specifically, Morgan Stanley asked DOL whether the program was an employee pension benefit plan under § 3(2)(A) of Title I of ERISA or whether it qualifies as an exempt bonus program under 29 C.F.R. § 2510.3-2(c). 

The advisory opinion addresses the Morgan Stanley deferred incentive compensation program for its financial advisors that provides award payments in the form of "an unsecured deferred stock award" and "an unsecured deferred cash-based award" (together, Deferred Compensation). The amount of Deferred Compensation a financial advisor receives is based on the advisor's "revenue and length of service" with Morgan Stanley and vests based on certain conditions being met, including "the advisor remaining continuously employed through the grant and vesting dates (4 years for stock awards and 6 years for cash awards)." In cases where the financial advisor does not meet the conditions of the program – including that they must be employed at Morgan Stanley at their scheduled vesting dates – their unvested Deferred Compensation is cancelled. The program contains certain exceptions to these conditions, which provide that the Deferred Compensation is not cancelled if the financial advisor's employment is terminated prior to the scheduled vesting dates due to: "(1) death; (2) disability; (3) retirement; (4) involuntary termination not involving any prohibited activity; or (5) termination due to government service not involving any prohibited activity."

DOL opined that based on program's structure and purpose to retain and reward financial advisors, it was not a type of program "contemplated by ERISA § 3(2)(A)" and in any case, qualified as "an exempt bonus program under 29 C.F.R. § 2510.3-2(c)." DOL stated that the materials submitted regarding the program did "not appear to indicate the existence of any of the surrounding circumstances that the Department has previously said would tend to support the finding that an arrangement constitutes a pension plan." The agency further opined that based on "both the program's design and operative provisions, its annual disclosures, the data on when most awards were received, and all other materials [Morgan Stanley] provided ... the mere fact that the terms of the program contemplate limited situations where an award could be paid after termination of employment does not implicate a deferral of income of the kind contemplated by ERISA section 3(2)(A)." The advisory opinion also noted that "the program does not involve the systematic deferral of payments to the termination of covered employment or beyond, which would preclude the deferred incentive compensation program from being a bonus program."

The advisory opinion is noteworthy as the issue addressed has been a point of litigation in two recent matters, including a decision by the Second Circuit involving Morgan Stanley (Shafer v. Morgan Stanley, No. 24-3272 (2nd Cir., July 9, 2025)) and a pending appeal to the Fourth Circuit involving Merrill Lynch (Milligan v. Merrill Lynch, No. 25-1385 (4th Cir.)). The Second Circuit in Shafer denied Morgan Stanley's request for a writ of mandamus directing the district court to strike its legal conclusion that the deferred compensation plans at issue are governed by ERISA. The Fourth Circuit is taking up the appeal of a decision by the district court in Merrill Lynch granting summary judgment in favor of Merrill Lynch and holding that the deferred compensation plan there was not an ERISA governed plan. 

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.