Kurt Herzog V. Kaiser Foundation Health Plan Of Washington, Et Ano

• Court: Court of Appeals of Washington
• Decided: May 4, 2026
• Docket: 87256-7
• Status: Unpublished

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

KURT HERZOG, on his own behalf and on behalf of similarly situated others, No. 87256-7-I

Appellant, DIVISION ONE

v. UNPUBLISHED OPINION

KAISER FOUNDATION HEALTH PLAN OF WASHINGTION; KAISER FOUNDATION HEALTH PLAN OF WASHINGTION OPTIONS, INC.,

Respondent.

COBURN, J. — Kurt Herzog’s doctor diagnosed him as suffering from obesity. His

doctor prescribed Victoza (liraglutide) as medically necessary. Herzog’s insurer denied

coverage of the drug because his plan uniformly excludes any drug treatment for

obesity. On behalf of a putative class, Herzog sued Kaiser Foundation Health Plan of

Washington and Kaiser Foundation Health Plan of Washington Optics, Inc. (collectively

“Kaiser”). He claims Kaiser violated the Washington Law Against Discrimination,

chapter 49.60 RCW, and the Consumer Protection Act, chapter 19.86 RCW. The trial

court dismissed the claims because, as a matter of law, insurance regulation WAC 284-

43-5642 authorized the exclusion. This court rejected this exact argument in Simonton 87256-7-I/2

v. HCA, No. 86988-4-I, slip op. at 4-11 (Wash. Ct. App. May 4, 2026). 1 We reverse and

remand.

FACTS

Because this case comes to us following a CR 12(b)(6) dismissal, the following

facts alleged in the complaint are presumed true. Wash. Trucking Associations v. State

Emp’t Sec. Dep’t, 188 Wn.2d 198, 207, 393 P.3d 761 (2017). A doctor diagnosed Kurt

Herzog as suffering from obesity. His doctor prescribed Victoza (liraglutide), a

prescription weight loss drug as medically necessary.

Obesity is a physiological medical condition characterized by excessive fat tissue

that affects one’s endocrine, cardiovascular, and musculoskeletal systems. Additionally,

obesity involves numerous pathophysiological processes, including changes in cellular,

hormonal, neurochemical, and organ levels. Therefore, it is a disease that can cause

concurrent changes in the body. For example, obesity neurochemically causes

inflammation within appetite control centers in the hypothalamus, decreasing the body’s

ability to signal hunger and satiety, and making it more challenging to decrease food

intake. Notably, obesity is different from being overweight because the latter means

having more body weight than is considered normal for an individual’s age and height

which is not, by itself, a disease.

Herzog’s health insurance provider, Kaiser Foundation Health Plan of

Washington, denied coverage of Victoza (liraglutide), an FDA approved treatment for

obesity. Herzog’s health insurance plan states that, for “Obesity Related Surgical

1 Oral argument for the instant case, Simonton, and Solorio v. Regence Blueshield, No. 87362-8-I were heard on the same day before the same panel. 2 87256-7-I/3

Services”, bariatric surgery and services related to obesity screening and counseling

are covered. In its exclusions section for obesity related surgical services it includes:

Obesity treatment and treatment for morbid obesity for any reason including any medical services, drugs, supplies, regardless of co- morbidities, except as described above; specialty treatment programs such as weight control self-help programs or memberships, such as Weight Watchers, Jenny Craig or other such programs; medications and related physician visits for medication monitoring.

In denying Herzog’s request for coverage, his insurer explained that Victoza (liraglutide)

is only covered if the insured “meet[s] medical necessity criteria (have a given disease,

condition, illness, or injury and/or tried and failed certain medications). The information

available to us did not show that you are being treated for a covered diagnosis of type 2

diabetes with additional criteria.” Additionally, Herzog’s insurer clarified that he is using

Victoza (liraglutide) for weight loss and “[m]edications used for weight loss are not

covered on your Kaiser Permanente Plan.” Subsequently, Herzog’s insurer included

preferred alternative prescription drug options for Herzog to discuss with a provider,

such as topiramate, bupropion, and naltrexone, as well as over the counter medication,

Alli. Herzog appealed his insurer’s decision declining coverage, which was again

denied.

On March 20, 2024, on behalf of a putative class, Herzog sued Kaiser, alleging

that its benefit design violated RCW 48.43.0128 and constituted a discriminatory act

under the Washington Law Against Discrimination (WLAD), RCW 49.60.030(1)(e), as

well as a violation of the Consumer Protection Act (CPA). Herzog claims that Kaiser

discriminates against the disabled—people who have been diagnosed as suffering from

obesity—by denying prescribed medications that are medically necessary to treat their

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diagnosed health condition. Under the WLAD, obesity is a recognized disability. Taylor

v. Burlington N. R.R. Holdings, Inc., 193 Wn.2d 611, 615, 444 P.3d 606 (2019).

Kaiser moved to dismiss Herzog’s lawsuit under CR 12(b)(6), arguing that, as a

matter of law, Herzog cannot assert a WLAD claim because what is permitted under

insurance regulation WAC XXX-XX-XXXX and RCW 48.43.0128 could not be considered

an unfair practice under the WLAD. RCW 48.43.0128(2) allows health plan carriers to

utilize reasonable medical management techniques. According to the Office of the

Insurance Commissioner’s (OIC) promulgated rules, a health benefit plan may, but is

not required to, include services for obesity or weight reduction or control in its essential

health benefit (EHB) benchmark plan. WAC XXX-XX-XXXX(1)(b)(viii). The trial court

granted Kaiser’s motion and dismissed Herzog’s complaint.

Herzog appeals.

DISCUSSION

Standard of Review

We review de novo an order granting a motion to dismiss under CR 12(b)(6).

FutureSelect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc., 180 Wn.2d 954, 962,

331 P.3d 29 (2014). A CR 12(b)(6) motion challenges the legal sufficiency of the

allegations in the complaint. McAfee v. Select Portfolio Servicing, Inc., 193 Wn. App.

220, 226, 370 P.3d 25 (2016). A court may dismiss a petitioner’s claim under CR

12(b)(6) for “failure to state a claim upon which relief can be granted.” The rule “weeds

out complaints where, even if what the plaintiff alleges is true, the law does not provide

a remedy.” McCurry v. Chevy Chase Bank, FSB, 169 Wn.2d 96, 102, 233 P.3d 861

(2010). “Dismissal under CR 12(b)(6) is appropriate in those cases where the plaintiff

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cannot prove any set of facts consistent with the complaint that would entitle the plaintiff

to relief.” Jackson v. Quality Loan Serv. Corp., 186 Wn. App. 838, 843, 347 P.3d 487

(2015). In considering a motion to dismiss under CR 12(b)(6), we take all facts alleged

in the complaint as true. FutureSelect Portfolio Mgmt., Inc., 180 Wn.2d at 962. Though

we may consider hypothetical facts, “‘[i]f a plaintiff’s claim remains legally insufficient

even under his or her proffered hypothetical facts, dismissal pursuant to CR 12(b)(6) is

appropriate.’” Id. at 963 (alteration in original) (quoting Gorman v. Garlock, Inc., 155

Wn.2d 198, 215, 118 P.3d 311 (2005)). We must determine whether the plaintiff can

prove any set of facts consistent with their complaint that would entitle them to relief.

Orwick v. City of Seattle, 103 Wn.2d 249, 254, 692 P.2d 793 (1984).

Discrimination in Insurance

Kaiser argues that WAC XXX-XX-XXXX authorizes them to exclude services to

treat obesity, such as prescription weight loss drugs. Section 5642 states, “A health

benefit plan may, but is not required to, include … as part of the EHB-benchmark

package … Obesity or weight reduction or control,” WAC XXX-XX-XXXX(1)(b)(viii), and

says the same of “Weight loss drugs,” WAC XXX-XX-XXXX(6)(b)(ii). In response, Herzog

alleges that section 5642 does not govern nondiscrimination compliance requirements

and has a narrow purpose of establishing benefit minimums.

We considered this very issue in Simonton, No. 86988-4-I, slip op. at 4-11, and

concluded that the purpose of section 5642 has more to do with concerns about

determining a plan’s actuarial value than establishing an exception to WLAD that

prohibits discrimination based on physical disability. We held that the WLAD and the

insurance code, under Title 48 RCW, with limited exceptions, bar discrimination in

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insurance. Id. at 4.

As explained in Simonton, the insurance code, Title 48 RCW, states in relevant

part that, notwithstanding any provision contained in Title 48 RCW to the contrary, “The

amount of benefits payable, or any term, rate, condition, or type of coverage may not …

be restricted, modified, excluded, or reduced on the basis of the presence of any

disability of the insured or prospective insured.” Id. at 4-5 (citing RCW 48.30.300(1)).

The WLAD guarantees “[t]he right to be free from discrimination” based on, among

other statuses, “the presence of any sensory, mental, or physical disability,” and this

includes “[t]he right to engage in insurance transactions.” Id. at 4 (citing RCW

49.60.030(1)(e)). The WLAD, however, allows “fair discrimination” unless it is prohibited

under RCW 48.43.0128, which specifically applies to health insurance. Simonton, No.

86988-4-I, slip op. at 5.

Under RCW 48.43.0128, a covered health carrier may not “[i]n its benefit design

or implementation of its benefit design, discriminate against individuals because of their

… present or predicted disability.” Id. at 6 (citing RCW 48.43.0128(1)(a)). “The

nondiscrimination statute allows excluding coverage for services to treat a disability for

an undefined range of valid reasons, for instance because they are experimental, not

effective, or not cost-effective (among other reasons), but it prohibits excluding

coverage for services simply because they are to treat that disability.” Simonton, No.

86988-4-I, slip op. at 7-8. “To do so would discriminate ‘because of’ that disability.” Id. at

8. This does not mean that a health plan carrier cannot use medical management

techniques or must cover a service that is not medically necessary. Id. at 6-7 (citing

RCW 48.43.0128(2), (5)). As a result, the Legislature required the OIC to adopt the

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rules necessary to implement RCW 48.43.0128(1) and (2) consistent with the Patient

Protection and Affordable Care Act (ACA). Id. at 5-6 (citing RCW 48.43.0128).

Accordingly, the ACA is a starting point to understand RCW 48.43.0128 and OIC’s rules

that implement that statute. Simonton, No. 86988-4-I, slip op. at 5.

The ACA requires health care benefit providers to consider disabled peoples’

needs and not discriminate against them. Id. at 6 (citing Schmitt v. Kaiser Found. Health

Plan of Wash., 965 F.3d 945, 955 (9th Cir. 2020)). Therefore, health insurance

providers must provide coverage consistent with a Secretary of Health and Human

Services defined EHBs package. Id. at 8-9 (citing 42 U.S.C. § 18022(b)(1)(A)-(J)). An

insurer that provides EHBs must offer benefits that are “substantially equal” to an “EHB-

benchmark” plan. Id. at 9 (citing 45 C.F.R. § 156.115(a)(1)). When a state selects a

base-benchmark plan, it can be updated to meet ACA standards. Id. (citing 45 C.F.R. §

156.100, .100(b)). “The OIC first established the Washington benchmark plan in

regulations adopted in 2013.” Id. (citing WSR 13-15-025).

Under WAC XXX-XX-XXXX(1), the commissioner defined two EHB categories

applicable to the instant case, “[a]mbulatory patient services” and “[p]rescription drugs”

as well as the “items and services” within those categories. See id. The OIC also

adopted a nondiscrimination provision in health plan design under WAC XXX-XX-XXXX

which states, in relevant part, that “[a]n issuer offering a plan … may not … [d]esign

plan benefits, or implement its plan benefits, in a manner that results in discrimination

against individuals because of their … present or predicted disability.” WAC 284-43-

5940(1)(a).

Under “[a]mbulatory patient services,” EHB-benchmark plans may cover “obesity

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or weight reduction or control” other than nutritional counseling and obesity-related

services that the U.S. Preventative Services Task Force for prevention and chronic care

has issued recommendations on. Simonton, No. 86988-4-I, slip op. at 10 (citing WAC

XXX-XX-XXXX(1)(b)(viii)). Additionally, under the “prescription drug services” category an

EHB-benchmark plan may cover “Weight loss drugs.” See id. (citing WAC 284-43-

5642(6)(b)(ii)). When an EHB-benchmark plan covers nonrequired benefits, it is not

allowed to include those benefits in establishing the actuarial value for that category. Id.

(citing WAC XXX-XX-XXXX(1)(b); (6)(b)).

Upon examination of section 5642, its aim is to “determin[e] a plan’s actuarial

value.” Id. (citing WAC XXX-XX-XXXX(1)). Generally, section 5642 states the benefits that

a plan must include, specifies which benefits a plan may include, then explains that the

latter benefits cannot be included when determining a plan’s actuarial value. Id.

This interpretation of section 5642 is consistent with the ACA’s goal of providing

coverage for EHBs. Id. at 11. Specifically, federal law allows states to prohibit benefit

substitution “within the same EHB category,” 45 C.F.R. § 156.115(b)(2), consistent with

WAC XXX-XX-XXXX(1)(b) and (6)(b). Id. Moreover, section 5642 is harmonious “with the

principle that a plan must ‘provide coverage that is substantially equal to the EHB-

benchmark plan,’ where ‘substantially equal’ requires that each EHB category be a

meaningful health benefit and deliver value substantially equal to the EHB-benchmark

plan both in the aggregate and category-by-category.” Id. (citing WAC 284-43-

5622(1)(a)-(b)). Therefore, section 5642 ensures that EHBs coverage is not reduced

without reducing the plan’s actuarial value and categorization under the ACA because

when a plan covers a non-mandatory benefit, such as obesity treatment, it does not

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contribute to the actuarial value. Id.

“But these background purposes do not support that section 5642 also means

that a plan providing minimum benefits is not discriminatory.” Id. In Simonton, we

analyzed the ACA and held that, “compliance with federal and state law regarding

essential health benefits did not guarantee compliance with the ACA’s nondiscrimination

requirement.” Id. (citing Schmitt, 965 F.3d at 956). “The nondiscrimination requirement

of RCW 48.43.0128 must be met independently of compliance with the essential health

benefits mandates of section 5642.” Id.

The WLAD codifies discrimination of any act in violation of RCW 49.60.030(1),

which expressly states that this civil right includes, but is not limited to, the right to

engage in insurance transactions. Id. at at 17-18 (citing RCW 49.60.030(1)(e)). Under

the WLAD, unlawful practices under RCW 48.30.300 include when an entity in the

business of insurance in this state restricts or excludes coverage based on the

presence of any disability of the insured. Id. at 4-5 (citing RCW 48.30.300(1)).

We explained in Simonton:

Excluding coverage for supported clinical or cost-benefit reasons, among others, is not unlawfully discriminatory. RCW 48.43.0128(2), (5). There could be “a reasonable, nondiscriminatory reason” for the exclusion for prescription drugs for obesity, and even if [Herzog] were to prevail and the exclusion had to be limited to the extent it is discriminatory, the plan could still use exclusions “based on nondiscriminatory standards” such as excluding “treatment that is experimental or has a high cost-to-benefit ratio” based on the efficacy of the treatment and its cost at the time the benefit plan became effective. Schmitt, 965 F.3d at 958.

Id. at 20. In the instant case, it is undisputed that, with the exception of bariatric surgery

and services related to obesity screening and counseling, Herzog’s health plan

excludes obesity treatment, including drugs for obesity treatment and treatment for

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morbid obesity for any reason. 2

CONCLUSION

The trial court erred in concluding that, as a matter of law, Herzog has failed to

state a claim upon which relief can be granted. Because Kaiser based its motion to

dismiss the CPA claim for the same basis, we reverse and remand.

WE CONCUR:

2 To the extent Kaiser, in passing, disputes Herzog’s factual assertions, they are not relevant in a CR 12(b)(6) dismissal where we presume all facts asserted in the complaint are true. 10