                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


ANDREA SCHMITT, on her own                No. 18-35846
behalf, and on behalf of all similarly
situated individuals; ELIZABETH              D.C. No.
MOHUNDRO, on her own behalf, and          2:17-cv-01611-
on behalf of all similarly situated            RSL
individuals,
                 Plaintiffs-Appellants,
                                            OPINION
                  v.

KAISER FOUNDATION HEALTH PLAN
OF WASHINGTON; KAISER
FOUNDATION HEALTH PLAN OF THE
NORTHWEST; KAISER FOUNDATION
HEALTH PLAN, INC.,
            Defendants-Appellees.

      Appeal from the United States District Court
        for the Western District of Washington
       Robert S. Lasnik, District Judge, Presiding

        Argued and Submitted November 8, 2019
                 Seattle, Washington

                    Filed July 14, 2020
2          SCHMITT V. KAISER FOUND. HEALTH PLAN

     Before: Ronald M. Gould and Jacqueline H. Nguyen,
    Circuit Judges, and Gregory A. Presnell, * District Judge.

                   Opinion by Judge Nguyen


                          SUMMARY **


          Patient Protection and Affordable Care Act

    The panel affirmed in part and reversed in part the
district court’s dismissal without leave to amend of an action
alleging that a health insurer violated the Patient Protection
and Affordable Care Act’s nondiscrimination mandate by
excluding coverage of all hearing loss treatment except
cochlear implants.

    Plaintiffs claimed that the insurer’s plans discriminated
against hearing disabled people in violation of section 1557
of the ACA, which incorporates by reference the grounds
protected by four earlier nondiscrimination statutes,
including the Rehabilitation Act, and prohibits
discrimination on those grounds in the health care system,
including in health care contracts. The panel agreed with the
district court that plaintiffs failed to state a plausible
discrimination claim. The panel held that the ADA
specifically prohibits discrimination in plan benefit design,
and a categorical exclusion of treatment for hearing loss

      *
      The Honorable Gregory A. Presnell, United States District Judge
for the Middle District of Florida, 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.
         SCHMITT V. KAISER FOUND. HEALTH PLAN               3

would raise an inference of discrimination against hearing
disabled people notwithstanding that it would also adversely
affect individuals with nondisabling hearing loss. But the
exclusion here was not categorical. The panel held that
while the insurer’s coverage of cochlear implants was
inadequate to serve plaintiffs’ health needs, it might
adequately serve the needs of hearing disabled people as a
group. Because amendment might not be futile, the panel
reversed the district court’s dismissal without leave to amend
and remanded.


                        COUNSEL

Eleanor Hamburger (argued) and Richard E. Spoonemore,
Sirianni Youtz Spoonemore Hamburger PLLC, Seattle,
Washington, for Plaintiffs-Appellants.

Medora A. Marisseau (argued) and Mark A. Bailey, Karr
Tuttle Campbell, Seattle, Washington, for Defendants-
Appellees.

Huma Zarif, Northwest Health Law Advocates, Seattle,
Washington; Sarah Somers, Elizabeth Edwards, and Wayne
Turner, National Health Law Program, Carrboro, North
Carolina; for Amici Curiae National Health Law Program
and Northwest Health Law Advocates.

Carly A. Myers, Silvia Yee, and Arlene B. Mayerson,
Disability Rights Education & Defense Fund, Berkeley,
California, for Amici Curiae Disability Rights Education
and Defense Fund; National Association of the Deaf;
Bazelon Center for Mental Health Law; Hearing Loss
Association of America; Hearing Loss Association, Oregon
State Association; Washington State Communication
4        SCHMITT V. KAISER FOUND. HEALTH PLAN

Access Project; Oregon Communication Access Project; and
California Communication Access Project.


                         OPINION

NGUYEN, Circuit Judge:

    Section 1557 of the Patient Protection and Affordable
Care Act (“ACA”), 42 U.S.C. § 18116, prohibits covered
health insurers from discriminating based on various
grounds, including disability. Prior to the ACA’s enactment,
an insurer could generally design plans to offer or exclude
benefits as it saw fit without violating federal
antidiscrimination law—in particular, the Rehabilitation
Act—so long as the insurer did not discriminate against
disabled people in providing treatment for whatever
conditions it chose to cover. The primary issue before us is
whether the ACA’s nondiscrimination mandate imposes any
constraints on a health insurer’s selection of plan benefits.
We hold that it does.

    Andrea Schmitt and Elizabeth Mohundro have hearing
loss severe enough to qualify them as disabled. They require
treatment other than cochlear implants, but their Kaiser
health insurance plans exclude all hearing loss treatment
except cochlear implants. In a putative class action, Schmitt
and Mohundro allege that Kaiser violated section 1557 when
designing plan benefits.        They claim that Kaiser’s
categorical exclusion of most hearing loss treatment
discriminates against hearing disabled people. The district
court ruled that Kaiser’s plans do not exclude benefits based
on disability because the plans treat individuals with hearing
loss alike, regardless of whether their hearing loss is
disabling.
         SCHMITT V. KAISER FOUND. HEALTH PLAN                5

    We agree with the district court that Schmitt and
Mohundro have failed to state a plausible discrimination
claim. The ACA specifically prohibits discrimination in
plan benefit design, and a categorical exclusion of treatment
for hearing loss would raise an inference of discrimination
against hearing disabled people notwithstanding that it
would also adversely affect individuals with non-disabling
hearing loss. But the exclusion here is not categorical.
While Kaiser’s coverage of cochlear implants is inadequate
to serve Schmitt and Mohundro’s health needs, it may
adequately serve the needs of hearing disabled people as a
group. Because the pleadings do not suggest otherwise, we
affirm the district court’s dismissal of the second amended
complaint. But because amendment may not be futile, we
reverse the district court’s dismissal without leave to amend
and remand so that Schmitt and Mohundro have that
opportunity.

                 I. Statutory Background

A. Essential Health Benefits

    Congress enacted the ACA “to increase the number of
Americans covered by health insurance and decrease the cost
of health care.” Nat’l Fed’n of Indep. Bus. v. Sebelius,
567 U.S. 519, 538 (2012). The ACA requires most
Americans to maintain “minimum essential coverage,”
26 U.S.C. § 5000A(a), which they can do through a variety
of health insurance plans, such as those provided by their
employer or the government or purchased directly from
private carriers. See id. § 5000A(f). Plans that insurers offer
to individuals and small employers must include an
6         SCHMITT V. KAISER FOUND. HEALTH PLAN

“essential health benefits package.” 1 42 U.S.C. § 300gg-
6(a); see also 45 C.F.R. § 147.150(a) (“A health insurance
issuer offering health insurance coverage in the individual or
small group market must ensure that such coverage includes
the essential health benefits package . . . .”).

    The ACA directs the Secretary of Health and Human
Services to define, subject to certain constraints, the
“essential health benefits” that plans in the individual and
small group markets must cover. 42 U.S.C. § 18022(b)(1).
The definition must include at least ten specified “general
categories” of benefits, including “[r]ehabilitative and
habilitative services and devices,” 2 as well as the “items and
services” within those categories. Id. § 18022(b)(1),
(b)(1)(G). The scope of coverage must be “equal to the
scope of benefits provided under a typical employer plan,”
and the agency must conduct “a survey of employer-
sponsored coverage” to inform its determination. Id.
§ 18022(b)(2)(A).

    Under agency regulations, an insurer providing essential
health benefits must offer benefits that are “substantially
equal” to a “benchmark” plan set by the state. 45 C.F.R.
§ 156.115(a)(1). The State of Washington selects as its

     1
       A “small” employer generally has no more than 50 employees, but
states can extend the definition to encompass up to 100 employees. See
42 U.S.C. § 18024 (b)(2)–(3).

    2
       The other categories are: “[a]mbulatory patient services”;
“[e]mergency services”; “[h]ospitalization”; “[m]aternity and newborn
care”; “[m]ental health and substance use disorder services, including
behavioral health treatment”; “[p]rescription drugs”; “[l]aboratory
services”; “[p]reventive and wellness services and chronic disease
management”; and “[p]ediatric services, including oral and vision care.”
42 U.S.C. § 18022(b)(1)(A)–(F), (H)–(J).
         SCHMITT V. KAISER FOUND. HEALTH PLAN                7

benchmark plan “the largest small group plan in the state by
enrollment,” which it supplements “as needed” to ensure
coverage of “all of the ten essential health benefits
categories.” Wash. Rev. Code § 48.43.715(1)–(2); accord
45 C.F.R. § 156.100(a)(1). Washington’s benchmark plan
includes cochlear implants as “rehabilitative services” but
excludes “[h]earing aids other than cochlear implants.”
Wash. Admin. Code § XXX-XX-XXXX(7)(b)(i), (c)(iv).

B. Nondiscrimination Statutes

   1. The Rehabilitation Act

    The Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq.,
was the first major federal statute designed to protect the
rights of individuals with disabilities. Smith v. Barton,
914 F.2d 1330, 1338 (9th Cir. 1990). Its linchpin, section
504, “creates a private right of action for individuals
subjected to disability discrimination.” Fleming v. Yuma
Reg’l Med. Ctr., 587 F.3d 938, 940 (9th Cir. 2009); see
29 U.S.C. § 794a(a)(2).

    Section 504 broadly provides that “[n]o otherwise
qualified individual with a disability . . . shall, solely by
reason of her or his disability, be excluded from the
participation in, be denied the benefits of, or be subjected to
discrimination under any [federally funded] program or
activity.” 29 U.S.C. § 794(a). However, section 504 does
not require an insurer to design plan benefits so as to avoid
imposing a disproportionate burden on disabled people—the
insurer need only provide disabled people “meaningful
access” to whatever benefits it chooses to offer. Alexander
v. Choate, 469 U.S. 287, 301 (1985). In Choate, the
Supreme Court rejected a Rehabilitation Act challenge to a
state Medicaid regulation that adversely affected a
disproportionate number of disabled users of hospital
8        SCHMITT V. KAISER FOUND. HEALTH PLAN

services. Id. at 289. The Court reasoned that the rule applied
equally to disabled and non-disabled people, noting that it
was “neutral on its face, [was] not alleged to rest on a
discriminatory motive, and [did] not deny [disabled people]
access to or exclude them from the particular package of
Medicaid services [the state had] chosen to provide.” Id.
at 309.

    2. The Affordable Care Act

    Section 1557 of the ACA prohibits certain types of
discrimination in health care. It does so by referencing four
other statutes, including section 504 of the Rehabilitation
Act, that address discrimination based on various suspect
grounds: “race, color, or national origin,” 42 U.S.C. § 2000d,
“age,” id. § 6101, “sex,” 20 U.S.C. § 1681, and “disability,”
29 U.S.C. § 794(a). See 42 U.S.C. § 18116(a). Section 1557
provides that “an individual shall not, on the ground
prohibited under [the four enumerated statutes] . . . , be
excluded from participation in, be denied the benefits of, or
be subjected to discrimination under, any health program or
activity” receiving federal funding, “including . . . contracts
of insurance.” Id.

C. Factual and Procedural History

    Schmitt and Mohundro are insured by Kaiser under
policies offered through their respective employers. 3 They
both have been diagnosed with disabling hearing loss. They
require treatment other than cochlear implants, such as
outpatient office visits to a licensed audiologist and hearing
    3
    Schmitt is insured by defendant Kaiser Foundation Health Plan of
Washington, and Mohundro is insured by Kaiser Foundation Health Plan
of Washington Options Inc. We refer to these entities and the other
named defendants collectively as “Kaiser.”
         SCHMITT V. KAISER FOUND. HEALTH PLAN               9

aids or other durable medical equipment or prosthetic
devices. Their Kaiser policies cover cochlear implants and
related screening tests but exclude all other programs or
treatments for hearing loss and hearing care.

    In October 2017, Schmitt and Mohundro filed this class
action against Kaiser, asserting a single claim under the
ACA. 4 They alleged that Kaiser’s exclusion of all
treatments for hearing loss other than cochlear implants
discriminates against putative class members on the basis of
their disability in violation of section 1557. The district
court granted Kaiser’s motion to dismiss their second
amended complaint for failure to state a claim and entered
judgment.

    The district court concluded that “insurers have
discretion” over “the scope of benefits provided in the first
instance” so long as they “provide [the] benefits offered in a
non-discriminatory manner.” It therefore ruled that Schmitt
and Mohundro’s allegations “do not . . . give rise to a
plausible inference that they were excluded from
participation in or denied the benefits of their health plan
under . . . the ACA” because “[t]he benefits plaintiffs seek
are not part of the plan in which they participate.” Although
the court suggested that a coverage exclusion or limitation
might “be impermissible and a violation Section 1557 if it
were motivated by discriminatory intent,” it did not address
the issue. The court found that Schmitt and Mohundro failed
to raise an inference of discrimination because “the hearing
loss exclusion . . . is not designed with reference to a



   4
     Mohundro was added as a plaintiff in the second amended
complaint.
10       SCHMITT V. KAISER FOUND. HEALTH PLAN

disability and applies to both disabled and nondisabled plan
participants.”

        II. Jurisdiction and Standard of Review

    The district court had jurisdiction pursuant to 28 U.S.C.
§ 1331, and we have jurisdiction pursuant to 28 U.S.C.
§ 1291. We review de novo the district court’s dismissal of
the operative complaint for failure to state a claim. See
Segalman v. Sw. Airlines Co., 895 F.3d 1219, 1222 (9th Cir.
2018).

                       III. Discussion

A. Legal Standards Governing a Discrimination Claim
   Under Section 1557

    Applying section 1557 requires an understanding of its
relationship to previous civil rights statutes. Section 1557
incorporates by reference the grounds protected by four
earlier    nondiscrimination      statutes    and     prohibits
discrimination on those grounds in the health care system—
as relevant here, in health insurance contracts. See 42 U.S.C.
§ 18116(a). In addition to the Rehabilitation Act, section
1557 invokes Title VI of the Civil Rights Act of 1964 (“Title
VI”), 42 U.S.C. § 2000d, Title IX of the Education
Amendments Act of 1972 (“Title IX”), 20 U.S.C. § 1681,
and the Age Discrimination Act of 1972, 42 U.S.C. § 6101.

    Congress occasionally drafts statutes by referencing the
substantive provisions of earlier-enacted laws. See Panama
R.R. v. Johnson, 264 U.S. 375, 391–92 (1924) (observing
that “a generic reference” to an existing statute “is a
recognized mode of incorporating one statute or system of
statutes into another, and serves to bring into the latter all
that is fairly covered by the reference”). The question is how
        SCHMITT V. KAISER FOUND. HEALTH PLAN              11

much of the earlier statutes Congress meant to incorporate.
As usual, we start with the statute’s text. See Jam v. Int’l
Fin. Corp., 139 S. Ct. 759, 769 (2019) (“[A]bsent a clearly
expressed legislative intention to the contrary . . . the
legislative purpose is expressed by the ordinary meaning of
the words used.” (quoting Am. Tobacco Co. v. Patterson,
456 U.S. 63, 68 (1982))).

       (a) In general

           Except as otherwise provided for in [the
           ACA or its amendments], an individual
           shall not, on the ground prohibited under
           [Title VI], [Title IX], the Age
           Discrimination Act . . . , or [the
           Rehabilitation Act], be excluded from
           participation in, be denied the benefits of,
           or be subjected to discrimination under,
           any [federally funded] health program or
           activity     ....     The     enforcement
           mechanisms provided for and available
           under such [T]itle VI, [T]itle IX,
           [Rehabilitation Act], or such Age
           Discrimination Act shall apply for
           purposes of violations of this subsection.

       (b) Continued application of laws

           Nothing in [the ACA or its amendments]
           shall be construed to invalidate or limit
           the rights, remedies, procedures, or legal
           standards available to individuals
           aggrieved under [Title VI], [Title VII of
           the Civil Rights Act of 1964, 42 U.S.C.
           § 2000e et seq.], [Title IX], [the
12       SCHMITT V. KAISER FOUND. HEALTH PLAN

            Rehabilitation Act], or the Age
            Discrimination Act . . . , or to supersede
            State laws that provide additional
            protections against discrimination on any
            basis described in subsection (a).

42 U.S.C. § 18116.

    The first sentence of section 1557(a) is similar to the first
sentence of section 504 of the Rehabilitation Act. Both
statutes provide that an individual with a disability shall not,
on that ground, “be excluded from the participation in, be
denied the benefits of, or be subjected to discrimination
under any [federally-funded health] program or activity.”
29 U.S.C. § 794(a); accord 42 U.S.C. § 18116(a).

    But the two statutes are dissimilar in two respects. First,
they differ in scope. Section 1557 is both broader and
narrower than the Rehabilitation Act. It is broader because
the Rehabilitation Act addresses only disability
discrimination, and section 1557 concerns discrimination
based on several additional grounds. It is narrower because
the Rehabilitation Act addresses disability discrimination
generally whereas section 1557 is limited to discrimination
in the context of health programs or activities.

    Second, the Rehabilitation Act prohibits discrimination
“solely by reason of [an individual’s] disability,” 29 U.S.C.
§ 794(a) (emphasis added), while section 1557 prohibits
discrimination “on the ground prohibited under . . . [the
Rehabilitation Act],” 42 U.S.C. § 18116(a), i.e., on the
ground of disability. In this regard, section 1557 is worded
more similarly to the other three statutes it references. See
42 U.S.C. § 2000d (prohibiting discrimination “on the
ground of race, color, or national origin”); 20 U.S.C.
§ 1681(a) (same “on the basis of sex”); 42 U.S.C. § 6102
         SCHMITT V. KAISER FOUND. HEALTH PLAN               13

(same “on the basis of age”). While section 1557’s omission
of the modifier “solely” could point to a less strict causal
standard than under the Rehabilitation Act, see K.M. ex rel.
Bright v. Tustin Unified Sch. Dist., 725 F.3d 1088, 1099 (9th
Cir. 2013), that presupposes a single legal standard
governing all section 1557 claims rather than separate
standards for each protected classification drawn from case
law interpreting the incorporated statutes.

     The text is ambiguous on this score. Section 1557(a)
incorporates only the prohibited “ground[s]” and “[t]he
enforcement mechanisms provided for and available under”
the four civil rights statutes. A prohibited “ground” for
discrimination is not typically understood to encompass the
legal elements necessary to establish a discrimination claim;
it is simply the protected classification at issue. See, e.g.,
Perry v. Merit Sys. Prot. Bd., 137 S. Ct. 1975, 1982 (2017)
(“He alleged discrimination on grounds of race, age, and
disability . . . .”). And “enforcement mechanism” may mean
no more than “the process for compelling compliance with a
substantive right, not the substantive right itself.” Doe v.
BlueCross BlueShield of Tenn., Inc., 926 F.3d 235, 239 (6th
Cir. 2019). Even if one assumes that “enforcement
mechanisms” includes the claims available under the four
statutes and the standards used to evaluate them, it is unclear
from section 1557’s text whether a plaintiff alleging one type
of discrimination can utilize any of the statutes’ enforcement
mechanisms or only the one corresponding to the
classification at issue.

   The agency appears to have taken the view that a plaintiff
may take advantage of enforcement mechanisms available in
any of the four incorporated statutes. In response to
regulations proposed by the Department of Health and
Human Services’ Office of Civil Rights (“OCR”), several
14       SCHMITT V. KAISER FOUND. HEALTH PLAN

commenters sought clarification “that all enforcement
mechanisms available under the statutes listed in [s]ection
1557 are available to each [s]ection 1557 plaintiff, regardless
of the plaintiff’s protected class.” Nondiscrimination in
Health Programs and Activities, 81 Fed. Reg. 31,375, 31,439
(May 18, 2016). Their concern was the availability of a
disparate impact theory of discrimination—they believed
that Title VI did not allow it but the other three statutes did.
See id. at 31,440. OCR responded that it “interprets [s]ection
1557 as authorizing a private right of action for claims of
disparate impact discrimination on the basis of any of the
criteria enumerated in the legislation.” Id.

    Ordinarily, we would defer to an agency’s reasonable
interpretation of an ambiguous statute that it administers.
See Rust v. Sullivan, 500 U.S. 173, 184 (1991). Here,
however, OCR’s interpretation appears to be based on the
assumption that certain civil rights statutes permit disparate
impact claims, an assumption that may not be accurate.

    Title VI served as the model for Title IX, the Age
Discrimination Act, and the Rehabilitation Act, so we
interpret the four statutes similarly. See U.S. Dep’t of
Transp. v. Paralyzed Veterans of Am., 477 U.S. 597, 600 n.4
(1986); see also Nat’l Coll. Athletic Ass’n v. Smith, 525 U.S.
459, 466 n.3 (1999) (noting that the statutes are “defined in
nearly identical terms”). Title VI implies a private right of
action for intentional discrimination. See Alexander v.
Sandoval, 532 U.S. 275, 279–80 (2001). For a time, the
Supreme Court had construed Title VI to allow disparate
impact claims as well. See Lau v. Nichols, 414 U.S. 563, 568
(1974) (“Discrimination is barred which has that effect even
though no purposeful design is present . . . .”). Sandoval
shut that door. See Sandoval, 532 U.S. at 285 (“[W]e have
         SCHMITT V. KAISER FOUND. HEALTH PLAN                15

since rejected Lau’s interpretation of [Title VI] as reaching
beyond intentional discrimination.”).

    Before the disparate impact door closed, though, we and
other circuits relied on the Title VI authority to hold that the
Rehabilitation Act permits disparate impact claims. See,
e.g., Crowder v. Kitagawa, 81 F.3d 1480, 1484 (9th Cir.
1996); Prewitt v. U.S. Postal Serv., 662 F.2d 292, 306 (5th
Cir. Unit A Nov. 1981); NAACP v. Med. Ctr., Inc., 657 F.2d
1322, 1331 (3d Cir. 1981) (en banc). Although it is unclear
whether a disparate impact theory remains permissible under
the Rehabilitation Act after Sandoval, we need not reach that
issue because here Schmitt and Mohundro did not allege a
disparate impact claim.

    Given the similar analytical framework applied to claims
under Title VI, Title IX, the Age Discrimination Act, and the
Rehabilitation Act, we need not decide whether section 1557
incorporates their legal standards and, if so, how. The
parties agree, and we can assume, that the case law
construing the Rehabilitation Act generally applies to claims
under section 1557 for disability discrimination by a health
care insurer.

    A Rehabilitation Act claim requires a showing that
(1) the plaintiff is an individual with a disability; (2) she is
otherwise qualified to receive the benefit; (3) she was denied
the benefits of the program solely by reason of her disability;
and (4) the program receives federal financial assistance.
Updike v. Multnomah County, 870 F.3d 939, 949 (9th Cir.
2017), cert. denied, 139 S. Ct. 55 (2018). While a private
plaintiff must show intentional discrimination under the
statutes modeled after Title VI, we interpret this requirement
“somewhat more broadly” for Rehabilitation Act claims in
16        SCHMITT V. KAISER FOUND. HEALTH PLAN

light of that statute’s purpose. 5 Mark H. v. Lemahieu,
513 F.3d 922, 937 (9th Cir. 2008). The claim at issue here—
that Kaiser designed its plan benefits in a discriminatory
way—inherently involves intentional conduct. 6 See id.
at 936 (“To ‘design’ something to produce a certain, equal
outcome involves some measure of intentionality.”).

B. The ACA Prohibits Discrimination in the Design of
   Plan Benefits

      The ACA provides that “[i]n defining the essential health
benefits,” the agency must “take into account the health care
needs of diverse segments of the population, including . . .
persons with disabilities,” and “not make coverage decisions
. . . or design benefits in ways that discriminate against
individuals because of their . . . disability.” 42 U.S.C.
§ 18022(b)(4)(B)–(C) (emphasis added). In line with this
directive, the agency promulgated a regulation that an
insurer “does not provide [essential health benefits] if its
benefit design, or the implementation of its benefit design,
discriminates based on an individual’s . . . present or
predicted disability . . . , or other health conditions.”

     5
        In drafting the Rehabilitation Act, Congress perceived
discrimination against disabled persons “to be most often the product,
not of invidious animus, but rather of thoughtlessness and indifference.”
Choate, 469 U.S. at 295. “[M]uch of the conduct that Congress sought
to alter . . . would be difficult if not impossible to reach were the
[Rehabilitation] Act construed to proscribe only conduct fueled by a
discriminatory intent.” Id. at 296–97. Choate’s “meaningful access”
standard was an attempt to honor Congressional intent while “keep[ing]
§ 504 within manageable bounds.” Id. at 299.

     6
      To be entitled to monetary damages, however, Schmitt and
Mohundro “must prove a mens rea of ‘intentional discrimination’ . . . by
showing ‘deliberate indifference’ [or] ‘discriminatory animus.’” Mark
H., 513 F.3d at 938.
         SCHMITT V. KAISER FOUND. HEALTH PLAN                17

45 C.F.R. § 156.125(a). Another regulation prohibits health
insurers from “[having] or implement[ing] . . . benefit
designs that discriminate on the basis of . . . disability.” Id.
§ 92.207(b)(2).     Benefit design, though intentionally
undefined, “includ[es] covered benefits, benefits limitations
or restrictions, and cost-sharing mechanisms, such as
coinsurance,       copayments,        and         deductibles.”
Nondiscrimination in Health Programs and Activities,
81 Fed. Reg. at 31,376 (emphasis added).

    In holding that the Rehabilitation Act does not cover
discriminatory plan benefit design, the Supreme Court
rejected a group of Medicaid recipients’ attempt to define the
benefit at issue as “the amorphous objective of ‘adequate
health care.’” Choate, 469 U.S. at 303. “Medicaid
programs,” the Court explained, “do not guarantee that each
recipient will receive that level of health care precisely
tailored to his or her particular needs,” id., and states have
long had “discretion to choose the proper mix of amount,
scope, and duration limitations on services covered by state
Medicaid.” Id. at 307. The Rehabilitation Act does not
impose a general requirement on “each recipient of federal
funds first to evaluate the effect on [disabled people] of
every proposed action that might touch [their] interests . . . ,
and then to consider alternatives for achieving the same
objectives with less severe disadvantage to [them].” Id.
at 298, 307.

    The ACA, in contrast, does almost all of this. While it
does not guarantee individually tailored health care plans, it
attempts to provide adequate health care to as many
individuals as possible by requiring insurers to provide
essential health benefits. And it imposes an affirmative
obligation not to discriminate in the provision of health
care—in particular, to consider the needs of disabled people
18       SCHMITT V. KAISER FOUND. HEALTH PLAN

and not design plan benefits in ways that discriminate
against them.

    Thus, the ACA allows a claim for discriminatory benefit
design notwithstanding that, under Choate, the
Rehabilitation Act does not. In arguing otherwise, Kaiser
relies on several incorrect assumptions.

     1. Compliance with a state’s benchmark plan does
        not guarantee compliance with section 1557

    Kaiser assumes that an insurer’s compliance with the
essential health benefits in a state’s benchmark plan was
sufficient to comply with the ACA’s nondiscrimination
requirement. According to Kaiser, “[t]he ACA did not
include hearing aids or services as an [essential health
benefit]” and the Secretary of Health and Human Services
“left it to each state to articulate the scope of essential health
benefits . . . through the adoption of a ‘benchmark’ plan.”

    As discussed, the ACA requires that essential health
benefits not only include the ten specified categories of
coverage, but also take into account the needs of persons
with disabilities and not be designed in ways that
discriminate against them. See 42 U.S.C. § 18022(b)(4)(B)–
(C). The ten general categories of benefits were intended to
be a minimum requirement, see id. § 18022(b)(1)
(“[Essential health] benefits shall include at least the
following . . . .”), subject to additional limitations and
“[r]equired elements for consideration,” id. § 18022(b)(4),
such as nondiscrimination in benefit design.

    ACA regulations also make clear that a state-selected
benchmark plan is only the starting point for determining
essential health benefits. They define “base-benchmark
plan” to mean “the plan that is selected by a State from the
          SCHMITT V. KAISER FOUND. HEALTH PLAN                        19

options [provided for by regulation], prior to any
adjustments made pursuant to the benchmark standards.”
45 C.F.R. § 156.20 (emphasis added). The regulations
distinguish the base-benchmark plan selected by a state from
an “EHB-benchmark plan,” which is “the standardized set of
essential health benefits that must be met” by an insurer. Id.
“In order to become an EHB-benchmark plan . . . , a state-
selected base-benchmark plan must meet the
requirements for coverage of benefits and limits described in
[45 C.F.R.] § 156.110”—i.e., the benchmark standards. Id.
§ 156.100(b). 7

    The benchmark standards require the benchmark plan to
include the ten essential benefit categories, 45 C.F.R.
§ 156.110(a), but they also require that the plan “[n]ot
include discriminatory benefit designs that contravene the
non-discrimination standards,” id. § 156.110(d).             The
nondiscrimination standards, in turn, provide that an insurer
“does not provide [essential health benefits] if its benefit
design . . . discriminates based on an individual’s . . . present
or predicted disability . . . or other health conditions.” Id.
§ 156.125(a).

   Congress authorized the Secretary of Health and Human
Services to promulgate regulations implementing the
nondiscrimination provision in section 1557 specifically.
See 42 U.S.C. § 18116(c). In doing so, OCR explained that
compliance with federal and state law regarding essential

    7
      This was the regulation in effect for the plan years prior to 2020.
The regulation currently in effect similarly provides that a state’s EHB-
benchmark plan must “[p]rovide benefits for diverse segments of the
population, including . . . persons with disabilities,” and “[n]ot include
discriminatory benefit designs that contravene the non-discrimination
standards defined in [45 C.F.R.] § 156.125.”                  45 C.F.R.
§ 156.111(b)(2)(iv)–(v).
20       SCHMITT V. KAISER FOUND. HEALTH PLAN

health benefits did not guarantee compliance with the ACA’s
nondiscrimination requirement.       Commenters on the
proposed regulations expressed concern that “a State might
approve a plan that OCR might later find discriminatory,”
and they suggested “allow[ing] issuers to be deemed
compliant with [s]ection 1557 if they are compliant with
existing Federal or State law.” Nondiscrimination in Health
Programs and Activities, 81 Fed. Reg. at 31,377. The
agency rejected this suggestion, finding that it would be
“inappropriate to define requirements under Federal law
based on what could be the varying, and potentially
changing, requirements of different States’ approaches.” Id.
at 31,377–78. The agency observed that its approach “is
consistent with the approach taken by other agencies to civil
rights obligations, in which compliance with one set of
requirements, adopted under different laws or for different
purposes, is not considered automatic compliance with civil
rights obligations.” Id. at 31,378.

    The State of Washington does not even require
compliance with section 1557 when its insurance
commissioner establishes the state’s benchmark plan. The
relevant statute provides that the insurance commissioner
“[m]ust ensure that the [benchmark] plan covers the ten
essential health benefits categories,” and “[m]ay consider
whether the health plan has a benefit design that would
create a risk of biased selection based on health status and
whether the health plan contains meaningful scope and level
of benefits in each of the ten essential health benefits
categories.” Wash. Rev. Code Ann. § 48.43.715(3)(a)–(b)
(emphasis added). But even if a state required its benchmark
plan to incorporate nondiscrimination principles, whether or
not it complied with section 1557 is a question of federal law
on which we owe the state no deference. Cf. Coeur D’Alene
Tribe of Idaho v. Hammond, 384 F.3d 674, 682–83 (9th Cir.
        SCHMITT V. KAISER FOUND. HEALTH PLAN             21

2004) (“[A] question of federal law . . . cannot be
conclusively resolved in and of itself by the state
legislature’s mere statement.”).

   2. The specific regulation prohibiting categorical
      coverage exclusions for gender transition
      treatment does not implicitly sanction categorical
      coverage exclusions for other conditions

    The regulations implementing section 1557 prohibit
“categorical coverage exclusion[s] or limitation[s] for all
health services related to gender transition.” 45 C.F.R.
§ 92.207(b)(4). Kaiser assumes that the agency’s inclusion
of a regulation specific to gender dysphoria signals the
agency’s implicit unwillingness to prohibit similar
categorical exclusions for treatments of other conditions.

    Application of the canon expressio unius est exclusio
alterius might be understandable in the abstract, see, e.g.,
Murray v. Mayo Clinic, 934 F.3d 1101, 1107 (9th Cir. 2019),
cert. denied, No. 19-995 (U.S. Apr. 27, 2020), though we
have rejected it in similar circumstances, see Mark H. v.
Hamamoto, 620 F.3d 1090, 1100 (9th Cir. 2010) (“That one
regulation identifies a specific requirement for compliance
with the Rehabilitation Act § 504 . . . does not negate the
broader rule that a federally funded entity violates the
Rehabilitation Act § 504 if it denies a qualified disabled
person the reasonable accommodation that the person needs
in order to enjoy meaningful access to a program or
service.”). In any event, the agency explained that that was
not its intent.

    The agency “received a number of comments requesting
that OCR add language to [45 C.F.R.] § 92.207(b) clarifying
that categorical exclusions of certain conditions, such as
coverage related to developmental disabilities or maternity
22       SCHMITT V. KAISER FOUND. HEALTH PLAN

care, are prohibited.”        Nondiscrimination in Health
Programs and Activities, 81 Fed. Reg. at 31,434. The
agency declined to do so.            Critically, however, it
acknowledged that “categorical exclusions of all coverage
related to certain conditions could raise significant
compliance concerns under [s]ection 1557.” Id. The agency
did not provide more explicit guidance because it believed
that “existing regulatory language is sufficient to address this
scenario.” Id.

    The reason for a special regulation pertaining to gender
transition was that blanket exclusions of treatment have
historically been justified “because [the treatments] have
been viewed as cosmetic or experimental.” Id. Because a
treatment exclusion on these grounds could be seen as a
nondiscriminatory reason that comports with section 1557,
the agency clarified that it does not share that view. See id.
at 31,435 (“[T]he across-the-board categorization of all
transition-related treatment, for example as experimental, is
outdated and not based on current standards of care.”).

     3. Requiring nondiscriminatory plan benefit design
        does not require insurers to cover all treatment

    Kaiser also assumes that if the ACA’s nondiscrimination
provision applies to plan benefit design, “every federally-
funded health insurer would need to immediately amend its
health plans and policies to cover hearing aids and related
services, and by extension, all other services and equipment
that might treat any other potentially disabling conditions.”
But the agency made clear that while discriminatory benefit
design is incompatible with essential health benefits, see
45 C.F.R. § 156.125(a), “[n]othing . . . prevent[s] an issuer
from appropriately utilizing reasonable medical
management techniques,” id. § 156.125(c).
         SCHMITT V. KAISER FOUND. HEALTH PLAN               23

       The final rule does not . . . require covered
       entities to cover any particular procedure
       or treatment. It also does not preclude a
       covered entity from applying neutral,
       nondiscriminatory standards that govern the
       circumstances in which it will offer coverage
       to all its enrollees in a nondiscriminatory
       manner. The rule prohibits a covered entity
       from employing benefit design or program
       administration practices that operate in a
       discriminatory manner.

Nondiscrimination in Health Programs and Activities,
81 Fed. Reg. at 31,434.

     It is possible that Kaiser has a reasonable,
nondiscriminatory reason for its blanket exclusion of
treatment for hearing loss other than cochlear implants.
Even if Schmitt and Mohundro ultimately prevail in this
litigation and Kaiser is forced to withdraw its blanket
prohibition on coverage for hearing loss treatment other than
cochlear implants, it still could exclude specific hearing loss
treatments based on nondiscriminatory standards. For
example, it may be reasonable for Kaiser to exclude
coverage of a particular hearing loss treatment that is
experimental or has a high cost-to-benefit ratio. At this stage
in the litigation, however, the question is whether the blanket
exclusion of non-cochlear treatment raises an inference of
discrimination.

C. The Second Amended Complaint Fails to State a
   Claim

   Schmitt and Mohundro argue that Kaiser’s categorical
exclusion of coverage for hearing loss treatment other than
cochlear implants is a form of proxy discrimination. “[Proxy
24       SCHMITT V. KAISER FOUND. HEALTH PLAN

discrimination] arises when the defendant enacts a law or
policy that treats individuals differently on the basis of
seemingly neutral criteria that are so closely associated with
the disfavored group that discrimination on the basis of such
criteria is, constructively, facial discrimination against the
disfavored group.” Davis v. Guam, 932 F.3d 822, 837 (9th
Cir. 2019) (quoting Pac. Shores Props., LLC v. City of
Newport Beach, 730 F.3d 1142, 1160 n.23 (9th Cir. 2013)).
“For example, discriminating against individuals with gray
hair is a proxy for age discrimination because ‘the “fit”
between age and gray hair is sufficiently close.’” Id. at 837–
38 (quoting Pac. Shores Props., 730 F.3d at 1160 n.23).

    Schmitt and Mohundro contend that hearing loss is a
proxy for hearing disability. All individuals with hearing
disability have hearing loss because “disability” is defined
in part as “a physical or mental impairment that substantially
limits one or more major life activities,” 42 U.S.C.
§ 12102(1)(A), including “hearing,” id. § 12102(2)(A). But
since not all hearing loss is substantial, at least some—and
potentially most—individuals with that condition are not
deemed disabled.

    That the hearing loss exclusion also affects some non-
disabled individuals does not doom Schmitt and Mohundro’s
claim per se, since “overdiscrimination is prohibited.” Pac.
Shores Props., 730 F.3d at 1160. “Discriminatory laws,
policies, or actions will often have negative effects (whether
intended or not) on individuals who do not belong to the
disfavored group,” yet “such laws, policies, or actions are
discriminatory when they are undertaken for the purpose of
harming protected individuals.” Id.

    The Supreme Court considered an overinclusive proxy
in Rice v. Cayetano, 528 U.S. 495 (2000), where a state law
discriminated on the basis of ancestry, providing benefits to
          SCHMITT V. KAISER FOUND. HEALTH PLAN                       25

individuals whose lineage traced to pre-1778 Hawaii. The
state argued that the classification was not race-based in part
because Polynesians were not the only race in Hawaii in
1778. Id. at 514. Rejecting that argument, the Supreme
Court observed that “[a]ncestry can be a proxy for race,” and
“[e]ven if the residents of Hawaii in 1778 had been of more
diverse ethnic backgrounds and cultures, it is far from clear
that a voting test favoring their descendants would not be a
race-based qualification.” Id. at 514.

    Here, Schmitt and Mohundro allege no facts giving rise
to an inference of intentional discrimination besides the
exclusion itself. Thus, the crucial question is whether the
proxy’s “fit” is “sufficiently close” to make a discriminatory
inference plausible. Davis, 932 F.3d at 838 (quoting Pac.
Shores Props., 730 F.3d at 1160 n.23). The second amended
complaint sheds no light on the answer.

    The complaint does not make clear to what extent the
proxy is overinclusive. Schmitt and Mohundro allege that
“[u]nder the Exclusion, only people with Hearing Loss, a
qualifying disability, are excluded from the benefits that they
require.” However, they define “people with Hearing Loss”
to include all persons with hearing loss that cannot be treated
with cochlear implants—not just those with disabilities—so
it is impossible to infer whether the exclusion primarily
affects disabled persons. Schmitt and Mohundro claim in
their brief that “few, if any, non-disabled insureds had claims
denied under the Hearing Loss Exclusion,” but this
allegation is not in their second amended complaint and in
any event requires further explanation to be plausible. 8


    8
     We recognize that prior to discovery it may be difficult for Schmitt
and Mohundro to allege with statistical accuracy the number of policy
26         SCHMITT V. KAISER FOUND. HEALTH PLAN

    At the same time, Schmitt and Mohundro’s alleged
proxy is underinclusive because it excludes hearing disabled
individuals who “require or will require treatment . . .
associated with cochlear implants.” Just as “[t]he benefit . . .
cannot be defined in a way that effectively denies otherwise
qualified [disabled] individuals the meaningful access to
which they are entitled,” Choate, 469 U.S. at 301, a section
1557 plaintiff cannot define the benefit so narrowly as to
require an insurer to curate coverage for each individual’s
health care needs. Kaiser covers cochlear implants and
related services, and some proportion of hearing disabled
insureds can meet their treatment needs through cochlear
implants alone. We are left to guess what that proportion
might be. The district court asserted that cochlear implants
are “medically appropriate only when the hearing loss is
significant and therefore disabling,” but that assertion is not
in the complaint. Still, nothing in the complaint suggests
otherwise. If cochlear implants serve the needs of most
individuals with hearing disability, that fact would tend to
undermine a claim of proxy discrimination.

   Because Schmitt and Mohundro’s allegations fail to
show the fit of their alleged proxy, they do not state a claim

claims by disabled persons relative to non-disabled persons that were
denied under the hearing loss exclusion, as this information may reside
exclusively with Kaiser. At the pleadings stage, we do not require a
plaintiff to allege enough detail to state a prima facie case of
discrimination, see Swierkiewicz v. Sorema N.A., 534 U.S. 506, 515
(2002)—only “sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Schmitt and Mohundro may be able to meet this burden, for
example, by alleging facts showing how the needs of hearing disabled
persons differ from the needs of persons whose hearing is merely
impaired such that the exclusion is likely to predominately affect
disabled persons.
         SCHMITT V. KAISER FOUND. HEALTH PLAN              27

for disability discrimination under section 1557. We
therefore affirm the district court’s dismissal of the second
amended complaint. “[I]n dismissing for failure to state a
claim under Rule 12(b)(6), ‘a district court should grant
leave to amend even if no request to amend the pleading was
made, unless it determines that the pleading could not
possibly be cured by the allegation of other facts.’” Lopez v.
Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc)
(quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir.
1995)). Because Schmitt and Mohundro may be able to
amend their pleading with details that would raise an
inference of proxy discrimination or some other theory of
relief, we reverse the district court’s decision not to allow
amendment and remand with instructions to do so.

  AFFIRMED in part, REVERSED in part, and
REMANDED.
