Beth Scott was told by her doctor she needed a mammogram, a cancer screening that health insurance usually covers.
She had the mammogram in June 2010, paying $385 out of pocket. But when she submitted the claim to her insurance company, Scott was denied coverage, because Scott is transgender.
But in an appeal that lasted almost two years, the Transgender Legal Defense and Education Fund intervened and announced this week that it had resolved Scott's claim, winning a landmark battle with Aetna.
"I am really pleased and glad it went smoothly," said Scott, 44, who for 11 years has worked as a data integrity specialist for a high-tech company, through which she gets her insurance.
"It's something that gives me hope -- by the fact that Aetna apologized and reimbursed me," she said. "Their willingness to treat transgender people is a positive sign."
Her settlement clarified that "these denials would not happen in the future," said TLDEF staff attorney Noah Lewis. "It also added a provision to allow transgender individuals to change their sex on their insurance records by providing a birth certificate or driver's license."
Lewis said denying health coverage for transgender employees was a "widespread problem and not an isolated incident."
Scott's claim was denied on the grounds that it fell under her policy's exclusion treatments "related to changing sex." She was born biologically male but developed breasts after she underwent estrogen treatments when transitioning to female.
But TLDEF argued that the insurance company's interpretation was "overbroad" and should apply only to medical treatments prescribed to change an individual's sex characteristics. It said that a mammogram had nothing to do with a sex change.
"Transgender people should have their health care needs covered by insurance just like everyone else," said Lewis.
"But as long as exclusions remain in place, Ms. Scott's case makes clear that they cannot be used to deny other medically necessary care simply because someone is transgender," he said.
Scott said she had struggled with her gender identity since the age of 8 or 9.
"I kind of knew that I felt different, but I didn't do anything about it until I went to a therapist," she said. "I started out slowly, educating myself. I was calculated and very careful about it."
In 2007, she made the physical switch from male to female, first undergoing the surgical shaving of her Adam's apple and following that with hormones. Neither treatment was covered by Aetna.
Aetna told ABCNews.com that it couldn't talk specifically about Scott's case because of privacy laws but clarified that the ruling had been made by a self-funded Aetna health plan run by Scott's employer.
"What we can say, in general, is that a mammogram is covered in a situation like the one described," said Aetna spokeswoman Cynthia B. Michener in an email to ABCNews.com. "Any denial would have been an error corrected by Aetna in administering the claims in the appeals process."
Since 2009, the company has covered breast cancer screenings for female-to-male transgenders who have not had a mastectomy, as well as prostate-cancer screenings for male-to-female transgenders who have retained their prostate, according to Michener.
But advocacy groups are fighting for full medical coverage for sex change treatments.
"The consensus in the medical community is that [being transgender] is a medical condition," said Jennifer Levi, director of the Boston-based Transgender Rights Project at Gay and Lesbian Advocates and Defenders, or GLAD. "It's legitimate and real and has an established protocol for treatment."
Advocates say it is a discriminatory practice when an employer knowingly hires employees who are transgender and then excludes them from basic workplace benefits, as, they say, was the case with Scott.
Levi, who recently co-edited a book called "Transgender Family Law", won a legal case in which the Internal Revenue Service ruled a transgender's sex change procedure was cosmetic and could not be claimed as a deduction for medical related care.
"What was so remarkable was that they would think someone would have genital surgery to look better," she said. "It was absurd. We had nearly a week-long trial and put all our experts in court and they agreed -- the transition was related to medical care."
Now, Levi hopes her book will serve to educate lawyers and those who are transgender.
"There are a growing number of protections for people in employment, but at the same time, there is a huge amount of discrimination in the family law context," she said. "We've seen some horrifying court outcomes where parents have lost custody of their children, or the courts are denying the validity of the marriage in the first place.
"So many lawyers want to do good work, but they don't know the first thing about transgender law," she said.
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