Josef Robinson was born a woman; he started the process of becoming a man about two and a half years ago. He began hormone therapy and planned to undergo a bilateral mastectomy as well.

But Robinson, a registered nurse at a Dignity Health facility in Arizona, got some surprising news: His San Francisco-based employer, which describes itself as being "rooted in the Catholic tradition," refused to cover any of his transition-related care under its employee health insurance plan. His policy excludes all coverage related to sex transformation surgery.

That "was totally shocking to me," said Robinson. "I never would have thought in a million years that that would happen."

Robinson sued Dignity, alleging that its refusal to cover transition-related care qualifies as sex discrimination under Title VII of the Civil Rights Act of 1964 and the Affordable Care Act.

Title VII forbids discrimination on the basis of sex. The Affordable Care Act prohibits discrimination based on sex in health insurance and health care. Section 1557 of the law, which the U.S. Department of Health and Human Services finalized in May, says categorical exclusions related to gender transitions are discriminatory.

"I work for a hospital who treats all kinds of people – doesn't matter race, religion, whatever – yet they have an insurance policy that has an exclusion for transgender individuals," Robinson said. "It just doesn't add up for me."

Dignity's defense is based on its argument that Title VII doesn't address transgender people, and that the Affordable Care Act's rules on gender transitions were not in place when Robinson first sought coverage for his treatments.

While declining to comment on why its policy excludes transition care, Dignity said in a statement that it's "committed to an inclusive, respectful and nondiscriminatory workplace."

"Through the lens of our...religious directives"

The nonprofit company's chief human resources officer, Daryll Robinson, hinted at the reasons behind the policy in an email to Joe Robinson's fiancée Melissa Mayo.

The Dignity executive was responding to Mayo's request that the company remove the transgender coverage exclusion.

"We discussed your situation through the lens of our values, our internal policy and our ethical & religious directives," Darryl Robinson wrote in the email, which is quoted in the complaint. He explained that the company found "no evidence of discriminatory practice" in its insurance plan.

At the Catholic hospitals it runs, Dignity uses the Ethical and Religious Directives for Catholic Health Care Services, written by the U.S. Conference of Catholic Bishops. Dignity's non-Catholic hospitals use a Statement of Common Values written by the company.

Dignity has not indicated whether its employee insurance plan follows the Directives or the Statement of Common Values. Each forbids abortion, artificial insemination and assisted suicide.

While neither set of ethics rules prohibits gender transition, the Conference of Catholic Bishops strongly opposes such treatments. Responding to the Affordable Care Act's proposed new anti-discrimination regulations last year, the Conference characterized transition-related procedures as "detrimental to patients."

"Such interventions are not properly viewed as health care because they do not cure or prevent disease or illness," the Bishops said in comments submitted to the federal government. "Rather they reject a person's nature at birth as male or female. Surgical alterations of the genitalia, in particular, mutilates the body by taking a perfectly healthy bodily system and rendering it dysfunctional."

In the latest edition of its Diagnostic and Statistical Manual of Mental Disorders, the American Psychiatric Association recognizes gender dysphoria as a mental disorder. It says treatment options for the condition include counseling, cross-sex hormones, gender reassignment surgery, and social and legal transition to the desired gender.

Under California law, companies are not allowed to exclude transition-related services from the health plans for their employees in the Golden State.

Joe Robinson's attorney, Elizabeth Gill, is convinced that his case is the latest example of a patient's needs and desires coming into conflict with the Catholic Bishops' guidelines. Gill, a senior staff attorney with the ACLU of Northern California, is also co-counsel in a lawsuit against Dignity Health over its guidelines-based refusal to perform a tubal ligation on a northern California woman following a scheduled cesarean section.

A central tension in both cases is whether Catholic hospitals, which receive taxpayer funds, "should … be able to deny people medically necessary care based on their corporate religious views," said Gill.

Robinson's case and others have prompted conversations among Catholic hospitals, said Lori Dangberg, vice president of the Alliance of Catholic Health Care, which lobbies on behalf of California's Catholic medical facilities.

"There is thoughtful discussion within Catholic health care on the complexities of transition-related surgeries," she said.

"A pretty extensive surgery"

After Dignity refused to cover his transition, Joe Robinson said he appealed the decision. He also asked Dignity to change its Arizona health insurance policy.

When he realized he wouldn't be able to resolve the coverage issue quickly, he decided to move forward with his transition. He paid almost $8,000 out-of-pocket for the double mastectomy.

"I lived my whole life not being in the right body," Robinson said. "At that point I was 50 and I thought, 'That's long enough to be living the way I've been living.'"

He said he needs one more major operation. A phalloplasty, or construction of a penis, would cost him about $100,000, he said, adding, "that's providing you don't have any complications; it's a pretty extensive surgery."

Robinson said he's waiting to get this procedure, in the hopes that the court will compel Dignity to cover the last stage of his transition.