Tag Archive for "Affordable Care Act" - Art Leonard Observations

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8th Circuit Greenlights Anti-Trans Discrimination by Catholic Health Care Providers and Employers

Posted on: December 14th, 2022 by Art Leonard No Comments

A three-judge panel of the 8^th Circuit Court of Appeals issued a decision on December 9 upholding an injunction barring the U.S. Department of Health and Human Services (HHS) and the Equal Employment Opportunity Commission (EEOC) from enforcing against Catholic institutions a rule that forbids health care providers from denying gender-affirming care to transgender individuals and that requires employers to cover gender-affirming care in their employee benefit plans.

The ruling upheld an injunction issued on January 19, 2021, by Chief U.S. District Judge Peter D. Welte of the District of North Dakota. Judge Welte was ruling in a lawsuit brought by The Religious Sisters of Mercy (RSM), RSM’s health care center, and various other North Dakota plaintiffs, and by Catholic Charities of North Dakota, the Catholic Medical Association, and the State of North Dakota. The injunction protects the plaintiffs and their members from any enforcement action by HHS or the EEOC, but does not directly affect individuals who bring lawsuits for denial of care or coverage against the plaintiffs. The court’s ruling is based on its interpretation of the Religious Freedom Restoration Act (RFRA), which provides a defense against the government’s enforcement of federal laws that substantially burden free exercise of religion.

Although the injunctive relief appears to be focused primarily on North Dakota, the co-plaintiff Catholic Medical Association’s members include Catholic hospitals and health-care providers in thousands of places around the country, so the practical effect may be to allow all of them to deny provision of gender-affirming care or its financing.

The litigation dates back to the final years of the Obama Administration, when HHS issued a Rule interpreting the anti-discrimination provision of the Affordable Care Act (ACA), Section 1557, to forbid discrimination by health care entities receiving federal money from discrimination on the basis of sexual stereotypes or gender identity, after the EEOC had interpreted Title VII of the Civil Rights Act of 1964 to ban employment discrimination based on sexual stereotyping or gender identity. Courts have generally follow interpretations of Title VII when they are interpreting Title IX of the Education Amendments of 1972, which forbids educational institutions from discrimination because of sex, and which is incorporated by reference into Section 1557 of the ACA.

The Obama Administration Rule was issued in 2016, shortly before Donald Trump was elected. The Trump Administration advised courts where litigation was then pending challenging the 2016 rule that it would not enforce the contested provisions while it considered replacing them. Litigation in other parts of the country resulted in injunctions being issued by some courts against the Obama Administration Rule, but when the Trump Administration issued its new rule in June 2020, deleting protection against gender identity discrimination, some other federal courts issued injunctions against that rule. In the meantime, individuals suing for discrimination by employers (including states that provide health insurance for their employees) won significant victories under Section 1557, which the Supreme Court has interpreted to provide a “private right of action.” The overall situation regarding these rules and their application is thus quite messy.

What is at stake for the plaintiffs in this and several similar cases brought by religious plaintiffs pending in other parts of the country is the possibility of being disqualified from participating in the Medicaid and Medicare programs, being fined, or being subjected to court orders in lawsuits by the government, if a court finds that they have violated the ACA’s antidiscrimination requirements.

The government argued that the lawsuit in North Dakota, which was aimed at attacking enforcement of the 2016 Rule, should be dismissed as moot, because the 2020 Trump Administration Rule revoked the 2016 rule. But the plaintiffs prevailed on their argument that they were attacking the interpretation of Section 1557 and Title VII – as to which the EEOC during the Trump Administration did not back away from its interpretation of Title VII to ban gender identity discrimination. The EEOC’s position was vindicated around the time the Trump Administration issued its 2020 Rule when the Supreme Court ruled in Bostock v. Clayton County that Title VII encompasses discrimination because of “transgender status.”

The Supreme Court ruling was followed five months later by the election of Joe Biden, who then took office in January 2021 and directed his administration to follow the Bostock decision in enforcing federal sex discrimination laws. HHS sent notifications to health care entities covered by the ACA later in 2021, announcing that it was interpreting Section 1557 to cover gender identity claims, and that refusals to perform gender affirming care to transgender individuals could result in liability under that statute.

The Obama, Trump, and Biden Administration interpretations of Section 1557 also differed over whether the exemption of religious educational institutions from compliance with Title IX should be considered as part of Title IX’s inclusion by reference in Section 1557. As one would expect, during the Obama Administration HHS said that the religious educational institution exemption did not apply to Section 1557, but the Trump Administration took the contrary view, and some courts ruling on challenges to the gender identity rule have sided with the Trump Administration on this.

In the Bostock decision, Justice Neil Gorsuch wrote for the Court that it was ruling only on the question whether discrimination because of sexual orientation or transgender status violates Title VII, and not on how to interpret other federal statutes. The three cases joined in appeal in Bostock v. Clayton County all involved plaintiffs who claimed that they were discharged because of their sexual orientation or gender identity, and the Court ruled that they could sue under Title VII, reversing contrary rulings by the 11^th Circuit (sexual orientation) and affirming rulings by the 2^nd Circuit (sexual orientation) and the 6^th Circuit (gender identity). The Trump Administration sought to give Bostock a narrow interpretation and argued that it did not affect their new Rule interpreting Section 1557 of the ACA. Justice Gorsuch also referred to the Religious Freedom Restoration Act (RFRA) as a “super statute” that could be relevant to religious freedom claims asserted by employers in Title VII cases.

This past summer, HHS published new proposed regulations that would basically restore and extend the Obama Administration’s 2016 regulations and make clear that gender identity discrimination is forbidden under the ACA and that refusal of health care providers and insurers to provide and cover such care violates Section 1557.

The case of Religious Sisters of Mercy v. Xavier Becerra (Secretary of HHS), now focuses on whether the plaintiffs are protected by RFRA from any enforcement action by HHS or the EEOC. The district judge answered that question affirmatively in 2021, based on the guidelines and notifications sent out by HHS stating that they would enforce the prohibition on gender identity discrimination relying on the reasoning of the Bostock case. Although HHS and EEOC have not yet actively pursued Catholic hospitals or other Catholic institutions, the plaintiffs persuaded the district court, and ultimately the court of appeals, that the threat of enforcement was sufficient to give the plaintiffs standing to bring this lawsuit and seek injunctive relief.

Most of the December 9 opinion by Chief Judge Lavenski Smith of the 8^th Circuit is focused on the issue of standing. The court accepts that the plaintiffs have a good defense against any enforcement action by virtue of RFRA, which places the burden on the government to show that it has a compelling interest in enforcing a challenged law that substantially burdens free exercise of religion, and that enforcing the law is the least restrictive alternative to achieving that interest. Smith’s opinion supports Judge Welte’s contention that if the government has a compelling interest in making sure that transgender people can get gender-affirming care, it can achieve that without forcing Catholic institutions to violate their religious beliefs by compelling them to perform the procedures or finance them.

Chief Judge Welte was appointed by President Donald J. Trump. Chief Judge Smith was appointed by President George W. Bush. The other judges on the three judge panel are Judge Raymond Grueder, also appointed by Bush, and Judge Jonathan Kobes, a Trump appointee. The 8^th Circuit Court of Appeals is dominated by Republican appointees – ten of the eleven active judges on the court.

Biden Administration Proposes New Anti-Discrimination Regulations Restoring Protection for LGBTQ Individuals Under the Affordable Care Act

Posted on: July 27th, 2022 by Art Leonard No Comments

The Biden Administration’s Department of Health and Human Services (HHS) proposed new regulations on July 25 to replace the Trump Administration’s regulations issued in 2020 under the anti-discrimination provision of the Affordable Care Act (ACA), Section 1557. The proposed regulations will not become effective until after a public comment period and subsequent possible revisions in light of the comments received, as required under the Administrative Procedure Act (APA). The proposed regulations build upon regulations adopted by the Obama Administration in 2016, but they propose new coverage that is even more extensive than those regulations provided. The Trump Administration regulations sharply cut back on the Obama regulations, including removing protection against discrimination because of gender identity and exempting insurance companies from the anti-discrimination requirements.

The ACA was adopted on a very close party-line vote in 2010, shortly before Republicans gained control of Congress as a result of the mid-term elections during President Obama’s first term. Because of the complexities of the lengthy and detailed statute, it took several years until the Obama Administration finished finalizing regulations in 2016. One of the most controversial elements of the 2016 regulations was the interpretation of the anti-discrimination provision to ban gender identity discrimination by entities subject to Section 1557, although the regulation was ambiguous about whether this meant that health insurers were required to cover gender-affirming surgery in order to meet the coverage requirements posed by the ACA. Litigation against the regulation quickly resulted in a preliminary injunction and it never actually went into effect.

The Trump Administration was determined to remove gender identity from the list of prohibited grounds of discrimination, but it took until the spring of 2020 for HHS to published a new proposed regulation to displace the 2016 regulation. This proposed regulation was published shortly before the Supreme Court ruled in June 2016 in Bostock v. Clayton County that the ban on employment discrimination because of sex under Title VII of the Civil Rights Act of 1964 extended to claims of discrimination because of sexual orientation or gender identity. The explanatory material accompanying the Trump Administration’s proposed regulation asserted that the inclusion of gender identity in the 2016 regulation was not supported by Section 1557, but noted that a ruling in Bostock was pending. However, after the Bostock decision was announced, the Trump Administration insisted that its reasoning applied only to Title VII, not to Section 1557.

Section 1557 does not directly list forbidden grounds of discrimination under the ACA. Instead, it provides that “an individual shall not, on the grounds prohibited under title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, the Age Discrimination Act of 1975, or section 794 of title 29, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any health program or activity, any part of which is receiving Federal financial assistance, including credits, subsidies, or contracts of insurance, or under any program or activity that is administered by an Executive Agency or any entity established under this title.”

Title VI of the Civil Rights Act refers to discrimination because of race, Title IX of the Education Amendments refers to discrimination on account of sex, the Age Discrimination Act’s purpose is obvious from its title, and Section 794 of title 29 prohibits discrimination because of disability. Thus, Section 1557 prohibits discrimination on the basis of race, sex, age, or disability to the extent such discrimination is prohibited under those statutes.

The Trump Administration contended that because the prohibition of sex discrimination under Section 1557 was derived from Title IX of the Education Amendments rather than from Title VII of the Civil Rights Act, the Bostock decision did not apply to it, which was consistent with the Trump Administration’s position that Bostock did not apply to any federal sex discrimination laws except Title VII, and then only in a limited way. The Department of Education under Trump also maintained that Title IX does not ban educational institutions receiving federal funds from discriminating based on sexual orientation or gender identity, and took that position in litigation under Title IX. Most, but not all, federal courts that have considered these questions have rejected the Trump Administration’s position. Thus, although the Education Department under Secretary Betsy Devos stopped processing sexual orientation or gender identity claims by students against educational institutions, individual plaintiffs were filing suit and achieving court victories addressing such discrimination during the Trump Administration, although some conservative judges (especially those appointed by Trump) were rejecting such claims.

When the ACA was enacted in 2010, some federal courts had already begun to recognize gender identity discrimination claims under Title VII, but it was only afterwards that some courts began to recognize gender identity discrimination claims under Title IX as well. The Obama Administration took an affirmative position on that issue a few years after the ACA was enacted by sending a letter of interest to the U.S. District Court in Virginia that was considering a lawsuit by Gavin Grimm, a transgender boy whose high school refused to let him use the boys’ restroom facilities, so it was not surprising that HHS’s proposed regulations in 2016 took the position that Section 1557 prohibited gender identity discrimination by health care providers and insurers who were subject to Section 1557. (Gavin Grimm eventually won his case in the U.S. Court of Appeals for the 4^th Circuit, whose ruling the Supreme Court refused to review.)

The Equal Employment Opportunity Commission (EEOC) began recognizing gender identity discrimination claims under Title VII in 2012, ruling on a discrimination claim by Mia Macy, a transgender woman, who was denied a job by the Bureau of Alcohol, Tobacco, Firearms and Explosives, a unit of the U.S. Department of Justice. In 2015, the EEOC first recognized a sexual orientation discrimination claim against the Department of Transportation in a case brought by David Baldwin, a gay air traffic controller. By the time the Supreme Court ruled in Bostock in 2020, several federal circuit courts had overruled old precedents to hold that sexual orientation and gender identity claims could be brought under Title VII, although the circuit courts were not unanimous on the issue.

The Trump Administration went ahead and published its proposed 2020 regulation, withdrawing coverage of gender identity claims, despite the Supreme Court’s ruling in Bostock. Although technically Bostock was decided only under Title VII, Justice Neil Gorsuch’s opinion for the Supreme Court employed reasoning that was obviously applicable to all sex discrimination laws. He proclaimed that it was impossible to discriminate “because of” a person’s sexual orientation or gender identity without taking account of their biological sex, because the very definitions of those concepts necessarily referred to the biological sex of the individual. He exclaimed that it would be impossible to describe the concepts of “sexual orientation” or “gender identity” without mentioning sex, so discrimination on those grounds necessarily involved taking account of an individual’s sex. Because Title VII prohibited discriminating “because of” a person’s sex, taking account of a person’s sex in deciding to discharge them (which was the issue in the cases from three circuit courts that the Supreme Court was deciding in Bostock) potentially violated the statute. Title VII does allow an employer to discriminate based on sex when sex is a “bona fide occupational qualification” for the job in question, but the Supreme Court has ruled that this is a narrow exception to the general rule, and it would not have applied to any of the cases then pending before the Supreme Court in Bostock.

On January 20, 2021, President Biden issued an Executive Order directing federal agencies that enforce sex discrimination laws to follow the reasoning of the Bostock decision, and to issue new guidelines or regulations as necessary to prevent discrimination against LGBTQ people. A few months later, the Education Department and the Health and Human Services Department had given notice that they would follow the Bostock ruling in enforcing Title IX and Section 1557, and the EEOC has never waivered from its prior rulings under Title VII in the Macy and Baldwin cases. However, litigation challenging these positions has been filed in federal courts, and preliminary injunctions issued to block enforcement actions by the agencies while the cases are pending. The 2016 regulation adopted by the Obama Administration under Section 1557 was not enforced by the Trump Administration, which had informed the courts that it would not be enforced while they worked on proposing a new regulation to replace it.

Removing gender identity protection was not the only change effected by the Trump Administration’s 2020 regulation. It also adopted a narrow interpretation of Section 1557, under which it asserted that insurance companies were not covered by the anti-discrimination requirement because they did not deliver health care directly. It asserted that various exceptions contained in Title IX, for example for religious educational institutions, should be interpreted to carry over as exceptions under Section 1557. It asserted that Section 1557 applied only to entities covered by the ACA, giving a narrow reading to the somewhat ambiguous part of Section 1557 dealing with its scope of application to all health care programs that receive federal money. The 2020 regulation also repealed various procedural requirements that the 2016 regulation imposed on employers and insurance companies to designate individuals charged with enforcing the anti-discrimination requirements, undertaking training of staff, giving formal notice to individuals about their rights, and setting up formal procedures for dealing with discrimination complaints.

Under the regulations proposed by the Biden Administration, the existing regulations will be amended to explicitly list sexual orientation and gender identity wherever discrimination because of sex is addressed, the Trump Administration’s narrow definition of covered entities and Title IX exception is replaced by a broad reading including insurance companies and going beyond programs established under the ACA, the procedural requirements imposed by the Obama Administration’s 2016 regulation are reinstated, and for the first time HHS is taking the position that Section 1557 applies to Medicare Part B, the health insurance program covering Americans age 65 and older. It already applies to Medicaid, as well as the health insurance programs adopted by state and local governments for their employees. The regulation does acknowledge, however, that its application is subject to the requirements of the Religious Freedom Restoration Act, which provides an affirmative defense against enforcement by the government that burdens the free exercise of religion, so it is questionable whether the requirement that insurance plans cover gender-affirming treatment will ultimately extend to health care institutions operated by those religious bodies which reject such treatments.

The proposed regulations run to more than 300 very detailed pages in the pdf file released by HHS, which helps to explain why it took 18 months for the Department to come up with this comprehensive proposal. It will definitely attract litigation, most likely from the same states and associations that attacked the 2016 regulations. If such litigation eventually rises to the level of the Supreme Court, it will test the willingness of the Court to treat Bostock as a broadly binding precedent. That case was decided by a 6-3 vote, with Chief Justice John Roberts joining Justice Gorsuch’s opinion, which was also supported by Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan. If Roberts and Gorsuch do not back away from the logical extension of Bostock’s reasoning, there would still be at least a 5-4 majority assuming that Justice Ketanji Brown Jackson, the Court’s newest member, and Justices Sotomayor and Kagan would also vote to reaffirm and apply Bostock to Title IX and thus by extension to Section 1557.

Trump Alumni Group Engineers Challenge to Bostock Application Outside of Title VII

Posted on: May 2nd, 2022 by Art Leonard No Comments

Shortly after the end of Donald Trump’s Administration, a group of his top officials formed a new organization intended to challenge attempts by the Biden Administration to change Trump’s policies. With Stephen Miller, White House counselor and the evil genius behind many of Trump’s policies, as its president and board chair, America First Legal Foundation boasts as board members former Chief of Staff Mark Meadows, former Acting Attorney General Matthew Whitaker, and former Director of the Office of Management and Budget Russ Vought. Co-founder with Miller is Gene Hamilton, former senior counselor to the Secretary of Homeland Security and former counselor to the Attorneys General in the Trump Administration. Not surprisingly, finding ways to limit the impact of the Supreme Court’s ruling in Bostock v. Clayton County, 140 S. Ct. 1731 (2020), is high on their list of priorities. In Bostock, the Supreme Court held that sexual orientation and gender identity discrimination claims came within the sphere of prohibited sex discrimination under Title VII of the Civil Rights Act of 1964. Justice Neil Gorsuch, writing for a 6-3 majority, purported to use “textual” analysis to reach this result based on the “original meaning” of the language used by Congress in 1964, which, according to Gorsuch, would be “biological sex.”

America First’s litigation vehicle for this project is Neese v. Becerra, 2022 WL 1265925, 2022 U.S. Dist. LEXIS 75847 (N.D. Tex., April 26, 2022). U.S. District Judge Matthew J. Kacsmaryk denied the government’s motion to dismiss this case on April 26. The suit targets the extension of Bostock’s reasoning to Title IX of the Education Amendments of 1972 and Section 1557 of the Affordable Care Act.

This case is an audacious example of overt forum-shopping. The suit was filed in the U.S. District Court in Amarillo, Texas, a courthouse within the Northern District of Texas. There is only one district judge assigned to that courthouse — Judge Kacsmaryk – so any case filed there goes directly to him. They could not have picked a better judge for their case. Kacsmaryk was among the early Trump judicial nominees, a Federalist Society member and former deputy general counsel of First Liberty Institute, a litigation group that pushes for the broadest possible interpretation of religious freedom as against government regulations. LGBT groups protested his nomination, pointing to his statements that homosexuality as “disordered,” and that transgender people are delusional and suffering a mental disorder. (As a member of the Red Mass Committee of the Roman Catholic Diocese of Fort Worth, his use of the term “disordered” is not surprising, given the use of this term by the Catholic Church to describe homosexuality.) Despite the iron grip on judicial nominations by then-Majority Leader Mitch McConnell and then-Judiciary Committee Chair Chuck Grassley in the Senate, it took three tries for Trump to get this one through. The 2017 nomination died at the end of session; Trump renominated in 2018, but that died at the end of session; Trump renominated in 2019. This time, Kacsmaryk passed the Judiciary Committee and the Senate floor on party-line votes. He’s the judge who enjoined the Biden Administration’s attempt to modify southern border control policies without going through a complete Administrative Procedure Act cycle.

The lawsuit was filed last year on behalf of three doctors, said to practice in Texas and California, but the judge’s opinion does not specify whether any of them practices within the geographical scope of the district court in Amarillo. No matter, as jurisdiction to sue the federal government lies in every federal district court. They claim fear of being sued or prosecuted for discrimination under Section 1557 because of their approach to dealing with transgender patients as the basis of their standing to sue.

Although one would expect a judge with Kacsmaryk’s background to be challenged with a recusal motion, or even to voluntarily recuse in an LGBT case given the controversy surrounding his appointment, there is not a whiff of that in the opinion. The Justice Department moved to dismiss on two grounds: standing of the plaintiffs, and failure to state a claim in light of Bostock. The essence of plaintiffs’ case is arguing that Bostock does not apply to Title IX and Section 1557, so the Biden Administration’s view (expressed in the President’s first executive order issued in January 2017 and a subsequent Notification sent to health care providers and insurers by HHS) is contrary to law.

As to standing, the plaintiffs allege that they have all had transgender plaintiffs, including minors (the main focus of their discussion), and that they have provided gender-affirming care to some when they felt it justified, but that they believe gender-affirming care is not appropriate for all minors who identify as transgender, that surgical alteration is never justified for minors, and that they should be free to treat their patients consistent with their patients’ “biological sex” and the doctors’ ethical views. The Notification that HHS sent to health care providers early in the Biden Administration advised that the agency would apply Bostock’s reasoning to hold that Section 1557 of the Affordable Care Act, whose prohibited grounds of discrimination are cross-referenced from other federal laws including Title IX, applies to claims of discrimination because of sexual orientation or gender identity, and that HHS would enforce the statute accordingly. This was directly contrary to the interpretation published by the Trump Administration as recently as January 2021, shortly before the transfer of office to Biden. The plaintiffs described various scenarios in which they believe that the treatments they were bound to provide or to deny based on their professional ethics would place them in danger of lawsuits by patients and enforcement by HHS under Section 1557. Judge Kacsmaryk decided this was sufficient to give them standing to challenge the interpretation. They are seeking declaratory and injunctive relief at this point. None of them have been sued or investigated by HHS on this issue.

As to failure to state a claim, plaintiffs disputed that Bostock’s reasoning was applicable to Title IX and Section 1557 (although several other federal courts since June 2020 have found the reasoning applicable). They note that the 5^th Circuit has yet to issue a controlling precedent on this, and the Supreme Court has not taken up the question. The judge decided that as a “pure question of law” this was an open issue, and that plaintiffs’ allegations were sufficient to put it in play.

In particular, the judge zeroed in on differences in language and structure between Title VII and Title IX. Title VII, an employment discrimination statute, was construed in Bostock to impose a “but-for” test of intent for disparate treatment employment discrimination claims. Judge Neil Gorsuch’s opinion for the Court reasoned that it was impossible for an employer to discriminate against an applicant or employee “because of” their sexual orientation or gender identity without discrimination “because of” their sex, using the language of the statute. Furthermore, Title VII has been construed – a construction bolstered by Congress in the Civil Rights Restoration Act of 1991 – to apply so long as a forbidden ground of discrimination, such as sex, was a factor in a personnel decision, albeit just a contributing one.

By contrast, Title IX, adopted a few years after Title VII, prohibits discrimination by educational institutions that receive federal money “on the basis of sex.” Plaintiffs argue that this is a different standard from that imposed by Title VII, and point to various provisions of Title IX that at least by implication would suggest a biological definition of sex and a binary treatment of sex, including a provision of the Title IX regulations (which is frequently invoked by defendant school districts in cases involving restroom and locker room access by transgender students) that authorize separate facilities for boys and girls. Their argument is that Gorsuch’s reasoning in Title VII is peculiar to Title VII and the workplace issues to which it applies, and is not transferable to other contexts, such as schools or health care providers. This argument, found the judge, puts the interpretive issue in play, so he denies the motion to dismiss for failure to state a claim.

As noted above, this case is clearly a set-up, filed in Amarillo specifically to present it to Judge Kacsmaryk, noting the strong rightward tilt of the 5^th Circuit, where Republican appointees among active judges outnumber Democratic appointees by 12-5 (including 6 Trump appointees), and the plaintiffs’ clear aim is to get this up to the Supreme Court’s 6-3 conservative majority to get a “definitive” ruling that Bostock does not apply to Title IX (and by extension to the ACA Section 1557). Civil rights enforcers in the Department of Education and the Department of Health and Human Services are already involved in investigating and pursuing claims in several courts. The Supreme Court has already declined opportunities to address the question, but a 5^th Circuit ruling along the lines proposed by America First in this lawsuit would create a circuit split that would prove most enticing to at least four and possibly more members of the court.

Counsel for plaintiffs from America First Legal Foundation is Gene Hamilton, with local counsel in Amarillo from Sprouse Shrader Smith PLLC, and Jonathan F. Mitchell of Austin. Lead attorney from the Civil Division of the Justice Department is Jeremy S. B. Newman, with Brian Walters Stoltz from the U.S. Attorney’s Office in Dallas and Jordan Landum Von Bokern from the Justice Department in Washington.

This case bears close watching. A “nationwide” injunction from Judge Kacsmaryk would seem likely, if his analysis on the motion to dismiss is any indication, and could throw a wrench into ongoing enforcement activity, not only by HHS and DOE, but by other federal agencies with sex discrimination jurisdiction.

Federal Court Enjoins HHS & EEOC From Requiring Catholic Plaintiffs to Perform or Provide Gender Transition Services

Posted on: January 23rd, 2021 by Art Leonard No Comments

Ruling on the last full day of the Trump Administration, one of the federal trial judges appointed by the outgoing president ruled that the Religious Freedom Restoration Act (RFRA) bars the federal government from enforcing the non-discrimination requirement of the Affordable Care Act (ACA) Section 1557 or Title VII of the Civil Rights Act of 1964 against Catholic plaintiffs to require them either to fund or perform gender transition procedures. Religious Sisters of Mercy v. Azar, 2021 WL 191009, 2021 U.S. Dist. LEXIS 9156 (D.N.D., January 19, 2021). Chief Judge Peter D. Welte denied summary judgment to co-plaintiff the State of North Dakota, which sought a declaration that it is not required to provide such procedures in its state health institutions or to its employees or through its Medicaid program, and found that the Plaintiffs lacked standing on their claims concerning performance of abortions and sterilizations, as the court found that various provisions of the ACA and other federal laws already relieved them of obligations in that regard.

Judge Welte issued his opinion just a few days after hearing oral argument on the summary judgment motions, but the case has been pending for a long time and it is likely that he had most of the lengthy, analytical opinion drafted well in advance of the argument, on the basis of the suit papers.

The case was complicated by the history of the federal government’s positions on the issue in question, which changed to the extent of the Trump Administration withdrawing an Obama Administration regulation from 2016 and replacing it with a new regulation, formally announced just days before the Supreme Court’s Bostock v. Clayton County decision. In Bostock, 140 S. Ct. 1731 (June 15, 2020), the Court determined that Title VII’s ban on discrimination because of sex necessarily extended to claims of discrimination because of sexual orientation and transgender status.

The final regulation announced days before Bostock acknowledged that the case had been argued and indicated that its outcome could affect the scope of the ACA’s non-discrimination requirement. In its explanatory Prologue to the regulation, HHS reiterated the Trump Administration’s view – presented to the Court in Bostock by the Solicitor General – that discrimination because of sex does not encompass discrimination because of gender identity. Confident that they were going to win, their new regulation, intended to supplant the Obama Administration’s regulation, removed the earlier regulation’s definition of “sex” so that it no longer specified “gender identity.” They went ahead and officially published the new regulation as previously schedule in the Federal Register a few days after Bostock was decided, making no effort to delay publication in order to take account of that decision. The result was peculiar: a regulation formally published just days after a Supreme Court decision that admittedly could affect the substance of the regulation, but utterly failing to grapple with that effect.

The Trump Administration’s brazen decision to go ahead with final publication without taking Bostock into account persuaded several other federal district courts to conclude that the final regulation’s definition of sex violated the Administrative Procedure Act as being inconsistent with the ACA statute’s non-discrimination requirement and/or because it was adopted arbitrarily by failing to consider the Bostock decision. Other district courts have also criticized HHS’s assertion in the regulation that Title IX’s religious entity exemption was relevant to the ACA, inasmuch as the ACA’s non-discrimination provision specifies that entities covered by it were subject to the kinds of discrimination prohibited by Title IX, which exempts religious schools from its sex discrimination requirements. The Trump Administration had also persisted in rejecting arguments that Bostock’s interpretation of Title VII necessarily applied to Title IX and other federal sex discrimination laws.

The day after Judge Welte issued his decision, President Biden included among his first Executive Orders one instructing the Executive Branch to apply Bostock to all federal sex discrimination laws. While EO’s are not interpretively binding on the courts, they are binding on how Executive Branch agencies interpret and enforce their statutory mandates, so the new leadership in HHS and, eventually, the EEOC (where the president gets to appoint one new member of the Commission each year, relatively quickly tipping the balance to the new Administration’s viewpoint regarding the definition of sex discrimination.

But that is neither here nor there regarding the central question in this case, at least as framed by Judge Welte in response to the Catholic plaintiffs, which is whether the government is precluded from enforcing any such non-discrimination requirement against the plaintiffs according to their religiously-based objections, in light of the Religious Freedom Restoration Act.

In Bostock, Justice Neil Gorsuch referred to RFRA as a “super statute” that may override non-discrimination requirements of Title VII (and by extension Title VII and the ACA) in an “appropriate case.” Is this such an appropriate case? That turns on whether application of the non-discrimination requirement imposes a substantial burden on the free exercise of religion by the Catholic plaintiffs, in which case Judge Welte characterizes the level of judicial review to be applied to the government’s policy as “strict scrutiny” such that the policy can only be applied if it is the least intrusive way to achieve a compelling government interest.

The court found that “compliance with the challenged laws would violate the Catholic Plaintiffs’ religious beliefs as they sincerely understand them. . . In meticulous detail, the Catholic Plaintiffs have explained that their religious beliefs regarding human sexuality and procreation prevent them from facilitating gender transitions through either medical services or insurance coverage.”

As to the compelling interest test, the court found that the Defendants “never attempt to make that showing here.” Of course, Defendants are the Trump Administration’s HHS (for the ACA) and EEOC (for Title VII). The rule HHS published in June 2020 “conceded to lacking a ‘compelling interest in forcing the provision, or coverage, of these medically controversial [gender-transition] services by covered entities.’” By contrast, of course, when the Obama Administration opined on this in 2016, HHS specified a compelling interest in ensuring nondiscriminatory access to healthcare, and the EEOC asserted a compelling interest in ensuring non-discriminatory employee benefits plans. But Judge Welte noted Supreme Court authority that those interests are stated at too high a level of generality to meet the RFRA test, directing courts to “scrutinize the asserted harm of granting specific exemptions to particular religious claimants and to look to the marginal interest in enforcing the challenged government action in that particular context.” Responding to this command, wrote Welte, “Neither HHS nor the EEOC has articulated how granting specific exemptions for the Catholic Plaintiffs will harm the asserted interests in preventing discrimination. . . In short, the Court harbors serious doubts that a compelling interest exists. This issue need not be resolved, however,” he continued, “because the Defendants fail to meet the rigors of the least-restrictive-means test.”

The “least-restrictive means” test is the third part of the RFRA analysis. Even if the government’s interest is compelling, the question is whether there is a way to achieve that interest without burdening the free exercise rights of the plaintiffs. Is requiring Catholic entities to perform or finance gender transition the “only feasible means to achieve its compelling interest,” asks the court. Here, resorting to the Supreme Court’s Hobby Lobby case, Welte suggests that “the most straightforward way of doing this would be for the Government to assume the cost of providing gender transition procedures for those unable to obtain them under their health-insurance policies due to their employers’ religious objections.” And, he opined, “if broadening access to gender-transition procedures themselves is the goal, then ‘the government could assist transgender individuals in finding and paying for transition procedures available from the growing number of healthcare providers who offer and specialize in those services,’” quoting Franciscan Alliance, a decision from the Northern District of Texas that had preliminarily enjoined the government from bringing enforcement actions under Section 1557 against religious objectors. (That injunction was dissolved when the Trump Administration indicated to that court that it did not intend to enforce Section 1557 against religious objectors and would replace the 2016 Obama Administration regulation with one that did not require such coverage.) And, said the court, the Defendants had not shown that “these alternatives are infeasible.”

Thus, the court granted summary judgment and issued a permanent injunction against enforcement of Sec. 1557 or Title VII against the Catholic Plaintiffs in this case. The court did not issue a nationwide injunction, however, limiting its injunction to the plaintiff organizations in this case, and as noted finding that the state of North Dakota did not have standing on these questions, rejecting its Spending Clause argument that the government was wrongly coercing the state to fund gender transition through the Medicare and Medicaid programs.

It is worth noting that this litigation was not brought on by an actual case of a transgender individual seeking gender transition services from a Catholic health care organization, or the employee of a Catholic entity challenging the failure of the employer’s health insurance to cover the procedures, or in response to a challenge to the state’s failure to cover these procedures for its employees or Medicaid participants. This was affirmative litigation brought by the state and the Catholic plaintiffs preemptively, seeking to establish judicial cover for their discriminatory policies. As such, and significantly, the interests of transgender people were not directly represented in this case although the ACLU participated as amicus curiae. (Curiously, the Westlaw report of the case did not list the ACLU among counsel, but the Lexis report did as of January 23 when this account was written.) The Plaintiffs were represented by the North Dakota Attorney General’s Office, The Becket Fund for Religious Liberty, and private counsel for several of the Catholic institutional plaintiffs. The government (i.e., the Trump Administration) was represented by the Justice Department and the U.S. Attorney’s Office for North Dakota, which of course was happy to let the Plaintiffs win in light of the Administration’s position opposing the Bostock ruling and their issuance of the 2020 Regulation (which the court could plausibly have found mooted the case, were it not for the fact that he was ruling the day before President Biden was to be inaugurated). Now it is up to the Biden Administration to take over and appeal this decision to the 8^th Circuit, in light of the President’s January 20 Executive Order.

Federal Court Blocks Trump Regulation Revoking Health Care Protections for Transgender People

Posted on: August 18th, 2020 by Art Leonard No Comments

U.S. District Judge Frederic Block ruled on August 17 that a new Trump Administration Rule that rescinded the Obama Administration’s Rule prohibiting gender identity discrimination in health care will not go into effect on August 18, its scheduled date, and he granted a preliminary injunction against the new Rule’s enforcement. Judge Block sits in the U.S. District Court for the Eastern District of New York, in Brooklyn. Walker v. Azar, 2020 U.S. Dist. LEXIS 148141.

After President Obama signed the Affordable Care Act (ACA) into law in 2010, the Department of Health and Human Services (HHS) decided to adopt a rule providing an official interpretation of the non-discrimination requirements contained in Section 1557 of that statute. Section 1557 incorporates by reference a provision of Title IX of the Education Amendments of 1972, which forbids discrimination because of sex in educational institutions that get federal funding. In the past, HHS and federal courts have looked to decisions interpreting the sex discrimination provision in Title VII of the Civil Rights Act of 1964, which bans sex discrimination in employment, in interpreting Title IX.

By the time HHS had finished writing its rule in 2016, both the Equal Employment Opportunity Commission and several federal appeals courts had interpreted Title VII to ban discrimination because of an individual’s gender identity. The Obama Administration followed these precedents and included a prohibition on gender identity discrimination in its ACA rule. Several states and a religious health care institution then joined together to challenge the rule before a federal district judge in Fort Worth, Texas, who was notoriously receptive to issuing nationwide injunctions against Obama Administration policies, and the court was true to that practice, holding that the inclusion of gender identity was contrary to the “original meaning” of the term “because of sex” when it was adopted by Congress in Title IX back in 1972. The case is Franciscan Alliance, Inc. v. Burwell, 227 F. Supp. 3d 660 (N.D. Tex. 2016).

The new Trump Administration rule that was challenged in the August 17 ruling was intended by the Department of Health and Human Services to codify the decision by district court in Franciscan Alliance. Franciscan Alliance was issued in December 2016, just weeks before the Trump Administration took office. Had Hillary Clinton been elected president, the incoming administration would likely have appealed the Fort Worth decision to the U.S. Court of Appeals for the 5^th Circuit. But the Trump Administration informed the district court that it was not appealing and instead would not enforce the Obama Administration rule and would eventually replace it.

Judge Block emphasized this history as he set out his reasons for finding that Human Rights Campaign (HRC) and its volunteer attorneys from Baker & Hostetler LLP, were likely to succeed on the merits of their claim that the Trump Rule was both inconsistent with the ACA, and that HHS was “arbitrary and capricious” in adopting this new Rule and publishing it just days after the Supreme Court had ruled in Bostock v. Clayton County that discrimination against a person because of their transgender status was “necessarily discrimination because of sex.”

The Supreme Court had heard oral arguments in the Bostock case, which concerned the interpretation of Title VII, on October 8, 2019, while HHS was working on its proposed new rule. The HHS attorneys knew that the Supreme Court would be issuing a decision by the end of its term, most likely in June 2020. One of the three cases consolidated in Bostock involved a gender identity discrimination claim by Aimee Stephens against Harris Funeral Homes. The Equal Employment Opportunity Commission (EEOC) had sued the employer on Stephens’ behalf. The 6^th Circuit Court of Appeals ruled that Harris Funeral Homes violated Title VII by discharging Stephens for transitioning, and the Supreme Court granted review on the specific question whether discrimination because of transgender status violates Title VII. HHS concedes in the “preamble” of its new rule that interpretations of Title IX (and thus Section 1157) generally follow interpretations of Title VII.

October 2017, then-Attorney General Jeff Sessions issued a memorandum to the Executive Branch explaining the Trump Administration’s position that bans on sex discrimination in federal law did not extend to claims of discrimination because of sexual orientation or gender identity. Thus, although the U.S. Solicitor General normally represents federal agencies such as the EEOC when their decisions are appealed to the Supreme Court, that office actually joined in arguing on behalf of Harris Funeral Homes, leaving it to the ACLU LGBT Rights Project to represent Aimee Stephens before the Supreme Court.

The Trump Administration was so confident that the Court would rule against Stephens that it decided to go ahead with its new Rule, effectively revoking the Obama Administration’s Rule, although the “preamble” did acknowledge that a decision by the Supreme Court in the Title VII case could affect the interpretation of Section 1557. LGBTQ rights advocates waited impatiently for a ruling in the Bostock case as the Court began to wind up its Term in June. The Trump Administration was no more patient, announcing its new Rule a few days before the Supreme Court announced its decision in Bostock, apparently assuming that the Court would rule against Stephens. Without publicly reacting to the Supreme Court’s opinion, or even revising its new Rule to acknowledge that the Trump Administration’s interpretation of “discrimination because of sex” had been rejected by the Supreme Court (in an opinion by Trump’s first appointee to the Court, Justice Neil Gorsuch), HHS went ahead and published the new Rule five days later.

Over the following weeks, challenges to the new Rule were filed in four different federal courts. HRC filed suit on behalf of two transgender women who had encountered discrimination from health care institutions covered by the ACA. Judge Block found that their experiences gave them formal standing to challenge the new Rule. Judge Block reached his decision the day before the new Rule was to go into effect.

He found that the well established practice of following Title VII interpretations in sex discrimination cases was likely to be followed under the ACA, just as it was under Title IX, and thus the plaintiffs were likely to succeed in their claim that the new Rule was inconsistent with the statute. He noted that just two weeks earlier, the 11^th Circuit Court of Appeals had followed the Bostock decision in finding that a Florida school district violated Title IX by denying appropriate restroom access to a transgender student.

Furthermore, the failure of the new rule, published after the Bostock decision, to mention that ruling or to offer any reasoned explanation why it should not be followed, was likely to be found to be “arbitrary and capricious,” so the adoption of the new Rule probably violated the Administrative Procedure Act (APA), the federal law that details how federal agencies are to proceed in adopting new rules and regulations or rescinding old ones.

Because of the December 2016 ruling in Franciscan Alliance and the subsequent non-enforcement policy by the Trump Administration, the Obama Administration’s Rule has not been enforced by HHS since December 2016. But the ACA allows individuals who suffer discrimination to sue on their own behalf to enforce the statute, and there have been numerous lawsuits under Section 1557 successfully challenging exclusion of transgender health care from coverage under health insurance policies that are subject to the ACA.

Judge Block’s stay of the effective date and injunction against enforcing the new Rule gives the green light to HHS to resume enforcing Section 1557 in gender identity discrimination cases consistent with the Bostock ruling. While there are probably plenty of career agency officials in the HHS Office of Civil Rights who would like to do so, any significant effort in that direction seems unlikely so long as Trump remains in office. For now, the main impact of Judge Block’s order will be to clear a potential obstacle for transgender litigants under Section 1557, as the opinion persuasively explains how Justice Gorsuch’s reasoning in Bostock compels protecting transgender health care patients under the ACA.

The practical effect of Judge Block’s ruling now is to place the burden on HHS if it wants to continue defending its new Rule. HHS must provide a reasoned explanation to the Court about why the Bostock interpretation of “discrimination because of sex” should not be followed under Section 1557. The simplest way for HHS to proceed consistent with the court’s order would be to strike those portions of the preamble discussing this subject, and to substitute a simple statement that Section 1557’s ban on discrimination because of sex includes claims of discrimination because of sexual orientation or gender identity consistent with the U.S. Supreme Court’s interpretation of similar statutory language in the Bostock case.

Federal Judge Issues National Preliminary Injunction against ACA Regulation Banning Gender Identity Discrimination

Posted on: January 1st, 2017 by Art Leonard No Comments

In an eleventh-hour action, U.S. District Judge Reed O’Connor (N.D. Texas, Wichita Div.) issued a nationwide preliminary injunction on December 31, barring the federal government from enforcing part of a new regulation that was scheduled to go into effect on January 1, 2017, which interpreted the prohibition on discrimination because of sex under the Affordable Care Act to extend to discrimination because of “gender identity” and “termination of pregnancy.” Franciscan Alliance v. Burwell, Civ. Action No. 7:16-cv-00108-O. Judge O’Connor’s action echoed his earlier issuance, on August 21, 2016, of a nationwide preliminary injunction against the enforcement by the federal government of Title IX of the Education Amendments of 1972 to protect transgender schoolchildren from discrimination, in State of Texas v. United States of America, 2016 WL 4426495 (N.D. Texas, August 21, 2016). In both opinions, O’Connor rejected the Obama Administration’s position that discrimination because of gender identity or expression is a form of “sex discrimination” that is illegal under federal laws, a question that the U.S. Supreme Court may address if it gets to the merits in G.G. v. Gloucester County School Board, 822 F.3d 709 (4th Cir.), cert. granted, 136 S. Ct. 2442 (No. 16A52)(2016). Judge O’Connor’s analytical task was “simplified” because the ACA anti-discrimination provision, Section 1557, incorporates by reference the sex discrimination ban in Title IX that was the subject of the judge’s prior preliminary injunction ruling.

The ACA authorizes the Department of Health and Human Services (HHS) to adopt regulations through the procedures of the Administrative Procedure Act (APA) to give detailed substance to the broad terms of the statute. The ACA provides in Section 1557 that health programs or activities receiving federal financial assistance not discriminate on grounds prohibited by four federal statutes. Title IX, which bans sex discrimination in educational programs receiving federal money, was one of the listed statutes and thus incorporated by reference into the ACA. (Others deal with discrimination because of race, national origin or disability.) The Title IX regulations adopted by the Education Department in the 1970s include an express religious exemption provision, so that religiously-controlled educational institutions are exempt from Title IX compliance to the extent that compliance would violate their religious tenets. After the ACA was enacted in 2010, the Department of Health and Human Services began the APA process, drafting proposed regulations, publishing them for comment, and publishing a final regulation that, with respect to the provisions in dispute in this case, was to go into effect on January 1, 2017. During the Obama Administration, several different federal agencies responsible for interpreting and enforcing sex discrimination bans have been working through the issue of how these relate to gender identity. The Equal Employment Opportunity Commission (EEOC) was the first to issue a ruling, in the context of adjudicating a federal job applicant’s complaint, that gender identity discrimination was actionable under Title VII’s sex discrimination ban, but in so doing it was actually following earlier case law, most specifically from the 6^th Circuit, which used sex stereotyping analysis first accepted by the Supreme Court in 1989 in Price Waterhouse v. Hopkins, a Title VII case. The HHS regulation drafters adopted similar reasoning to include “gender identity” in their proposed regulation, and included gender identity in the final Rule published in the federal register on May 18, 2016. 81 Fed. Reg. 31376-31473 (codified at 45 CFR Sec. 92). By the time of that publication, the Education Department had taken the position that Title IX bans gender identity discrimination, in the context of a restroom access dispute in the %Gloucester County School District% case and a subsequent “Dear Colleague” letter published on its website and distributed to school districts nationwide. However, HHS did not include in its proposed or final rule the religious exemption language from Title IX.

Several states and some religious health care providers joined together to challenge the new HHS Rule, not in its entirety but in a focused attack on the inclusion of “gender identity” and “termination of pregnancy” in the non-discrimination provisions. Blatantly forum shopping, they filed their suit in the U.S. District Court in Wichita Falls, an outpost of the Northern District of Texas where Judge O’Connor, the only judge assigned to that courthouse, sits a few days every month. (O’Connor’s chambers are in Fort Worth, the location of his home courtroom.) Filing in a major city would subject the plaintiffs to a random assignment of a judge; filing in Wichita Falls guaranteed that their case would be heard by Judge O’Connor. O’Connor, who was appointed by President George W. Bush, has a propensity to issue nationwide injunctions against regulatory actions of the Obama Administration on grounds that they exceed executive branch authority. His August 21 preliminary injunction in the Title IX case was not his first. There is no logical reason why this case should have been filed in the Wichita Falls court, but plaintiffs can claim proper venue there by pointing to local members of the co-plaintiff Christian Medical & Dental Association (CMDA), a national organization, who may reside within the geographical confines of the Wichita Falls court, or to local Texas state agencies whose operation in that area would be affected. (The court does not engage in a venue analysis, despite the obvious forum-shopping.) Other private plaintiffs are Franciscan Alliance, Inc. and its wholly owned entity Specialty Physicians of Illinois LLC. The public plaintiffs are the states of Texas, Wisconsin, Nebraska, Kansas, Louisiana, Arizona, Kentucky and Mississippi. The heavy hand of Texas Attorney General Ken Paxton looms over the litigation, since Paxton has said, in effect, that his job is to sue the federal government every day on behalf of the right of Texas to operate free of federal regulatory constraints. Plaintiffs moved for partial summary judgment or, in the alternative, a preliminary injunction, on October 21, 2016, and the court agreed to expedite briefing and hearing so as to be able to rule, at least on the preliminary injunction, before the Rule could go into effect on January 1.

There is a basic argument between the parties as to the requirements imposed by the Rule. The plaintiffs argue that under the rule they would be required to provide gender transition surgery and abortions or suffer liability to patients and potential loss of federal funding eligibility. They claim that this would violate their rights under the Religious Freedom Restoration Act, and that the government’s interpretation of the ban on sex discrimination to cover “gender identity” and “termination of pregnancy” went beyond regulatory authority. HHS argues that the rule does not compel either procedure in every case, merely banning discrimination on these bases. Thus, for example, it could be argued, if a health care provider/institution performs mastectomies, it may not take the position that it will perform a mastectomy for a woman as a treatment for breast cancer but will not perform a mastectomy for a transgender man as part of his transition process, as this would be sex discrimination. Both women and transgender men are entitled to mastectomies. Similar arguments are made for a variety of the component parts of procedures, including, for example, hormone therapy, sterilization procedures and the like. A woman suffering an estrogen deficiency can receive hormone therapy, and so can a transgender woman; depriving the transgender woman of estrogen therapy because she was identified male at birth is sex discrimination. In effect, argue the private plaintiffs, the non-discrimination requirement would inevitably require them to perform procedures that violate their religious views, and, argue the public plaintiffs, would require them to violate various state laws and regulations, such as banning the termination of pregnancies in state facilities or the use of state Medicaid funds for gender transition or pregnancy termination procedures. Judge O’Connor agreed with the private plaintiffs that however the dispute over interpretation is resolved, there is a likelihood that their exercise of religion would be substantially burdened.

A portion of the decision, not detailed here, goes through the analysis of jurisdiction, ripeness and administrative exhaustion, finding that none of those doctrines would require a finding against the court’s jurisdiction to grant the requested relief on this motion. Proceeding to the merits, Judge O’Connor provided a detailed discussion of the tests for issuing a preliminary injunction.

First, as to likelihood of success on the merits, he found that Title IX does not on its face ban discrimination because of “gender identity” or “termination of pregnancy.” Most of the discussion focuses on the “gender identity” issue, and channels the discussion accompanying his August 21 preliminary injunction against Title IX enforcement in gender identity cases. The discussion regarding the abortion issue focuses on the failure of HHS to incorporate in its new regulation the religious and abortion exemptions in existing Title IX regulations, arguing that Congress’s wording of the Section 1557 non-discrimination provision led to the conclusion that such incorporation was intended by Congress.

“The precise question at issue in this case is: What constitutes Title IX sex discrimination?” he wrote. “The text of Section 1557 is neither silent nor ambiguous as to its interpretation of sex discrimination. Section 1557 clearly adopted Title IX’s existing legal structure for prohibited sex discrimination. 42 U.S.C. sec. 18116(a). For the reasons set out more fully below, this Court has previously concluded: the meaning of sex in Title IX unambiguously refers to ‘the biological and anatomical differences between male and female students as determined at their birth.’ Texas v. United States, No. 7:16-cv-00054, 2016 WL 4426495, at *14 (N.D. Tex. Aug. 21, 2016).” Judge O’Connor reinforced this reference with a citation to the federal district court ruling in %Johnston v. Univ. of Pittsburgh of Com. Sys. of Higher Educ.%, 97 F. Supp. 3d 657, 674 (W.D. Pa. 2015), %appeal dismissed% (Mar. 30, 2016), rejecting a Title IX gender identity discrimination claim by a transgender college student with restroom access issues, but omits reference at this point to the contrary ruling the 4^th Circuit in the Gloucester County case. Because he finds Title IX unambiguous on this point, he concludes that the HHS Rule is not entitled to Chevron deference that would normally be accorded a regulation adopted under the APA, and proceeds to apply his own interpretation of the statute, in which he finds Congress’s “binary definition of sex” to be shown by references in the statute to “students of one sex,” “both sexes,” and “students of the other sex.” He also appeals to “ordinary meaning,” to the failure of Congress to spell out any intent to cover “gender identity,” and to the fact that as of the time the ACA was enacted, federal agencies had not yet begun to treat “gender identity” discrimination as cognizable under sex discrimination statutes.

He wrote that “even if, as Defendants argue, the definition of sex discrimination was determined in 2010 when the ACA incorporated Title IX’s prohibition of sex discrimination, the Court is not persuaded it was passed with the Rule’s expansive scope in mind because: (1) Congress knew how but did not use language indicating as much, and (2) in 2010 no federal court or agency had interpreted Title IX sex discrimination to include gender identity.” (To this point he quoted a Washington Post article from 2015 stating that the new HHS Rule “for the first time includes bans on gender identity discrimination as a form of sexual discrimination, language that advocacy groups have pushed for and immediately hailed as groundbreaking.”) And, of course, he notes that before the ACA was passed and “for more than forty years after the passage of Title IX in 1972, no federal court or agency had concluded sex should be defined to include gender identity” in a Title IX case. In a footnote, he rejected the government’s attempt to bolster its case by reference to Price Waterhouse, pointing out that it was Title IX, not Title VII, which was incorporated by reference into the ACA.

As to the failure of the Rule to incorporate Title IX’s religious exemption language, he wrote, “The text of Section 1557 prohibits discrimination ‘on the ground prohibited under Title IX of the Education Amendments Act of 1972 (20 U.S.C. 1681 et seq.).’ . . . That Congress included the signal ‘et seq.’, which means ‘and the following,’ after the citation to Title IX can only mean Congress intended to incorporate the entire statutory structure, including the abortion and religious exemptions. Title IX prohibits discrimination on the basis of sex, but exempts from this prohibition entities controlled by religious organizations when the proscription would be inconsistent with religious tenets. 20 U.S.C. sec. 1681(a)(3). Title IX also categorically exempts any application that would require a covered entity to provide abortion or abortion-related services. 20 U.S.C. sec. 1688. Therefore, a religious organization refusing to act inconsistent with its religious tenets on the basis of sex does not discriminate on the ground prohibited by Title IX,” and any attempt by HHS to impose the non-discrimination requirement without including the religious exemption violates Congressional intent. O’Connor bolstered this point by invoking the Supreme Court’s Hobby Lobby decision, finding that the Rule “places substantial pressure on Plaintiffs to abstain from religious exercise” by forcing them to provide services contrary to their religious tenets, and that the government’s desire to expand access to “transition and abortion procedures,” even if deemed a “compelling interest” for purposes of the federal Religious Freedom Restoration Act, was not the least restrictive alternative for providing such access, and thus failed under Hobby Lobby. Taking his cue from Justice Samuel Alito’s opinion in that case, O’Connor pointed out that the government could offer to pay for transition and abortion services to be provided by those who did not have religious objections to them in order to avoid burdening the Plaintiff’s religious rights.

In another point worth noting, O’Connor cited to an HHS study showing that the medical community is not unanimous on the value and necessity of performing transition procedures, particularly on minors, undermining the “compelling interest” that the government must show under RFRA to justify substantially burdening health care providers with sincere religious objections to performing such procedures.

Having concluded that the plaintiffs were likely to succeed on the merits of their attack, O’Connor found that they easily satisfied the other requirements for preliminary injunctive relief, noting in particular that an ongoing investigation of the state of Texas’s practices made the potential of harm to the Plaintiffs more than hypothetical, as did the looming requirement for the private Plaintiffs to change the range of services they offer or risk loss of federal funding. More significantly, as to the scope of the injunction, he cited authority that “the scope of injunctive relief is dictated by the extent of the violation established, not by the geographical extent of the plaintiff class,” and that “a nationwide injunction is appropriate when a party brings a facial challenge to agency action under the APA.” In this case, he pointed out, “CMDA’s membership extends across the country and the Rule applies broadly to ‘almost all licensed physicians,’” quoting the HHS description published in the Federal Register. “Accordingly, the Rule’s harm is felt by healthcare providers and states across the country, including all of CMDA’s members, and the Court finds a nationwide injunction appropriate.” Noting a severability provision in the Rule, he observed that the injunction only applied to the inclusion of “gender identity” and “termination of pregnancy” under the definition of sex discrimination, and did not bar enforcement of any other part of the Rule. A preliminary injunction stays in effect until the court issues a ruling on the merits, unless it is reversed on appeal. As of December 31, the Obama Administration had barely three weeks left in office, to be succeeded by an administration much less likely to defend the Rule, so while this is merely preliminary relief for the Plaintiffs, it signals a major and probably long-term setback to efforts by transgender people to obtain non-discriminatory health care, including coverage for medically-necessary transition procedures.

Federal Court Allows Transgender Challenge to NY Medicaid Regulations to Continue

Posted on: July 7th, 2015 by Art Leonard No Comments

U.S. District Judge Jed Rakoff in Manhattan denied most of New York State’s motion to dismiss a lawsuit challenging various limitations in the state’s Medicaid program relating to treatment for gender dysphoria. Judge Rakoff did not immediately issue a written opinion supporting his June 26 ruling, indicating that one would be issued later. The case is Cruz v. Zucker, No. 14-CV-4456 (JSR)(GWG) (S.D.N.Y., June 26, 2015).

Medicaid is a joint federal-state program to provide health care coverage for medically needy people who lack the financial resources to pay for adequate health care. States are not required to have a Medicaid program, but if they do they must comply with federal standards in order to be eligible for federal money to help pay for the program. In general, the federal program requires coverage for medically necessary care.

The lawsuit was brought on behalf of a class of transgender Medicaid-eligible New Yorkers seeking various medical procedures as a part of their gender transition. It was originally filed in June 2014 to challenge a New York State Medicaid regulation banning all coverage for sex reassignment treatments and procedures, which had been adopted during the Pataki Administration in 1998. The lawsuit arose from frustration about lack of response by the Cuomo Administration to continuing demands to change the policy, in an environment where federal Medicaid and Medicare programs had been evolving towards greater coverage in this area. Indeed, the U.S. Tax Court ruled just a few years ago that costs for gender transition treatment could be tax deductible as medically necessary, reversing a long-time policy, and just weeks ago the federal Office of Personnel Management notified insurance companies covering federal employees that they were required to cover such expenses. This New York lawsuit soon triggered a response from the state, which adopted a new regulation effective on March 11, 2015.

However, the new regulation only went part way towards the plaintiffs’ goal of achieving complete coverage for sex-reassignment procedures under Medicaid. They quickly filed an amended complaint, attacking the failure of the new regulation to provide complete coverage.

The old regulation was a blanket prohibition, stating: “Payment is not available for care, services, drugs, or supplies rendered for the purpose of gender reassignment (also known as transsexual surgery) or any care, services, drugs, or supplies intended to promote such treatment.”

The new regulation states that “payment is available for medically necessary hormone therapy and/or gender reassignment surgery for the treatment of gender dysphoria.” Payment for hormone therapy is available even if the individual is not seeking surgical reassignment. Two qualified New York State licensed health care professionals must certify that the individual suffers from gender dysphoria and that surgery is medically necessary. The regulation excludes coverage for people under age 18, and will not cover gender reassignment surgery that would render somebody sterile unless they are at least 21. This is most significant for transgender women, since the removal of male genitalia and reproductive system organs incident to transition always produces sterility. The regulation explicitly excludes a long list of procedures that are deemed “cosmetic” and thus not “medically necessary,” but that transgender individuals may need in order to accomplish a complete transition consistent with their gender identity.

The lawsuit challenges the exclusions of coverage for younger transgender people, and sharply disputes the contention that the various procedures labeled as “cosmetic” should be excluded. The mindset of those who drafted the regulation is exemplified by its explanation that “cosmetic surgery, services, and procedures refers to anything solely directed at improving an individual’s appearance.” Of course, Medicaid would cover these procedures in other contexts, such as reparative and cosmetic surgery for somebody who has suffered disfiguring injuries in a fire, auto crash or similar catastrophe, even though in such circumstance “improving an individual’s appearance” may be the primary goal of a particular procedure. The point is that these procedures are not sought by transgender individuals solely to improve their appearance, but rather to bring their appearance into more full accord with their gender identity.

The plaintiffs argue that these additional procedures can be centrally important for a successful gender transition process. The goal is not just to eliminate or modify unwanted genitalia and internal organs. It is rather to assist the individual in achieving a physical form that is consistent with their gender identity and how it is expressed to the world. The Complaint filed in this case spells out the problems encountered by some of the plaintiffs who were unable to access these procedures, which, they argue, are necessary for them to be able to present themselves in their desired gender. An incomplete transition makes their transgender status obvious, “outing” them and leaving them vulnerable to harassment or worse.

The legal theory behind the lawsuit is that denial of these services to those under 18, and the blanket denial of a range of procedures that are necessary to effectuate a successful gender transition, violates the state’s obligations under the federal Medicaid statute to cover medically necessary care and also raises constitutional issues of unequal treatment, as transgender people are being excluded from access to treatments and procedures that are covered in other contexts. The Complaint also alleges a violation of the non-discrimination requirements of the Affordable Care Act (ACA).

The Attorney General’s office quickly responded to the Amended Complaint by filing a motion to dismiss the case. The office’s brief, submitted in the name of Attorney General Eric Schneiderman by Assistant Attorneys General John Gasior and Zoey S. Chenitz, argued that the 11^th Amendment bars the plaintiffs’ constitutional claims, and that the Medicaid statute’s requirements are not enforceable by individuals in a federal lawsuit. Furthermore, they argued, the exclusion of those under age 18 would not violate any provisions of the statutes that the plaintiffs rely upon, the denial of coverage for cosmetic procedures was not “ripe” for review based on the factual allegations in the Complaint, and, they argued, the Complaint did not even raise a plausible claim for violation of the specific Medicaid regulation upon which the plaintiffs are relying.

Judge Rakoff rejected most of the Attorney General’s arguments, at least at this early stage of the lawsuit for purposes of determining whether the case should be thrown out or allowed to continue.

According to a summary of his ruling published by the New York Law Journal on June 30, he refused to dismiss the claims based on “refusal to fully fund the treatment of gender identity disorder or gender dysphoria” including “refusing surgery for those under 18.” He also refused to dismiss a sex-based discrimination claim under the ACA, but granted the state’s motion to dismiss an ACA claim for youth hormone therapy for those under 18. He also dismissed a claim under a section of the Medicaid law requiring the state to have reasonable standards for determining eligibility for the extent of medical assistance. Rakoff noted that the parties had agreed to dismiss the constitutional claim. An explanation for his rejection of the arguments made by the Attorney General’s office in its brief awaits publication of an opinion.

The plaintiffs are represented by the Sylvia Rivera Law Project and the Legal Aid Society, with pro bono assistance from lawyers at the firm of Willkie Farr & Gallagher LLP. Sumani Lanka, a Legal Aid Society attorney, told the Law Journal, “The state doesn’t really understand what gender identity is. Gender identity isn’t just reassignment surgery – it has to do with how a person perceives themselves and identifies themselves. It shouldn’t be that the state arbitrarily limits treatment that is medically necessary for gender dysphoria.”

Another Circuit Court Rules against Free Exercise of Religion Claim by a Business Corporation

Posted on: September 18th, 2013 by Art Leonard No Comments

A third federal circuit court of appeals has weighed in on the question whether for-profit business corporations have a right under the 1st Amendment to free exercise of religion, and thus to claim a religious exemption from compliance with a valid general law. As in Hobby Lobby Stores, Inc. v. Sebelius, 2013 WL 3216103 (10th Cir., June 27, 2013), and Conestoga Wood Specialties Corp. v. Sec’y of U.S. Dep’t of Health & Human Servs., 2013 WL 3845365 (3rd Cir., July 26, 2013), the case of Autocam Corp. v. Sebelius, 2013 U.S. App. LEXIS 19152 (6th Cir., Sept. 17, 2013), arises in the context of implementation of the Affordable Care Act regulations requiring that employer-provided health insurance plans include coverage for contraception for women. The spreading circuit splits will likely lead to Supreme Court review of the underlying constitutional question, which would be significant for enforcement of laws banning discrimination by businesses.

As in the earlier cases, the corporate defendants are not publicly-traded, but rather are closely held corporations owned entirely by individuals or groups of individuals whose religious beliefs deem contraception to be immoral. In Autocam, a 6th Circuit panel lines up with the 3rd Circuit in finding that such a business corporation cannot claim a right to free exercise of religion, either under the 1st Amendment directly or under the Religious Freedom Restoration Act (RFRA), which was passed by Congress in reaction to the Supreme Court’s 1990 ruling in Employment Division v. Smith, 494 U.S. 872, which had upheld the right of legislators to pass a “valid and neutral law of general applicability” outlawing conduct or requiring conduct that may be contrary to the teachings of a particular religion.

Both the 1st Amendment and RFRA speak in terms of protecting the right of “persons” to free exercise of religion, and the 3rd and 6th Circuits construe that to mean that neither the 1^st Amendment nor RFRA protect business corporations from having to comply with valid general laws that contradict the religious beliefs of their shareholders.

The 10th Circuit, by contrast, holds that as for-profit corporations are treated as “persons” for purposes of due process, equal protection, and freedom of speech, they should also be treated as persons who are capable of exercising the practice of religion. See, e.g., Citizens United v. Federal Election Commission, 558 U.S. 310 (2010), holding that corporations are protected by the 1st Amendment from restrictions on their expenditures in political campaigns under the Freedom of Speech Clause.

The Autocam court stated its agreement with the Obama Administration’s position, presented in this case by the Justice Department, that preliminary injunctive relief against implementation of the statutory requirement should not be granted and that claims asserted by the owners of Autocam Corporation under RFRA should be dismissed.

While acknowledging that the Supreme Court has recognized free speech rights for corporations under the 1st Amendment, Circuit Judge Julia Smith Gibbons wrote for the court, “No analogous body of precedent exists with regard to the rights of secular, for-profit corporations under the Free Exercise Clause prior to the enactment of RFRA. The Free Exercise Clause and the Free Speech Clause of the First Amendment have historically been interpreted in very different ways. Therefore, the Court’s recognition of rights for corporations like Autocam under the Free Speech Clause nearly twenty years after RFRA’s enactment does not require the conclusion that Autocam is a ‘person’ that can exercise religion for purposes of RFRA.” The court noted that Congress had specifically stated that it did not intend by enacting RFRA to expand 1^st Amendment free exercise rights beyond what they had been prior to the ruling in Employment Division v. Smith, and no prior Supreme Court ruling had found any corporate exemption from compliance with general laws due to the religious beliefs of the corporation’s owners.

We previously suggested that it was likely that the Supreme Court would grant certiorari in one or more of these cases, since the Court has never previously ruled on the question presented here: Whether somebody who has decided to run their sole proprietor or family-owned business as a for-profit corporation may assert his or her individual free exercise of religion rights through the control of the corporation to avoid the requirements of a valid general statute. The question has great importance for LGBT legal rights, of course, since recognition of a right of business corporations to avoid complying with general laws based on the religious beliefs of their owners could undermine the application of enforcement against such corporations of laws forbidding discrimination in employment, housing and public accommodations, such as, for example, the recent New Mexico Supreme Court decision in Elane Photography, LLC v. Willock, 2013 N.M. LEXIS 284, 2013 WL 4478229 (August 22, 2013), holding that the owner of a wedding photography business did not enjoy a religious exemption from the state’s public accommodations law based on the owner’s religious objection to same-sex commitment ceremonies.

Circuit Split May Take Religious Exemption Issue to Supreme Court

Posted on: July 31st, 2013 by Art Leonard No Comments

A divided panel of the U.S. Court of Appeals for the 3rd Circuit ruled on July 26 that a for-profit business corporation has no right to free exercise of religion under the 1st Amendment, rejecting a contrary doctrine that had been adopted by the 9th and 10th Circuits and setting up the possibility that the Supreme Court may intervene on a question that has become very salient in the context of marriage equality: Can business owners with religious objections to providing particular services claim an exemption from statutory requirements to provide those services?

The 3rd Circuit ruling came in one of several challenges that have been filed by businesses to the requirement under the Affordable Care Act that health insurance plans provided to employees include coverage for prescription contraceptives for women. Business owners who have religious objections to providing such coverage have asserted 1st Amendment free exercise claims. In Conestoga Wood Specialties Corp. v. Secretary of Health and Human Services, 2013 WL 3845365, the 3rd Circuit panel voted 2-1 to affirm District Judge Mitchell S. Goldberg’s denial of a preliminary injunction to the plaintiff. Conestoga is a corporation wholly owned by members of the Hahn family, who are all Mennonites who are opposed to any contraceptive that acts in effect as an abortifacient by preventing the development of a fertilized egg. Two such medications are included in the formulary required under regulations promulgated by the Department of Health and Human Services to be covered under employee group health insurance. Conestoga became subject to this requirement as of January 1, 2013, and due to the denial of preliminary injunctive relief, the company has been providing this coverage.

The Hahns rely heavily on the Supreme Court cases finding that corporations have 1st Amendment free speech rights, as well as 5th and 14th Amendment Due Process and Equal Protection rights, but the panel majority found that the Supreme Court has never ruled that corporations, across the board, are entitled to every constitutional right enjoyed by individuals. In particular, Circuit Judge Cowen wrote for the court, the Supreme Court’s recognition of religious free exercise rights for corporations has been limited to religious corporations, and has never been extended to business corporations based on the religious beliefs of their owners. Cowen pointed out that the Supreme Court has stated that the purpose of the Free Exercise Clause is to “secure religious liberty in the individual,” and stated, “We do not see how a for-profit ‘artificial being, invisible, intangible, and existing only in contemplation of law,’ that was created to make money could exercise such an inherently ‘human’ right.”

The ruling brings the 3rd Circuit into conflict with the 10th Circuit’s recent ruling in Hobby Lobby Stores, Inc. v. Sebelius, 2013 WL 3216103 (10th Cir., June 27, 2013), which held that a family-owned corporation that wanted an exemption from the ACA requirements on religious grounds could maintain a Free Exercise claim. There is also a conceptual conflict with the 9th Circuit’s rulings in EEOC v. Townley Engineering & Manufacturing Co., 859 F.2d 610 (9th Cir. 1988) and Stormans, Inc. v. Selecky, 586 F.3d 1109 (9th Cir. 2009), that adopted the so-called “pass through” theory under which a closely-held corporation whose small proprietor group had religious objections to a statutory requirement could assert their individual free exercise claims on behalf of their corporation. The 3rd Circuit specifically rejected the reasoning of the 9th Circuit cases, finding that once business people have adopted the corporate form of business, they have created an entity distinct and apart from themselves, which should be subject to commercial regulations of the civil rights laws as well as such public welfare regulations as the insurance requirements.

Similar arguments are now playing out in various cases where businesses are claiming that they should not be required to provide services to same-sex couples for commitment ceremonies or weddings, due to the business owners’ religious objections to same-sex marriage. The significance of recognizing corporate free exercise privileges to evade statutory rights of gay couples prompted amicus participation in these cases, including briefs filed by the ACLU and Lambda Legal.

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