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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 4th 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 5th 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 5th 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 5th 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.