New York Law School

Art Leonard Observations

Posts Tagged ‘Medicaid coverage for sex changes’

Iowa Judge Strikes Down Medicaid Ban on Sex Reassignment Surgery

Posted on: July 2nd, 2018 by Art Leonard No Comments

An Iowa trial judge ruled on June 6 that a state regulation prohibiting Medicaid coverage for sex reassignment surgery violates the state’s Civil Rights Act as well as the equal protection requirement of the state’s Constitution. Ruling on appeals by two transgender women who were denied preclearance for the procedures, Polk County District Judge Arthur E. Gamble rejected the state’s argument that the public accommodations law is inapplicable.

Iowa has a rather unusual history with this issue. Back in the 1970s, a transgender woman appealed a denial of benefits for sex reassignment surgery to federal court, winning a ruling from the district court and, in 1980, the 8th Circuit Court of Appeals, which held that under the federal Medicaid statute, as then written, such surgery was covered under a general category of medically necessary in-patient hospital services.  The federal Medicaid program subsequently adopted policy statements disavowing the 8th Circuit’s approach, purporting to relieve state Medicaid programs from any obligation to cover sex reassignment procedures.  The federal agency backed away from that position during the Obama Administration, taking a neutral stance on what states might cover, although the Affordable Care Act, which prohibits sex discrimination by health care providers, might be construed to require such coverage.  But the Trump Administration now take the position, contrary to the Obama Administration, that gender identity discrimination is not covered under sex discrimination.

In 1991, the Iowa Department of Human Services (DHS), ruling on a similar coverage claim, held that the language of the state’s Medicaid regulations required coverage. This prompted the state to take steps to change the regulatory language.  In 1995, relying on a report prepared by the Iowa Foundation for Medical Care, a non-profit that studies and generates reports on health care policy issues, DHS adopted new regulatory language, explicitly excluding from coverage “procedures related to transsexualism, hermaphroditism, gender identity disorders, or body dysmorphic disorders.”  Also excluded were “breast augmentation mammoplasty, surgical insertion of prosthetic testicles, penile implant procedures, and surgeries for the purpose of sex reassignment.”  This was included with a general ban on cosmetic procedures “performed primarily for psychological reasons or as a result of the aging process.”  The position of DHS in 1995, reiterated in this lawsuit, is that gender identity is entirely a psychological issue.

Although the 1995 Regulation has been reviewed by the agency numerous times since then, it has never been altered to take account of the changing medical consensus on gender identity and the role of sex reassignment procedures in treating gender dysphoria.

This is where the state fell down in the appeals filed by Eerieanna Good and Carol Beal from the denial of pre-clearance for their procedures. Their attorneys, Rita Bettis and Seth Horvath, retained the services of a distinguished expert, Dr. Randi Ettner, an author of several books on gender identity issues who has done a fair amount of public speaking and television appearances, who testified in detail about the current medical consensus about the nature of gender identity and appropriate health care for those diagnosed with gender dysphoria.  The current consensus goes beyond psychology to invoke fetal development, hormones, genes, and a biological basis for gender identity as a deeply rooted trait that is largely impervious to change, and these concepts are reflected in more up-to-date standard medical reference sources.

DHS did not produce an expert witness, instead resting on that quarter-century old Iowa Foundation report, which was mired in thinking already verging on obsolescence at the time, labeling “transsexualism” as purely a psychological issue and sex reassignment as essentially cosmetic.

Judge Gamble was not convinced by the state’s argument, finding Dr. Ettner’s testimony convincing and consistent with the medical literature. Gender identity issues are about more than psychology, the state agency has failed to keep up with the times, and the beliefs on which it based its 1995 regulation no longer enjoy professional acceptance in the field.  These findings clearly supported Judge Gamble’s conclusion that the Regulation is vulnerable to attack.

The state tried to argue that the Iowa Civil Rights Act, which was amended several years ago to add “gender identity” to the list of forbidden grounds of discrimination in public accommodations, did not apply. Medicaid, argued the state, is not a “public accommodation.”  Judge Gamble decided the state was mischaracterizing the issue.  Medicaid is a service, overseen and provided in Iowa through contracts with private managed care organizations (MCOs) by the DHS. The DHS, as a “unit of government,” is clearly a “public accommodation” within the meaning of the law, as are the MCOs that administer the program.

When the doctors for Good and Beal applied for pre-clearance to perform the medical procedures and were turned down, the MCOs relied on the DHS regulation, not engaging in any individualized evaluation of the claims. Similarly, when Good and Beal filed internal appeals, the DHS itself denied their appeals without any individualized analysis, merely invoking the old regulation. Thus, by refusing to authorize the procedures under Medicaid, the DHS, a public accommodation, was denying a service to Good and Beal.  And the court concluded that this denial was because of their gender identity, taking note of how the Regulation explicitly targeted transgender people for discrimination.

The plaintiffs had also claimed sex discrimination, but Judge Gamble found that under an old state supreme court decision that has never been overruled, he was precluded as a state trial judge from treating a gender identity discrimination claim as a sex discrimination claim under state law, although he acknowledged that many federal courts of appeals have now agreed with the argument that gender identity claims are covered by laws banning sex discrimination.

Turning to the constitutional challenge, Judge Gamble had to determine the level of judicial scrutiny to be applied to gender identity discrimination by a state agency, a question of first impression under the Iowa Constitution. He looked to the Iowa Supreme Court’s historic decision Varnum v. Brien from 2009, in which the Iowa Supreme Court became the first state high court in the nation to rule by unanimous vote that same-sex couples are entitled to marry.  In that case, the court had to determine the level of judicial scrutiny for a claim that the marriage laws unconstitutionally discriminated against gay people, and concluded that such discrimination was subject to heightened scrutiny, placing a significant burden of objective justification on the state.

Gamble found many parallels to the analysis of sexual orientation and gender identity claims, and concluded that heightened scrutiny should apply, having identified transgender people as a “quasi-suspect class.” The state had utterly failed to meet its burden of proof here, resting on outmoded misunderstanding of gender identity and failing to counter the plaintiffs’ expert testimony.  Hedging his bets in case of an appeal, Judge Gamble also evaluated the policy under the less demanding rational basis test, but the state fared no better, as he found that the plaintiffs “negated every reasonable basis for the classification that might support disparate treatment.  The Regulation’s exclusion of surgical treatment for Gender Dysphoria does not pass under rational basis review,” concluded Gamble, who went on to agree with the plaintiffs that continuing to enforce the Regulation violated the state’s Administrative Procedure Act, as being an “arbitrary or capricious” administrative action, depriving them of equal rights.

“While the Court understands that DHS is in some respect obligated to enforce the administrative rules as previously adopted,” Gamble wrote, “it also owes an obligation to ensure those rules conform to the statutes like the [Iowa Civil Rights Act] and the Iowa Constitution which trump any prior administrative rule. DHS also has an obligation to keep up with the medical science.  DHS failed to do so when it denied coverage to Good and Beal for medically necessary gender affirming surgery.  This decision was made without regard to the law and facts.  The agency acted in the face of evidence upon which there is no room for difference of opinion among reasonable minds.  The exclusion of coverage was unreasonable arbitrary and capricious.”

Finally, Judge Gamble rejected DHS’s plea to limit the scope of his ruling by giving the agency time to develop a new regulation and not make the court’s order immediately binding, or to write a narrow order that would not have any broader effect. Gamble refused to be so limited, pointing out that the plaintiffs had already suffered undue delay and were entitled to the coverage mandated by law.  A total wipe-out of the state’s position.  The Iowa Attorney General’s office did not offer any comment in the immediate aftermath of the ruling, which could be appealed.