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Posts Tagged ‘Sec. 1557 Affordable Care Act’

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 8th 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 11th Circuit (sexual orientation) and affirming rulings by the 2nd Circuit (sexual orientation) and the 6th 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 8th 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 8th Circuit Court of Appeals is dominated by Republican appointees – ten of the eleven active judges on the court.

North Carolina Federal Court Refuses to Dismiss Challenge to North Carolina’s Exclusion of Coverage for Gender Transition from State Employee Medical Plan

Posted on: April 5th, 2020 by Art Leonard No Comments

On March 11, U.S District Judge Loretta C. Biggs denied the state’s motion to dismiss a lawsuit brought by Lambda Legal claiming that the State Health Plan’s categorical exclusion of coverage for treatment sought “in conjunction with proposed gender transformation” or “in connection with sex changes or modifications” violates the Equal Protection Clause, Title IX, and Section 1557 of the Affordable Care Act (ACA). Kadel v. Folwell, 2020 WL 1169271, 2020 U.S. Dist. LEXIS 42586 (M.D.N.C.). The state university defendants had moved to dismiss the Title IX claim, and the State Health Plan defendants had moved to dismiss the Equal Protection and ACA claims. The plaintiffs are all current or former employees of the university defendants, or dependents of university employees, which were all enrolled in the Plan and are the parents of transgender individuals who have been diagnosed with gender dysphoria and are seeking treatment that is categorically excluded from coverage under the Plan.

The plaintiffs jointly allege that since the 1980s the Health Plan covering employees of the state university and their dependents has denied coverage for medically necessary treatment if the need stems from gender dysphoria, as opposed to some other condition. Thus, a cisgender woman’s medically necessary mastectomy would be covered, but a transgender man’s mastectomy for purpose of gender transition would not be covered. With the exception of 2017, this exclusionary policy has been in effect. Third party administrators retained by the employers to administer the plans – Blue Cross Blue Shield of North Carolina (claims administrator) and CBS Caremark (pharmaceuticals) – sell this kind of coverage to other employers, this it would be possible for the state to include such coverage using their current administrators, who are experienced in dealing with such claims.

The statutory causes of action (Title IX and ACA) would require the court to conclude that discrimination because of gender identity is covered under the statutory prohibition of sex discrimination, while the constitutional claim would require a finding that gender identity discrimination claims are actionable under the Equal Protection Clause of the 14th Amendment.

Judge Biggs turned first to the statutory claims in her analysis. She first rejected the state university’s claim that the suit should not be against them, because the state government dictates the content of their employee benefits plans. She found that the defendants “offer” the plan to plaintiffs, and “participate” (or participated) in its availability. “Indeed,” she wrote, “had University Defendants not hired Plaintiffs, they would not have been permitted to enroll in the Plan at all. The Court finds, at this stage, those facts provide a sufficient nexus between the alleged injuries the University Defendants.” Also, responding to the University’s argument that a ruling against them would not redress the plaintiffs’ claims because the defendants are bound by state policy, Biggs wrote that “there are other wahys in which a favorable ruling on Plaintiffs’ Title IX claim could give them the relief they seek. First, Plaintiffs have asked for – and ‘personally would benefit in a tangible way’ from – an award of damages.” Further, she noted, the university defendants might offer supplemental coverage beyond what the state Plan provides. She also rejected defendant’s arguments that since some of the Plaintiffs are not themselves transgender, their injuries are only indirect, because the minor plaintiffs’ “only ties” to the university are through their parents’ employment. Judge Biggs found that the parents were in this case within the class of plaintiffs protected by Title IX.

Turning to the argument that gender identity claims are not cognizable under Title IX, Biggs took note of the fact that the Supreme Court was considering whether Title VII covers gender identity discrimination claims in R.G. & G.R. Harris Funeral Homes v. EEOC, No. 18-107, which was argued on October 8, 2019, and had not been decided yet. The defendants argued that this case should be put “on hold” until a Supreme Court ruling was issued. “Because courts in this circuit often look to Title VII when construing like terms in Title IX,” she noted, “the Supreme Court’s decision could potentially impact the viability of the Title IX claim in this case. At this time, however, this Court is left to make its own determination as to whether discrimination ‘on the basis of sex’ encompasses discrimination on the basis of transgender status,” and she noted Grimm v. Gloucester County School Board, 302 F. Supp. 3d 730 (E.D. Va. 2018) and M.A.B. v. Board of Education of Talbot City, 286 F. Supp. 3d 704 (D. Md. 2918), in which other district courts also within the 4th Circuit have ruled that such claims are covered by Title IX. Biggs wrote that she “agrees with their reasoning and follows it here.” She also noted that some other district courts in other circuits have faced similar arguments challenging transgender exclusions under state employee benefit plans, and have ruled against the employing states in those cases.

“University Defendants do not seriously contest that discrimination because of transgender status is discrimination because of sex (although State Defendants do),” she wrote. “Rather, in moving to dismiss for failure to state a claim, they simply rephrase their arguments related to standing. There is no dispute that ‘a recipient of federal funds may be liable in damages under Title IX only for its own misconduct; the parties just disagree over whether University Defendants’ conduct is sufficiently implicated in this case.” Biggs held that “at this stage” in the litigation, the plaintiffs’ allegations concerning the university defendants’ role in providing benefits to their employees are sufficient both for standing and for the Title IX claim, and denied the motion to dismiss the Title IX claim.

Turning to the ACA claim, the state defendants argued sovereign immunity. “Section 1557 does not purport to condition a state’s acceptance of federal funding on a waiver of sovereign immunity,” she wrote. “Nor does any other provision of the ACA. However, in the Civil Rights Remedies Equalization Act of 1986 (CREA), Congress explicitly stated that a state shall not be immune from suit in federal court ‘for a violation of section 504 of the Rehabilitation Act of 1973, title IX of the Education Amendments of 1972, the Age Discrimination Act of 1975, title VI of the Civil Rights Act of 1964, or the provisions of any other Federal statute prohibiting discrimination by recipients of Federal assistance.” The 4th Circuit found clear congressional intent to waive the state’s sovereign immunity if they accepted money in programs that prohibit discrimination. The state’s response was that the lack of mention of gender identity or transgender status in Section 1557 shows that North Carolina did not “knowingly” waive its sovereign immunity with respect to discrimination claims on these bases. Disagreeing, Biggs wrote that the state’s potential exposure to such suits should not have been “surprising,” because “courts across the country have acknowledged for decades that sex discrimination can encompass discrimination against transgender plaintiffs. Further, as a general matter, ‘statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils,’” citing Oncale v. Sundowner Offshore Services, 523 U.S. 75 (1999). She asserted that surely the state would agree that Title IX covers sexual harassment claims, even though the word “harassment” does not appear in the statute. “By the same token, Section 1557 need not include the precise phrasing State Defendants demand to provide sufficient notice of a condition of waiver.”

Turning to the constitutional claim, asserted against specific state officials in their official capacity, she found convincing the case law supporting heightened scrutiny for gender identity discrimination claims as being essentially sex discrimination claims. “On its face,” she wrote, “the Exclusion bars coverage for ‘treatment in conjunction with proposed gender transformation’ and ‘sex changes or modifications.’ The characteristics of sex and gender are directly implicated; it is impossible to refer to the Exclusion without referring to them. State Defendants attempt to frame the Exclusion as one focused on ‘medical diagnoses, not . . . gender.’ However, the diagnosis at issue – gender dysphoria – only results from a discrepancy between assigned sex and gender identity. In short, the Exclusion facially discriminates on the basis of gender, and heightened scrutiny applies.” And, quoting from United States v. Virginia, 518 U.S. 515 (1996), she wrote, “A policy that classifies on the basis of gender violates the Equal Protection Clause unless the state can provide an ‘exceedingly persuasive justification’ for the classification.” [Thank-you, Justice Ginsburg!] Judge Biggs found that at this stage in the litigation, “State Defendants have failed to satisfy this demanding standard” and, in fact, “the only justification presented thus far is that the Exclusion ‘saves money.’ Under ordinary rational basis review, that could potentially be enough to thwart Plaintiffs’ claim. However, when heightened scrutiny applies, ‘a State may not protect the public fisc by drawing an invidious distinction between classes of its citizens,’” quoting from Memorial Hospital v. Maricopa County, 415 U.S. 250 (1974).

Next, Judge Biggs rejected the state defendants’ argument as a ground for dismissal the plaintiffs’ failure to join the Health Plan’s Board of Trustees as a required party, as they would have to vote to make any change in the Plan that would be required to repeal the Exclusion. She found that the state defendants “share primary responsibility for the operation and administration of the Plan” so an award of declaratory, injunctive and monetary remedies against them would “give plaintiffs all the relief they seek.”

Finally, rejecting defendants’ request that the action be stayed pending the Supreme Court’s ruling in Harris Funeral Homes, Judge Biggs pointed out that “the potential harm to Plaintiffs resulting from even a mild delay is significant, as they will continue to be denied healthcare coverage for medically necessary procedures. In contrast, the ‘harm’ to Defendants of not staying this case appears to be nothing more than the inconvenience of having to begin discovery.” This is obvious. Since discovery hasn’t begun yet, there is no chance this case would be ready for a motion for summary judgment for many months, and the Supreme Court will likely rule in Harris by the end of June. “Judicial economy is, of course, a consideration,” wrote Biggs. However, this case is in its infancy, and it may be months before a decision issued in Harris – a substantial delay for those seeking to vindicate their civil rights. Given the ongoing harm to Plaintiffs and Defendants’ failure to present ‘clear and convincing circumstances’ outweighing that harm, this Court declines to exercise its discretion to stay the proceedings.”

Thus, pending motions to dismiss are all denied. As of the end of March, the defendants had not petitioned the 4th Circuit for a stay.

Counsel for plaintiffs include Deepika H. Ravi, of Harris, Wiltshire & Grannis LLP, Washington, DC; Meredith T. Brown and Tara L. Borelli, Lambda Legal Defense And Education Fund, Inc., Atlanta, GA; Noah E. Lewis, of Transgender Legal Defense & Education Fund, Inc.; Omar F. Gonzalez-Pagan, Lambda Legal Defense And Education Fund, Inc., New York, NY; and Amy E. Richardson, Wiltshire & Grannis LLP, Raleigh, NC (local counsel).