U.S. District Judge Frederic Block ruled on August 17 that a new Trump Administration Rule that rescinded the Obama Administration’s Rule prohibiting gender identity discrimination in health care will not go into effect on August 18, its scheduled date, and he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 5th 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 6th 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 11th 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.