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U.S. District Judge Frederic Block ruled on August 17 that a new Trump Administration Rule that rescinded the Obama Administration’s Rule prohibiting gender identity discrimination in health care will not go into effect on August 18, its scheduled date, and he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

Federal Court Permanently Enjoins Wisconsin Medicaid from Enforcing State Statutory Exclusion of Coverage for Gender Transition

Posted on: August 26th, 2019 by Art Leonard No Comments

Last year, U.S. District Judge William M. Conley granted a preliminary injunction to several named plaintiffs in a case challenging a 1996 amendment to Wisconsin’s Medicaid statute under which transgender Medicaid participants were denied coverage for their gender transitions.  At that time, the court had concluded that the plaintiffs were likely to win their case on the merits and that delaying their access to gender transition coverage pending a final ruling on the merits would cause them irreparable injury, far outweighing any harm to the state.  The court refused to stay its preliminary injunction pending a possible appeal.  On August 16, Judge Conley issued his final ruling on the merits in the case, having in the interim certified it as a class action extending to all transgender people in the state who relied on Medicaid for their health care coverage, and making the injunction permanent.  The judge ordered the parties to “meet and confer” within 14 days on the scope of relief and final wording of an injunction.  Flack v. Wisconsin Department of Health Services, 2019 U.S. Dist. LEXIS 139388, 2019 WL 3858297 (W.D. Wis., Aug. 16, 2019).

Judge Conley premised his ruling on three sources of law: Section 1557 of the Affordable Care Act, the “Availability and Comparability” provisions of the Medicaid Act, and the Equal Protection Clause of the 14th Amendment.  Providing three independent and equal bases for the ruling makes it eminently defensible should the state decided to seek review at the 7th Circuit.  In this connection, the 7th Circuit has previously found thta government policies that disadvantage transgender people may violate the Equal Protection Clause, and it has adopted an interpretation of Title IX of the Education Amendments of 1972 that accepts the contention that a federal law banning sex discrimination would extend to gender identity discrimination, although this holding might be adversely affected by a Supreme Court ruling under Title VII in a pending case from the 6th Circuit, R.G. & G.R. Harris Funeral Homes v. EEOC, to be argued on October 8.

Judge Conley accepted the plaintiffs’ contention that the standards of care for gender dysphoria published by the World Professional Association of Transgender Health (WPATH), most recently updated in 2011, as supplemented by clinical guidelines on hormone treatment for gender dysphoria published in 2017 by the Endocrine Society, represent a medical consensus recognized by numerous professional health care associations and many, many court decisions, defining the standard of care in the context of any dispute about medically necessary treatment for gender dysphoria.  There is near-unanimity among federal courts at this point that gender dysphoria can be a serious medical condition and that, depending on the symptoms of the individual transgender person, various forms of treatment involved in transition, including hormone therapy and gender confirmation surgery (GCS), may be medically necessary.  The published standards emphasize, as does Judge Conley, that not every person who identifies as transgender experiences gender dysphoria (a “disconnect” between their gender identity and their anatomy), and that there is a range of severity, so not every person with gender dysphoria will necessarily seek GCS.  The Medicaid program’s coverage should depend upon competent medical professionals diagnosing gender dysphoria in the individual case and determining that hormone therapy and or GCS are medically necessary for the individual in question.

A significant problem for the defendants in this case, who include various officials as well as the state’s health services department, was that the legislature, evidently for political reasons, voted in 1996 to forbid the use of state Medicaid funds for gender transition, even though the particular treatments and procedures involved remain covered for a variety of other medical conditions.  For example, somebody suffering a severe hormone deficiency could obtain hormone replacement therapy under Medicaid, and a woman with breast cancer would be covered for a mastectomy, while transgender people would be denied coverage for hormone therapy or mastectomies, even though there was a medical consensus that these treatments were necessary to deal with their gender dysphoria.  The legislature did not undertake any serious study of the expenses of providing such treatment or of the professional medical standards in effect for treating gender dysphoria at that time.  The state tried to defend the statute in this case by coming up with various post hoc arguments that were easily discredited by the court, which observed that the state had failed to present credible expert testimony that there was a sound medical reason to deny the specified procedures to individuals for whom it was medically necessary.

The bulk of Judge Conley’s opinion is devoted to describing the medical evidence in the case, much of it derived from expert testimony provided by the plaintiffs, whose two expert witnesses were experienced medical specialists who had treated hundreds of transgender individuals and who were well-recognized in their field.  The state’s response to this, from the point of view of litigation strategy, was pathetic.  It failed even to offer experts with facially relevant expertise to contest any of the medical evidence.  Indeed, officials of the Wisconsin Medicaid program conceded in their testimony that the WPATH standards describe safe and effective treatments for gender dysphoria in appropriate cases, and there was little dispute that the named plaintiffs qualified for these treatments but were denied coverage for them solely because of the statute.  The court also pointed out that the state had attempted to rely in its arguments on materials that could not have provided a basis for the statute when it was passed, because their publication post-dated it.  In addition, Judge Conley observed that scientific knowledge about gender identity had significantly moved on since the mid-1990s, making the treatments and procedures even safer and more effective today.

The defendants sought to rely on two decision from other circuits: Kosilek v. Spencer, 774 F.3d 63 (1st Cir. en banc, 2014), and Gibson v. Collier, 920 F.3d 212 (5th Cir. 2019), but Judge Conley concluded these rulings were not persuasive precedents for this case.

Kosilek culminated long-running litigation and was based on expert testimony presented to the trial court in 2006, predating the current WPATH and Endocrine Society standards.  Also, the en banc 1st Circuit, which was ruling on the question whether GCS was medically necessary in the 8th Amendment context of a state prisoner serving a life sentence for murder (and which, incidentally, was reversing a 3-judge panel decision in the plaintiff’s favor), was heavily influenced by prison security concerns raised by the state that are not relevant in to Medicaid.

As to Gibson, Judge Conley performed a total demolition job on the cock-eyed reasoning of the 5th Circuit panel, whose opinion was written by Trump appointee James Ho.  This was also a prisoner case, the issue being whether it violated the 8th Amendment for the state to maintain a categorical refusal to provide GCS to transgender inmates (unlike in Kosilek, where the court focused on the individual inmate rather than an explicitly categorical treatment ban).  Gibson was a pro se case at the trial level, where the unrepresented inmate was incapable of compiling a state-of-the-art record of expert medical testimony, leaving a factual record bare of the kind of detailed information available to Judge Conley in this case litigated by experience attorneys.  In the absence of such a record, Judge Ho invoked the 1st Circuit’s decision in Kosilek, with its reliance on out-of-date information.  Of course, unlike the present Medicaid case, a case involving a prison setting raises different issues.  On the other hand, Judge Conley’s opinion leaves little doubt that he found the 5th Circuit’s analysis unpersuasive on the key points in common: whether there is a medical consensus that GCS can be medically necessary and that it is a safe and effective treatment.

For the short Affordable Care Act portion of his analysis, Judge Conley refers the reader to his earlier preliminary injunction decision.  As to the Medicaid portion, he details the requirement under Medicaid to cover medically necessary treatments, and furthermore the specific ban on discriminating in coverage decisions depending on the diagnosis of the individual participant.  In the Equal Protection portion of the opinion, he explained that the parties agree that Equal Protection claims by transgender plaintiffs are subject to “some sort of heightened scrutiny,” requiring the state to take on the burden of proving that it has an “exceedingly persuasive” justification for carving out this particular exception from its Medicaid coverage.  The government’s justification, stated now in its defense of the 1996 enactment, was “containing costs and protecting public health in face of uncertainty.”  Conley found neither justification to be sufficient under heightened scrutiny.  For one thing, the state conceded that the legislature made no study prior to passing the statute, either of the costs involved in providing coverage or of the medical facts surrounding gender transition and available treatments.  The only cost projections introduced by the state now were undertaken in response to this litigation, two decades later, and showed that the additional cost to the state’s Medicaid budget on an annual basis amounted to little more than a rounding error.  And, the court observed, there was no credible evidence to support the contention that covering these procedures would endanger public health.

The court also rejected a “spending clause” constitutional argument raised for the first time in support of the state’s opposition to plaintiffs’ summary judgment motion: that it was somehow unfair to the state to impose this “new” burden on it as a matter of federal law when it wasn’t contemplated at the time the state agreed to expand the Medicaid program in response to the Affordable Care Act in 2014.   “Nonsense,” wrote the judge.  Too late, and too bad.

Plaintiffs are represented by attorneys from McNally Peterson, S.C, Milwaukee; Dane & Colfax PLLC, Washington; Abigail Koelzer Coursolle of the National Health Law Program, Los Angeles; and Catherine Anne McKee of the National Health Law Program, Washington.