Federal Court Blocks Rules With Transgender Protections

A Federal court has issued a nationwide injunction against enforcement of health care reform regulations on gender identity and termination of pregnancy. These regulations, which were scheduled to go into effect for plan years beginning on and after January 1, 2017, were intended to end discrimination on the basis of gender identity.

The case is Franciscan Alliance v. Burwell.

The injunction prohibits the Office of Civil Rights (OCR) within the Department of Health and Human Services (HHS) from enforcing the requirements of the regulations regarding services for transgender persons. It does not prevent individuals from bringing private lawsuits to enforce the requirements. Therefore, plan sponsors that do not wish to cover services for transgender people should proceed with caution and consult with legal counsel.

The injunction only blocks some parts of the regulations issued by HHS under Section 1557 of the Affordable Care Act (ACA). The blocked parts prohibit discrimination on the basis of gender identity and termination of pregnancy. Other parts of the regulations remain in place, such as the requirement to include taglines in other languages telling people where they can get more information in their language. Section 1557 applies to any organization (and the health plans it sponsors) that receives Federal funds; however, the HHS regulations only apply to organizations that receive funds from HHS. HHS issued a press release indicating it will continue to enforce other provisions of the law.

The injunction was prompted by challenges from three religiously affiliated medical groups and 8 States, who argued that the regulations interfered with doctors’ ability to make the best decisions for their patients and contradicted prior Federal discrimination guidelines. The Obama Administration did not submit much of a brief on the issue, possibly anticipating that the Trump Administration would drop the case. The American Civil Liberties Union has filed a motion to intervene in the case, on the basis that the Trump Administration will not adequately represent the interests of transgender people.

Like the blocked HHS regulations, the Equal Employment Opportunity Commission has taken the position that sex discrimination includes discrimination against transgender individuals.

Section 1557 of the ACA prohibits entities that receive Federal funds from discriminating on the basis of race, color, national origin, sex, age or disability, including discrimination based on pregnancy, gender identity and sex stereotyping in certain health programs and activities. OCR issued final regulations under Section 1557 in May of 2016. The rule did not include new religious exemptions, although existing religious protections remain in place.

The plaintiffs argued that the regulations would require doctors to perform controversial procedures and force them to violate their deeply held religious beliefs. The plaintiffs argued that the definition of sex should be the immutable, biological differences between males and females as acknowledged at or before birth. They also argued that the Section 1557 regulations would require health care providers to perform or refer patients for certain abortion services to avoid sex discrimination on the basis of termination of pregnancy. They argued that gender identity should not form the basis of discrimination based on sex.

The District Court refused to defer to OCR’s interpretation of sex discrimination as including gender identity. The court noted that Medicare and Medicaid do not mandate coverage for gender transition surgeries and that the military’s TRICARE program specifically excludes transition coverage.

About John Garner

John Garner has over thirty five years of experience in employee benefits. He specializes in compliance, health care reform, the Health Insurance Portability and Accountability Act (HIPAA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), and the Employee Retirement Income Security Act (ERISA). He helps clients with life, health, and disability benefits, cost containment, flexible benefits, and claim consulting.

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