A federal judge has issued an order, in State of Tennessee v. Becerra, temporarily blocking the nationwide enforcement of Affordable Care Act (ACA) Section 1557 regulations on transgender care issued by the Department of Health and Human Services (HHS) in May. This means that covered entities (e.g., health providers, insurers and third-party administrators receiving federal funding) are not prohibited from discriminating against those seeking care on the basis of gender identity or sexual orientation under Section 1557, at least until Becerra is fully decided.
Note: Employers (which are generally not covered by Section 1557 directly) may still be sued under Title VII of the Civil Rights Act of 1964, which prohibits discrimination in the workplace on the basis of race, religion, national origin and sex. In the case of Bostock v. Clayton County, the U.S. Supreme Court ruled that "sex" is a distinct characteristic but inseparable from the concepts of sexual orientation and gender identity, and therefore workplace discrimination on that basis is illegal.
ACA Section 1557 prohibits discrimination by covered entities on the basis of race, color, national origin, sex, age or disability in certain health programs and activities. It is intended to help achieve the ACA’s goals of expanding access to healthcare and coverage, eliminating barriers and reducing health disparities. The Section 1557 final regulations, which were to take effect July 5, expanded the definition of sex discrimination, from biological sex only, to include discrimination based on sexual orientation and gender identity in certain health programs and activities.[1]
According to an HHS fact sheet released along with the final regulations, the regulations “do not require [health plans] to cover a particular health service for the treatment of gender dysphoria…. Rather, it prohibits health insurance issuers, state Medicaid agencies, and other covered entities from excluding categories of services in a discriminatory way. Coverage must be provided in a neutral and nondiscriminatory manner.”
In the U.S. District Court for the Southern District of Mississippi, the state of Tennessee, joined by 14 additional states, argued that the final regulations exceed HHS’s statutory authority. Their reasoning is that “[n]either Section 1557 nor Title IX of the Education Amendments of 1972 mention ‘gender identity’ as a protected category….Instead, Congress expressly limited the statutes’ coverage to discrimination on the basis of sex.”
HHS countered that the meaning of the term “sex” is irrelevant because the U.S. Supreme Court decision in Bostock protects employees from discrimination based on sexual orientation and gender identity. HHS added that covered entities will not violate Section 1557 if they have “a legitimate nondiscriminatory reason for denying care or coverage to a transgender person.”
The district court rejected the Bostock argument, as that case involved only Title VII employment discrimination and not Title IX.
Interestingly, the district court referenced the end of Chevron deference in their justification for blocking the HHS rule. In June, the U.S. Supreme Court overturned the Chevron doctrine, allowing courts to make their own interpretations of ambiguous laws rather than deferring to agencies to interpret the laws they administer.
The court, quoting from Chevron, stated that courts must now exercise their independent judgment in deciding whether an agency has acted within its statutory authority. The court held that the states have a substantial likelihood of success on the merits of their claims and, if the Section 1557 final regulations on gender identity are enforced, will suffer irreparable harm from compliance costs or lost federal funding. As a result, the federal government cannot enforce HHS anti-discrimination rules and protections for transgender patients while Becerra is being decided.
