Trumpie Judge Muddled Biden's LGBTQ Health Shield Plan

 The future of the Biden administration’s efforts to prohibit LGBTQ discrimination in health care is at stake after a Trump-appointed judge ruled that the Affordable Care Act defines sex narrowly.

The decision weakens protections for LGBTQ people who believe they were discriminated against because of gender identity or sexual orientation, while the Biden administration still works on a final rule that would guarantee those protections remain.

The issue has been debated since the Obama administration and the ruling adds to the uncertainty.

“There’s no question that this has created a mess for the agency,” Karen Loewy, senior counsel and director of constitutional law practice for civil rights group Lambda Legal, said of the opinion by Federal District Judge Matthew J. Kacsmaryk.

Kacsmaryk, a judge in Texas who has criticized the constitutional right to same-sex marriage, recently held that discrimination on the basis of gender identity and sexual orientation isn’t barred under Section 1557 of the ACA. The ruling rejected a Biden administration notice that it would enforce protections for LGBT Americans.

The ruling “purports to basically shield all health-care entities across the country from having to comply with a federal statute to which they are subject,” Loewy said. “The statute itself makes clear that sex discrimination in federally funded health programs and activities is prohibited, and the Supreme Court has made clear that sex discrimination includes discrimination against transgender people.”

The district court decision is one of several recent blows to LGBT rights. The US Court of Appeals for the Eighth Circuit on Friday upheld a lower court’s permanent injunction blocking the government from forcing Catholic entities to provide or pay for transgender-related care. Proceedings will continue in the lower court.

The Department of Health and Human Services received more than 70,000 comments on its proposed rule to restore protections for LGBTQ people (RIN 0945-AA17), which it was hoping to finalize by the end of 2022.

The HHS didn’t respond to a request for comment.

Defining Sex

Section 1557 of the ACA prohibits discrimination in healthcare programs on the basis of race, color, national origin, age, disability, or sex. The Biden administration moved to enforce broader protections with its notice in May 2021, after the US Supreme Court’s decision in Bostock v Clayton that gender discrimination in employment counts as sex discrimination under Title VII of the Civil Rights Act of 1964.

The administration unveiled the proposed rule in July and accepted comments until October.

The Biden administration’s efforts follow a host of Republican-led attempts to stop children from receiving gender-affirming care. The Trump administration previously knocked down an Obama-era safeguard in 2020 and allowed healthcare providers, hospitals, and insurers to withhold care or coverage from LGBTQ people.

The November Kacsmaryk ruling stems from a challenge brought by two Texas doctors over concerns that they would lose federal money for denying transgender patients gender-affirming care. The case is one of several lawsuits attempting to clearly define the boundaries of sexual discrimination protections after Bostock.

If the Biden administration appeals the case, it will head to the Fifth Circuit, which is dominated by judges appointed by Republican presidents. A victory for the plaintiffs would set up a circuit split, making the case a likely candidate for Supreme Court consideration, healthcare scholars say.

Rulemaking Challenges

The proposed rule aims to “reflect recent developments in civil rights case law” and address issues of discrimination that contribute to negative health interactions and outcomes,” according to the HHS.

The Texas doctors sued over a notice the HHS sent out before it initiated rulemaking, so the lawsuit can’t stop the department from continuing to develop the new rule, Loewy said.

But in the final rule, “the government will have to acknowledge the ongoing litigation, as they did in the proposed rule,” said Zachary Baron, associate director of the Health Policy and the Law Initiative at the O’Neill Institute.

While the class of plaintiffs the judge’s decision covers is large—encompassing more than a million healthcare providers subject to Section 1557—it doesn’t apply to other entities like insurers, Baron said. “I would anticipate that the government will seek to do whatever it can to ensure that some of these protections are in place in other circumstances” in the final rule, Baron said.

Meanwhile, other jurisdictions could contradict the ruling, said Christy Mallory, legal director at UCLA School of Law’s LGBTQ think-tank, the Williams Institute. The HHS is also likely to appeal.

The ruling “doesn’t mean discrimination against LGBTQ people in health care is now legal,” Mallory said. But it’s clear that the HHS won’t be able to accept complaints from patients who claim their providers discriminated against them on the basis of gender identity or sexual orientation, she said.

People who believe they were discriminated against on the basis of sexual orientation or gender identity can still file lawsuits under Section 1557. Some state laws also prohibit this kind of discrimination.

“We may see more of these decisions arising under federal statutes that prohibit discrimination based on sex”—of which there are hundreds, Mallory said.

Roger Severino, director of the HHS’ Office for Civil Rights under the Trump administration, said a separate appeals court ruling already stops the HHS from interpreting the ACA to explicitly protect against discrimination on the basis of gender identity and sexual orientation.

The Fifth Circuit ruled in August in Franciscan Alliance Inc. v. Burwell that the HHS can’t force healthcare professionals to provide services that conflict with their religious beliefs, like gender-affirming surgeries or abortions.

But that ruling was over the Obama administration’s version of the rule implementing Section 1557, “which is not the operative rule at this point,” Loewy said.

Judge’s Reasoning

Kacsmaryk said the Supreme Court’s ruling in Bostock doesn’t apply to Section 1557.

“Bostock decided only what Bostock decided,” Kacsmaryk wrote in his opinion.

More than 70 LGBTQ groups, led by Lambda Legal, wrote to Congress in 2019 opposing Kacsmaryk’s judicial nomination because of his “anti-LGBTQ” beliefs.

Some attorneys agreed that Bostock‘s scope is narrow.

The Supreme Court was clear that its ruling about sex discrimination “is limited to the employment context, hiring and firing, and transgender status based on a biological binary,” Severino said.

“When Congress outlawed sex discrimination in health care, it meant biological sex, not gender identity,” Severino said. “In fact, had they included gender identity, the Affordable Care Act probably would not have passed.”

The ACA makes explicit distinctions “between the two biological sexes” to ensure that doctors can provide appropriate health care based on biology, said Matt Bowman, senior counsel for Alliance Defending Freedom. Bowman served as deputy general counsel for the HHS under the Trump administration.

Other health lawyers said Kacsmaryk understated the importance of Bostock. The case “was viewed as a sea change in terms of nondiscrimination with respect to sexual orientation or gender identity,” Baron said.

Mallory said there’s “ample case law” before and after Bostock that interprets Section 1557 to prohibit discrimination on the basis of sexual orientation and gender identity.

The Fourth Circuit ruled in August 2020 that transgender discrimination is sex discrimination in Grimm v. Gloucester County School Board, a case about school bathroom usage. The Eleventh Circuit agreed in the same month in Adams v. School Board of St. Johns County, another case about bathroom use.

It’s hard to say whether this case will be a vehicle that requires the Supreme Court to rule again on the scope of gender identity. The HHS “flouted the rulemaking process” by issuing a notice of enforcement prior to rulemaking, so “this is a bit of an easier case,” Severino said.

Others say the Bostock decision is enough. “The Supreme Court has made clear that federal sex discrimination protections include protections for LGBTQ people,” Loewy said.

To contact the reporter on this story: Allie Reed in Washington at areed@bloombergindustry.com

To contact the editors responsible for this story: Alexis Kramer at akramer@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com