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North Carolina Transgender Surgery Ban Violates ACA, Court Rules

Dec. 6, 2022, 2:26 PM

The North Carolina State Health Plan for Teachers and State Employees’ blanket exclusion on paying for gender-confirming care unlawfully discriminates against transgender employees and their dependents on the basis of sex, a federal court said.

This is one of several cases throughout the country disputing government health plans’ limitations on paying for medically necessary transition-related care, including surgeries such as hysterectomies and vaginoplasties.

Section 1557 of the Affordable Care Act prohibits discrimination in “any health care program or activity” that receives federal money. It expressly incorporates Title VI, which prohibits discrimination based on race, color, and national origin, and Title IX, which prohibits discrimination in educational programs. Courts evaluating this provision also look to cases interpreting Title VII, which prohibits employment discrimination, to determine if a policy violates the ACA, the US District Court for the Middle District of North Carolina said.

The NCSHP’s exclusion “necessarily rests on a sex classification” because it would be impossible to determine if a particular treatment is connected to gender-confirming care without considering a person’s biological sex, the court said. The court relied on the US Supreme Court’s reasoning in Bostock v. Clayton County, where it held that an employer can’t fire an employee solely for being gay or transgender.

The North Carolina plan, moreover, is a “health program or activity” governed by the ACA, the court said. The law’s plain language includes insurers within its definition of the term, it said. A plan’s “role as a health insurance provider undoubtedly implicates the health of persons falling within the scope of ACA protections,” the court said, quoting a similar case, Fain v. Crouch.

It’s also apparent when looking at the ACA’s purpose—increasing the number of citizens covered by health insurance—that Section 1557’s “health program or activity” includes health insurance providers and plans, the court said.

There’s no need to defer to a 2020 Health and Human Services Department rule that purported to exclude health plans from Section 1557’s coverage, because the law itself isn’t ambiguous as to what constitutes a health program or activity, Judge Loretta C. Biggs said in Monday’s opinion.

Biggs previously granted summary judgment for the plaintiffs on their equal protection and employment discrimination claims. She barred certain North Carolina officials from enforcing the exclusion and ordered the plan to pay for medically necessary gender-confirming care.

The US Court of Appeals for the Fourth Circuit is currently reviewing that decision. It recently refused to block Biggs’ permanent injunction while the appeal is pending.

Harris, Wiltshire & Grannis LLP; Lambda Legal Defense & Education Fund Inc.; Transgender Legal Defense & Education Fund Inc.; and McDermott Will & Emery LLP represent the employees. Law Office of John G. Knepper LLC; Bell, Davis & Pitt PA; and the N.C. Department of Justice represent the plan and state defendants.

The case is Kadel v. Folwell, M.D.N.C., No. 19-cv-272, 12/5/22.

To contact the reporter on this story: Mary Anne Pazanowski in Washington at mpazanowski@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Brian Flood at bflood@bloomberglaw.com