Texas Federal Court Nixes Obamacare Trans Protections

Texas Federal Court Nixes Obamacare Trans Protections

A federal trial judge has issued his final ruling in a case challenging protections for transgender people under the Affordable Care Act (ACA), finding that a regulation guaranteeing that patients would be free from discrimination based on gender identity — as well as “termination of pregnancy” — was based on an incorrect interpretation of existing federal nondiscrimination law.

Judge Reed O’Connor of the Northern District of Texas vacated an Obama administration regulation issued under the ACA in 2016, effectively ordering the government not to enforce it, though he declined to issue an injunction to that effect.

Government agencies and courts in several states had relied on the Obama administration regulation in several important cases, ruling, for example, that state Medicaid programs and the insurance coverage that states provide to their employees must provide coverage for medically necessary gender transition treatment. The regulation has also been invoked in lawsuits challenging the refusal of private employers to cover such treatment.

O’Connor’s ruling was not a real surprise, since he issued a “nationwide” preliminary injunction barring the government from enforcing the regulation on December 31, 2016, just as it was set to go into effect the following day.

The Department of Health and Human Services (HHS) formally adopted the regulation in May 2016 as the official interpretation of the ACA’s anti-discrimination language, which mentions neither gender identity nor abortions. The ACA did however, cite four other federal anti-discrimination laws — the 1964 Civil Rights Act, Title IX of the Education Amendments of 1972 prohibiting sex discrimination by educational institutions receiving federal funding, and age and disability nondiscrimination laws — to guide the development of administrative regulations for implementing the law.

HHS, under Obama, interpreted Title IX’s sex discrimination ban to include discrimination against an individual because of their “gender identity” or “termination of a pregnancy” in the context of the ACA.

Franciscan Alliance, an operator of 14 Catholic-based healthcare institutions in Indiana and Illinois, and two other private sector plaintiffs joined together with eight states to file a lawsuit in the US District Court in Wichita Falls, Texas, shortly after the regulation was published. The plaintiffs challenged the administrative procedures under which the regulation was adopted and also cited the federal Religious Freedom Restoration Act (RFRA) in their suit. Franciscan Alliance specifically alleged that providing gender transition treatment violated its religious beliefs, and that the regulation would require them to perform abortions, also against their religious beliefs. The state government plaintiffs, as well as Franciscan Alliance, argued that the regulation was not based on a legitimate interpretation of Title IX’s anti-discrimination provisions.

The venue the plaintiffs sued in was not a matter of happenstance. During the Obama administration, Judge O’Connor — the only judge in the Northern District of Texas assigned to sit for several days in the Wichita Falls courthouse — became the go-to judge for those opposing Obama initiatives, usually conservative state governments or faith-based organizations. Attorneys describe the choice of venues like the Wichita Falls courthouse as “forum shopping.”

Concerned that the new regulations might be struck down, the American Civil Liberties Union of Texas and the River City Gender Alliance filed motions in September 2016 to intervene as parties to help defend the regulation. O’Connor reserved judgment on this motion pending the federal government’s response to the complaint, but allowed the two groups to participate as amicus parties.

As this litigation proceeded, O’Connor became embroiled in a separate Title IX lawsuit brought by states challenging the Obama administration’s interpretation that the 1972 statute protected transgender school students from discrimination based on their gender identity. In issuing a nationwide preliminary injunction against the federal Education Department enforcing that interpretation, O’Connor found that the plaintiffs would likely prevail in their argument that Title IX offers no such protection.

His preliminary injunction in the ACA case drew the same conclusion, and he also found that the HHS regulation, by failing to incorporate Title IX’s religious exemption language, violated the intent of Congress. If the government were to try to enforce the regulation against faith-based healthcare providers, O’Connor found, that would likely violate the institutions’ free exercise rights without any justification spelled out in RFRA.

In May 2017, five months into the Trump administration, the federal government asked O’Connor to “remand” the HHS regulation back to the agency for review. At that point, the judge stayed the case while HHS decided whether to revoke the regulation. But even though Attorney General Jeff Sessions later issued a memorandum opining that federal laws banning sex discrimination do not ban gender identity discrimination, as well as the Trump administration’s consistent hostility toward abortion rights, HHS has never revoked the Obama administration ACA regulation.

O’Connor apparently lost patience and decided to issue a ruling on the merits, which was published October 15.

Doubling down on the logic of his preliminary injunction, O’Connor noted that when Congress passed Title IX in 1972 it knew that federal courts and the Equal Employment Opportunity Commission had been rejecting sex discrimination claims by transgender individuals under Title VII of the Civil Rights Act — and so did not intend to outlaw discrimination because of gender identity.

And while O’Connor acknowledged that the government has a compelling interest in prohibiting discrimination in healthcare, he found that RFRA requires that any administrative regulation in that regard impose the “least restrictive alternative.” Because there are non-faith based healthcare providers who offer gender transition treatment and abortions, he wrote, it is not necessary to burden faith-based providers with having to do so. Patients can simply go elsewhere.

O’Connor concluded that HHS had exceed its administrative authority in adopting its 2016 regulation and that enforcement of it against faith-based healthcare providers would violate RFRA.

Since the Trump administration would not defend the HHS regulation in court, O’Connor found that the ACLU and the River City Gender Alliance were entitled to intervene as co-defendants. He reminded those two groups, however, that should they appeal to the Fifth Circuit they will have to establish individual standing to do so. Notably, the Fifth Circuit vacated a ruling against Mississippi’s anti-LGBTQ statute on the grounds that the organizations challenging it lacked standing to do so before it went into effect.

O’Connor did not issue a nationwide injunction in connection with this ACA ruling presumably because the Trump administration is clearly going to comply.