Trans Medicaid Denial OKed

By: ARTHUR S. LEONARD | A legal challenge to a state regulation prohibiting the use of Medicaid funds to pay for sex reassignment treatment – implemented by the administration of former Republican Governor George Pataki – was rejected by US District Judge P. Kevin Castel on August 5.

Castel found that the regulation does not violate the constitutional right to equal protection of the law, and that the plaintiff, whose coverage for hormone treatment had been provided for decades until they were cut off when the Pataki regulation took effect, has no legal claim against the state for violating her right to continued Medicaid coverage to maintain her feminine body characteristics.

The suit was brought by Terri Casillas, a male-to-female transsexual who has identified as a woman since the age of 16 and was diagnosed with gender identity disorder in 1978. Beginning in 1980, she began receiving support from the New York Medicaid program for hormone therapy to conform her body to her gender identity.

Casillas stated that, due to this treatment, she “developed breasts and her facial and body hair lessened so that she no longer needed to shave… She developed a more traditionally female body with a smaller waist and larger fat pockets around the hips.” Consequently, she said, her psychological discomfort about her gender “dramatically lessened.”

However, in 1997, the New York State Department of Health adopted a regulation that “payment is not available for the care, services, drugs, or supplies rendered for the purpose of gender reassignment,” and Casillas was notified that her Medicaid reimbursement for hormones would cease. By 2006, she had run out of funds and had to discontinue her treatments.

Castel's opinion noted that because she stopped treatment, Casillas suffered “fatigue, nausea, and body tremors,” and her breasts shrunk, hair grew on them, and her voice deepened. “Horrified” by these changes, Casillas consulted a specialist in 2007, who advised that “hormones, orchiectomy, and vaginoplasty are medically necessary” in treating her gender identity disorder, an opinion endorsed by both her current psychologist and a psychiatrist who treated her earlier.

But Medicaid refused to resume paying for hormones or to pay for the indicated surgery, which would have removed Casillas' testicles and built up her vagina. She sued, arguing she is entitled to be covered for these treatments under the federal Medicaid statute, which establishes minimum standards for participating state programs. Denying her coverage robs her of the equal protection of the law, Casillas' suit maintains.

Casillas' suit was premised on the claim that New York was violating non-discrimination principles of the federal Medicaid statute. The state's Medicaid program covers hormone therapy and the surgical procedures she is seeking in other cases – for example, if somebody needs to have breasts removed to treat cancer or requires plastic surgery for bodily repair after an accident.

In justifying its regulation at the time it was adopted, the Department of Health cited the need to allocate scarce resources, the paucity of medical facilities in New York providing the full scope of gender reassignment services, and “compelling arguments indicating that gender reassignment, involving the ablation of normal organs for which there is no medical necessity because of underlying disease or pathology in the organ, remains an experimental treatment, associated with serious complications.” The department asserted, “there are serious questions about the long-term safety of administering testosterone at therapeutic levels, required for the remainder of the life of the person who undergoes gender reassignment.”

Castel found, pointing to a 2002 US Supreme Court ruling, that only an “unambiguously conferred right” can support a valid lawsuit. He ruled that Casillas' treatment did not meet that test and noted that federal statute allows states to establish limitations as a way of allocating scarce resources. The standard is not whether a treatment is medically necessary, but rather whether those procedures made available by a state are done so at an adequate level.

Having rejected Casillas' claim that the federal Medicaid statute had been violated, Castel offered only cursory analysis of her equal protection constitutional claim. The judge found that Casillas' claim did not involve a “fundamental right,” so New York only needed to provide a rational basis for denying her treatment. The state met that burden, stated Castel, who accepted the state's argument about the “serious complications” of long-term use of hormones, even though the Department of Health warned about testosterone, and it is estrogen that Casillas needs. The judge also agreed the state was justified in acting to conserve its “limited resources.”

Castel's decision was written in respectful terms, but it clearly accepts the health department's view, at least during the Pataki era, that gender identity disorder can be treated fully through psychotherapy, even when experts find that medical treatment is necessary. Given the change in Albany's leadership, an appeal to the Paterson administration now seems a more fruitful route for Casillas than further litigation in the conservative federal courts.