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Court Sets Aside HHS Interpretation That ACA Section 1557 Prohibits Discrimination on the Basis of Sexual Orientation or Gender Identity



Neese v. Becerra, 2022 WL 16902425 (N.D. Tex. 2022)

In a class action lawsuit brought by two medical providers, a federal trial court has set aside HHS’s interpretation that Section 1557’s prohibition of discrimination “on the basis of sex” includes discrimination on the basis of sexual orientation and gender identity. The lawsuit challenged a May 2021 notification announcing that HHS would interpret Section 1557 consistent with the U.S. Supreme Court’s Bostock decision, which held that discrimination based on sex (for Title VII purposes) encompasses discrimination based on sexual orientation or gender identity (see our Checkpoint article). The providers contended that, because Section 1557 incorporates Title IX’s prohibition of discrimination “on the basis of sex” rather than Title VII’s prohibition of discrimination “because of sex,” HHS overstepped in extending the Bostock reasoning to Section 1557. Thus, they claimed, Section 1557 does not require them to provide gender affirming health services that are inconsistent with their ethical beliefs. HHS argued that Section 1557 prohibits discrimination on the basis of sexual orientation or gender identity because discrimination on either of those grounds necessarily involves discrimination on the basis of sex.

The court agreed with the providers. While acknowledging that courts in other circuits have looked to Title VII in construing the reach of Title IX, the court refused to apply Title VII precedent in the context of Title IX. The court noted that Title IX “says nothing about ‘sexual orientation’ or ‘gender identity’…[because its] protections center on differences between the two biological sexes.” To extend the reach of Title IX, the court concluded, would imperil its “overarching purpose”—to ensure that women are not denied educational opportunities that are available to men. Accordingly, the court held without a trial that the HHS notification was unlawful and declared that Section 1557 does not prohibit discrimination on account of sexual orientation and gender identity—rather, it prohibits only “sex” discrimination in which a provider “would have acted differently toward an identically situated member of the opposite biological sex.”

EBIA Comment: This court also vacated earlier HHS and EEOC guidance on gender identity discrimination on the grounds that it violated the Administrative Procedure Act (see our Checkpoint article). However, as the court noted, other courts have reached different conclusions, holding, for example, that denying care for gender dysphoria violates Section 1557 because it “invidiously discriminates on the basis of sex” (see our Checkpoint article). And courts have held that health plan exclusions of gender affirming care violate Title VII and the U.S. Constitution (see, for example, our Checkpoint article). In addition, HHS has issued proposed regulations reaffirming its commitment to prohibiting discrimination in health care—including on the basis of sexual orientation and gender identity (see our Checkpoint article). For more information, see EBIA’s Health Care Reform manual at Section XXXIV.A (“Section 1557 Nondiscrimination: Grounds Prohibited Under Federal Laws”) and EBIA’s Group Health Plan Mandates manual at Section XXI.M.1 (“Interaction of Title VII and Section 1557”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.D.5 (“Section 1557 Nondiscrimination: Nondiscrimination in Health Programs and Activities”).

Contributing Editors: EBIA Staff.

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