Court Vacates HHS and EEOC Guidance on Gender Identity Discrimination Under Section 1557 and Title VII

A federal trial court has vacated HHS and EEOC guidance regarding the prohibition of gender identity discrimination under Affordable Care Act Section 1557 and Title VII of the Civil Rights Act. The HHS guidance, issued in March 2022, explained that Section 1557 protects an individual’s right to access health programs and activities receiving federal financial assistance without facing discrimination on the basis of sex, which includes discrimination on the basis of gender identity (see our Checkpoint article). A press release accompanying the guidance made clear that the notice was issued in response to a Texas gubernatorial order aimed at disallowing certain gender-transitioning procedures for adolescents with gender dysphoria. In June 2021, in response to the U.S. Supreme Court’s Bostock decision (see our Checkpoint article), the EEOC issued guidance on related issues under Title VII. The State of Texas sued the agencies, arguing that the guidance was unlawful and should be vacated.

The court vacated both the HHS and EEOC guidance, concluding that the agencies violated the Administrative Procedures Act and other laws by issuing substantive, legislative rules through improper procedures, including by failing to provide notice and comment periods. The court also held that the HHS guidance was arbitrary and capricious because it appeared to misstate the law and did not articulate reasons to justify extending Bostock to gender dysphoria.

EBIA Comment: The impact of this decision remains to be seen as litigation continues in the long-running Franciscan dispute (see our Checkpoint article) and other cases challenging the Section 1557 regulations and the agencies’ interpretation of Title VII as protecting against discrimination based on gender identity and gender dysphoria (see, e.g., our Checkpoint article). In the meantime, HHS has reiterated its commitment to prohibiting discrimination in health care by proposing regulations reinstating, revising, and expanding prior regulations under Section 1557 (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 Sections XXI.C (“EEOC’s Position on Title VII and Health Coverage”) and 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.