Tennessee v. Becerra, 2024 WL 3283887 (S.D. Miss. 2024); Texas v. Becerra, 2024 WL 3297147 (E.D. Tex. 2024)
A court in Mississippi has issued a nationwide injunction and stay on portions of recently released regulations under Affordable Care Act (ACA) Section 1557, which prohibits discrimination in certain health programs and activities on the basis of race, color, national origin, sex, age, or disability. In a separate decision, a court in Texas has stayed all provisions of the regulations in Texas and Montana. As background, HHS issued regulations in May 2024 that relied on evolving Title IX rules, incorporated by reference into Section 1557, to provide that “discrimination on the basis of sex” specifically includes discrimination based on sexual orientation, gender identity, sex characteristics, pregnancy, and sex stereotypes (see our article). Before the regulations’ scheduled effective date of July 5, 2024, several states sued HHS seeking to block it from enforcing the regulations and to stay the effective date, arguing that the regulations’ redefinition of sex discrimination was, among other things, unlawful under the Administrative Procedure Act (APA). HHS countered that the regulations merely clarified the definition of sex discrimination in accordance with the U.S. Supreme Court’s Bostock decision, which held that employers violate Title VII’s prohibitions on employment discrimination based on race, color, religion, sex, or national origin when they discharge employees merely for being gay or transgender (see our article).
Invoking the U.S. Supreme Court’s recent Loper Bright decision (see our article), both courts declined to defer to HHS’s interpretation. The Mississippi court ruled that there was a substantial likelihood that HHS exceeded its statutory authority when it applied the Bostock holding regarding Title VII to interpret the phrase “on the basis of sex” in Title IX. The court stayed the effective date of the regulations nationwide as to certain provisions, in so far as they extend “discrimination on the basis of sex” to include gender identity. HHS was also enjoined nationwide from implementing or enforcing the provisions as to gender identity. The Texas court, however, concluded that HHS’s improper interpretation of Title IX permeated the regulations and HHS had offered no guidance on how the court should “excise the offending provisions.” Thus, the court stayed the effective date of all portions of the regulations—not just portions relating to the interpretation of sex discrimination to include discrimination on the basis of gender identity—for Section 1557 covered entities in Texas and Montana.
EBIA Comment: The 2024 Section 1557 regulations have become an early casualty of Loper Bright. Employers and their advisors will need to parse the regulations to determine which provisions apply after these court decisions. To the extent that a provision has been stayed, statutory language and the 2020 regulations (minus certain portions previously set aside by courts—see, e.g., our article) remain in effect. 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”) and EBIA’s Consumer-Driven Health Care manual at Section XXVI.E.5 (“Section 1557 Requirements”).
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