Kadel v. Folwell, 2024 WL 1846802 (4th Cir. 2024)
In a combined decision, the Fourth Circuit has affirmed trial court rulings that the exclusion of coverage for gender affirming care by state health plans in West Virginia and North Carolina violated the nondiscrimination protections of Affordable Care Act (ACA) Section 1557. Current and former state employees (and a Medicaid program participant) sued because the states’ health plans and programs denied coverage for medically necessary gender affirming care for themselves or their dependents. They alleged that the plans’ exclusions of coverage for certain procedures for the treatment of gender dysphoria—but not other medical conditions—discriminated on the basis of sex in violation of ACA Section 1557, the U.S. Constitution’s Equal Protection Clause, Title VII of the Civil Rights Act of 1964, and other federal laws. The trial courts held that, among other things, the exclusions discriminated on the basis of sex in violation of Section 1557 (see, e.g., our article).
On appeal, the Fourth Circuit agreed that the exclusions violated Section 1557 and other federal nondiscrimination laws. Notably, the court rejected a challenge to the trial court’s reliance on the Supreme Court’s Bostock ruling (see our article) in the context of a Section 1557 nondiscrimination claim. While Bostock held that employers violate Title VII when they discharge employees merely for being gay or transgender, Title VII addresses employment discrimination and is not determinative as to Section 1557 discrimination. The court concluded, however, that based on Fourth Circuit precedent, courts may use case law interpreting Title VII for guidance when interpreting sex discrimination under Title IX—the violation of which is a basis for a finding of discrimination under Section 1557.
EBIA Comment: While Section 1557’s application to employer-sponsored health plans remains in flux in the courts, much-anticipated final regulations implementing Section 1557 were recently issued (see our article). Consistent with developing case law, the 2024 regulations provide that “discrimination on the basis of sex” specifically includes discrimination based on sexual orientation, gender identity, sex characteristics, pregnancy, and sex stereotypes. Although covered entities are not required to provide coverage for particular health services, such as surgical treatment for gender dysphoria, the regulations prohibit the exclusion of categories of services in a discriminatory manner. For more information, see EBIA’s Health Care Reform manual at Section XXXIV.A (“Section 1557 Nondiscrimination: Grounds Prohibited Under Federal Laws”), EBIA’s Group Health Plan Mandates manual at Section XXI.M.1 (“Interaction of Title VII and Section 1557”), and EBIA’s Self-Insured Health Plans manual at Section XIII.D.5 (“Section 1557 Nondiscrimination: Nondiscrimination in Health Programs and Activities”).
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