States, Providers Challenge ACA Antidiscrimination Rule

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By Mary Anne Pazanowski

Aug. 23 — Texas and four other states have joined a Catholic health-care system in challenging a final rule implementing the Affordable Care Act's antidiscrimination provision ( Franciscan Alliance, Inc. v. Burwell, N.D. Tex., No. 16-cv-108, filed 8/23/16 ).

Franciscan Alliance Inc., Specialty Physicians of Illinois LLC, the Christian Medical & Dental Associations, Texas, Wisconsin, Nebraska, Kentucky and Kansas Aug. 23 sued the Department of Health and Human Services and HHS Secretary Sylvia Mathews Burwell to stop the agency from enforcing a rule that, they said, “would force doctors to ignore science and their medical judgment and perform gender transition procedures.” The complaint was filed in the U.S. District Court for the Northern District of Texas.

The ACA's Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age or disability in certain health programs or activities. It applies to programs and activities that receive federal funding, programs and activities that are administered by the HHS and health plans issued by insurers that participate in the health insurance marketplaces.

According to the complaint, the HHS has estimated that the rule likely will cover almost all licensed physicians, because they accept federal financial assistance, as well as “virtually all” hospitals, health systems and similar provider facilities.

‘Sweeping' Law, Regulation Challenged

There had been some question on whether Section 1557's prohibition on sex discrimination included discrimination based on sexual orientation or transgender status. The government answered the question in the final rule issued May 18, 45 C.F.R. § 92.

There, the HHS defined “sex” to include “an individual's internal sense of gender, which may be male, female, neither, or a combination of male and female, and which may be different from an individuals sex assigned at birth,”45 C.F.R. § 92.4.

Section 1557, as interpreted by the rule, requires covered entities to perform medical transition procedures if they offer analogous services in other contexts. The complaint said this means providers must offer those services, regardless of their medical judgment. Thus, “with a single stroke of the pen, HHS has created a massive new liability for thousands of healthcare professionals unless they cast aside their medical judgment and perform controversial and even harmful medical transition procedures,” the complaint alleged.

The Becket Fund for Religious Liberty, headquartered in Washington, is representing the plaintiffs. Senior Counsel Lori Windham told Bloomberg BNA that the “sweeping” law and regulation “will impact virtually every doctor in the U.S.” It will force them to engage in activities against their medical judgment and, in some cases, against their religious beliefs, she said.

As Windham described it, the law prohibits providers who regularly perform certain procedures for medical reasons from refusing to perform the same procedures when the intended result is gender transition. For example, an obstetrician/gynecologist who performs hysterectomies to treat uterine cancer may not refuse to perform a hysterectomy for the purpose of gender transition.

Because the rule doesn't contain an age limit, it could force doctors to perform these gender transition procedures for children, Windham said. The complaint added that providers may not defend their refusal to perform a transition procedure by stating their concern that the procedure poses the possibility of serious medical harm to the patient. A requirement that providers perform the procedures despite their best medical judgment “turns the venerable medical oath to ‘do no harm' on its head,” the complaint said.

Interpretation Too Broad

Transgender advocates disagreed. Kenneth Upton, senior counsel at New York-based Lambda Legal, told Bloomberg BNA that it doesn't appear that the plaintiffs read the regulation very closely. Upton is in Lambda Legal’s South Central Regional Office, based in Dallas

Nothing in the regulations trumps doctors' medical judgment or precludes them from acting in accordance with evidence-based protocols, he said. The regulations also say nothing about children.

In short, the federal government isn't forcing doctors to provide care for transgender people, Upton said. The rule only requires providers, insurers and others to have neutral, nondiscriminatory reasons for denying services or coverage. A refusal must be justified from a medical standpoint, he said.

The plaintiffs complained that the regulations should have included religious or conscience-based exceptions for providers. But the government's comments to the new rule explained that existing federal protections applied and that there was no need for additional religious or conscience-based protections to be included in it, Upton said.

He added that the religious argument appeared to be included for effect, but that it could become a significant issue, as the courts have become more concerned with religious liberty arguments.

The “parade of horrors” set out in the complaint all were accounted for in the rule, Upton said.

Transgender Mandate

The transgender mandate, as Becket referred to the rule in a press release, also requires insurers who sell plans on the ACA marketplaces to cover transition procedures when medically necessary to treat gender dysphoria. This means, Windham said, that insurers may not deny coverage by categorizing procedures as cosmetic or experimental.

The complaint called the requirement “hypocritical,” because neither Medicare nor Medicaid is required to cover transition-related services procedures. Instead, the HHS said it would make coverage determinations on a case-by-case basis.

Several lawsuits have been brought challenging insurers' coverage of transition-related services (139 HCDR, 7/20/16).

Forum Shopping?

Timothy S. Jost, an emeritus professor of law at Washington and Lee University in Lexington, Va., and a health policy expert, commented on the filing of the complaint in the Wichita Falls division of the Northern District of Texas, calling it an “egregious example of forum shopping.”

There is only one judge who hears cases in that division, Judge Reed Charles O'Connor, and he has often ruled against the Obama administration. For example, on Aug. 21 he issued an order blocking an administrative directive designed to protect transgender students' bathroom access ( Texas v. United States, N.D. Tex., No. 16-54, 8/21/16 ).

Upton agreed, saying there appears to be a “tenuous” connection at most between the plaintiffs and the court's location. Texas is a party to the lawsuit, and it could argue that the forum was proper because it pays funds to providers in the district, but Franciscan, the lead plaintiff, is located in Indiana. Another plaintiff, Specialty Physicians, provides services in Illinois.

Upton told Bloomberg BNA that O'Connor will give serious consideration to the case, and an order blocking enforcement of the regulation is possible. An appeal to the U.S. Court of Appeals for the Fifth Circuit also likely would be against the administration, he said.

It wouldn't be surprising to see this case someday end up in front of the Supreme Court, Upton said.

Luke W. Goodrich, of the Becket Fund for Religious Liberty, Washington; and Ken Paxton, Jeffrey C. Mateer, Brantley Starr, Prerak Shah, Andrew D. Leonie, Austin R. Nimocks and Michael C. Toth, of the Texas Attorney General's Office, Austin, represented the plaintiffs.

To contact the reporter on this story: Mary Anne Pazanowski in Washington at mpazanowski@bna.com

To contact the editor responsible for this story: Peyton M. Sturges at psturges@bna.com

For More Information

The complaint is at http://src.bna.com/hYK.

Judge O'Connor's order in the transgender bathroom case is at http://src.bna.com/hYL.

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