SUMMARY

The U.S. District Court for the Eastern District of New York blocked federal rules seeking to remove nondiscrimination protections for health care patients. The blocked rules would have removed protections against discrimination based on gender identity and sex stereotyping from the nondiscrimination provision within the Patient Protection and Affordable Care Act (ACA).

THE UPSHOT

• The Department of Health and Human Services (HHS) proposed a series of rules that more narrowly defined discrimination on the basis of sex under the ACA. Under these new rules, discrimination based on sex includes discrimination based on a person’s biological sex, but the rules do not provide protection for discrimination based on sex stereotypes or gender identity. The new rules were set to take effect on August 18, 2020.
• Two plaintiffs challenged the rules, alleging that they experienced discrimination from health care professionals based on their transgender status. The plaintiffs argued that the rules were invalid under the Administrative Procedures Act and requested that the U.S. District Court preliminarily enjoin HHS from enforcing the rules.
• The U.S. District Court ultimately determined that the new rules are contrary to law based on the U.S. Supreme Court’s recent holding in Bostock v. Clayton, which was issued after HHS issued its proposed rules but before it published the rules. The court held that HHS acted arbitrarily and capriciously in enacting the rules and issued a preliminary injunction that prevented the rules from taking effect.

THE BOTTOM LINE

As a result of the U.S. District Court’s injunction, certain health care providers, health insurers, and health benefit plans that receive federal financial assistance or are administered by certain governmental entities must continue abiding by the definition of discrimination on the basis of sex within the Obama-era ACA nondiscrimination rules that were previously in effect and refrain from discriminating against patients on account of their sex, their gender identity, and sex stereotyping.

FULL ALERT

The U.S. District Court for the Eastern District of New York issued an order on Monday (August 17, 2020) that prevented federal rules removing nondiscrimination protections from taking effect. The rules would have removed protections against discrimination based on gender identity and sex stereotyping from the nondiscrimination provision within the Patient Protection and Affordable Care Act (ACA).

The rules at issue relate to an ACA provision that prohibits discrimination, in part, on the basis of sex. To be subject to these nondiscrimination rules, a health program or activity must receive federal financial assistance or be administered by certain governmental entities, including an administrator of the marketplace (the health insurance exchanges under the ACA).

During the Obama administration, the Department of Health and Human Services (HHS) issued rules under the ACA nondiscrimination provision that defined discrimination on the basis of sex to include discrimination on the basis of sex stereotyping and gender identity. Sex stereotyping is defined to include “stereotypical notions of gender, including expectations of how an individual represents or communicates gender to others, such as behavior, clothing, hairstyles, activities, voice, mannerisms, or body characteristics,” and gender identity is defined as “an individual’s internal sense of gender.”

Under the Trump administration, HHS proposed a new series of rules that defined discrimination on the basis of sex under the ACA more narrowly. Under these new rules, discrimination based on sex includes discrimination based on a person’s biological sex, but the rules do not provide protection for discrimination based on sex stereotypes or gender identity.  The new rules were set to take effect on August 18, 2020.

The two plaintiffs that challenged the new rules alleged that they experienced discrimination from health care professionals based on their transgender status. The plaintiffs argued that the HHS rules were invalid under the Administrative Procedures Act and requested that the court preliminarily enjoin HHS from enforcing the rules.

The court ultimately determined that the new rules were contrary to law based on the U.S. Supreme Court’s recent holding in Bostock v. Clayton, which was issued after HHS issued its proposed rules but before it published the rules. In Bostock, the U.S. Supreme Court held that under Title VII of the Civil Rights Act of 1964 (Title VII), discrimination based on sex includes discrimination based on a person’s gender identity or sexual orientation because it would be impossible to discriminate against a person for being homosexual or transgender without discriminating against that person based on his or her sex. 

The court noted that although the anti-discrimination provision in Bostock relied on the definition of discrimination based on sex within Title VII and the ACA’s nondiscrimination provision relies on definitions with Title IX of the Education Amendments of 1972 (Title IX), HHS should have considered the U.S. Supreme Court’s holding because Title IX has consistently relied on Title VII to define discrimination on the basis of sex. 

The court held that HHS acted arbitrarily and capriciously in enacting the rules and issued a preliminary injunction that prevented the rules from taking effect.

As a result of the U.S. District Court’s injunction, certain health care providers, health insurers, and health benefit plans that receive federal financial assistance or are administered by certain governmental entities must continue abiding by the definition of discrimination on the basis of sex within the Obama-era ACA nondiscrimination rules that were previously in effect and refrain from discriminating against patients on account of their sex, their gender identity, and sex stereotyping.