Section 1557 of the Affordable Care Act prohibits health programs and activities that receive federal financial assistance from discriminating on the basis of race, color, national origin, sex, age or disability. On June 19, 2020, the Department of Health and Human Services (HHS) issued a Final Rule that supersedes important aspects of its prior interpretation of Section 1557. In particular, the Final Rule removes Obama-era protections against discrimination based on gender identity and sex stereotyping. It also raises questions as to how it can be reconciled with the U.S. Supreme Court’s recent opinion in Bostock v. Clayton County Board of Commissioners as well as certain provisions of Connecticut law.

In 2016, HHS expanded its prohibition on sex discrimination in health programs and activities to include discrimination on the basis of gender identity, which it defined as “an individual’s internal sense of gender, which may be male, female, neither or a combination of male and female,” as well as sex stereotyping, which it defined to include “gendered expectations related to the appropriate roles of a certain sex.”[i]  2016 rule. Pursuant to this rule, covered entities are prohibited from discriminating against transgender individuals.

HHS explained in commentary to the Final Rule that it lacked the authority to make such expansions, and that these protections went beyond “the plain meaning of the underlying civil rights statutes.” In particular, HHS has taken the position that Title IX of the Education Amendments of 1972 (“Title IX”), which is the statutory basis for Section 1557’s prohibition on sex discrimination, does not include prohibitions on discrimination on the basis of gender identity or sexual orientation. Accordingly, HHS stated that it is adopting “the government’s longstanding interpretation and ordinary meaning of the term ‘sex’” as a person’s biological status as male or female at birth.

Although the Final Rule is scheduled to take effect on August 18, 2020, the U.S. Supreme Court’s recent opinion in the Bostock case raises questions about the Final Rule’s future. In Bostock, the Supreme Court held that discrimination based on gender identity and sexual orientation is illegal under Title VII of the Civil Rights Act, explaining that “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”[ii] This decision opens the door to challenges to the definition of sex discrimination under Title IX, the statutory basis for Section 1557’s prohibition on sex discrimination. In fact, Justice Alito anticipated in his dissent that “[h]ealthcare benefits may emerge as an intense battleground under the Court’s holding.”

Even if the Final Rule does take effect, Connecticut health care providers must continue to maintain compliance with state laws, which prohibit discrimination on the basis of “gender identity or expression” and sexual orientation in public accommodations, public and private employment, and housing.

Covered entities also should make note of additional significant changes made by the Final Rule, including:

• Limiting the scope of entities subject to its requirements to entities “principally engaged in healthcare,” as well as to the healthcare activities of other entities to the extent they are funded by HHS; and
• Eliminating the requirement that health care companies distribute nondiscrimination notices and taglines in at least 15 languages within all “significant communications” to patients and customers.

[i] HHS defined sex stereotyping to include “gendered expectations related to the appropriate roles of a certain sex.” In its commentary to the 2016 rule, HHS explained that “Section 1557’s prohibition of discrimination on the basis of sex includes, at a minimum, sex discrimination related to an individual’s sexual orientation where the evidence establishes that the discrimination is based on gender stereotypes.” HHS also defined sex discrimination to encompass pregnancy, which it defined to include termination of pregnancy, childbirth and related medical conditions.

[ii] Title VII prohibits employment discrimination on the basis of race, color, religion, sex or national origin.

[View source.]