Court Denies Attempt to Prevent Closure of Lone Maternity Ward Under Section 1557 of ACA and Disparate-Impact Theory of Discrimination

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Introduction to Disparate-Impact Discrimination Claims in Healthcare: Sandoval (2001) and Section 1557 of the ACA

Disparate-impact claims of discrimination in healthcare are powerful and can be incredibly varied. These claims challenge facially neutral policies or practices that have a disproportionate effect on protected classes. These claims are often associated with “impact litigation” strategies, and historical examples include actions challenging the relocation of hospitals and the “redlining” of minority communities by long-term care facilities. These claims may also involve allegations concerning the failure to provide language-assistance services to individuals with Limited-English Proficiency.

These claims, however, have been exceedingly rare in healthcare since the U.S. Supreme Court’s 2001 decision in Alexander v. Sandoval, 532 U.S. 275 (2001), which held that Title VI of the Civil Rights Act of 1964 does not permit a private cause of action for discrimination claims based on disparate impact. Though the Sandoval decision does not bar the federal government from asserting disparate-impact claims under Title VI, the Office for Civil Rights at HHS has not prioritized or pursued these claims in the healthcare industry.

The enactment of Section 1557 of the Affordable Care Act has thus posed the vexing legal question of whether the ACA provides a work-around to Sandoval. In other words, courts and litigants have for several years now wrestled with the question of whether a private cause of action for disparate-impact discrimination is available under Section 1557 of the ACA.

In 2016, the Obama administration’s regulation under Section 1557 adopted an interpretation of the statutory text that endorsed this work-around view: that is, that Section 1557 provided a private cause of action for a disparate-impact claim of discrimination on the basis of any protected class listed in the statute. This momentous interpretation was nevertheless rejected by most federal courts—with one very notable exception. Compare Doe v. BlueCross BlueShield of Tennessee, Inc., 926 F.3d 235, 239 (6th Cir. 2019) (rejecting claim for disparate impact discrimination under Section 1557), with Rumble v. Fairview Health Servs., No. 14-CV-2037 SRN/FLN, 2015 WL 1197415, at *11 (D. Minn. Mar. 16, 2015) (“Here, looking at Section 1557 and the Affordable Care Act as a whole, it appears that Congress intended to create a new, health-specific, anti-discrimination cause of action that is subject to a singular standard, regardless of a plaintiff’s protected class status.”).

Moreover, in 2020, HHS reversed course and rescinded the Obama administration’s interpretation in its revised regulation under Section 1557. The Ninth Circuit Court of Appeals has nevertheless recently and explicitly left open the possibility that the Obama administration’s original interpretation of Section 1557’s text was correct. See Schmitt v. Kaiser Found. Health Plan of Washington, 965 F.3d 945, 954 (9th Cir. 2020) (finding it “unclear whether a disparate impact theory remains permissible under the Rehabilitation Act [which is incorporated into Section 1557’s statutory text] after Sandoval”—but not deciding the question).

In view of this back-and-forth, it may be fair to say that this critical legal question, whether Section 1557 permits private causes of action for disparate impact claims of discrimination, is not completely settled at present. Instead, it is likely that courts throughout the country will continue to address this question. And if the appellate courts arrive at conflicting conclusions, this legal question could present a circuit split that would ultimately need to be resolved by the U.S. Supreme Court.

Ohio Nurses Ass’n v. Ashtabula Cty. Med. Ctr., No. 1:20CV1656, 2020 WL 4390524, at *4 (N.D. Ohio July 31, 2020).

Against this legal backdrop, the Ohio Nurses Association and two individuals recently asked a federal court to prevent Ashtabula County Medical Center (“ACMC”) from closing the lone maternity ward in Ashtabula County, Ohio. Part of the basis of this request was the theory that leaving women in the county without critical OB-GYN care would constitute sex discrimination under Section 1557 of the Affordable Care Act. According to the plaintiffs, the closest maternity unit was almost fifty miles away, and without the Ashtabula maternity unit, expectant mothers would need to present at the emergency room, which lacked staff specifically trained in OB-GYN services.

Importantly, the plaintiffs did not allege that this discrimination was intentional. Rather, they alleged that the closure would have a disparate impact on pregnant women by adversely affecting them more than men. As explained by the Court:

Plaintiffs allege a disparate impact claim of sex discrimination because the actions of ACMC in closing its Maternity Ward, although facially neutral, will have a disparate discriminatory impact on the safety and health of women employed at ACMC and in the greater Ashtabula County community.

See id. at *4.

Relying on the Sixth Circuit’s opinion in Doe (cited above), the Court held that a claim for sex discrimination under Section 1557 of the ACA is governed by the substantive law of Title IX—not some other legal standard unique to claims under Section 1557 itself. See id. (“By referring to four statutes, Congress incorporated the legal standards that define discrimination under each one.”).

As such, under Title IX, a plaintiff must show “the defendant discriminated against him or her because of sex; that the discrimination was intentional; and that the discrimination was a ‘substantial’ or ‘motivating factor’ for the defendant’s actions.” See id. The Court thus had no trouble concluding, consistent with the weight of authority on the issue, that Title IX does not permit a disparate-impact claim of discrimination. See id. Therefore, because the plaintiffs had not alleged intentional discrimination by the Medical Center, the Court denied the plaintiffs’ request for injunctive relief. See id.

Hospitals and Health Systems Should Continue to Address the Application of Title IX through Section 1557 of the ACA

Even though the plaintiffs’ discrimination claim in Ashtabula Cty failed, there are several key takeaways for hospitals and health systems.

First, hospitals and health systems should continue to adapt to the novel application of Title IX to the healthcare industry through its inclusion in Section 1557 of the ACA. For example, given the U.S. Supreme Court’s opinion in Bostock, Section 1557 in all likelihood bars discrimination on the basis of gender-identity and sexual orientation in the provision of healthcare. See Whitman-Walker Clinic, Inc. v. U.S. Dep’t of Health & Human Servs., No. CV 20-1630 (JEB), 2020 WL 5232076, at *1 (D.D.C. Sept. 2, 2020); Walker v. Azar, No. 20CV2834FBSMG, 2020 WL 4749859, at *1 (E.D.N.Y. Aug. 17, 2020). As we’ve written before, this should have an impact on how hospitals and health systems operate on a day-to-day basis, including by promptly investigating and resolving complaints of sexual harassment or abuse communicated by patients and their companions. See Rumble v. Fairview Health Servs., No. 14-CV-2037 SRN/FLN, 2015 WL 1197415, at *21-22 (D. Minn. Mar. 16, 2015) (applying Title IX’s deliberate-indifference standard for imposition of direct liability to health system based on allegation of sex-discrimination by individual provider). Hospitals and health systems should also review and operationalize HHS OCR’s recent guidance on Effective Practices for Preventing Sexual Harassment.

Second, hospitals and health systems should respect the fact that HHS OCR and the Department of Justice can still investigate and assert disparate-impact claims of discrimination in healthcare. So while resolution of the sex discrimination claim discussed above turned on whether Title IX permitted a private cause of action for disparate impact discrimination, there would be no question that such a claim would be viable if it were asserted by the federal government. Indeed, Section 1557’s inclusion of Title IX provided the basis for HHS OCR’s historic settlement in August 2019 with Michigan State University and its affiliated healthcare entities in light of the Larry Nassar sexual abuse scandal.

Third and finally, hospitals and health systems should continue to monitor legal developments under Section 1557, especially as it relates to disparate-impact claims of discrimination and sex discrimination claims brought pursuant to Title IX.

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