HHS Issues Final Rule on Section 1557

Seyfarth Shaw LLP

What could the Supreme Court’s Title VII decision mean for the final rule?

Under Section 1557 of the Affordable Care Act (“Section 1557”), health programs and activities that receive federal financial assistance cannot discriminate on the basis of race, color, national origin, disability, age, or sex.[1] Beginning in 2010, “sex” in this context included protections on the basis of gender identity – meaning that covered entities could not discriminate against transgender patients.[2]

These protections on the basis of gender identity were challenged in 2016.[3] In May 2019, the Department of Health and Human Services (HHS) issued a notice of proposed rulemaking pertaining to Section 1557,[4] and in June 2019 it began accepting public comment on its proposed rule which excluded protections on the basis of gender identity.[5]

On Friday, June 12, 2020, HHS issued its final rule, which removed health care protections based on gender identity from Section 1557.[6] In the Department’s view, these protections stretched “the plain meaning of the underlying civil rights statutes” too far.[7] In short, the Department said that gender identity is not captured within Title IX’s prohibition against discrimination “on the basis of sex.”[8]

On Monday, June 15, 2020, in Bostock v. Clayton County, the Supreme Court held that “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”[9] In short, the Court held that sexual orientation and gender identity are captured within Title VII’s prohibition against discrimination “on the basis of sex.”[10]

Title VII and Title IX both offer protections “on the basis of sex” – the former in employment and the latter in education.[11] The prohibition against sex discrimination under Section 1557 flows from its reference to Title IX, as the rule borrows its grounds for prohibiting discrimination on each relevant basis from an existing civil rights law: “The grounds are the grounds prohibited under the following statutes …. (2) Title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.) (sex)…”[12]

In a bulletin we authored in November 2019, we predicted that the Supreme Court’s then-forthcoming decision regarding Title VII may determine what would happen with the then-proposed changes to Section 1557.[13] We did not predict that, over the course of three days, we would potentially end up in the current accordion-like quagmire where “on the basis of sex” includes gender identity under Title VII and but is still interpreted by at least one executive branch agency to exclude gender identity under Section 1557 vis-à-vis Title IX.

In issuing its holding in Bostock, the Supreme Court was clear that its decision with respect to sexual orientation and gender identity was limited to Title VII.[14] (In the Opinion, Justice Gorsuch wrote: “The employers worry that our decision will sweep beyond Title VII to other federal or state laws that prohibit sex discrimination… But none of these other laws are before us; we have not had the benefit of adversarial testing about the meaning of their terms, and we do not prejudge any such question today.”[15])

In his dissent, Justice Alito predicted that “[h]ealthcare benefits may emerge as an intense battleground under the Court’s holding” and specifically footnoted Section 1557.[16] Given the historic definitional kinship between Title VII and Title IX – and Title IX’s relationship to Section 1557 – it is apparent that those setting out to challenge the removal of gender identity from the protection of Section 1557 have received quite a boost.

For now, gender identity is excluded from Section 1557 under the final rule.

But this was not the only change to Section 1557 under the final rule. The final rule limits the scope of which entities are “covered” – and so must comply – with the rule.[17] Under the final rule, to be captured, an entity must be “principally engaged in health care” or, for entities outside of that scope, the particular activity must be funded by HHS.[18]

The final rule eliminates its predecessor’s definitions of terms – as well as its enumerated examples of prohibited practices. It also eliminates specific requirements that covered entities make information available to those with limited English proficiency—namely the requirement that certain notices be distributed in at least 15 languages.[19]

For more information about these and other changes to Section 1557, the Final Rule can be found on the Federal Register.[20]

[1] Nondiscrimination Requirements, 45 C.F.R. § 92.2 (2020).

[2] HHS Finalizes Rule on Section 1557, June 12, 2020, https://www.hhs.gov/about/news/2020/06/12/hhs-finalizes-rule-section-1557-protecting-civil-rights-health care.html (accessed June 16, 2020).

[3] Id.

[4] HHS Proposes to Revise ACA Section 1557 Rule, May 24, 2020, https://www.hhs.gov/about/news/2019/05/24/hhs-proposes-to-revise-aca-section-1557-rule.html (accessed June 16, 2020).

[5] Proposed Rule, June 14, 2019, https://www.federalregister.gov/documents/2019/06/14/2019-11512/nondiscrimination-in-health-and-health-education-programs-or-activities (accessed June 16, 2020).

[6] Final Rule, June 12, 2020, https://www.federalregister.gov/documents/2020/06/19/2020-11758/nondiscrimination-in-health-and-health-education-programs-or-activities-delegation-of-authority (accessed June 16, 2020).

[7] Id.

[8] Id.

[9] Bostock v. Clayton County, 590 U.S. __ (2020), https://www.supremecourt.gov/opinions/19pdf/17-1618_hfci.pdf (accessed June 16, 2020).

[10] 45 C.F.R. § 92.2.

[11] Title IX, 20 U.S.C. § 1681 (1972); Title VII, 42 U.S.C. § 2000e (1964).

[12] 45 C.F.R. § 92.2.

[13] Leon Rodriguez and Emily Miller, Preventing and Responding to Sex Discrimination in Health Care – Ensuring Compliance with Section 1557 of the Affordable Care Act, Nov. 14, 2019, https://www.seyfarth.com/images/content/4/5/45462/AHLA_Bulletin_LE_Miller_Rodriguez_11-14-19.pdf (accessed June 16, 2020).

[14] Bostock, 590 U.S. __ (2020) at p. 31.

[15] Id.

[16] Id. at p. 50.

[17] Final Rule at p. 45.

[18] Id.

[19] Id. at p. 194.

[20] Final Rule, June 12, 2020, https://www.federalregister.gov/documents/2020/06/19/2020-11758/nondiscrimination-in-health-and-health-education-programs-or-activities-delegation-of-authority (accessed June 16, 2020).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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