In a Class Action, a Federal Court Rejects HHS OCR Interpretation of ACA Section 1557 and Limits the Reach of Unintentional Discrimination Claims in Healthcare

Arnall Golden Gregory LLP

In a class-action lawsuit, the Northern District of Illinois has deepened a pre-existing district-court split on a key legal question under Section 1557 of the ACA and, in doing so, explicitly rejected a pivotal HHS OCR regulatory interpretation of Section 1557. See Laura Briscoe v. Health Care Service Corporation, 2017 WL 5989727 at *10 (N.D. Ill. Dec. 4, 2017). That pivotal question is whether Section 1557 provides for a private right of action for claims of unintentional discrimination in healthcare—known as “disparate-impact discrimination”—on the basis of any of its enumerated protected classes: race, color, national origin, age, sex, and disability.

In its regulation in May of 2016, HHS OCR had said that Section 1557 does provide for such a cause of action. If ultimately affirmed, this interpretation would greatly expand the reach of unintentional discrimination claims. Providers should therefore closely monitor how the federal courts ultimately rule on this question.

Before Section 1557, no private cause of action for a disparate-impact claim in healthcare existed on the basis of race, color, national origin, or sex.

Under a 2001 Supreme Court case, a private cause of action for a disparate impact claim of discrimination does not exist under Title VI of the Civil Rights Act (which prohibits discrimination on the basis of race, color, or national origin in federally-funded healthcare). See Alexander v. Sandoval, 532 U.S. 275, 280 (2001). And until Section 1557 incorporated Title IX, no such cause of action was available on the basis of sex-discrimination in healthcare either. (HHS OCR retains the ability to bring disparate-impact claims of discrimination in healthcare under Title VI, but the office has historically been reticent to do so.)

So, HHS OCR’s interpretation of Section 1557 as providing for such a cause of action on the basis of race, color, national origin, and sex, is therefore of critical importance to healthcare providers. For example, were Section 1557 to provide this private cause of action, it would mean that a single patient or a class of patients could challenge any facially neutral policy or practice that has a disproportionately adverse impact on the basis of race, color, national origin, or sex. Examples of such policies or practices that could be challenged include the failure to provide language assistance services to patients with Limited English Proficiency (which is disparate impact discrimination on the basis of national origin) or redlining low-income neighborhoods (which could be disparate impact discrimination on the basis of race). In truth, the range of facially neutral policies or practices that could be challenged is vast. In the Briscoe case, for example, a class of new mothers had brought a disparate-impact discrimination claim against a health-insurer for its failure to cover lactation counseling services.

Is this key legal question tied to a separate legal question under Section 1557?

According to the Briscoe court, this disparate-impact question—and the propriety of HHS OCR’s interpretation—is actually tied to a separate but related question under Section 1557: whether a single standard governs all discrimination claims under the section. On this question, federal district courts are already divided. On the one hand, one federal court has ruled that Congress intended to apply a new, single standard to all discrimination claims brought under Section 1557, regardless of the protected class at issue. On the other hand, other federal courts, including the Briscoe court, have ruled that claims under Section 1557 must proceed under the pre-existing legal standards that apply to each separate protected class.

Adopting the latter interpretation, the Briscoe court concluded that HHS OCR’s interpretation on the disparate-impact question could not stand. In short, the Briscoe concluded that because Section 1557 unambiguously incorporates the pre-existing legal standards under pre-existing civil rights laws, it does not create new causes of action where they did not already exist. Therefore, the Briscoe court ruled, because no private cause of action for disparate-impact discrimination exists under Title IX, no such cause of action is available to a claimant alleging sex-discrimination under Section 1557.

Conclusion: Providers should monitor legal developments under Section 1557

The question of whether Section 1557 provides for a private cause of action for a disparate-impact claim of discrimination is of tremendous consequence to healthcare providers. So much so that, given the emerging split on the question between federal courts, it is likely that the question will need to be resolved by the U.S. Supreme Court. Providers should therefore continue to monitor this critical question of federal civil rights law.

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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