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Several other nondiscrimination provisions took effect on Jan. 1
A federal judge in Texas has blocked enforcement of Affordable Care Act (ACA) protections aimed at preventing health care providers from discriminating based on gender identity.
Judge Reed O'Connor of the U.S. District Court for the Northern District of Texas granted a nationwide preliminary injunction on Dec. 31, 2016, preventing certain disputed portions of a final rule from taking effect on Jan. 1.
In addition to halting protections based on gender identity, O'Connor also barred nondiscrimination provisions regarding abortion-related services.
The contested rule—which the Department of Health and Human Services (HHS) published in May 2016—applies to health care programs and activities that receive federal financial assistance.
[SHRM members-only toolkit: Communicating with Employees About Health Care Benefits Under the Affordable Care Act]
The rule's purpose was to implement nondiscrimination provisions under Section 1557 of the ACA that are built on other federal anti-discrimination statutes, which preclude discrimination based on race, color, sex, national origin, age and disability.
The controversy concerns the rule's interpretation of "sex discrimination," which includes issues related to pregnancy, gender identity and sex stereotyping.
A group of states and religiously affiliated health care providers filed a lawsuit challenging this interpretation, arguing that the rule "would require them to perform and provide insurance coverage for gender transitions and abortions, regardless of their contrary religious beliefs or medical judgment," according to the court's order.
The HHS, however, argued that the rule doesn't mandate specific procedures, rather it requires only that covered entities provide health services and insurance in a nondiscriminatory manner.
Siding with the states and health care providers, O'Connor found that the HHS exceeded its authority and that the rule contradicts existing laws.
Section 1557 of the ACA incorporated the sex discrimination provisions under Title IX of the Education Amendments of 1972.
O'Connor found that "the meaning of sex in Title IX unambiguously refers to 'the biological and anatomical differences between male and female students as determined at their birth.' "
O'Connor added, "If Congress had intended to enact a new, different or expansive definition of prohibited sex discrimination in Section 1557, it knew how to do so and would not have chosen to explicitly incorporate its meaning from Title IX." The final rule also failed to incorporate Title IX's religious and abortion exemptions, he said.
Additionally, O'Connor found that the regulation likely violates the Religious Freedom Restoration Act (RFRA).
He said the rule places substantial pressure on the health care providers to "abstain from religious exercise" by requiring them to "remove the categorical exclusion of transitions and abortions … and conduct an individualized assessment of every request for those procedures."
O'Connor's "ruling ensures that doctors' best medical judgment will not be replaced with political agendas and bureaucratic interference," said Lori Windham, an attorney with Becket Law in Washington, D.C., who represented the plaintiffs in the case.
However, Timothy Jost, a professor at the Washington and Lee University School of Law in Lexington, Va., said that "nothing in the Section 1557 rule specifically requires practitioners or health care facilities to provide gender transition services."
Furthermore, "the rule is not intended to displace existing federal conscience protection laws (including RFRA), ACA provisions that reject an abortion coverage mandate, or state laws governing abortion," Jost said in a post on the blog of the journal Health Affairs.
He noted that the remaining provisions of the rule that prohibit discrimination based on race, color, sex, national origin, age and disability —other than gender identity—will take effect as scheduled.
Impact of Ruling
The injunction has nationwide reach, and therefore, any entity that would have been covered by Section 1557 and the final rule is impacted by the decision, according to Jaklyn Wrigley, an attorney with Fisher Phillips in Gulfport, Miss.
"Given the broad definition of a covered entity, this affects just about every health care provider," she said, although responses to the ruling may depend on a covered entity's particular circumstances.
Wrigley said there has been "a collective sigh of relief" from religiously affiliated entities and from those that were waiting for a ruling on the injunction before taking action under the final rule.
Other providers may decide to voluntarily comply with all aspects of the final rule despite the injunction, she added. "Still others, perhaps those focusing on the economics of the coverage, may choose to sit back and see how this all shakes out."
Regardless of how an entity responds, the decision should be well-considered and deliberate, she said.
A preliminary injunction isn't a final ruling on the matter; instead, it preserves the status quo while the judge considers the merits of the case. However, it is a difficult order to obtain.
Among other things, plaintiffs must show a substantial likelihood of success on the merits of the claim and a substantial likelihood that they would suffer irreparable harm if the injunction wasn't granted.
The government has the option to appeal the preliminary injunction to the 5th U.S. Circuit Court of Appeals.
"If the government chooses to appeal, it will have to urge the 5th Circuit to act much more quickly than federal appellate courts normally do," Wrigley said. It's nearly impossible for the matter to be resolved before President-elect Donald Trump is sworn into office later this month.
"With that changing of the guard, there will be an uncertain legal environment until we glean some insight on what a Trump administration will mean for the federal government," Wrigley added. She noted that even if the new administration decides not to appeal the injunction, a civil rights organization could intervene.
"Ultimately, what sex discrimination means will continue to be disputed until the Supreme Court of the United States weighs in," she said.
The case is Franciscan Alliance v. Burwell, N.D. Tex., No. 7:16-cv-00108-O (Dec. 31, 2016).
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