A New York court has restored anti-discrimination protections for transgender patients under the Affordable Care Act (ACA). Walker et al. v. Azar et al., No. 20-cv-2834 (E.D.N.Y. Aug. 17, 2020).

Section 1557 of the ACA extends Title IX of the Education Amendments of 1972’s prohibition against “sex discrimination” to covered entities in the healthcare setting. On June 12, 2020, the Department of Health and Human Services (HHS) issued a final rule that walked back broad prohibitions against transgender-based discrimination, among other changes because HHS “disagree[d] … that Section 1557 or Title IX encompass gender identity discrimination within their prohibition on sex discrimination.” On August 17, 2020, a New York federal court issued an order that “stays the repeal of the 2016 definition of discrimination on the basis of sex.” In other words, this decision restores the definition contained in the previous Section 1557 regulations from 2016. Under that definition, sex is “an individual’s internal sense of gender, which may be male, female, neither, or a combination of male and female, and which may be different from an individual’s sex assigned at birth.” The 2016 Rule required covered entities: (1) to not discriminate on the basis of sex in providing access to health programs and activities; and (2) to “treat individuals consistent with their gender identity.” It prohibited “deny[ing] or limit[ing] health services that are ordinarily or exclusively available to individuals of one sex, to a transgender individual based on the fact that the individual’s sex assigned at birth, gender identity, or gender otherwise recorded is different from the one to which such health services are ordinarily or exclusively available.”

As noted in the court’s decision: “Timing, the saying goes, is everything.” The 2020 Rule expressly recognized that a U.S. Supreme Court decision involving whether Title VII of the Civil Rights Act protected transgender employees was forthcoming, but announced HHS decided not to wait for the decision when it issued it on June 12. Three days later, on June 15, 2020, the Supreme Court decided that Title VII protects transgender employees. The 2020 Rule was formally published in the Federal Register four days after that, on June 19, 2020, and was to take effect 60 days after publishing (on August 18, 2020). As a result of the Supreme Court decision, and the day before it was to take effect, the court held the 2020 Rule was contrary to law: “It is clear from the preamble to the 2020 Rules that a central reason for HHS’s action was a fundamental disagreement as to whether Title IX—and, by implication, § 1557—prohibited discrimination based on gender identity and sex stereotyping. HHS took a position on that issue, as it was entitled to do, but that position was effectively rejected by the Supreme Court.”

The court noted that the plaintiffs may be able to prove the 2020 Rule was “arbitrary and capricious” because HHS failed to consider the Supreme Court’s guidance. It noted HHS “had an (admittedly brief) opportunity to re-evaluate its proposed rules after the case was decided contrary to its expectations. Instead, it did nothing. The timing might even suggest to a cynic that the agency pushed ahead specifically to avoid having to address an adverse decision.”

The court’s injunction is preliminary, and HHS has not yet announced whether it will appeal this decision.