On July 3, 2024, the United States District Court for the Southern District of Mississippi issued a nationwide injunction to block enforcement of the Affordable Care Act (“ACA”) Section 1557 regulations that prohibit discrimination on the basis of gender identity.
In May 2021, the United States Department of Health and Human Services (“HHS”) published a notice stating that it would interpret and enforce Section 1557’s prohibition of discrimination on the basis of sex to include discrimination on the basis of sexual orientation and gender identity. Then in April 2024, HHS issued a final rule for Section 1557 that broadened protections against discrimination on the basis of race, color, national origin, sex, age, and disability with health programs and activities receiving federal financial assistance. The final rule clarified that sex discrimination includes, but is not limited to, prohibiting discrimination on the basis of sexual orientation, gender identity, sex characteristics (including intersex traits), pregnancy or related conditions, and sex stereotypes.
Fifteen states filed a lawsuit seeking to enjoin HHS from enforcing the final rule that would have gone into effect July 5, 2024. The fifteen states claimed the final rule would “unlawfully coerce [their] compliance by threatening to strip billions of dollars in federal funding” if they did not comply with the final rule by providing health coverage for procedures like gender-transitions surgeries.
The United States District Court for the Southern District of Mississippi determined that HHS overreached its authority to interpret Section 1557 as including gender identity in sex discrimination. The Court found that the fifteen states met the requirements for imposing a preliminary injunction and stay of the final rule.
The nationwide ban on the final rule of Section 1557 means that HHS is prohibited from enforcing, relying on, implementing, or otherwise acting pursuant to the final rule provision that provides sex discrimination includes discriminated based on gender identity. A similar case, Texas v. Becerra, 2024 WL 329147 (E.D. Tex. 2024) set a similar injunction in Texas and Montana.
While the final rule did not apply to employment practices, which means that public agencies are not directly impacted by the recent injunction, public agency employers should keep in mind that there are California laws prohibiting employment discrimination based on gender and gender identity. Although Section 1557 is not an employment discrimination law, public agency employers should still be aware of Section 1557’s requirements since they relate to services provided by health insurance issuers that the public agencies may contract with.
Tennessee v. Becerra, __ F.Supp.3d __, 2024 U.S. Dist. LEXIS 119525 (S.D. Miss. 2024); Texas v. Becerra, __ F.Supp.3d, 2024 U.S. Dist. LEXIS 117573 (E.D. Tex. 2024).