Health Reform WK-EDGE State did not prove injury-in-fact from HHS’ failure to define sexual discrimination
Thursday, September 10, 2020

State did not prove injury-in-fact from HHS’ failure to define sexual discrimination

By Jeffrey H. Brochin, J.D.

HHS’ 2020 final rule implementing Section 1557 of the ACA which relied on the "basis of sex" non-discrimination definition of Title IX, was not shown to have a negative impact on persons asserting gender identity.

A federal district court in Washington State has denied the motion for preliminary injunction filed by that state against the HHS in which they sought to enjoin the agency from implementing HHS’ final rule (85 FR 37160, June 19, 2020), which revised the earlier implementing rule of §1557 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), as to the definition of "on the basis of sex." The state lacked standing to challenge the 2020 rule’s definition, the 2020 rule’s incorporation of a religious exemption, and the scope of covered entities under the 2020 rule (State of Washington v. HHSAugust 28, 2020, Robart, J.).

Comparison of 2016 rule versus 2020 rule. Acting under its authority to issue regulations to implement §1557 of the ACA, HHS issued a rule on May 18, 2016 (81 FR 31376), that prohibited discrimination "on the basis of sex" and specifically defined that term as including sex stereotyping and gender identity, and incorporated Title IX’s prohibition on discrimination on the basis of sex. The rule also declined to incorporate a religious exemption codified in Title IX and it defined the term covered entity as (1) one that operates a health program or activity, any part of which receives federal financial assistance; (2) an entity established under Title I of the ACA that administers a health program or activity; and (3) HHS.

Conversely, the 2020 rule which was the subject of the instant lawsuit, sought to eliminate provisions that were inconsistent or redundant with pre-existing civil rights statutes and regulations prohibiting discrimination on the basis of race, color, national origin, sex, age, and disability. Therefore, rather than provide a definition of the term, the 2020 rule incorporated by reference the definition of "on the basis of sex" as codified in Title IX. HHS contended that the change was intended to merely revert to the "plain meaning" of the term "sex" as it was used in Title IX.

State’s claims of adverse impact. The state alleged that the changes in the 2020 rule would lead to discrimination against persons identifying with various gender identity characteristics. It stated that its Article III standing was based on two alleged injuries that it believed it would incur if the provisions of the 2020 rule that did not define the term sex went into effect: (1) additional costs or other economic harms incurred by Washington (including things like decreased tax revenue, additional healthcare coverage costs, increased costs for unemployment benefits, and harm mitigation measures) resulting from an increase in discrimination against Washingtonians or decreased healthcare coverage for Washingtonians; and (2) increased administrative costs that the state believed it would incur as a result of changes made in HHS policy under the 2020 rule.

Assumption of discrimination. To establish injury in fact, the state needed to show that it suffered an invasion of a legally protected interest that was concrete and particularized and actual or imminent, and not conjectural or hypothetical. The state supported its argument by submitting 17 declarations, many of which attempted to address expected harm to Washington, and many of which assumed that HHS’s decision not to define sex in the rule itself, meant that the rule would not provide protection from discrimination on the basis of sex in healthcare, because the protection would not extend to LGBTQ people.

No injury in fact. The court examined the threshold issue of standing, and found that the state’s argument failed at the injury in fact prong of the standing inquiry. The state referenced a recent U.S. Supreme Court case to mean that Title IX and Section 1557 must incorporate protection for gender identity and sexual orientation discrimination, and the court relied on that to mean that the 2020 rule—which incorporated Title IX by reference—does in fact extend protection against discrimination to LGBTQ individuals via the rule’s incorporation by reference.

For purposes of standing, the court found that the state made no effort to explain why providers or insurers would be willing to risk revising their practices or policies to discriminate against LGBTQ individuals in light of the Supreme Court’s guidance. Accordingly, the court found that the state failed to establish an injury in fact, and their suit for preliminary injunctive relief was therefore dismissed due to lack of standing.

The case is No. C20-1105JLR.

Attorneys: Brian J. Sutherland, Office of the Attorney General, for State of Washington. Liam Holland, U.S. Department of Justice, for United States Department of Health and Human Services and Alex M. Azar.

Companies: State of Washington; United States Department of Health and Human Services

Cases: CaseDecisions AccessNews AgencyNews MedicaidNews WashingtonNews

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