Franciscan Alliance v. Azar

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Brief Summary: This case challenges Section 1557 of the Patient Protection and Affordable Care Act (ACA), which prohibits discrimination on the basis of race, color, national origin, age, disability, and sex. Here, the plaintiffs challenged whether sex-based discrimination includes discrimination based on gender identity and termination of pregnancy.

Overview: Section 1557 of the ACA prohibits health programs and facilities that receive federal funds from discriminating against individuals on the basis of race, color, national origin, age, disability, or sex. The U.S. Department of Health and Human Services (HHS) Office of Civil Rights (OCR) finalized Section 1557’s implementing regulations in 2016 clarifying that the prohibition on sex-based discrimination included discrimination based on gender identity and termination of pregnancy. After these regulations were implemented, several states and religious plaintiffs challenged the agency’s interpretation of the law. The plaintiffs claimed that this interpretation of the law violates the Administrative Procedure Act (APA), the Religious Freedom Restoration Act (RFRA), and the Free Exercise Clause of the Constitution. Notably, the plaintiffs alleged that in order to comply with these regulations, parties would be required to offer abortion services and gender transition services even if these services were contrary to their religious beliefs. The court sided with the plaintiffs and issued a preliminary injunction to prevent these regulations from going into effect until after a full adjudication.

Instead of going to trial, the U.S. Department of Justice (DOJ) asked the court to send the regulations back to HHS so the agency could take steps to address the court’s concerns. Next, the DOJ filed a motion informing the court that HHS no longer interpreted “sex” to include gender identity and that the agency would not defend the 2016 regulation. The American Civil Liberties Union of Texas (ACLU) and River City Gender Alliance then filed a motion to intervene in the lawsuit to defend the 2016 regulation.

In December 2018, the case was reopened. The plaintiffs noted delays in the rulemaking process. In May 2019, HHS proposed new regulations that remove the language explicitly prohibiting discrimination on the basis of gender identity. The defendants asked the court to postpone its opinion until after the rulemaking process was completed. The regulations are currently still under review by the White House’s Office of Management and Budget (OMB). In light of the delay, the judge issued a final ruling in October.

Court Updates: U.S. District Court for the Northern District of Texas – Order, Dec 31, 2016

The court granted the plaintiff’s motion for summary judgment and enjoined HHS from enforcing the 2016 regulation’s prohibition against discrimination on the basis of gender identity and termination of pregnancy. Instead of appealing this decision, the DOJ requested that the rule be remanded back to HHS to be rewritten to comply with the court’s order. This request was granted, putting the lawsuit on hold while HHS revised the rule. At this point, the ACLU and River City Gender Alliance were not permitted to intervene.

U.S. District Court for the Northern District of Texas – Opinion, Oct 15, 2019

The plaintiffs and defendants jointly requested the court to reopen the case and rule on the ACLU’s motion to intervene. The court allowed the ACLU and River City Gender Alliance to intervene as a defendant. The court held that the prohibitions on discrimination on the basis of gender identity and termination of pregnancy violate RFRA and the APA. The court overturned these portions of the regulation and sent the rule back to HHS for further consideration.

Current Status: The ACLU and River City Gender Alliance will likely appeal the court’s decision to the Fifth Circuit Court of Appeals, following the Supreme Court’s summer 2020 decision in Altitude Express v. Zarda, which will decide whether the prohibition of sex discrimination under Title VII of the Civil Rights Act includes discrimination on sexual orientation or gender identity.

Impact: Health insurers and providers may rely on this case to discriminate against patients on the basis of gender identity and termination of pregnancy. Discrimination in this context would result in patients being denied health care services based on their gender identity or their termination of a pregnancy. However, other courts have reached different conclusions, and this case will likely be appealed.

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