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.

The case was then appealed to the United States Court of Appeals for the Fifth Circuit. On April 15, 2021, the Fifth Circuit held that in light of the Supreme Court’s Bostock v. Clayton County decision; President Biden’s executive order declaring that the Bostock interpretation would apply to Title VII statutes prohibiting sex discrimination; the Department of Justice guidance instructing agencies to apply Bostock to Title IX sex discrimination cases; and HHS’s reconsideration of the rule, the Court would not address the merits of the appeal. Instead, the Fifth Circuit remanded the case back to the district court to determine (1) if the case was moot considering the recent judicial and executive actions; and (2) if the plaintiff is still likely to suffer a substantial threat of irreparable harm from the 2016 rule.  

On May 14, 2021, the plaintiffs filed a supplemental brief with the district court, in which they argued that the prior district court decision only remedied the APA violations and did not address violations of RFRA. Plaintiffs reasoned that without an injunction, HHS can select a different means to re-impose the exact same 2016 rule that was struck down for APA violations, thus, placing plaintiffs in the same position they were earlier and be forced to provide medical procedures that are against their religious beliefs or be subject to civil penalties.  

On June 4, 2021, HHS also filed a supplemental brief with the district court. HHS argued that the case is now moot in light of the executive action and judicial decisions. Specifically, HHS argued that the prior action challenged the 2016 Rule which has since been revoked. HHS petitioned the Court to deny the plaintiffs extended request that would enjoin any interpretation of section 1557 that would result in plaintiff’s being required to perform medical procedures in contradiction to religious beliefs. HHS argues that allowing the Court to enjoin an interpretation of section 1557 before HHS has attempted to interpret this clause, in that manner, is too speculative a harm, thus failing to meet the Article III standing requirements. Ultimately, HHS asks the Court to dismiss the case as moot and require the plaintiffs to file a separate litigation if they wish to challenge HHS 2020 rule and interpretation under 1557.  

On August 9, 2021, the District Court granted the motion for an injunction. The Court reasoned that the plaintiff’s claim was not moot because the 2020 Rule posed the same threat to plaintiff’s religious rights as the 2016 Rule, and the Court read the plaintiffs pleadings to attack Section 1557, not just the 2016 Rule. Further, the Court held that the RFRA violation was “all but conceded” by the parties. The Court reasoned that despite the 2016 Rule was being revoked, the 2020 Rule placed the same substantial burden on plaintiff’s religious exercise in violation of the RFRA. Thus, the Court granted the permanent injunction against HHS’s interpretation of Section 1557.  

Current Status: HHS has not yet filed an appeal to the Fifth Circuit Court of Appeal. 

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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