Section 1557 Litigation

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Brief Summary: Three cases – State of New York v. U.S. Department of Health and Human Services, Asapansa-Johnson Walker v. Azar, and Whitman-Walker Clinic, Inc. v. U.S. Department of Health and Human Services – challenge the U.S. Department of Health and Human Services’ regulation implementing nondiscrimination protections in healthcare under Section 1557 of the Patient Protection and Affordable Care Act. Section 1557 forbids discrimination in all health programs and activities receiving federal financial assistance.

Overview: On June 19, 2020, the U.S. Department of Health and Human Services (HHS) published a final rule (Final Rule) that eliminated protections for LGBTQ people and women seeking termination of pregnancy, and reduced protections for individuals with limited English proficiency. Namely, HHS argued that the prior interpretation of “because of sex” was too broad, and that including protections for gender identity and sexual orientation were beyond congressional intent. However, the rule was issued shortly after the Supreme Court’s decision in Bostock v. Clayton County, which held that discrimination based on sexual orientation or transgender status is also discrimination prohibited under the Civil Rights Act.

Update: On May 10, 2021 the Department of Health and Human Services announced that the Office for Civil Rights will interpret and enforce Section 1557 and Title IX’s prohibitions on discrimination based on sex to include: (1) discrimination on the basis of sexual orientation; and (2) discrimination on the basis of gender identity. Ultimately, Section 1557 will prohibit discrimination on the basis of race, color, national origin, sex, age, or disability in covered health programs or activities.  The update was made in light of the U.S. Supreme Court’s decision in Bostock v. Clayton County and subsequent court decisions. The official order can be read here

Impact: These cases have limited the enforcement of the Final Rule, with the courts in Asapansa-Johnson Walker and Whitman-Walker Clinic issuing nationwide preliminary injunctions against the exclusion of stereotyping based on sex and preventing HHS from adopting a blanket religious exemption from sex-discrimination claims, resulting in a return to the prior regulations covering sex discrimination. However, these injunctions are somewhat limited, as prior court cases preclude HHS from including gender identity in sex discrimination (see our discussion on Franciscan Alliance v. Azar). However, the new administration may attempt to issue a new rule in light of the Bostock decision that includes expanded protections for LGBTQ and individuals with limited English proficiency.

Current Status:

  • State of New York v. U.S. Department of Health and Human Services (S.D.N.Y)
    • On February 18, 2021, the court granted HHS’s unopposed motion to stay until May 14, 2021. The stay allows the new Biden administration time to review the rule and its litigation stance.
  • Asapansa-Johnson Walker v. Azar (E.D.N.Y.)
    • On August 17, 2020, the court granted the plaintiffs a preliminary injunction, finding the Final Rule was contrary to Bostock and HHS acted in an arbitrary and capricious manner in enacting the rule. The court also ruled that the plaintiffs had standing because the possibility of future discrimination based on the Final Rule is an injury in fact.
    • HHS appealed the preliminary injunction to the Second Circuit, and the case is stayed pending appeal.
    • On October 29, 2020, the plaintiffs requested the scope of the granted injunction include the entirety of the 2020 rule because the impact of the Bostock holding “permeates [the]entire rule making endeavor.” However, the Court disagreed and denied the request for an expanded injunction and limited the injunction to the definition of “on the basis of sex” “gender identity” and “sex stereotyping” as listed under 45 C.F.R 92.4. and 92.206. 
  • Whitman-Walker Clinic, Inc. v. U.S. Department of Health and Human Services (D.D.C.)
    • On September 2, 2020, the court granted the plaintiffs a partial preliminary injunction, finding that the plaintiffs were likely to succeed on their arbitrary and capricious allegations and that HHS improperly incorporated religious organization exemption into the Final Rule.
    • HHS appealed the preliminary injunction to the D.C. Circuit. As of February 18, 2021, the case is stayed upon HHS’s motion at both the Circuit and District level.
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