Trial News

A North Carolina health care plan for state employees cannot categorically exclude gender-affirming or transgender medical treatment, a North Carolina federal district court has ruled. The plan’s exclusion is facially discriminatory under the Fourteenth Amendment’s equal protection clause and does not stand up to intermediate scrutiny. (Kadel v. Folwell, 2022 WL 2106270 (M.D.N.C. June 10, 2022).)

The plaintiffs are transgender people and the parents of transgender people who receive health insurance through the state’s plan for employees, which covers more than 740,000 people. The plan excludes coverage for treatment “leading to or in connection with sex changes or modifications,” which the plaintiffs alleged is discriminatory and violates the Fourteenth Amendment’s equal protection clause, the Affordable Care Act, and Title VII of the Civil Rights Act of 1964. The plaintiffs were all diagnosed with gender dysphoria and experienced anxiety and depression, as well as discrimination and harassment from others as they sought to affirm their gender identities through standard medical treatments.

The case came before the Middle District of North Carolina to hear the parties’ motions for summary judgment. The court granted the plaintiffs’ motion for summary judgment on their equal protection claim, as well as their request for a permanent injunction against the exclusion.

For the equal protection claim, the court followed the test outlined in Grimm v. Gloucester County School Board (972 F.3d 586 (4th Cir. 2021)) to determine what level of scrutiny applied to the plan and whether it survives that scrutiny. In the Fourth Circuit, intermediate scrutiny is applied to laws that discriminate on the basis of sex or transgender status—which means such laws are unconstitutional unless they are “substantially related to a sufficiently important governmental interest.” A law or policy is facially discriminatory when it treats certain classes of people differently, and “a policy that uses racial or gendered terms ‘falls into an inherently suspect category’ even if it creates classifications that are not ‘obviously pernicious’”—therefore, the exclusion is subject to intermediate scrutiny.

The state’s plan broadly excludes medical care that does not align with a recipient’s assigned sex while it does not exclude that same care when it does align with the recipient’s assigned sex. The court concluded that the exclusion cannot exist without referencing the person’s sex, discriminates against plan members who do not conform to sex stereotypes, and discriminates against transgender people by wording their medical care as a change or modification when they are simply seeking treatment that is consistent with their existing gender identity. For example, the court pointed out that under the exclusion “a cisgender man who receives medically necessary testosterone is covered, while a transgender man who receives medically necessary testosterone is not”—even though both are men.

The court rejected the defendant’s contention that the plan does not discriminate based on sex or transgender status but instead differentiates covered treatment based on diagnoses. “Discrimination against individuals suffering from gender dysphoria is also discrimination based on sex and transgender status,” the court stated. The court also was not persuaded by the defendant’s arguments that the exclusion was necessary to advance government interests of keeping medical care costs low and ensuring that plan members did not receive medically unproven treatments. The court pushed back, finding that the “defendants’ belief that gender-affirming care is ineffective and unnecessary is simply not supported by the record.”

The court granted the plaintiffs a permanent injunction against the health plan. The court noted that because the defendant intended to continue enforcing the exclusion throughout the litigation, subjecting the plaintiffs to extra expense to receive their medically necessary treatments or having to delay or forgo them altogether, the defendant must reinstate coverage for medically necessary treatment related to a diagnosis of gender dysphoria.

The court also granted summary judgment for one plaintiff’s Title VII claim against her employer for denying her gender-affirming treatment through the plan. Title VII requires but-for causation to show discrimination, and the court concluded that but for the plaintiff’s assignment as male at birth, she could have accessed medically necessary treatment under the plan that other women were entitled to. The court rejected the defendant’s argument that it could not be liable under Title VII because it had no choice but to provide the plaintiff with the state health plan and could not offer supplemental insurance options: “[C]ompliance with state law is no defense to a federal violation.”

David Brown, one of the plaintiffs’ attorneys, said, “Gender-affirming health care is essential health care. We are thrilled to know that moving forward our clients and other transgender North Carolina state employees and state employees with transgender dependents will finally have access to this lifesaving care.”