District Court Ruling Sidesteps Trump-Era Regulations in Favor of Expansive Application of ACA Section 1557 Nondiscrimination Requirements

A federal district court in West Virginia has ruled that an anti-discrimination lawsuit against a health insurer can proceed because the insurer accepts federal funding, making it accountable under the Affordable Care Act’s (ACA) Section 1557 that prohibits discrimination under “any health program or activity, any part of which is receiving federal assistance, including credits, subsidies, or contracts of insurance….”


The case – Fain et al v. Crouch et al – was filed by a West Virginia Medicaid recipient, a state employee and the employee’s spouse alleging that West Virginia’s public health insurance program discriminated against transgender people in violation of Section 1557 of the ACA. Christopher Fain, the Medicaid recipient, had his request for transgender surgery denied and the state employee’s spouse was also denied coverage for hormone replacement therapy.

The issue in the case was whether the insurer qualified as a “health program or activity” and was therefore subject to Section 1557. Under the Obama administration, the term “health program or activity” was made to apply to health insurers that provided or administered health insurance coverage and received federal assistance. However, the Trump administration narrowed the application of Section 1557 to those entities that were “principally engaged in the business of providing health care.”

The Decision

In deciding the case, U.S. District Judge Robert C. Chambers declined to defer to the Trump administration’s 2020 regulations, instead hewing to the exact language of the statute to represent the intent of Congress. 

“By extending nondiscrimination protections to individuals under ‘any health program or activity,’ Congress clearly intended to prohibit discrimination by any entity acting within the ‘health” system,’” wrote Judge Chambers. “Although ‘health program or activity’ is not defined by the ACA, its meaning becomes evident as the Court widens its analytical lens beyond the phrase itself. In the same section, Congress provides that applicable ‘Federal financial assistance include[s] . . . contracts of insurance.’ It is unclear to whom this clause would apply if not health insurance issuers like The Health Plan….

“The Court concludes that The Health Plan is unambiguously a ‘health program or activity’ under the plain text of Section 1557. Consequently, by virtue of its acceptance of federal assistance under its Medicare Advantage program, The Health Plan must comply with Section 1557 under its entire portfolio. “

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