HHS Issues Proposed Rule to Substantially Revise Civil Rights Provision That Discriminates Based Upon Sex

In May, the U.S. Department of Health and Human Services (“HHS”) issued a new proposed rule on Section 1557. This rule is aimed at revising the Affordable Care Act (ACA) and preventing discrimination based upon sex. Section 1557 is a civil rights provision broadly prohibiting discrimination based on a variety of factors in health programs and activities receiving federal funding. The proposed rule specifically targets sex and makes the civil rights section of the ACA inapplicable to many group health plans.

“On the Basis of Sex”

It’s not just a movie, but also a key legal concept that still has much room for debate. Currently, ACA section 1557 defines such discrimination to include decisions based on a person’s “gender identity” as well as their “termination of pregnancy.” Much concern about sex discrimination has risen in context of new regulations which specify that medical providers are not required to perform health care services against their strong moral or religious convictions. In a 2016 case, Franciscan Alliance, Inc., et al. v. Burwell, et al., 227 F. Supp. 3d 660 (N.D. Tex. 2016), the argument was made by the plaintiffs that the regulations forced them to provide those services against their medical judgment and that Section 1557 was in conflict with both the Administrative Procedure Act (APA) and the Religious Freedom Restoration Act (RFRA).

While Section 1557 does not directly require the coverage of abortions, it does prohibit discrimination against women who have had an abortion. A preliminary injunction stopped HHS from enforcing Section 1557, which prevented discrimination against transgender people and those who have terminated a pregnancy. This injunction remains in place.

HHS Proposed Rule

The new rule proposed by HHS eliminates the definitions section of the current rule. It replaces it with language that provides definitions as found “explicitly in other sections or through incorporation by reference to relevant statutes or regulations.” This removes the definition regarding sex as well as specific sections regarding nondiscrimination based on gender identity. Removing these definitions means that discrimination in these categories would depend on Title IX of the Civil Rights Act and related case law and regulations.

The proposed rule also changes the definition of a “health program or activity” to ensure that the definition specifically includes health care entities as defined in the Civil Rights Restoration Act of 1987 (“CRRA”). This definition provides that any entity that is “principally engaged in the business of providing […] health care” and receives federal funding is considered a “health program or activity” under the Section. For entities that do not meet this definition, the section is only applicable to the extent they receive federal funding from HHS. Finally, the rule includes a religious and conscience-based exemption, eliminates notice and tagline requirements, and changes requirements related to individuals who speak limited English to ensure meaningful access.

This rule hardly clears the air when it comes to discrimination, and we expect the U.S. Supreme Court to weigh in, as it has granted review of a number of cases regarding discrimination, with decisions anticipated in June 2020. Hall Benefits Law will be paying close attention to this and other rule changes, as well as the outcome of various related cases. We aim to keep our clients up to date with the latest legislative, regulatory, and case law changes and to ensure their plans and documents are complying with the law. To learn more, call us today at 678-439-6236, or visit the Hall Benefits Law website.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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