State Health Plan Violates Title VII in Barring Transgender Care

A federal district court judge in North Carolina has ruled that the North Carolina State Health Plan for Teachers and State Employees constitutes sex discrimination under Title VII of the Civil Rights Act and the U.S. Constitution in barring coverage for treatment related to gender dysphoria and transition. In her ruling, U.S. District Court Judge Loretta Biggs permanently enjoined the state health plan from enforcing the exclusion and ordered the reinstatement of coverage for medically necessary treatment for gender dysphoria. 

State health plan participants, parents, and transgender children sued the state over the coverage exclusion in 2019 under the Equal Protection Clause and the Affordable Care Act (ACA). In 2021, the plaintiffs added the North Carolina Department of Public Safety as a defendant and added a claim for sex discrimination under Title VII. The case is Kadel et al. v. Folwell et al., case number 1:19-cv-00272, the U.S. District Court for the Middle District of North Carolina.

The state was unsuccessful in persuading either the federal district court or the U.S. Court of Appeals for the 4th Circuit to dismiss the case. As a result, the U.S. Supreme Court declined to consider the case in January 2022. 

Judge Biggs granted the defendants’ motion for summary judgment on the discrimination claims, finding the plan’s exclusion discriminatory and an example of “textbook discrimination.” Although the plan excluded coverage for treatments for transgender individuals, such as hormone therapy or chest surgery, the plan provided coverage for the same treatments for non-transgender individuals based on medical necessity. Judge Biggs also pointed to a lack of evidence and qualified expert witnesses for the state that could justify such an exclusion. 

The judge emphasized that based on costs from 2017, the only year that the North Carolina plan covered treatment related to gender dysphoria and transition, the plan’s estimated costs to cover these services would be $300,000 to $900,000, or about $1 per plan participant. Judge Biggs characterized this cost as “paltry” and “not an important government interest.” 

The court also granted summary judgment on a Title VII claim by a transgender woman and state corrections officer against the North Carolina Department of Public Safety (DPS). In doing so, the court rejected the state’s argument that it wasn’t liable for discrimination claims because it was required to offer the state health plan to all state employees. 

The court reserved ruling on the plaintiff’s ACA claim, partly because the U.S. Department of Health and Human Services (HHS)’s interpretation of nondiscrimination provisions under the ACA could change or be enjoined before the scheduled trial date of July 5, 2022. 

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