Appeals Court hears arguments on transgender health care ban for state employees

This story was originally published by NC Policy Watch. Story by Joe Killian.

The U.S. Court of Appeals for the Fourth Circuit heard oral arguments Wednesday in a case in which the state was found to have violated the rights of state employees and their families with a blanket exclusion of gender-affirming care for transgender people under the state health plan.

Last year a federal judge in Winston-Salem ruled the ban violated the Equal Protection Clause of the U.S. Constitution and Title VII of the Civil Rights Act of 1964 through discrimination based on sex and transgender status. That decision came just months after the U.S. Supreme court denied the state’s petition to review a lower court ruling that the state health plan wasn’t entitled to sovereign immunity and could be sued for violating the nondiscrimination provisions of the Affordable Care Act.

In 2019, Lambda Legal and the Transgender Legal Defense & Education Fund (TLDEF) brought the original suit, Kadel v. Folwell, on behalf of eight plaintiffs – current and former state employees and their children – who were denied coverage under the state health plan. Their victory was celebrated by the LGBTQ community, along with a successful suit to allow transgender people born in North Carolina to change the gender marker on their birth certificates without undergoing medical transition. The appeal comes as transgender issues continue to be the focus of national political debates and State Treasurer Dale Folwell, who opposed the coverage from his initial run for that office, is increasingly seen as a likely Republican candidate for governor.

“We are confident that the district court’s decision is going to stand the test of time,” said Tara Borelli, one of the attorneys handling the case for Lambda Legal. “It’s so thorough and so well-reasoned that we don’t believe there is any basis to show reversible error.”

The defendants have never been able to offer any good explanation for excluding care for health care specific to transgender people, Borelli said, and courts across the country have found and continue to find those exclusions discriminatory.

“I don’t think they’ve advanced any argument on appeal that would persuade otherwise,” Borelli said.

As Policy Watch has reported, the board of trustees of the state health care plan voted to begin covering treatments for gender dysphoria at the end of 2016, near the end of Janet Cowell’s term as State Treasurer. The move was necessary to comply with the Affordable Care Act. When Folwell came into office in 2017, he made it clear he opposed the move, calling transition-related care elective and unnecessary.

The plan’s trustees allowed the coverage to expire at the first opportunity — not renewing it for the 2018 plan year or for 2019.

Blue Cross/Blue Shield of North Carolina, the company which until recently administered the state health plan, has recognized dysphoria as a serious medical issue and covered treatments related to transition, including hormone therapy and gender confirmation surgery. Transgender patients and their doctors have testified before the plan’s board of trustees that the treatment is necessary and life-saving.

The American Medical Association and the American Psychological Association recognize gender dysphoria and transition-related care to treat it as medically necessary and potentially life-saving. A myriad of professional medical organizations have called for an end to transgender-focused exclusions in public and private health insurance policies.

Despite that, Folwell continued to describe the care as elective and to concentrate only on surgeries, just one part of transgender health care the blanket exclusion prevented families from accessing. Many transgender people elect not to have any surgery related to their transition. The blanket exemption excludes not just surgical procedures but coverage of all treatment related to gender dysphoria – including things like hormone treatment and even talk therapy. Similar treatments available to patients who are not transgender are covered under the plan.

“Until the court system, a legislative body or voters tell us that we ‘have to,’ ‘when to,’ and ‘how to’ spend taxpayers money on gender reassignment surgery, I will not make a decision that has the potential to discriminate against those who desire other currently uncovered, elective procedures,” Folwell said in the statement shortly after the original suit was filed

The court did issue a clear order, Borelli said, but Folwell’s office continues to fight it.

“The trial court ordered a permanent injunction, requiring the plan to provide the care,” Borelli said. “The defendant sought to stay that order two times, first in the trial court and then again in the appeal court. Both courts rejected that request. So the permanent injunction remains fully in effect and we’re optimistic that injunction will be upheld once all appeals are done.”

Oral arguments began on Wednesday at 10 a.m. at the Lewis F. Powell Jr. Courthouse & Annex in Richmond, Virginia. A livestream of the arguments is available here.