Featured photo: An individual attends the first annual Trans Pride Festival on April 2 in Winston-Salem (photo by Stan Sussina)

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

When a federal District Court judge ruled last year the North Carolina State Health Plan’s exclusion of gender-affirming treatments for transgender people was discriminatory and unconstitutional, the state’s LGBTQ community celebrated victory in a legal fight it had been waging since 2019.

But that decision is being revisited on appeal this month in a political environment in which conservative activists, politicians and lawmakers increasingly portray transgender people as mentally ill, those who support them as a threat to children, and doctors who treat them as “mutilators.”

State Treasurer Dale Folwell, whose office administers the plan, has championed and strongly defended the exclusion of transgender care since taking office in 2017. He’s also considering a run for governor next year, which could set up a Republican primary battle with Lt. Gov. Mark Robinson, whose fiery anti-LGBTQ statements have become a defining element of his political identity.

“I don’t care how much you cut yourself up, drug yourself up and dress yourself up, you still either one of two things — you’re either a man or a woman,” Robinson said in a speech to a Baptist church in Winston-Salem in 2021. “You might be a cut up, dressed up, drugged up ugly man or woman, but you still a man or a woman, and I don’t care who doesn’t like it.”

Opposition to gender transition plays well with segments of the Republican base. Robinson has repeatedly mocked transgender people and characterized them as “filth.” That grabs headlines, but the relative powerlessness of Robinson’s office doesn’t allow for much in the way of real world policy action on the issue. Folwell’s exclusion of gender affirming care from the state health plan — along with his willingness to wage long court battles to preserve it — has been praised by conservative activists as less dramatic but more tangible.

Tami Fitzgerald, executive director of the NC Values Coalition, praised Folwell in a statement last week on the appeal.

“Taxpayers should not be forced to fund elective sex changes and hormone therapy which often result in emotional devastation and regret after healthy body parts are amputated, and permanent damage is done,” Fitzgerald said. “In doing so, we are also enabling the culture’s dangerous narrative that gender is fluid, and that medical procedures can actually change someone’s gender. These procedures not only damage the gender confused, but also open the state up to liability for genital mutilation and emotional distress, which often cause long-term medical problems.”

State Treasurer Folwell

Fitzgerald’s statements are at odds with more than 40 years of research and treatment of transgender people and the positions of both the American Medical Association and American Psychiatric Association, which consider the treatment at issue necessary and in some cases lifesaving. But they are indicative of right-wing sentiments that will carry a lot of weight in a Republican primary.

Having their personal identities and medical treatment discussed in political and legal terms makes transgender North Carolinians feel like political pawns in a game that is, for many of them, life and death.

“I am disappointed to see that North Carolina officials, particularly Dale Folwell, are doubling down on their discriminatory effort to deny me and others critical medical care by pursuing this appeal,” said Julia McKeown, an associate professor in North Carolina State University’s College of Education and one of the plaintiffs in the suit. “I hope that the Court of Appeals affirms our win and we can finally put this issue to rest.”

Defining discrimination

The State Health Plan, overseen by Folwell’s office and a 10-member board composed largely of political appointees, provides coverage for more than 750,000 state employees and their dependents.

Last week, before a three judge panel of the 4th Circuit Court of Appeals in Richmond, Virginia, attorney John Knepper defended a blanket exclusion for gender affirming care in the plan. His argument: The state doesn’t discriminate against all transgender people because not all transgender people experience gender dysphoria, the psychological term for a significant and prolonged conflict between one’s gender identity and the gender they are assigned at birth.

“The record is clear that there are transgender people who have gender dysphoria and would seek these changes, seek this medical care, and would have physicians recommending it,’ Knepper said. “And there are transgender people who don’t have gender dysphoria and have no either desire or medical recommendation to receive this care. There are transgender people on both sides of the ledger, so it’s not a facial classification of transgender people.”

Criteria: Gender Dysphoria in Adolescents and Adults
A marked incongruence between one’s experienced/expressed gender and assigned gender, of at least six months’ duration, as manifested by at least two or more of the following:

  • A marked incongruence between one’s experienced/expressed gender and primary and/or secondary sex characteristics (or in young adolescents, the anticipated secondary sex characteristics)
  • A strong desire to be rid of one’s primary and/or secondary sex characteristics because of a marked incongruence with one’s experienced/expressed gender (or in young adolescents, a desire to prevent the development of the anticipated secondary sex characteristics)
  • A strong desire for the primary and/or secondary sex characteristics of the other gender
  • A strong desire to be of the other gender (or some alternative gender different from one’s assigned gender)
  • A strong desire to be treated as the other gender (or some alternative gender different from one’s assigned gender)
  • A strong conviction that one has the typical feelings and reactions of the other gender (or some alternative gender different from one’s assigned gender)
    The condition is associated with clinically significant distress or impairment in social, occupational, or other important areas of functioning.
    Source: American Psychiatric Association Diagnostic and Statistical Manual of Mental Disorders (5th ed.)

    Chief Judge Robert L. Gregory said some people not being interested in services to which they should have access doesn’t make sense as an explanation for eliminating the whole group’s access.

    “That’s like saying, “‘We have facial discrimination against Blacks,’” said Gregory, who is Black. “‘But it’s okay because there are some Black people who don’t care about going to a restaurant at all, others who do.’

    Left to right: Chief Judge Roger Gregory, Judge Steven Agee, and Judge Albert Diaz

    “We don’t look at that, their choices, whether there are some transgender people who don’t need these services,” Gregory said. “You cut that off categorically.”

    The three judge panel:

    • Chief Judge Roger L. Gregory
      • Nominated by: Presidents Bill Clinton (recess appointment) and George W. Bush
      • Confirmed by the Senate: 2001
    • Judge Steven Agee
      • Nominated by: President George W. Bush
      • Confirmed by the Senate: May 20, 2008
    • Judge Albert Diaz
      • Nominated by: President Barack Obama
      • Confirmed by the Senate: December 18, 2010

    Gregory was a recess appointment of former President Bill Clinton who was later nominated to the same position by former President George W. Bush. Throughout last week’s oral arguments, he expressed strong skepticism of the state health plan’s exclusion. At times he clashed with Knepper, at one point chiding him for shaking his head while the judge was attempting to make a point.

    Judge Steven Agee, who was also a nominee of former President George W. Bush, was more sympathetic to Knepper’s positions throughout the oral arguments. He firmly questioned Tara Borelli, senior counsel at Lambda Legal, during her argument for the plaintiffs, but without apparent tension.

    Judge Albert Diaz, a nominee of former President Barack Obama, was relatively quiet throughout last week’s arguments as Gregory and Agee dominated the back and forth with the opposing attorneys.

    “What they’re asking this court to do is to pick up its judicial pen and rescue this exclusion by rewriting it,” Borelli told the three judge panel. “Because the one they’ve adopted, and the one that they actually have to defend, is so indefensible. It so plainly and clearly discriminates based on sex and transgender status.”

    A fraught history and the road ahead

    North Carolina was one of a number of states that began covering medically necessary treatment for transgender people in 2017 to comply with federal non-discrimination laws. That includes everything from talk-therapy related to gender transition to hormone therapy and some surgeries.

    But when Folwell came to office, he dismissed that coverage as unnecessary, too expensive and out of step with his primary goal of cutting costs. He and the State Health Plan’s board of trustees let the extension of coverage for transgender treatment lapse. In the face of criticism and lawsuits, Folwell defended the exemption.

    “Until the court system, a legislative body or voters tell us that we ‘have to,’ ‘when to,’ and ‘how to’ spend taxpayers’ money on sex change operations, I will not make a decision that has the potential to discriminate against those who desire other currently uncovered elective, non-emergency procedures,” Folwell told Policy Watch in 2018.

    “Sex change operation” is not a term used by medical professionals treating transgender people, insurance companies or the LGBTQ community. It is widely considered offensive both because of its technical inaccuracy and because a wide array of procedures—not just one operation—are utilized in gender transition.

    Knepper and Borelli, in debating the exclusion before the appeals court panel last week, repeatedly apologized for having to use the term — and related terms — when quoting writings and opinions on the subject from years ago.

    Last year, when U.S. District Judge Loretta Biggs ruled against the plan’s exclusion, Folwell’s office restored the coverage, but also moved immediately to appeal the decision.

    Policy Watch has reached out to Folwell for comment on the appeal, but calls were not returned.

    As Biggs wrote in her ruling last year, a key point in the case is whether excluding treatments related to gender dysphoria necessarily discriminates against transgender people.

    “On its face, the Exclusion bars coverage for ‘treatment in conjunction with proposed gender transformation’ and ‘sex changes or modifications,’” Biggs wrote.”The characteristics of sex and gender are directly implicated; it is impossible to refer to the Exclusion without referring to them.”

    “State Defendants attempt to frame the Exclusion as one focused on “medical diagnoses, not … gender.” (ECF No. 37 at 6.),” Biggs wrote. “However, the diagnosis at issue—gender dysphoria—only results from a discrepancy between assigned sex and gender identity. Cf. McWright v. Alexander, 982 F.2d 222, 228 (7th Cir. 1992) (‘[A]n employer cannot be permitted to use a technically neutral classification as a proxy to evade the prohibition of intentional discrimination,” such as ‘gray hair as a proxy for age.’). In short, the Exclusion facially discriminates on the basis of gender, and heightened scrutiny applies.”

    How best to treat gender dysphoria — or even to discuss it — remains a debate even within the LGBTQ community. Its more nuanced definition as a diagnosis in the fifth edition of the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM-5) was seen as a step forward as compared to transgender identity itself being considered a disorder. Its definition has also gone a long way toward helping transgender people access medical care and legal recognition they’ve long sought.

    In many ways, transgender identity has mirrored the path of homosexuality in terms of mainstream and medical acceptance. When the first edition of the DSM was published in 1952, homosexuality was included as a psychological disorder. With further study and debate, that was changed in 1974 to a diagnosis for those distressed by their homosexuality. By 2013 that too was removed.

    Many LGBTQ advocates say they look forward to a day when transgender identity is so widely accepted that a medical diagnosis is no longer part of their fight for medical care and legal rights. But for now, political debates and legal fights over who is transgender, how they should be treated when experiencing dysphoria and whether and how they can legally change their legal gender continue.

    Last year transgender people born in North Carolina prevailed in a lawsuit over changing the gender marker on their birth certificates without being required to medically transition.

    It isn’t clear when the appeals court will make its decision on the State Health Plan. But Borelli, the attorney for the plaintiffs, told Policy Watch she believes the original district court opinion will hold up.

    “That is the trend we are seeing across the country on these sorts of exclusions,” Borelli said. “The courts continue to make clear that they are discriminatory.”

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