HHS Will Enforce Section 1557 To Protect LGBTQ People From Discrimination

On May 10, 2021, the Office for Civil Rights (OCR) within the Department of Health and Human Services (HHS) announced that it will interpret Section 1557 and Title IX, which prohibit discrimination on the basis of sex, to include discrimination on the basis of sexual orientation and gender identity. The new interpretation is being made pursuant to Bostock v. Clayton County. In that case, the Supreme Court—in a 6-3 decision written by Justice Gorsuch—held that Title VII’s ban on sex discrimination bars workplace discrimination because someone is gay or transgender. OCR also issued a notice of this new interpretation and its intent to enforce Section 1557 through its complaints and investigations process.

Future action, including new rulemaking, is expected. But, in the meantime, OCR makes clear that it will accept, investigate, and resolve complaints of health care discrimination from LGBTQ people under Section 1557. OCR’s new interpretation comes at a time when access to medical care for transgender young people is being restricted in states across the country and provides a strong statement from the Biden administration that LGBTQ patients should be able to access health care without discrimination. Additional implications are discussed in more detail below.

Section 1557 Developments: How We Got Here

Section 1557 is the Affordable Care Act’s (ACA’s) chief nondiscrimination provision and prohibits health programs or facilities that receive federal funds from discriminating based on race, color, national origin, age, disability, or sex. Section 1557 incorporates existing federal civil rights laws, including protections on the basis of sex under Title IX, and applies them to federally funded health programs. Section 1557 is one of the few parts of the ACA that went into effect upon enactment in 2010. But its implementation has long been contentious and a source of ongoing litigation.

2016 Rule

The Obama administration issued a final rule to implement Section 1557 in 2016. Parts of that rule—including interpreting “sex” to include gender identity—were preliminarily enjoined and ultimately vacated by Judge Reed O’Connor, a federal district court judge in Texas. This litigation, known as Franciscan Alliance, was filed by state attorneys general and religious health care entities. Judge O’Connor also held that the rule violated the Religious Freedom Restoration Act (RFRA).

A similar lawsuit was filed in federal district court in North Dakota. In the Religious Sisters of Mercy case, Chief Judge Peter Welte held that the challenged interpretations of Section 1557 violated RFRA and permanently enjoined HHS from enforcing the gender identity interpretation against the religious plaintiffs.

2020 Rule

Relying heavily on the district court’s decision in Franciscan Alliance, the Trump administration issued a revised final rule in 2020. The 2020 rule eliminated the 2016 rule’s definition of “sex,” which explicitly referred to gender identity and sex stereotyping.

OCR did so mere days before the Supreme Court issued its Bostock decision. The Court’s decision in Bostock called the 2020 rule into question after OCR relied on the (ultimately wrong) position that Title VII’s sex discrimination protections do not extend to LGBTQ people. The Court disagreed, holding that an employer who fires someone because they are gay or transgender violates Title VII because being gay or transgender is “inextricably bound up with sex.” 

Bostock was heavily cited in several lawsuits that challenged the 2020 rule. Two of those lawsuits—Whitman-Walker Clinic, filed in DC, and Asapansa-Johnson Walker, filed in New York—led to partial preliminary injunctions. Those courts blocked the part of the 2020 rule that would have eliminated explicit protections based on sex stereotyping (based on the 2016 rule). OCR, the courts reasoned, was arbitrary and capricious and acted contrary to law by failing to account for the Court’s decision in Bostock. As one district court put it, OCR “plowed ahead” with the 2020 rule without “without even pausing to consider the Court’s decision” or reasoning.

Franciscan Alliance Case Continues

In the meantime, litigation continued in Franciscan Alliance. Even after the challenged portions of the 2016 rule were vacated, these plaintiffs asked that OCR be permanently enjoined from enforcing any interpretation that stems from the challenged provisions. Judge O’Connor declined to do so, concluding that an injunction was unnecessary since he vacated the challenged parts of the rule. The religious plaintiffs, led by Franciscan Alliance, then appealed that decision to the Fifth Circuit Court of Appeals.

The Fifth Circuit remanded the lawsuit back to Judge O’Connor for additional consideration of whether the plaintiffs did (or did not) ask for an injunction against Section 1557 itself (versus just the 2016 rule). Remand was appropriate, the panel reasoned, because “the legal landscape has shifted significantly” since the initial challenge. The panel cited Bostock, the 2020 rule, litigation over the 2020 rule, President Biden’s executive order on Bostock implementation, and a Department of Justice memo on Title IX. Judge O’Connor ordered a supplemental briefing schedule that will extend through June 2021.

Where We Stand Now

So, what is the current status of federal rules on Section 1557? The vast majority of the 2020 rule remains in effect. This includes the elimination of many explicit protections included in the prior rule, including the definition of sex to include gender identity and termination of pregnancy and transgender-specific protections outlined in other parts of the 2016 rule. The only parts of the 2016 rule that have been revived by courts are the parts that bar discrimination based on sex stereotyping and a prior (narrower) religious exemption relative to the 2020 rule. In the meantime, the religious plaintiffs in Franciscan Alliance and Religious Sisters of Mercy remain protected by district court rulings that the 2016 rule’s interpretation violated RFRA.

OCR’s New Interpretation

That brings us to OCR’s announcement and notice on May 10. Consistent with the Supreme Court’s decision in Bostock and subsequent court decisions (presumably a reference to the district court decisions on the 2020 rule), OCR will interpret and enforce Section 1557 and Title IX’s ban on sex discrimination to include discrimination on the basis of sexual orientation and gender identity. Entities that must comply with Section 1557 (known as covered entities) cannot discriminate against patients based on sexual orientation or gender identity.

Beginning on May 10, OCR will accept, process, investigate, and resolve complaints that allege discrimination based on sexual orientation and gender identity under Section 1557. This was true under the Obama administration. But OCR had generally stopped investigating complaints based on at least gender identity following the preliminary injunction issued in Franciscan Alliance in late 2016.

With the new announcement, LGBTQ people who have faced discrimination in a covered health care setting can once again file a complaint with OCR and expect a full investigation and enforcement action if warranted. Enforcement action will be consistent with the mechanisms and procedures used to enforce Title IX. While OCR will accept complaints and investigate claims consistent with its new interpretation, each complaint will be considered and investigated on a case-by-case basis.

In issuing the new interpretation, OCR notes that the plain meaning of “because of sex” under Title VII included discrimination based on sexual orientation and gender identity in Bostock. Section 1557 incorporates Title IX, which contains a similar ban on sex discrimination and will thus be interpreted in the same way. The notice also highlights two appellate decisions—from the Fourth and Eleventh Circuit Courts of Appeals—that applied Bostock to hold that Title IX protects transgender students; it also cites a Department of Justice memo regarding Bostock’s application to Title IX.

OCR also recognizes the ongoing litigation over Section 1557’s implementing rules and notes that it will comply with RFRA, all other legal requirements, and all applicable court orders (Franciscan Alliance, Religious Sisters of Mercy, Asapansa-Johnson Walker, and Whitman-Walker Clinic).

Putting The Interpretation In Context

OCR’s announcement is consistent with a day-one executive order from President Biden that directed federal agencies to interpret and enforce federal sex discrimination laws in a manner that is consistent with Bostock. There is precedent for doing so. The federal government under the Obama administration, took similar steps to implement two other Supreme Court decisions on LGBTQ rights—United States v. Windsor in 2013 and Obergefell v. Hodges in 2015—on a government-wide basis.

Under President Biden’s executive order, federal agencies were directed to review and consider revising, suspending, or rescinding any existing orders, regulations, guidance documents, policies, programs, and other agency action inconsistent with Bostock and related to Title VII or any other statute or regulation that prohibits sex discrimination. Several agencies, such as Department of Housing and Urban Development and the Department of Justice, have already issued guidance consistent with President Biden’s executive order. The new interpretation from OCR adds HHS to the list of agencies that have taken steps to implement Bostock.

A New Interpretation Was Expected

OCR’s announcement was not a surprise in light of Bostock. The Supreme Court’s ruling was always going to have a significant impact on interpretations of Title IX and Section 1557 and severely undercut the validity of the Trump administration’s approach. As discussed in a prior post, the similarities between Title VII and Title IX have led courts to look to Title VII when interpreting Title IX (and vice versa). OCR acknowledged as much in its preamble to the 2020 rule but proceeded to finalize the rule anyway. Combined with President Biden’s executive order, the Department of Justice’s memo on Title IX, and the lawsuits over the 2020 rule, it was only a matter of time before OCR clarified its interpretation of sex discrimination under Section 1557.

It is also worth emphasizing that the 2020 rule did not define “sex” at all; rather, it eliminated the 2016 rule’s definition altogether. OCR argued that it did so in part to ensure that the rule could be flexible enough to accommodate a future Bostock ruling. As such, the Biden administration’s interpretation does not conflict with any current federal rule. Instead, this new Biden-era guidance (from a press release and notice) merely parts ways with the prior Trump-era guidance (from the preamble of the 2020 rule).

What The New Interpretation Means

Under the new interpretation, LGBTQ people who face discrimination in covered health care settings can file a complaint and be assured that OCR will fully investigate and resolve that complaint. OCR may take enforcement action if an entity is found to have violated Section 1557 but will do so based on the particular case or set of facts at hand.

This move is significant: In the preamble to the 2020 rule, OCR estimated that about 60 percent of its long-term caseload would stem from complaints regarding LGBTQ-specific discrimination. Analysis of prior OCR complaint data underscored the discriminatory treatment that many transgender patients, in particular, experience in health care settings. Most of the analyzed complaints involved denials of care or insurance coverage because of a person’s gender identity and were unrelated to gender transition. Examples include transgender people being denied mammograms, screening for a urinary tract infection, or a medical forensic exam after sexual assault.

Accepting complaints also enables OCR to collect data on discriminatory behavior and patient concerns. The Obama administration collected and investigated complaints from LGBTQ people even before the 2016 rule and took enforcement action where necessary. One high-profile example included a resolution agreement with the Brooklyn Hospital Center in 2015 to implement nondiscriminatory practices for transgender patients. Other illustrative examples were made public as well (though later removed by the Trump administration).

What the New Interpretation Does Not Do

The new interpretation is critical for LGBTQ patients but does not address other important parts of the 2020 rule. Although the May 10 announcement helps clarify explicit protections for LGBTQ people, it does not address other changes made in the 2020 rule (such as eliminating major language access requirements, notice requirements, enforcement standards, and carving out health insurers as covered entities). Some of these provisions are the continued subject of litigation, and OCR will be pushed to address these issues (among others) in future rulemaking.

Although it confirms OCR’s view that LGBTQ people are protected from discrimination, the May 10 announcement does not provide detail or additional guidance on what it means not to discriminate based on sexual orientation and gender identity. For instance, the 2016 rule—in both the regulatory text and preamble—included several barred types or examples of discriminatory behavior by covered entities. Covered entities could not categorically exclude services related to gender transition or deny coverage based on sex assigned at birth, gender identity, or gender. The preamble included additional examples of behavior that could trigger closer review by OCR and noted that a provider’s persistent and intentional refusal to use a transgender patient’s name and pronoun could constitute illegal sex discrimination. Covered entities will want to review their practices and policies to ensure that they do not discriminate on the basis of sexual orientation and gender identity.

The new interpretation also does not resolve pending litigation over Section 1557 implementing rules. For one thing, OCR notes that it will continue to comply with RFRA and all other legal requirements. It is not entirely clear what OCR means by compliance with RFRA, a matter that is hotly contested and was at issue, but ultimately not resolved, in the Supreme Court’s recent decision over the contraceptive mandate in Little Sisters of The Poor in 2020.

Relatedly, OCR affirms that it will comply with prior court orders. This suggests that the plaintiffs in Franciscan Alliance and Religious Sisters of Mercy do not face an enforcement threat even with the new interpretation, as their injunctions—generally issued under RFRA—will be respected.

Next Steps

OCR will ultimately want to revisit the Trump-era rule on Section 1557 and formalize its new interpretation of sex. Future rulemaking should be expected. In the meantime, complaints can inform a future rule, guidance, or enforcement position. By signaling its openness to accepting complaints from LGBTQ people, OCR can build an additional record and evidence base to inform future rulemaking.

At the same time, litigation is practically assured. Lawsuits remain over the Obama- and Trump-era rules to implement Section 1557. Notwithstanding the Supreme Court’s resounding decision in Bostock, I would expect a Biden-era interpretation or rule to be no different. We may see some of this impact sooner rather than later—the religious plaintiffs in the Franciscan Alliance litigation are likely to soon cite the new interpretation as another reason why their request for a permanent injunction should be granted.