Another Federal District Court Invalidates the Current Section 1557 Rules

On September 2, 2020, the US District Court for the District of Columbia issued an injunction against HHS, stopping the agency from enforcing its amendments to its rule implementing Section 1557 of the ACA. The specific amendments subject to the injunction are those that scale back the rule’s prohibition against discriminating on the basis of gender identity or sexual orientation, as well as the insertion of a religious exemption allowing religious organizations to opt out of following the rule when doing so would be inconsistent with their religious beliefs. This is the second federal district court to block these new amendments.

The amendments to the rule implementing Section 1557 were discussed in the June 23, 2020, edition of Compliance Corner.

In this case, Whitman-Walker Clinic v. HHS, a group of organizations that provide healthcare and other services to the LGBTQ community filed suit against HHS within days of the publication of its final rule. The plaintiffs alleged that the agency acted in an arbitrary and capricious way when implementing the amendments to the rule, and that these amendments conflict with Section 1554 of the ACA by creating unreasonable barriers and impeding access to healthcare services to members of the LGBTQ. The plaintiffs also alleged that the final rule violates the First Amendment’s right to free speech, the Fifth Amendment’s guarantees of equal protection and substantive due process, and the Establishment Clause. As a preliminary matter, the plaintiffs asked the court to enjoin the agency from enforcing its final rule while litigation proceeded.

The court considered whether the plaintiffs would likely succeed on the merits of their case. The court concluded that they were likely to both succeed on the merits and suffer irreparable harm on the allegations that HHS acted arbitrarily and capriciously when it stripped out language regarding sexual orientation and gender identity from the definition of “discrimination of the basis of sex.” Although the court did not agree that “gender identity” was included in the original regulation, it did agree that discrimination based upon “sex stereotyping” was prohibited. The court additionally found that the agency improperly incorporated the religious exemption established in Title IX of the Civil Rights Act of 1964 into the final rule. Accordingly, the court issued its injunction. The injunction is effective nationwide.

This ruling is part of ongoing litigation and could be appealed, so the ultimate disposition of the final rule is unknown. It should be noted that this is the second federal district court to enjoin this rule. The first case, Walker v. Azar, was discussed in the August 18, 2020, edition of Compliance Corner. Employers that would operate their plans in a manner consistent with the final rules should consult with legal counsel about the implications of this decision. We will keep an eye on developments in this area to see how they may affect the benefits employers provide to their employees.

Whitman-Walker Clinic v. HHS »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

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