A federal discrimination lawsuit against Dignity Health may foreshadow a legal effort by Catholic providers and other employers to seek religious freedom exemptions from federal requirements to cover transgender-related healthcare services.
So far the San Francisco-based health system is arguing a lawsuit filed by a transgender nurse should be dismissed not on religious grounds but rather by arguing that civil rights law does not require its self-insured employer health plan to cover care related to gender reassignment.
Dignity's motion filed last month in response to the closely watched suit—one of the first of its kind in the country—says Title VII of the Civil Rights Act does not cover transgender status as a protected classification.
Dignity also argued that HHS' May rule barring categorical exclusion of coverage for gender transition services did not require it to provide coverage for “sex transformation” treatment for the nurse because the rule does not take effect until Jan. 1, 2017. In addition, the system argued, the new rule doesn't bar self-insured employer health plans from excluding benefits for services that are not medically necessary and “the medical efficacy of sex transformation surgery remains the subject of debate.”
But lawyers for the American Civil Liberties Union who are representing nurse Josef Robinson say both Title VII and the new HHS rule interpreting Section 1557 of the Affordable Care Act clearly require employers and health plans to cover treatment related to gender dysphoria. That's the name of the condition in which people feel they are not the gender they were assigned at birth.
Legal experts expect more such lawsuits following HHS' issuance of the anti-bias rule in May.
Lisa deFilippis, an attorney at Jackson Lewis in Cleveland who counsels employers on benefits, predicted that Catholic and other religious groups will turn to the courts seeking a religious freedom exemption from the federal prohibition against discrimination relating to gender reassignment-related care. It will be similar to legal challenges against the ACA mandate to provide coverage of contraception. “I would not be the least surprised to see people waving the Hobby Lobby and Zubik cases, saying this is the same thing and we shouldn't have to provide these services,” she said.
Robinson was assigned the gender of female at birth but identifies as a man. He claims the self-insured health plan operated by Chandler (Ariz.) Regional Medical Center, the Dignity-owned hospital where Robinson works, denied him coverage for double mastectomy and phalloplasty operations, and he had to pay thousands of dollars for the mastectomy and hasn't been able to afford the phalloplasty.
The Phoenix office of the federal Equal Employment Opportunity Commission found that the denial of coverage by Chandler Regional's plan was a Title VII violation and granted Robinson a notice of right to sue.
Dignity “is making an argument that's been rejected over and over and is flatly inconsistent with controlling law in the 9th Circuit,” said Josh Block, a senior staff attorney at the ACLU's LGBT Project in New York City.
The lead attorney for Dignity, Barry Landsberg, of Manatt Phelps & Phillips in Los Angeles, said he could not comment on pending litigation.
Dignity issued a written statement saying it is “committed to an inclusive, respectful, and nondiscriminatory workplace” and that Robinson “continues to be a valued member of our staff.”
While the new HHS rule is not specific about every type of transgender-related healthcare service that must be covered, some legal experts say there's a medical consensus that gender reassignment care is medically necessary, depending on the patient. A growing number of employers are covering their employees for these services, including both nonsurgical and surgical care, according to the National Business Group on Health.