A federal judge yesterday vacated a portion of a federal regulation protecting transgender people from discrimination in certain health care settings.
Judge Reed O’Connor of the United States District Court for the Northern District of Texas issued the ruling in Franciscan Alliance, Inc. v. Azar.
Under section 1557 of the Affordable Care Act, a health program or activity that receives federal funding — including a hospital that receives reimbursement from the Medicare program — may not discriminate based on, among other things, sex. In 2016, the Department of Health and Human Services Office for Civil Rights issued a regulation interpreting sex discrimination broadly to include discrimination based on, among other things, gender identity, thereby protecting transgender people.
This portion of the regulation was challenged in this lawsuit under, among other things, the Administrative Procedure Act and the Religious Freedom Restoration Act. In 2016, O’Connor issued a preliminary nationwide injunction enjoining enforcement, and his most recent ruling reaffirms his prior reasoning.
Notably, the APA claim concerns the propriety of interpreting sex discrimination to include gender identity discrimination. This question is currently before the U.S. Supreme Court in the context of employment discrimination under Title VII. And the RFRA claim concerns the propriety of applying a federal requirement to a party whose religious conscience would be violated if it were to abide by the requirement; this question could return to the U.S. Supreme Court in the context of the contraceptive coverage mandate under the ACA. 
While the Trump Administration may elect not to appeal yesterday’s ruling to the Fifth Circuit, the American Civil Liberties Union may do so because it successfully intervened in the litigation. 
HHS in May issued a proposed rule revising certain provisions of the 2016 final rule implementing the ACA’s nondiscrimination protections for patients. 

In comments on the proposed rule, AHA urged HHS not to finalize certain proposed revisions that seek to end protection against discrimination based on an individual's gender identity or sexual orientation, or on sex stereotypes. "The AHA is concerned that narrowing the current regulation's protections against discrimination based on sex, including gender identity, sexual orientation and sex stereotypes, could have an adverse impact on access to care and the health of individuals," the association wrote in its Aug. 13 comment letter. "... We also are concerned by the proposed changes that would limit the circumstances in which prohibitions against discrimination would apply to health insurers. Without meaningful access to coverage, there is no meaningful access to care.” 

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