The impact of the Supreme Court’s interpretation of “sex” in R.G. & G.R. Harris Funeral Homes, Inc. v. Equal Employment Opportunity Commission this Term may not be limited to enforcement of the Civil Rights Act. In fact, many federal statutes, including the 2010 Affordable Care Act (ACA), have adopted identical language. Recently in Franciscan Alliance, Inc. v. Azar, a judge in the United States District Court for the Northern District of Texas vacated a rule promulgated under the ACA prohibiting healthcare providers from discriminating on the basis of gender identity and termination of pregnancy. Regardless of the outcome, the opinion’s shallow discussion of the merits ignores the political and legal atmosphere in the background of the decision.
Section 1557 of the ACA prohibits “discrimination on the basis of . . . sex” among other characteristics by healthcare providers for access to either care or insurance. After the ACA was signed into law, the Department of Health and Human Services (HHS), tasked with enforcing the law, interpreted “sex” to include gender identity and termination of pregnancy. Several states and providers subsequently filed lawsuits challenging the agency’s interpretation. On December 31, 2016, Judge Reed O’Connor, in the U.S. District Court for the Northern District of Texas, granted a preliminary injunction to prohibit HHS from enforcing this rule against providers. Shortly after the ruling, on January 21, 2017, a new administration under Republican President Donald Trump took office. On May 2, 2017, the Department of Justice (DOJ) on behalf of HHS filed a motion for remand and stay pending reconsideration of the rule. Two years later, on April 5, 2019, the DOJ filed another motion informing the court that HHS no longer interpreted “sex” to include gender identity and thus did not oppose plaintiff’s challenge. A few months earlier on February 1, 2019, the American Civil Liberties Union of Texas and River City Gender Alliance (ACLU) filed a motion to intervene to defend the lawfulness of the rule. Finally, on February 4, 2019, Plaintiffs filed a motion for summary judgment seeking permanent relief in the form of a vacatur and permanent injunction.
In an opinion issued on October 15, 2019, the court granted the ACLU’s motion to intervene but ultimately vacated the HHS rule. While the court had previously denied the ACLU’s motion to intervene, it found that once the DOJ had declined to defend the rule, the ACLU’s interest was “inadequately represented” and it therefore had the right to intervene. The court disagreed with plaintiff’s claim that the ACLU could not intervene because it based its motion on inadmissible hearsay and did not have a “legally protectable interest.” The court did, however, impose limits on intervention. It decided that since intervenors were able to participate from early on, there was “no need for factual discovery” or “further briefing” and that such “reasonable limitations are necessary to avoid a further delay in litigation.”
Despite allowing the ACLU to intervene, Judge O’Connor granted summary judgment to plaintiffs, finding that the HHS rule was unlawful. Plaintiffs argued the rule was unlawful on three separate bases: An Administrative Procedure Act (APA) claim; a Religious Freedom Restoration Act (RFRA) claim; and a Free Exercise claim. But the court ignored the constitutional claim and decided only the APA and RFRA claims.
In addressing the APA claim, Judge O’Connor relied on his previous ruling in issuing the preliminary injunction. There, Judge O’Connor had declined to apply Chevron, holding that Section 1557 unambiguously referred only to biological sex discrimination, as “sex” does in Title IX. Once again, Judge O’Connor found that “‘the Rule’s conflict with its incorporated statute—Title IX—renders it contrary to law under the APA.’”
Turning to the RFRA claim, Judge O’Connor determined the HHS rule also unlawfully burdened religious exercise. Under RFRA, Judge O’Connor wrote, “a court must first determine whether the rule ‘imposes a substantial burden on the exercise of religion.’” If it does, the court asks whether there is a compelling government interest and if the measure in question is the least restrictive means the government can use to further that interest. The court concluded that the rule indeed burdened plaintiffs’ ability to exercise religion. “Because the Rule ‘[1] places substantial pressure on Plaintiffs to perform and cover transition and abortion procedures . . . [2] forces Plaintiffs to provide the federal government a nondiscriminatory and ‘exceedingly persuasive justification’ for their refusal to perform or cover such procedures [and] . . . [3] requires them to remove the categorical exclusion of transitions and abortions,’” Judge O’Connor wrote, it made religious practice in business too burdensome. While intervenors urged the court to find that the government had a compelling interest in “‘ensuring that individuals have nondiscriminatory access to health care and health coverage,’” the court found that only the government itself could carry this burden under RFRA. And since the government addressed only the APA claim, Judge O’Connor held the rule violated RFRA.
Finally, Judge O’Connor decided to grant a vacatur of the rule rather than issue a permanent injunction. While the plaintiffs had asked for both, Judge O’Connor determined that issuing a permanent national injunction would be an overcorrection and that a vacatur of the rule afforded the plaintiffs proper relief under APA guidelines.
The court’s decision in this case is significant in large part because of the politically charged atmosphere surrounding cases challenging Obama-era rules. This is the second highly controversial ruling Judge O’Connor has issued on the ACA. Last December, Judge O’Connor struck down the entire law, ruling that the ACA’s individual mandate was no longer a tax (because Congress had gotten rid of the penalty) and it was inseverable from the remainder of the law. The ruling is currently on appeal before the Fifth Circuit. Given the impact the ruling could have on transgender individuals, this decision will likely be appealed as well.
In light of the current reality, it is discouraging that Judge O’Connor did not take the opportunity to fully lay out the case against the rule or explain why a narrower ruling that the rule must allow for religious exemptions, like in Burwell v. Hobby Lobby Stores, was not appropriate. The vast majority of the twenty-five-page ruling was dedicated to an analysis on the ACLU’s motion to intervene, while very little space was given to the discussion of the merits. Judge O’Connor debated the intervenor’s challenge briefly, summarily dismissing the claims and relying heavily on his previous opinion granting the plaintiff a preliminary injunction. More robust discussion on the claim that the government did not have a compelling interest, particularly in light of the policy implications, was warranted.
Much like the term “sex” in Title VII, “sex” in section 1557 has been the subject of much disagreement among judges. Several other federal district courts have disagreed with Judge O’Connor’s interpretation, holding that the rule did apply to transgender individuals and termination of pregnancy. Thus, it may be the case that Franciscan Alliance will be resolved only after the Supreme Court announces its decision in Harris Funeral Homesnext year.