On April 29, 2024, the Fourth Circuit, sitting en banc, affirmed district court findings that coverage exclusions of gender-affirming care for the treatment of gender dysphoria violated both the 14th Amendment’s Equal Protection Clause and Section 1557 of the ACA, which in part prohibits discrimination in coverage based on sex.

The Fourth Circuit’s decision regarded two cases. In the first, the trial court found in favor of transgender North Carolina and West Virginia state employees who sued those states’ health plans for their exclusions of “treatment or studies leading to or in connection with sex changes or modifications and related care” on constitutional grounds, finding that these exclusions violated the Equal Protection Clause of the 14th Amendment. In the second, the trial court found in favor of transgender West Virginia Medicaid recipients who sued that state’s Medicaid program for its exclusion of gender-affirming surgery (called “transsexual surgery” by the program), finding that this exclusion violated both the Equal Protection Clause and the nondiscrimination provisions of Section 1557 of the ACA. (For additional information regarding the scope of Section 1557, please see our article in this edition of Compliance Corner.)

The defendant state programs appealed these decisions and the Fourth Circuit affirmed both district court rulings that the exclusions discriminate based on sex, with specific reference to the district court’s observation that these exclusions “cannot be applied ‘without referencing sex’.”

The court also endorsed the trial court’s application of the Supreme Court’s holding in Bostock v. Clayton County, which held that transgender individuals are protected by Title VII of the Civil Rights Act. The defendant states argued that it was not appropriate to extend Bostock – which regarded employment discrimination against transgender individuals – to claims of discriminatory coverage by health plans. The Fourth Circuit disagreed, observing that “there is nothing in Bostock to suggest the holding was that narrow.”

Notably, the Fourth Circuit’s decision was not joined by six of the court’s 14 judges, who wrote or joined dissents that, taken together with the majority opinion, broadly reflect the current national divide on these issues. The 39 amici briefs filed by 38 states and the District of Columbia, 21 of which were filed in support of the defendant state plans and 18 of which were filed in support of the plaintiffs, also illustrate this divide.

As this case demonstrates, coverage exclusions for gender-affirming care and surgery are being closely examined by the courts. It is widely anticipated that the Supreme Court will weigh in on this issue at some point in the future, though it has not yet expressed an intention to do so. In the meantime, employers and group health plans that want to exclude gender-affirming coverage for their employees and their families should consult with legal counsel regarding the potential ramifications of that decision.

Fourth Circuit Opinion No. 22-1721 »