Federal Court Grants Injunction to Religiously-Affiliated Healthcare Providers in Litigation Under Section 1557 of ACA

Introduction

Recent litigation has once again illustrated the ways in which religious beliefs and bioethics can collide under Section 1557 of the Affordable Care Act, which prohibits discrimination in healthcare by entities that accept federal financial assistance. This time, the United States District Court for the Northern District of North Dakota granted permanent injunctive relief (pursuant to Religious Freedom Restoration Act) to a coalition of entities affiliated with the Catholic Church to relieve them of any obligation to provide or cover gender-transition procedures. See Religious Sisters of Mercy v. Azar, No. 3:16-CV-00386, 2021 WL 191009, at *1 (D.N.D. Jan. 19, 2021).

Summary of the Ruling

The Court’s order begins with an excellent overview of Section 1557’s novel prohibition on sex discrimination in healthcare, including its relationship to Title IX and the various regulatory actions and related litigation concerning the interpretation of Section 1557’s prohibition on sex discrimination in healthcare.

This overview is lengthy, but concludes as it must with a review of the U.S. Supreme Court’s opinion in Bostock—which held that, under Title VII, it is “impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex” 140 S. Ct. at 1744—and the litigation under Section 1557 that followed the Bostock ruling.

In summary, although litigation is ongoing in several related cases, federal courts following Bostsock have reinstated the Obama Administration’s interpretation of “on the basis of sex” under Section 1557 to include gender identity discrimination and sex stereotyping discrimination.

The plaintiff-entities in the litigation before the Northern District of North Dakota included religiously-affiliated non-profit health clinics, which, according to the Court “believe that performing gender-transition, abortion, and sterilization services would violate their religious beliefs regarding human sexuality and procreation.”

Thus, after a lengthy analysis of issues related to standing, judicial comity, ripeness, and mootness, the Court commenced with its review of the plaintiffs’ Religious Freedom Restoration Act claim on the merits. In doing so, the Court ruled that the prevailing interpretation of Section 1557 following Bostock substantially burdened the plaintiffs’ exercise of religion “by threatening to penalize them for adhering to their beliefs). The Court also found that HHS had failed to satisfy the “least restrictive means” test.

The Court, therefore, ruled in favor of the religiously-affiliated healthcare providers and issued an injunction barring HHS from forcing the religious healthcare entities to perform or provide insurance coverage for gender-transition procedures.

Conclusion

It is fair to expect litigation of this type to continue. Hospitals and health systems should therefore carefully consider the impact of litigation like this on their systems, especially if they include religiously-affiliated healthcare entities. Hospitals and health systems should also consider the individual conscience protections afforded to individual healthcare providers when formulating policies and procedures around gender-transition procedures, abortions, or sterilization procedures.