RALEIGH
Transgender state employees can sue North Carolina for banning the use of state health insurance to pay for transition care, treatment and surgery, a federal appeals court said Wednesday in upholding a lower court’s ruling.
Six state employees filed the lawsuit in 2019 accusing the North Carolina State Health Plan of discrimination against them or their children.
Attorneys for the state argued that it had protection from being sued under the legal doctrine known as sovereign immunity, but judges ruled that that immunity was waived when North Carolina used federal funds on the state’s health plan but did not uphold the requirements of the Affordable Care Act.
Chief Appellate Judge Roger Gregory and Judge Albert Diaz wrote the majority opinion released Wednesday.
Judge G. Steven Agee wrote a 39-page opinion disagreeing with his colleagues on the 4th Circuit U.S. Court of Appeals and inviting the U.S. Supreme Court to overrule them.
“The NCSHP’s sovereign immunity from suit should have been confirmed and the case dismissed,” Agee wrote. “The Supreme Court should proceed expeditiously to correct the constitutional error here.”
This argument over coverage began in 2019, a year after Treasurer Dale Folwell, a Republican, supported rescinding the coverage from the state’s health insurance policies. Folwell oversees policies for more than 700,000 of the state’s employees and retirees.
Folwell learned about the decision from The News & Observer late Wednesday afternoon but said he agrees that “the Supreme Court should proceed expeditiously to correct the constitutional error of this ruling.”
“Two other federal courts came to a different conclusion which verifies the legal uncertainty of this issue,” Folwell said. “The question as to whether the ACA should force taxpayers to pay for sex transition operations has never been greater.”
Folwell’s decision not to pay for transitioning differed from that of his predecessor, Janet Cowell, who had backed adding the coverage for state employees and retirees at the height of the controversy over House Bill 2. Former Republican governor and current U.S. Senate candidate Pat McCrory signed HB2 into law requiring transgender people in schools and other government buildings use the bathroom of the gender they were assigned at birth.
Folwell was sworn into office a year after Cowell began the coverage.
The appellate judges quote Folwell pledging then that until the courts, legislature, or voters required him to spend taxpayers’ money on what he called sex change operations, he would not remove the exclusion.
The exclusion began under the 2018 plan.
The judges recognized that this was a departure from past policies and that the Affordable Care Act — President Barack Obama’s health care law — prohibits “any health program or activity” that receives federal funds from discriminating against individuals on any grounds prohibited by various federal laws, including Title IX dealing with gender discrimination.
The judges also quoted a 2016 report that said if North Carolina excluded gender-affirming care from its policies it risked millions of dollars in federal funding and discrimination lawsuits for noncompliance. Providing gender-affirming care is estimated to cost up to 0.027% of the state’s $3.2 billion in premiums, according to the court records, and the judges agreed the cost to not provide it would far exceed that.
The judges also said gender-affirming care is medically necessary.
“People identify as transgender when their gender identity — their inherent and deeply felt sense of gender — does not align with the sex they were assigned at birth,” Gregory wrote. “We have previously noted what should by now be uncontroversial: ‘Just like being cisgender, being transgender is natural and is not a choice.’ Nor is someone’s transgender status a ‘psychiatric condition’ that implies any impairment in judgment, stability, reliability, or gender social or vocational capabilities.”
The two judges recognized that the difference between a person’s gender identity and their body’s sexual characteristics can result in what is known as gender dysphoria and lead to clinical stress and discomfort that, without treatment, could lead to severe anxiety, depression and suicide.
The judges said that it is not elective and is medically safe, effective and necessary for people suffering from gender dysphoria to have the medical care they need available.
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