An Iowa trial judge has ruled that a state regulation prohibiting Medicaid coverage for sex reassignment surgery violates the state’s Civil Rights Act as well as the State Constitution’s equal protection requirement.
Ruling on June 6 on appeals by two transgender women denied preclearance for the procedures, Polk County District Judge Arthur E. Gamble in Des Moines rejected the state’s argument that the public accommodations law is inapplicable.
Iowa has a long history with this issue. In the 1970s, a transgender woman appealed a denial of benefits for sex reassignment surgery in federal court, winning a ruling from a district court and, in 1980, from the Eighth Circuit Court of Appeals, which found that under the federal Medicaid statute, as then written, such surgery was covered as medically necessary in-patient hospital services.
The federal Medicaid program subsequently adopted policy provisions disavowing the Eighth Circuit’s approach, relieving state Medicaid programs from any obligation to cover sex reassignment procedures. During the Obama administration, the agency backed away from that position, taking a neutral stance on the requirement facings states. The Affordable Care Act, however, which prohibits sex discrimination by health care providers, might be construed to require such coverage. But the Trump administration, contrary to findings by federal agencies during the Obama years, takes the position that gender identity discrimination is not covered under provisions barring sex discrimination.
Meanwhile in Iowa, the state Department of Human Services (DHS), ruling in 1991 on a similar claim, held that the state’s Medicaid regulations required coverage. That finding prompted the state to take steps to change the language of those regulations. In 1995, DHS adopted language explicitly excluding from coverage “procedures related to transsexualism, hermaphroditism, gender identity disorders, or body dysmorphic disorders.” Also excluded were “breast augmentation mammoplasty, surgical insertion of prosthetic testicles, penile implant procedures, and surgeries for the purpose of sex reassignment.” All of this was included as part of a general ban on cosmetic procedures “performed primarily for psychological reasons or as a result of the aging process.”
DHS’ position in 1995, reiterated in this lawsuit, is that gender identity is entirely a psychological issue. The state has never modified that approach to take account of the changing medical consensus on gender identity and the role of sex reassignment procedures in treating gender dysphoria.
When EerieAnna Good, and Carol Ann Beal appealed the denial of pre-clearance for their procedures, their attorneys, Rita Bettis, legal director at the ACLU of Iowa, and Seth Horvath from Nixon Peabody’s Chicago office, retained the services of a distinguished expert, Dr. Randi Ettner, an author of several books on gender identity issues, who testified in detail about the current medical consensus about gender identity and the appropriate health care for those diagnosed with gender dysphoria. That consensus goes well beyond psychology in identifying gender identity as a deeply rooted trait, largely impervious to change, with a biological basis and involving fetal development, hormones, and genes. This perspective is reflected in more up-to-date standard medical reference sources.
DHS did not produce an expert witness, instead resting on its quarter-century-old sources.
Judge Gamble was not convinced by the state’s argument, finding Ettner’s testimony convincing and consistent with the medical literature. The state agency, he found, has failed to keep up with the times and the basis of its 1995 regulations no longer enjoys professional acceptance.
The state tried to argue that the Iowa Civil Rights Act, which was amended several years ago to add “gender identity” to the list of forbidden grounds of discrimination in public accommodations, did not apply. Medicaid, argued the state, is not a “public accommodation.”
Gamble decided the state was mischaracterizing that issue. Medicaid is a service, overseen by DHS and provided in Iowa through contracts with private managed care organizations. DHS, as a “unit of government,” he found, is clearly a “public accommodation,” as are the private contractors working with the agency. By refusing to authorize the procedures Good and Beal sought under Medicaid, DHS, a public accommodation, was denying a service to Good and Beal. That denial, the court concluded, was based on their gender identity, with Gamble noting how the 1995 regulations explicitly targeted transgender people for discrimination.
The plaintiffs had also claimed sex discrimination, but Gamble said that an exiting State Supreme Court ruling precluded him from treating a gender identity discrimination claim as a sex discrimination claim, though he acknowledged that many federal courts of appeals have now agreed that gender identity claims are covered by laws banning sex discrimination.
In evaluating the plaintiffs’ state constitutional equal protection claims, Gamble had to determine the level of judicial scrutiny warranted by gender identity discrimination claims against a state agency, a question never before addressed by the Iowa courts. In 2009, the Iowa Supreme Court unanimously ruled in favor of marriage equality, concluding that discrimination against gay people was subject to heightened scrutiny, placing a significant burden on the state to justify excluding same-sex couples from marriage. Gamble found many parallels to the analysis of sexual orientation and gender identity claims, and concluded that heightened scrutiny should apply to Good and Beal’s claims, as well.
Using that standard, Gamble found, the state utterly failed to meet its burden of proof, resting its arguments on an outmoded misunderstanding of gender identity and failing to counter the plaintiffs’ expert testimony. As a hedge against appeals court review, Gamble also examined the issue applying a less demanding standard, asking whether the state policy had any rational basis, but the state fared no better. The plaintiffs, he found, had “negated every reasonable basis for the classification that might support disparate treatment” of them. Agreeing with Good and Beal, Gamble found that enforcing the state’s policy was an “arbitrary or capricious” administrative action that deprived them of their equal rights.
DHS, Gamble concluded, “acted in the face of evidence upon which there is no room for difference of opinion among reasonable minds. The exclusion of coverage was unreasonable, arbitrary, and capricious.”
Gamble also rejected DHS’s plea that it be given time to develop a new regulation and that the court’s order not be immediately binding or have any broader effect.
Iowa’s attorney general did not comment in the immediate aftermath of the ruling, which could be appealed.
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