A Mississippi federal district court has issued a nationwide injunction and stay on some of the new federal regulations concerning Affordable Care Act (ACA) Section 1557, which prohibits discrimination in specified health programs and activities based on certain protected characteristics. The regulations include a new and expanded definition of sex discrimination. The case is Tennessee v. Becerra, 2024 WL 3283887 (S.D. Miss. 2024).
In a separate case, a Texas federal district court has stayed all provisions of the new regulations in Texas and Montana. That case is Texas v. Becerra, 2024 WL 3297147 (E.D. Tex. 2024).
The U.S. Department of Health and Human Services (HHS) issued new regulations in May 2024, which incorporated Title IX rules by references into Section 1557. The regulations specifically provide that discrimination “on the basis of sex” includes discrimination based on “sexual orientation, gender identity, sex characteristics, pregnancy, and sex stereotypes.”
Several states filed lawsuits to block the HHS from enforcing the regulations before they were scheduled to go into effect on July 5, 2024, claiming that the regulations violated the Administrative Procedure Act (APA). In response, the HHS argued that its regulations clarified the definition of sex discrimination based on the U.S. Supreme Court’s decision in Bostock v. Clayton County, 590 U.S. 644 (U.S. 2020). Under the Bostock ruling, employers violate Title VII prohibitions on employment discrimination if they discharge employees solely because they are gay or transgender.
In the two federal district court cases, both courts declined to defer to the HHS interpretation of Section 1557 as outlined in its regulations. In their decisions, the courts relied on the U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raimundo, 2024 WL 3208360 (U.S. 2024). However, the two courts used distinct reasonings to reach their differing conclusions.
The Mississippi court found that the HHS exceeded its authority when it applied the Bostock decision to interpret the definition of discrimination “on the basis of sex” in Title IX. As a result, that Court issued a nationwide injunction and stayed only those parts of the regulations that interpreted “on the basis of sex” as including gender identity.
Conversely, the Texas court found that HHS’s improper interpretation of “on the basis of sex” in Title IX negatively impacted all the regulations. As a result, the Court could not separate any non-offending regulations from the offending regulations and, therefore, stayed the regulations in their entirety for entities affected by Section 1557 in Texas and Montana.
The takeaway from these court decisions is that while Section 1557 of the ACA and the 2020 regulations remain in effect, portions of the 2024 regulations – those that exclusively relate to discrimination based on gender identity – are not in effect nationwide. Furthermore, the 2024 regulations are not in effect in Texas and Montana. Employers must watch the outcome of this continued litigation closely for further developments.
