On October 1, 2022, the U.S. District Court for the Northern District of Texas, in Texas v. EEOC, et al., invalidated U.S. Department of Health and Human Services (HHS) guidance that prohibited, as discriminatory, the denial of gender affirming care for minors. The HHS guidance, applicable only to entities subject to Section 1557 of the Affordable Care Act (ACA) (see “Comment,” below), was issued in direct response to a Texas gubernatorial order directing the state’s child welfare agency to investigate incidents of sex change procedures performed on minors. Texas sued to invalidate the HHS guidance, contending that it is “arbitrary and capricious”— that is, it improperly expands upon settled law, as set forth by the U.S. Supreme Court’s 2020 decision in Bostock v. Clayton County.

COMMENT: The District Court’s decision affects only health programs or activities that are subject to Section 1557 of the ACA (“covered entities”). Such entities generally include (i) any health program or activity that receives HHS funding, in whole or in part; (ii) any program or activity administered under Title I of the ACA; and (iii) Federal and State Health Insurance Marketplace participants (in other words, any health plan or policy offered through an ACA-related Exchange). Importantly, the decision only applies to employers who principally engaged in the business of providing healthcare and who receive federal financial assistance from HHS; accordingly, private employers offering health insurance to their employees are generally not subject to Section 1557 of ACA and, therefore, are not affected by the Texas decision.

Background – Section 1557 Nondiscrimination Provisions.

The ACA, passed in 2012, contains Section 1557, which sets forth nondiscrimination provisions generally applicable to the health programs or activities described in the “Comment,” above. Generally stated, Section 1557 makes it unlawful for such programs or activities to refuse to treat an individual, or to otherwise discriminate against the individual, based on race, color, national origin, sex (emphasis supplied), age or disability.

Bostock Decision and “Discrimination Based on Sex.”

In June 2020, the U.S. Supreme Court held in Bostock v. Clayton County that Title VII of the Civil Rights Act of 1964 covers employment discrimination protection based on sexual orientation. Specifically, the Court held that Title VII’s “because of sex” terminology prohibits both “sexual orientation” and “gender identity” discrimination in employment. The decision, considered by many to be a landmark for LGBQT rights, did not specifically address the ACA or health care generally; nevertheless, some legal analysts have seen the ruling as having an impact beyond employment, extending to areas such as education, health care, housing and financial credit.

Texas Gubernatorial Action and HHS Response.

In February 2022, in a controversial move, Texas Governor Greg Abbot directed the Texas Department of Family and Protective Services to investigate certain gender affirming care (specifically, incidents of sex change procedures performed on minors) as possible “child abuse.”

On March 2, 2022, the HHS specifically targeted Governor Abbot’s action by issuing the “HHS Notice and Guidance on Gender Affirming Care, Civil Rights, and Patient Privacy”. Relying on the Supreme Court’s Bostock decision, the HHS guidance explicitly prohibited federally funded entities from restricting an individual’s ability to receive, or limiting a health provider’s ability to provide, gender affirming care based on an individual’s sex assigned at birth or his or her gender identity.

Texas sued to invalidate the March 2022 HHS guidance, along with a related, earlier EEOC pronouncement.

Texas v. EEOC Result.

The Federal District Court held, among other things, that the March 2022 HHS guidance was “arbitrary and capricious” because it overstated Bostock’s holding by stretching protected class status (protected under Bostock) to encompass related conduct (not protected). Accordingly, as of the date of this article, the HHS guidance, along with the earlier EEOC guidance, is invalidated, pending any further action or appeals.

OBSERVATION: Although, as previously stated, the Texas decision is narrow in its applicability – not directly affecting private employers or private health insurance plans at this time – it warrants careful watching as a potential barometer of future developments in this arena, particularly given the veritable legal minefield concerning coverage of gender dysphoria treatments. As always, we will be keeping our eyes open for further developments along these lines, and will keep you informed of important changes or events that may affect you.

DISCLAIMER: This article is intended only as a brief overview of Texas v. EEOC and its impact upon health programs or activities subject to Section 1557 of the ACA. This article is not intended to address the details of the ACA (including Section 1557), Bostock v. Clayton County, gender discrimination, gender affirming care, or similar topics. As always, please consult your own employee benefits attorney or professional advisor for individualized advice concerning your own health and welfare plan.


The information and content contained in this blog post are for general informational purposes only, and does not, and is not intended to, constitute legal advice. As always, for specific questions concerning your health and welfare plan, or for help in operating your plan during the current COVID-19 crisis, please consult your own ERISA attorney or professional advisor.

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