A federal judge has denied North Carolina officials’ request to dismiss a lawsuit challenging the state’s blanket exclusion of transition-related health care in its state employee health insurance plan.

The lawsuit, Kadel et. al. v. Folwell et. al., was filed last year by Lambda Legal and Transgender Legal Defense and Education Fund on behalf of several current and former state employees and their children, who were denied coverage for hormones or gender confirmation surgery under the exclusion.

In 2016, an independent consulting company had advised state officials that the exclusion should be removed to comply with the Affordable Care Act’s nondiscrimination mandate. In 2017, the state removed the exclusion from the North Carolina State Health Plan.

But just a year later, newly-elected State Treasurer Dale Folwell delivered on a campaign promise to eliminate coverage for transition-related care and reinstated the blanket exclusion.

The seven plaintiffs in the lawsuit are: Max Kadel, a transgender man employee of the University of North Carolina at Chapel Hill; Julia McKeown, a transgender woman who teaches at North Carolina State University; Jason Fleck, an employee of the University of North Carolina at Greensboro, and his transgender son, Connor; Michael D. Bunting, Jr., retired employee of the University of North Carolina at Chapel Hill and former Associate Athletic Director for Facility Planning and Management, and his transgender son, C.B.; and Sam Silvaine, a former North Carolina State University employee with a male affirmed sex.

All were denied coverage for treatments for gender dysphoria that had been deemed “medically necessary” by their primary health care providers and were forced to either forego the recommended treatments or pay out of pocket to cover their costs. Enlisting the help of Lambda Legal and TLDEF, they sued the state and several state universities in March 2019. 

The lawsuit argues that the exclusion unlawfully discriminates against the plaintiffs specifically, and transgender individuals in general, both on the basis of sex and transgender status, in violation of the Equal Protection Clause of the U.S. Constitution, Title IX of the Education Amendments of 1972, and the nondiscrimination provision of the Affordable Care Act.

In response, the defendants asked that the lawsuit be dismissed. The University of North Carolina at Chapel Hill, North Carolina State University, and the University of North Carolina at Greensboro argued that the court should reject the plaintiff’s sex discrimination claim under Title IX. Folwell, the North Carolina State Health Plan for Teachers and State Employees, and its administrator, Dee Jones, on the other hand, argued that the court should dismiss the plaintiffs’ claims under the Equal Protection Clause and the Affordable Care Act.

Related: North Carolina state employees sue over health insurance exclusion for transgender care

But U.S. District Judge Loretta Biggs, of the Middle District of North Carolina, denied the motions to dismiss, finding that the exclusion does indeed discriminate against the plaintiffs in violation of the contested statutes.

“By denying coverage for gender-confirming treatment, the Exclusion tethers Plaintiffs to sex stereotypes which, as a matter of medical necessity, they seek to reject,” Biggs wrote, rejecting the motion to dismiss the Title IX claim. “The Exclusion also discriminates on the basis of natal sex — that is, the sex one was assigned at birth — by denying equal access to certain medical procedures, depending on whether an individual’s assigned sex is male or female.”

Regarding the ACA claim, Biggs wrote: “[C]ourts across the country have acknowledged for decades that sex discrimination can encompass discrimination against transgender plaintiffs. Further, as a general matter, ‘statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils.’ … [B]ecause Plaintiffs have plausibly alleged a claim of sex discrimination under Title IX, they have likewise succeeded in stating a plausible claim of discrimination under Section 1557.”

Regarding the Equal Protection Clause, Biggs added: “Discrimination is not always obvious. A policy may appear facially neutral, but nonetheless be discriminatory by design or applied in a discriminatory fashion. … Plaintiffs argue that that is the case here, … and the Court agrees. … The characteristics of sex and gender are directly implicated; it is impossible to refer to the Exclusion without referring to them. … In short, the Exclusion facially discriminates on the basis of gender, and heightened scrutiny applies.”

See also: Transgender sheriff’s deputy sues Georgia county over health insurance exclusion

Lawyers for the plaintiffs celebrated Biggs’ ruling and expressed hope that they would eventually prevail in having the exclusion overturned.

“Today we are one step closer to justice and ensuring that North Carolina stops depriving transgender employees and family members access to essential health care services,” Tara Borelli, counsel at Lambda Legal, said in a statement. “We are pleased that the court recognized that this exclusion is sex discrimination, plain and simple, which ensures that the plaintiffs will get to have their day in court.”

“I hope this decision from the courts prompts North Carolina state officials to open their eyes to the fact that denying transgender employees and their family members access to health care just because they are transgender is discriminatory and unlawful,” Taylor Meredith Brown, former Lambda Legal counsel in the lawsuit.

“As a transgender woman, born and raised in North Carolina, and an alumna of UNC-Chapel Hill, this kind of targeted discrimination is shameful to me personally and does not reflect the true values of the state of North Carolina nor those of North Carolinians,” Brown added. “Access to health care for transgender people is life-saving and is medically-necessary: denying it is not only cruel but heightens vulnerability to potentially deadly healthcare outcomes for transgender people. It is time for North Carolina to reconsider its position, legally and morally, and recognize they are fighting a losing battle.”

All mainstream medical associations, including the American Medical Association and the American Psychological Association, have recognized that transition-related care can be medically necessary, with many calling for an end to exclusions similar to the one in North Carolina’s state employee insurance plan.

“We commend the court for denying North Carolina’s attempt to dismiss this important lawsuit on behalf of transgender state employees and their families,” Andy Marra, the executive director of TLDEF, said in a statement. “North Carolina has failed its transgender employees and their families who, like all people, have pressing health needs at certain times in their lives. Especially now, it is vital to listen to doctors and not spread misinformation or rely on junk science.”

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