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4th Circuit Rules NC State Health Plan Must Cover Transgender Treatments

Doctors performing surgery in scrubs

The Fourth Circuit Court of Appeals has ruled that the North Carolina State Health Plan must provide coverage for transgender “treatments,” asserting that the Plan’s ban on such procedures violates the Equal Protection Clause. North Carolina State Treasurer Dale Folwell was named as the lead defendant in the case since the NC State Health Plan falls under his purview as Treasurer. John Knepper, the attorney representing Folwell and the State Health Plan, argued that the Plan did not discriminate against transgender-identifying individuals because the treatments at issue were not available to anyone through the plan. The majority of the court did not agree.

Judge Roger L. Gregory wrote for the majority opinion, “Do healthcare plans that cover medically necessary treatments for certain diagnoses but bar coverage of those same medically necessary treatments for a diagnosis unique to transgender patients violate either the Equal Protection Clause or other provisions of federal law? We hold that they do. . .” He continued, “. . .[W]e hold that the coverage exclusions facially discriminate on the basis of sex and gender identity, and are not substantially related to an important government interest. . .” The decision split the court 8-6 with all Democrat-appointed judges ruling against the Plan and all Republican-appointed judges dissenting.

In dissent, Judge Julius N. Richardson wrote, “Today’s result is a victory for plaintiffs but a defeat for the rule of law. To reach its holding, the majority misconstrues the challenged policies and steamrolls over the careful distinctions embedded in Equal Protection doctrine. It finds unlawful discrimination where there is none, stripping the states of their prerogative to create health-insurance and Medicaid systems that serve the best interests of their overall populations.”

In support of Folwell and the State Health Plan, twenty-one states filed a friend-of-the-court brief in May of 2023. The brief was in response to previous US District Court rulings against both North Carolina and West Virginia, forcing them to fund “transgender procedures.” In it, the states stressed the importance of preserving the rights of individual states to make decisions “in areas fraught with medical and scientific uncertainties.” The brief cited unsettled science and Europe’s growing declarations of transgender procedures being experimental, deficient in evidentiary support, and having risks that outweigh possible benefits.

Also in dissent, Judge A. Marvin Quattlebaum, Jr. questioned the majority opinion’s view of North Carolina’s obligation to “trans-treatments,” saying, “In order to conclude that no legitimate, non-discriminatory reasons support denying coverage for certain treatments of gender dysphoria, the majority abandons settled evidentiary principles. Properly accounting for the record, questions about the medical necessity and efficacy of such treatments linger. And those lingering questions support the states’ coverage decisions.”

In a prepared statement following the ruling, Treasurer Folwell stated, “It is our mission to protect the Plan for our more than 750,000 current members, as well as future members. Key to achieving this mission is protecting the Plan’s fiscal sustainability; simply, the Plan must continue to exist for our current and future members. However, due to unabated and rapidly increasing health care costs, funding that has not increased at the same rate, and the aging and declining health of the Plan member pool (due in part to the inability to attract younger dependents and families into the SHP because of high family premiums), the Plan is facing the real risk of looming insolvency. Accordingly, the Plan cannot be everything for everyone — our priority is to provide coverage that does the most good for the highest number of people with the finite resources we have available.”

“Protecting the Plan for our current and future members has always been what this case has been about. So, clearly, we disagree with the Fourth Circuit’s majority opinion. Untethered to the reality of the Plan’s fiscal situation, the majority opinion opens the way for any dissatisfied individual to override the Plan’s reasoned and responsible decisions and drive the Plan towards collapse.

“As I have said consistently, I respect the rule of law and, therefore, will continue to follow every legal avenue available to protect the Plan and its members,” Folwell concluded.


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