Since 2019, North Carolina State Treasurer Dale Folwell has been engaged in a lawsuit over whether the North Carolina State Employees Health Plan (NCSHP) should cover controversial treatments such as hormone therapy and gender reassignment surgeries. Under Folwell’s leadership, the plan has excluded this coverage, but on Monday, federal District Court Judge Loretta C. Biggs ruled that the health plan’s limitations on gender-dysphoria-related medical procedures unlawfully discriminates against transgender persons, violating both the Equal Protection Clause of the 14th Amendment and the Affordable Care Act. In effect, this decision will require the NCSHP to cover “medically necessary services of treatment for gender dysphoria,” which include counseling services, hormone therapies, and elective surgical procedures related to genital reconstruction.
The case, Kadel v. Folwell, began in 2019 when a group of North Carolina public employees, some of whom identify as transgender and others who are family members of transgender-identifying individuals, filed suit. At that time, the NCSHP did not cover “psychological assessment and psychotherapy treatment in conjunction with proposed gender transformation” or “treatment or studies leading to or in connection with sex changes or modification and related care.” The plaintiffs alleged that the State’s “categorical exclusion” of various transgender therapies constituted discrimination “on the basis of sex and transgender status in violation of the Equal Protection Clause and the Affordable Care Act.”
Following the initial announcement of the lawsuit, Treasurer Folwell and the State sought a dismissal based on the plaintiffs’ lack of standing, but the Court denied the motion. When an appeal was filed in 2021, the Fourth Circuit affirmed the District Court’s decision. Folwell and the State then appealed to the U.S. Supreme Court, but the High Court refused to hear the case, allowing the suit to move forward on the district court level.
In the Defense’s argument, Folwell and a number of medical and legal experts asserted that the plan does not discriminate “based on sex or transgender status but based on diagnosis,” meaning that a treatment’s necessity is judged on a case-to-case basis. The judge rejected this argument, declaring that a different interpretation of the rule’s intent does not prevent it from being discriminatory on its face.
The State also argued that the gender-reassignment-related treatments are not effective and that the exclusion of these services limits healthcare costs. The defense brought in a number of expert witnesses including licensed physicians, psychiatrists, and surgeons. However, large portions of the testimonies of these experts were declared inadmissible, because the judge said these postulations had not been “accepted by the relevant scientific community.” In the conclusion of the decision, the judge labeled the inadmissible testimony as an “attempt to create scientific controversy in this uniform agreement through experts who mix their scientific analysis with hypothetical speculation and political hyperbole,” thereby invalidating much of the Defense’s expert testimony on gender dysphoria.
In Monday’s action, the court ruled in favor of the plaintiffs on both the Equal Protection and Title VII claims and imposed a permanent injunction against the NCSHP from “enforcing the plan’s exclusions.” Additionally, the judge ordered that regulators return the plan to its 2017 version in which “defendants covered medically necessary services for the treatment of gender dysphoria.”
The state could appeal this ruling.