Boston Alliance of Gay, Lesbian, Bisexual and Transgender Youth (BAGLY) v. United States Department of Health and Human Services

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

___________________________________

)

BOSTON ALLIANCE OF GAY, LESBIAN, )

BISEXUAL AND TRANSGENDER YOUTH )

(BAGLY); CALLEN-LORDE COMMUNITY )

HEALTH CENTER; CAMPAIGN FOR )

SOUTHERN EQUALITY; DARREN LAZOR; )

EQUALITY CALIFORNIA; FENWAY HEALTH;)

INDIGENOUS WOMEN RISING; NO/AIDS )

TASK FORCE (D/B/A CRESCENTCARE); )

AND TRANSGENDER EMERGENCY FUND OF )

MASSACHUSETTS, )

)

Plaintiffs, )

) Civil Action

v. ) No. 20-11297-PBS

)

UNITED STATES DEPARTMENT OF HEALTH )

AND HUMAN SERVICES; XAVIER BECERRA,)

IN HIS OFFICIAL CAPACITY AS )

SECRETARY OF THE U.S. DEPARTMENT )

OF HEALTH AND HUMAN SERVICES; )

ROBINSUE FROHBOESE, IN HER OFFICIAL)

CAPACITY AS ACTING DIRECTOR, OFFICE)

FOR CIVIL RIGHTS, U.S. DEPARTMENT )

OF HEALTH AND HUMAN SERVICES; AND )

CHIQUITA BROOKS-LASURE, IN HER )

OFFICIAL CAPACITY AS ADMINISTRATOR )

FOR THE CENTERS FOR MEDICARE AND )

MEDICAID SERVICES, U.S. DEPARTMENT )

OF HEALTH AND HUMAN SERVICES, )

)

Defendants. )

______________________________ )

MEMORANDUM AND ORDER

August 18, 2021

Saris, D.J.

INTRODUCTION

Plaintiffs challenge a final rule promulgated by the United

States Department of Health and Human Services (“HHS”) entitled

Nondiscrimination in Health and Health Education Programs or

Activities, 85 Fed. Reg. 37,160 (June 19, 2020) (“2020 Rule”),

which implements Section 1557 of the Patient Protection and

Affordable Care Act, 42 U.S.C. § 18116. Plaintiffs include three

private healthcare facilities that serve LGBTQ+ people, one

membership organization, four advocacy organizations that provide

services to the LGBTQ+ community, a Native-led reproductive

justice collective, and a transgender man. They allege that the

2020 Rule violates the Administrative Procedure Act and the

Constitution.1

Among other things, Plaintiffs contend that the 2020 Rule

arbitrarily repealed provisions of the 2016 Rule including the

definition of “on the basis of sex,” the prohibition of categorical

coverage exclusions for transgender-related care, the requirement

1 Plaintiffs bring claims for violation of 5 U.S.C. § 706(2)(A)

(agency action “not in accordance with law”) and 5 U.S.C.

§ 706(2)(C) (agency action “in excess of statutory jurisdiction,

authority, or limitations, or short of statutory right”)(Count I);

violation of 5 U.S.C. § 706(2)(A) (agency action that is

“arbitrary, capricious, [or] an abuse of discretion”) (Count II);

violation of 5 U.S.C. § 706(2)(B) (agency action “contrary to

constitutional right, power, privilege, or immunity”) and the

equal protection component of the Fifth Amendment’s Due Process

Clause (Count III); and violation of 5 U.S.C. § 706(2)(A)

(enforcement policy “not in accordance with law”)(Count IV).

that covered entities “treat individuals consistent with their

gender identity,” the prohibition of “association” discrimination,

and the specific requirement that covered entities provide certain

notices of prohibited discrimination and taglines indicating the

availability of language assistance services. Plaintiffs also

object to the 2020 Rule’s incorporation of Title IX’s religious

and abortion exemptions, the narrowing of the scope of covered

entities, and the change to the enforcement scheme. They challenge

many of these provisions in light of Bostock v. Clayton County,

140 S. Ct. 1731, 1747 (2020), which held that “discrimination based

on . . . transgender status necessarily entails discrimination

based on sex.” This decision was issued just after the Rule was

promulgated.

The Government now moves to dismiss all claims based on lack

of standing and ripeness. It also moves to dismiss Count III for

failure to state a claim.2 After hearing, the Court ALLOWS in part

and DENIES in part Defendants’ motion to dismiss (Dkt. 21). Some

of the plaintiffs have established organizational standing based

on economic injury caused by portions of the 2020 Rule (and

redressable by its vacatur) to challenge (1) the incorporation of

Title IX’s abortion exemption, (2) the narrowing of the scope of

2 Plaintiffs agreed not to press Count IV in light of HHS’s May

10, 2021 “Notification of Interpretation and Enforcement of

Section 1557 of the Affordable Care Act and Title IX of the

Education Amendments of 1972” (Dkt. 50).

covered entities, and (3) the elimination of the prohibition on

categorical coverage exclusions for care related to gender

transition. Plaintiffs lack standing to challenge the change to

the enforcement scheme, the elimination of the prohibition on

association discrimination, the elimination of the notice and

taglines requirements, and the conforming amendments to related

regulations because they have not adequately alleged an injury in

fact caused by those provisions.

FACTUAL BACKGROUND

I. The 2016 Rule

Congress enacted the Affordable Care Act (“ACA”) in 2010. 42

U.S.C. § 18116. The ACA contains a non-discrimination provision

known as § 1557, which states:

[A]n individual shall not, on the ground prohibited

under title VI of the Civil Rights Act of 1964 (42 U.S.C.

2000d et seq.) [“race, color, or national origin”],

title IX of the Education Amendments of 1972 (20 U.S.C.

1681 et seq.) [“sex”], the Age Discrimination Act of

1975 (42 U.S.C. 6101 et seq.) [“age”], or section 794 of

Title 29 [“disability”], be excluded from participation

in, be denied the benefits of, or be subjected to

discrimination under, any health program or activity,

any part of which is receiving Federal financial

assistance, including credits, subsidies, or contracts

of insurance, or under any program or activity that is

administered by an Executive Agency or any entity

established under this title (or amendments). The

enforcement mechanisms provided for and available under

such title VI, title IX, section 794, or such Age

Discrimination Act shall apply for purposes of

violations of this subsection.

Id. § 18116(a).

In 2016, HHS promulgated a final rule implementing § 1557.

Nondiscrimination in Health Programs and Activities, 81 Fed. Reg.

31,376 (May 18, 2016) (“2016 Rule”). Among other things, the 2016

Rule states that § 1557 applies to:

every health program or activity, any part of which

receives Federal financial assistance provided or made

available by [HHS]; every health program or activity

administered by [HHS]; and every health program or

activity administered by a Title I entity.

81 Fed. Reg. at 31,466 (formerly codified at 45 C.F.R. § 92.2(a)).

It defines “covered entity” as “(1) [a]n entity that operates a

health program or activity, any part of which received Federal

financial assistance; (2) [a]n entity established under Title I of

the ACA that administers a health program or activity; and (3)

[HHS].” Id. It defines discrimination “on the basis of sex” as

including “pregnancy, false pregnancy, termination of pregnancy,

or recovery therefrom, childbirth or related medical conditions,

sex stereotyping, and gender identity.” Id. at 31,467.

The 2016 Rule also specifically requires covered entities to

post notice of prohibited discrimination and taglines in at least

the top fifteen languages spoken by individuals with limited

English proficiency in that State in “conspicuous physical

locations where the entity interacts with the public” and in

significant communications that are not small-sized, and in at

least the top two languages in significant communications that are

small-sized. Id. at 31,469 (formerly codified at 45 C.F.R.

§ 92.8(f)-(g)); see also id. at 31,468 (defining taglines as “short

statements written in non-English languages that indicate the

availability of language assistance services free of charge”). It

prohibits covered entities providing health insurance from

“[h]av[ing] or implement[ing] a categorical coverage exclusion or

limitation for all health services related to gender transition.”

Id. at 31,472 (formerly codified at 45 C.F.R. § 92.207(b)(4)).

Under the Rule, a plaintiff bringing a claim under § 1557 can

invoke the enforcement mechanism from any of the referenced civil

rights statutes, regardless of the type of discrimination alleged.

Id. (formerly codified at 45 C.F.R. § 92.301(a)).

A Catholic hospital association, a Christian healthcare

professional association, and several states sued to enjoin

portions of the 2016 Rule. Franciscan Alliance, Inc. v. Becerra,

No. 16-cv-00108-O, 2021 WL 3492338 at *1–2 (N.D. Tex. Aug. 9,

2021). They alleged that the Rule’s prohibition of discrimination

on the basis of “termination of pregnancy” and “gender identity”

violated the APA and violated the Religious Freedom Restoration

Act (“RFRA”) as applied to the religious association plaintiffs.

Id. at *2. The court “vacated the 2016 Rule insofar as it defined

‘on the basis of sex’ to include gender identity and termination

of pregnancy.” Id. at *1. The Fifth Circuit later remanded to the

district court for further consideration in light of the 2020 Rule

and actions by the Biden Administration. Id. at *2. On August 9,

2021, based on the alleged RFRA violations, the district court

issued an Order “permanently enjoin[ing] HHS . . . from

interpreting or enforcing Section 1557 . . . or any implementing

regulations thereto against Plaintiffs, their current and future

members, and those acting in concert or participation with them

. . . in a manner that would require them to perform or provide

insurance coverage for gender-transition procedures or abortions.”

Id. at *12.

II. The 2020 Rule

The 2020 Rule substantially repeals the 2016 Rule. See 85

Fed. Reg. 37,160. Among other things, it removes the definition of

“on the basis of sex,” id. at 37,245, the prohibition of

categorical coverage exclusions for gender transition-related

care, id. at 37,247, the requirement that covered entities “treat

individuals consistent with their gender identity,” id., and the

specific requirement that covered entities provide certain notice

and taglines, id. at 37,204. It explicitly incorporates the

religious and abortion exemptions from Title IX. Id. at 37,243. It

also changes the scope of covered entities, stating that § 1557

applies to:

(1) [a]ny health program or activity, any part of which

is receiving Federal financial assistance (including

credits, subsidies, or contracts of insurance) provided

by [HHS]; (2) [a]ny program or activity administered by

[HHS] under Title I of the [ACA]; or (3) [a]ny program

or activity administered by any entity established under

such Title.

Id. at 37,244 (codified at 45 C.F.R. § 92.3(a)). The scope of

covered entities is restricted by the 2020 Rule’s definition of

“health program or activity.” Id. (codified at 45 C.F.R. § 92.3(b).

The 2020 Rule includes within that definition “all of the

operations of entities principally engaged in the business of

providing healthcare that receive Federal financial assistance as

described,” but it categorizes “an entity principally or otherwise

engaged in the business of providing health insurance” as not

“principally engaged in the business of providing healthcare.” Id.

at 37,244-37,245 (codified at 45 C.F.R. § 92.3(b)-(c)). It also

changes the § 1557 enforcement scheme to apply the enforcement

mechanism of only the referenced civil rights statute that

corresponds to the discrimination alleged. Id. 37,202, 37,245

(codified at 45 C.F.R. § 92.5(a)).

III. Challenges to the 2020 Rule

“Almost immediately [after Bostock], five cases sprung up

seeking to prevent enforcement of the 2020 Rule and to revive

various aspects of the 2016 Rule.” Religious Sisters of Mercy v.

Azar, No. 3:16-CV-00386, 2021 WL 191009, at *7 (D.N.D. Jan. 19,

2021), judgment entered sub nom. Religious Sisters of Mercy v.

Cochran, No. 3:16-CV-00386, 2021 WL 1574628 (D.N.D. Feb. 19, 2021).

There are now six cases challenging the 2020 Rule – three have

received rulings on standing and two are stayed without decision.

Whitman-Walker Clinic, Inc. v. U.S. Dep’t of Health & Hum. Servs.,

485 F. Supp. 3d 1, 64 (D.D.C. 2020) (ruling on standing and

enjoining portions of the 2020 Rule); Washington v. U.S. Dep’t of

Health & Hum. Servs., 482 F. Supp. 3d 1104, 1122 (W.D. Wash. 2020)

(ruling on standing); Walker v. Azar, 480 F. Supp. 3d 417, 427

(E.D.N.Y. 2020) (ruling on standing and enjoining portions of the

2020 Rule); Order Granting Unopposed Motion to Stay Proceedings,

New York v. U.S. Dep’t of Health & Hum. Servs., Case No. 1:20-cv-

05583 (S.D.N.Y. February 18, 2021), ECF No. 41 (stayed without

decision); Minute Order Granting ECF No. 18 Joint Motion to Stay,

Chinatown Service Center v. U.S. Dep’t of Health & Hum. Servs.,

No. 21-cv-00331 (D.D.C. May 27, 2021) (stayed without decision).

Two district courts have issued nationwide preliminary

injunctions enjoining Defendants from implementing some portions

of the 2020 Rule. See Walker, 480 F. Supp. 3d at 430 (enjoining

elimination of the 2016 Rule’s definition of “on the basis of sex,”

“sex stereotyping,” and “gender identity” in 45 C.F.R. § 92.4);

Walker v. Azar, Case No. 20-CV-2834 (FB) (SMG), 2020 WL 6363970,

at *4 (E.D.N.Y. Oct. 29, 2020) (enjoining repeal of 45 C.F.R.

§ 92.206, which requires healthcare providers to “treat

individuals consistent with their gender identity” and prohibits

them from “deny[ing] or limit[ing] health services that are

ordinarily or exclusively available to individuals of one sex, to

a transgender individual”); Whitman-Walker Clinic, 485 F. Supp. 3d

at 64 (enjoining removal of “sex stereotyping” from the definition

of “on the basis of sex” and incorporation of Title IX’s religious

exemption).

In light of the nationwide injunctions issued by sister

courts, this Court declines to address now Plaintiffs’ challenges

to the repeal of the definition of “on the basis of sex,” the

repeal of 45 C.F.R. § 92.206, and the incorporation of Title IX’s

religious exemption. See Abbott Labs v. Gardner, 387 U.S. 136, 155

(1967) (holding that a court may “in its discretion dismiss a

declaratory judgment or injunctive suit if the same issue is

pending in litigation elsewhere”); City of Bangor v. Citizens

Commc’ns Co., 532 F.3d 70, 99 (1st Cir. 2008) (“A district court

enjoys inherent power to ‘control the disposition of the causes on

its docket with economy of time and effort for itself, for counsel,

and for litigants.’”) (quoting Landis v. N. Am. Co., 299 U.S. 248,

254 (1936)).

Plaintiffs’ assert that confusion as to those provisions will

cause harm despite the nationwide injunctions. It is true that the

2016 Rule, its repeal by the 2020 Rule, President Biden’s Executive

Order (see below), and potentially cross-cutting injunctions have

created a difficult terrain to follow. This Court will only address

portions of the Rule not already enjoined by sister courts.

IV. Biden Administration Policies

On January 20, 2021, President Biden signed the Executive

Order on Preventing and Combating Discrimination on the Basis of

Gender Identity or Sexual Orientation. It states:

Under Bostock’s reasoning, laws that prohibit sex

discrimination—including Title IX of the Education

Amendments of 1972, as amended (20 U.S.C. 1681 et seq.)

. . . along with their respective implementing

regulations—prohibit discrimination on the basis of

gender identity or sexual orientation, so long as the

laws do not contain sufficient indications to the

contrary. . . .It is the policy of my Administration to

prevent and combat discrimination on the basis of gender

identity or sexual orientation, and to fully enforce

Title VII and other laws that prohibit discrimination on

the basis of gender identity or sexual orientation.

Exec. Order No. 13988, 86 Fed. Reg. 7023, 7023. The Executive Order

instructed agency heads to “review all existing . . . regulations

. . . that: (i) were promulgated or are administered by the agency

under Title VII or any other statute or regulation that prohibits

sex discrimination . . .; and (ii) are or may be inconsistent with

the policy set forth in . . . this order.” Id. at 7023–24.

On May 10, 2021, HHS issued a notice entitled “Notification

of Interpretation and Enforcement of Section 1557 of the Affordable

Care Act and Title IX of the Education Amendments of 1972.” It

states:

Consistent with the Supreme Court’s decision in Bostock

and Title IX, beginning today, [the Office of Civil

Rights] will interpret and enforce Section 1557’s

prohibition on discrimination on the basis of sex to

include: (1) discrimination on the basis of sexual

orientation; and (2) discrimination on the basis of

gender identity.

Dkt. 50 at 3. In so doing, “OCR will comply with [RFRA] and

all other legal requirements . . . [and] with all applicable

court orders.” Id.

V. Parties

Plaintiff Darren Lazor is a transgender man who lives in Ohio

and “regularly needs to access medical treatment, and uses health

insurance coverage.” Dkt. 18 ¶ 19. Mr. Lazor has experienced past

discrimination in healthcare based on his transgender status.

Plaintiffs Fenway Health, Callen-Lorde Community Health

Center, and NO/AIDS Task Force (d/b/a CrescentCare) are private

healthcare facilities that serve LGBTQ+ people. Fenway Health

serves more than 33,000 patients at its three Boston locations and

many more through its telehealth program. About 42% of its patient

population have a sexual orientation other than heterosexual and

about 12% are transgender. Callen-Lorde Community Health Center

serves nearly 18,000 patients at four New York City locations and

more through its telehealth program. It also provides consulting

services to other clinicians and has direct services programs.

About 80% of its patient population are lesbian, gay, bisexual, or

identify as having a sexual orientation other than heterosexual

and about 24% are transgender. CrescentCare serves almost 14,000

individuals at two New Orleans clinics and served over 20,000

people through its testing and prevention programs and more than

3,500 individuals through its supportive services programs in

2019. About 40% of its patient population have a sexual orientation

other than heterosexual and over 7% are transgender.

Plaintiffs Boston Alliance of Gay, Lesbian, Bisexual and

Transgender Youth (“BAGLY”), Campaign for Southern Equality,

Indigenous Women Rising (“IWR”), and Transgender Emergency Fund of

Massachusetts are organizations that provide services to LGBTQ+

people. BAGLY provides free healthcare and health education

services to LGBTQ+ youth. About 98.7% of its service population

are lesbian, gay, bisexual, transgender, non-binary, or have a

sexual orientation other than heterosexual, and about 60% are

transgender and/or non-binary. The Campaign for Southern Equality

is a nonprofit organization with about 8,000 members for advancing

LGBTQ+ civil rights. About 40% of its work focuses on LGBTQ+

persons’ access to healthcare.

IWR is a “Native-led and Native-centered reproductive justice

collective.” Dkt. 18 ¶ 61. It supports Indigenous people who become

pregnant in accessing healthcare, focusing on an abortion fund, a

midwifery fund, and a sex education program. It helps Indigenous

people pay for abortion care by providing clients with funds to

cover lodging, gas, food, childcare, and related travel expenses.

Many of the clients come from Native communities and live in rural

areas, usually on reservations. Most of the fund’s clients have

limited financial resources and are either uninsured or lack

insurance coverage for abortion.

Plaintiff Transgender Emergency Fund provides financial

assistance to transgender people for co-payments for hormone

replacement therapy, provides referrals, and assists in navigating

health insurance coverage denials. It serves exclusively

transgender and gender-nonconforming people.

Plaintiff Equality California is a nonprofit membership

organization that advocates for the health and equality of LGBTQ+

people. It has over 500,000 members throughout the United States,

the majority in California. Its programs include training for

healthcare providers on culturally competent care for LGBTQ+

patients.

Defendant United States Department of Health and Human

Services (“HHS”) is an “agency” under 5 U.S.C. § 551(1). Defendant

Xavier Becerra is named in his official capacity as Secretary of

HHS. Defendant Robinsue Frohboese is named in her official capacity

as Acting Director of the Office for Civil Rights at HHS. Defendant

Chiquita Brooks-Lasure is named in her official capacity as

Administrator for the Center for Medicare and Medicaid Services.

DISCUSSION

I. Jurisdiction

A. Legal Standard

Defendants argue that Plaintiffs lack standing to bring each

of their claims, and that their challenges to certain provisions

of the 2020 Rule are not ripe. Plaintiffs argue that Plaintiff

Darren Lazor, a transgender man, has individual standing and that

Plaintiff membership organizations and healthcare facilities have

both representational standing based on substantial risk of

discrimination against their LGBTQ+ members or patients and

organizational standing based on substantial risk of financial

harm and frustration of purpose.

Standing is a threshold question in every case; “if a party

lacks standing to bring a matter before the court, the court lacks

jurisdiction to decide the merits of the underlying case.” United

States v. AVX Corp., 962 F.2d 108, 113 (1st Cir. 1992).

“[P]laintiffs must demonstrate standing for each claim that they

press and for each form of relief that they seek.” TransUnion LLC

v. Ramirez, 141 S. Ct. 2190, 2208 (2021). So long as one plaintiff

has standing to bring each claim, the court need not address

whether other plaintiffs have standing. Massachusetts v. E.P.A.,

549 U.S. 497, 518 (2007) (citing Rumsfeld v. Forum for Academic

and Institutional Rights, Inc., 547 U.S. 47, 52 n.2 (2006)).

“A plaintiff has standing only if he can allege personal

injury fairly traceable to the defendant’s allegedly unlawful

conduct and likely to be redressed by the requested relief.”

California v. Texas, 141 S. Ct. 2104, 2113 (2021) (cleaned up).

The plaintiff must show that the injury is “certainly impending”

or “there is a substantial risk that the harm will occur.” Susan

B. Anthony List v. Driehaus, 573 U.S. 149, 158 (2014) (cleaned

up). “[W]here a causal relation between injury and challenged

action depends upon the decision of an independent third party

. . . the plaintiff must show at the least that third parties will

likely react in predictable ways.” California v. Texas, 141 S. Ct.

at 2117 (cleaned up).

Where an organization brings a claim on its own behalf, it

must show “injury to the organization’s activities” and “the

consequent drain on the organization’s resources” to satisfy the

injury prong. Havens Realty Corp. v. Coleman, 455 U.S. 363, 379

(1982). However, “an organization cannot establish standing if the

‘only injury arises from the effect of [a challenged action] on

the organizations’ lobbying activities, or when the service

impaired is pure issue-advocacy.’” Equal Means Equal v. Ferriero,

3 F.4th 24, 30 (1st Cir. 2021) (quoting People for the Ethical

Treatment of Animals v. U.S. Dep’t of Agric., 797 F.3d 1087, 1093-

94 (D.C. Cir. 2015)).

To survive a motion to dismiss for lack of standing, “[t]he

complainant must set forth reasonably definite factual

allegations, either direct or inferential, regarding each material

element needed to sustain standing.” Draper v. Healey, 827 F.3d 1,

3 (1st Cir. 2016) (quoting AVX Corp., 962 F.2d at 115). “Neither

conclusory assertions nor unfounded speculation can supply the

necessary heft.” Hochendoner v. Genzyme Corp., 823 F.3d 724, 731

(1st Cir. 2016).

Ripeness is another essential component of federal subject

matter jurisdiction. McInnis-Misenor v. Maine Med. Ctr., 319 F.3d

63, 70 (1st Cir. 2003). “Determining whether administrative action

is ripe for judicial review requires [courts] to evaluate (1) the

fitness of the issues for judicial decision and (2) the hardship

to the parties of withholding court consideration.” Nat’l Park

Hosp. Ass’n v. U.S. Dep’t of Interior, 538 U.S. 803, 808 (2003).

“Both prongs of the test must be satisfied, although a strong

showing on one may compensate for a weak on the other.” McInnis-

Misenor, 319 F.3d at 70. “In general, standing and ripeness

inquiries overlap.” Id. at 69 (citations omitted); see also 13B

Wright & Miller, Fed. Prac. & Proc. (3d ed.), § 3531.12 (“The most

direct connections [among justiciability doctrines] run between

standing and ripeness.”).

The Court may consider evidence outside of the pleadings on

jurisdictional questions. United States ex rel. Gadbois v.

PharMerica Corp., 809 F.3d 1, 6 n.2 (1st Cir. 2015) (“[W]e conclude

that a supplemental pleading can be used to cure a jurisdictional

defect.”). The Supreme Court analyses the standing inquiry based

on the time “when the complaint [was] filed.” See Lujan v. Defs.

of Wildlife, 504 U.S. 555, 569 n.4 (1992). However, in assessing

a claim of imminent harm, it defies common sense not to consider

the time after the complaint is filed in order to assess how

imminent the risk of harm really was. See Nat’l Fair Hous. All. V.

Carson, 330 F. Supp. 3d 14, 46 (D.D.C. 2018).

Here, the case was stayed at the request of the Government

until May. The Plaintiffs were given the opportunity to supplement

the pleadings with additional declarations to demonstrate

standing. The Court will consider those supplements: the

Declaration of Katie Keith, co-founder of the health insurance

information initiative Out2Enroll, and the Declaration of Rachael

Lorenzo, co-founder and Abortion Access Lead of IWR (Dkt. 56). The

Government initially challenged standing because Plaintiffs

provided no evidence of actual harm. The supplemental pleadings

attempt to address that challenge. The Court will also consider

the supplemental briefing and declaration filed on July 15, 2021

by the Government.

B. Analysis of Challenges to 2020 Rule

Because Plaintiffs raise multiple challenges, the Court must

address the jurisdictional questions, issue-by-issue.

i. Title IX’s Abortion Exemption

The 2020 Rule explicitly incorporates Title IX’s abortion

exemption (“Danforth Amendment”) into § 1557. It provides in

relevant part:

(a) Nothing in this part shall be construed to force or

require any individual or hospital or any other

institution, program, or activity receiving Federal

funds to perform or pay for an abortion.

(b) Nothing in this part shall be construed to require

or prohibit any person, or public or private entity, to

provide or pay for any benefit or service, including the

use of facilities, related to an abortion. Nothing in

the preceding sentence shall be construed to permit a

penalty to be imposed on any person or individual because

such person or individual is seeking or has received any

benefit or service related to a legal abortion.

85 Fed. Reg. at 37,243. See 20 U.S.C. § 1688 (Title IX’s abortion

exemption). This case challenges this provision of the 2020 Rule.

Plaintiffs allege that the 2020 “Rule’s incorporation of the

Title IX . . . abortion exemption[] will embolden and, in some

cases allow, hospitals, insurers, and others to discriminate

against patients based on sex by using . . . anti-abortion beliefs

as justifications to refuse care or coverage.” Dkt. 18 ¶ 191.

Specifically, Plaintiffs allege that Plaintiffs CrescentCare and

IWR have organizational standing to challenge the incorporation of

the abortion exemption. According to Plaintiffs, due to the

abortion exception CrescentCare “will experience increased strain

on their resources and capacity” from patients seeking care in an

environment they know to be non-discriminatory, Dkt. 18 ¶ 233, and

IWR will “expend more resources on services for abortion, midwife,

and doula care” including “more expensive abortion care later in

pregnancy,” Dkt. 27 at 42.

In their supplemental filings, Plaintiffs argue that those

fears have been borne out. Since the fall of 2020, IWR’s Abortion

Fund has gone from getting one to three callers per week to about

ten callers per week, and from spending a maximum of $2000 per

month to about $5000 per month. Some callers “report that [Indian

Health Services (“IHS")] and other providers refuse to give them

the information that they need to access an abortion.” Dkt. 56-2

¶ 5. Because IHS is administered by HHS but not established under

Title I of the ACA, it is no longer a covered entity under the

2020 Rule. See 85 Fed. Reg. at 37,244 (codified at 45 C.F.R.

§ 92.3(a)). IWR’s co-founder took a $30,000 pay cut to ensure the

fund could continue, and it has halted “direct health care funding

in our” abortion fund and midwifery fund this summer. Dkt. 56-2

¶ 7.

Defendants respond that Plaintiffs have failed to establish

how the Rule has resulted in cognizable injury or how injury was

imminent when they filed suit. Defendants argue that

organizational injuries caused by increased demand from patients

who fear discrimination due to the 2020 Rule are “not . . . fairly

traceable to [the government] because they are based on third

parties’ subjective fear.” Dkt. 33 at 10 (quoting Clapper v.

Amnesty Int’l, 568 U.S. 398, 417 n.7 (2013)). With respect to IWR,

Defendants argue that it fails to carry its burden to demonstrate

that it suffered an injury caused by the 2020 Rule that can be

redressed by the relief it seeks. The Acting Chief Medical Officer

for IHS, Dr. Greggory Woitte, submitted a supplemental declaration

stating that “IHS did not make any changes to any of its policies

or practices based on HHS’s 2020 final rule.” Dkt. 59-3 ¶ 10.

CrescentCare and IWR have established organizational standing

based on a substantial risk of organizational harm. The abortion

exception allows “any individual or hospital or any other

institution, program, or activity receiving Federal funds” to

refuse “to perform or pay for an abortion,” and allows “any person,

or public or private entity” to refuse “to provide or pay for any

benefit or service, including the use of facilities, related to an

abortion.” 85 Fed. Reg. at 37,243. Its incorporation will likely

cause patients who seek or have had abortion care to fear

discrimination by healthcare providers, which will contribute to

increased demand for the services of CrescentCare and IWR and their

accompanying financial and operational injuries. Cf. Whitman-

Walker Clinic, 485 F. Supp. 3d at 33 (finding healthcare provider

had standing to challenge the 2020 Rule’s incorporation of the

religious exemption based on patients’ fear of discrimination by

other providers and increased demand for care from plaintiff).

While it is true there is no evidence that the 2020 rule caused

the Indian Health Service to cut back funding of abortion care,

this stark evidence concerning the depletion of the funds for

abortion supports a reasonable inference of present injury caused

by the predictable reaction of Indigenous people who need an

abortion and fear denial by IHS and other entities. Plaintiffs

CrescentCare and IWR have established a substantial risk of harm

from the Defendants’ conduct resulting from a denial of abortion

services or fear of such denial that could be redressed by

equitable relief.

ii. Narrowing of Scope of Covered Entities

The Amended Complaint alleges that Plaintiffs Fenway Health

and CrescentCare will be injured by HHS’s construction of the scope

of covered entities since third party payors will no longer feel

constrained from offering plans that categorically exclude gender-

affirming care or other sex-based treatment. Plaintiffs argue that

diminishing insurance coverage will generate harm to Fenway Health

in terms of diminished reimbursement and administrative time

appealing coverage decisions. Defendants challenge Plaintiffs’

allegations that they will receive fewer insurance reimbursements

from insurers who will view themselves as outside of the 2020

Rule’s definition of “health program or activity” as based “on

pure speculation that insurers are discriminating against or

limiting healthcare coverage for LGBTQ individuals.” Dkt. 22 at

28. “The Amended Complaint,” in Defendants’ view, “includes zero

allegations indicating that any health insurer has changed its

coverage because of the 2020 Rule or plans on changing its

insurance coverage.” Id.

The 2020 Rule “modifies the 2016 Rule’s definition of entities

covered by Section 1557.” 85 Fed. Reg. at 37,162. Under the 2020

Rule, “covered entities” are:

(1) Any health program or activity, any part of which is

receiving Federal financial assistance (including

credits, subsidies, or contracts of insurance) provided

by [HHS]; (2) any program or activity administered by

[HHS] under Title I of the ACA; or (3) any program or

activity administered by any entity established under

such Title.”

85 Fed. Reg. at 37,244 (codified at 45 C.F.R. § 92.3(a)). It

further defines “health program or activity” as “all of the

operations of entities principally engaged in the business of

providing healthcare that receive Federal financial assistance,”

but “[f]or any entity not principally engaged in the business of

providing healthcare, . . . such entity’s operations only to the

extent any such operation receives Federal financial assistance.”

Id. (codified at 45 C.F.R. § 92.3(b)).

The 2016 Rule had listed as covered entities:

(1) An entity that operates a health program or activity,

any part of which receives Federal financial assistance;

(2) An entity established under Title I of the ACA that

administers a health program or activity; and (3) [HHS].

81 Fed. Reg. at 31,466 (formerly codified at 45 C.F.R. § 92.4). It

broadly defined “health program or activity” as:

[T]he provision or administration of health-related

services, health-related insurance coverage, or other

health-related coverage, and the provision of assistance

to individuals in obtaining health-related services or

health-related insurance coverage. For an entity

principally engaged in providing or administering health

services or health insurance coverage or other health

coverage, all of its operations are considered part of

the health program or activity. . . . Such entities

include a . . . group health plan [and] health insurance

issuer. . . . A health program or activity also includes

all of the operations of a State Medicaid program, a

Children’s Health Insurance Program, and the Basic

Health Program.

Id. at 31,467 (formerly codified at 45 C.F.R. § 92.4). HHS said it

changed this regulatory definition “in order to align it more

closely with the statutory text.” 85 Fed. Reg. at 37,162.

The 2020 Rule exempts certain insurers from compliance with

§ 1557’s prohibition of discrimination. It is difficult to assess

the full impact of this narrowing of the scope of covered entities

on Plaintiffs, but some insurers that are exempted will likely

react in predictable ways: deny coverage for gender-affirming

care. See Dep’t of Commerce v. New York, 139 S. Ct. 2551, 2565-66

(2019) (relying on the predictable effect of Government action on

third parties); Massachusetts v. U.S. Dep’t of Health & Hum.

Servs., 923 F.3d 209, 227 (1st Cir. 2019) (finding standing based

on probable market behavior). The agency itself recognized that

some entities would make changes in response to the Rule. 85 Fed.

Reg. at 37,225.

Plaintiffs plausibly allege that the narrowed scope of

covered entities will result in more patients seeking their

services and reduced insurance reimbursements,3 which “will consume

Plaintiff Healthcare Facilities’ budgets, force Plaintiff

Healthcare Advocates to divert limited resources to help people

navigate barriers to care, and make it harder for individuals to

access care.” Dkt. 27 at 35. “It is by no means speculative to

conclude that, under the 2020 Rule, certain insurers will deny

reimbursement for treatment they previously covered.” Whitman-

Walker Clinic, 485 F. Supp. 3d at 29.

iii. Categorical Coverage Exclusions

The 2020 Rule eliminates the 2016 Rule’s prohibition on

categorical coverage exclusions for care related to gender

transition. 85 Fed. Reg. at 37,247. The 2016 Rule stated: “A

covered entity shall not, in providing or administering health-

related insurance or other health-related coverage[,] . . . [h]ave

or implement a categorical coverage exclusion or limitation for

all health services related to gender transition.” 81 Fed. Reg. at

31,471–31,472 (formerly codified at 45 C.F.R. § 92.207).

Plaintiffs allege that as a result of the 2020 Rule’s

elimination of the prohibition on categorical coverage exclusions

for care related to gender transition, “some insurers will stop

3 The parties dispute the extent to which Medicaid remains a covered

entity under the 2020 Rule.

reimbursing Plaintiff Healthcare Facilities for . . . gender-

affirming care.” Dkt. 27 at 36. Lack of reimbursement will cause

financial injury to Plaintiff healthcare facilities because they

provide care regardless of a patient’s ability to pay.

Analysis of 2021 marketplace plans supports that allegation.

Out2Enroll, “a national initiative dedicated to ensuring that

LGBTQ people have information about their health insurance

options,” Dkt. 56-1 ¶ 5, found “the highest number of insurers

using [transgender-specific] exclusions that Out2Enroll has

documented in its five years of analysis,” id. ¶ 10. From 2020 to

2021, “the number of insurers using transgender-specific

exclusions . . . more than doubled.” Id. ¶ 10. The report shows

that four insurers—Bright Health, United Healthcare, Alliance, and

MercyCare—contain transgender-related exclusions for thirteen 2021

silver marketplace plans in nine states. Plaintiffs also allege

that Plaintiff healthcare facilities have patients enrolled in

Cigna, which has changed its coverage to exclude “surgical services

commonly deemed medically necessary as an integral part of gender

affirming care.” Dkt. 56 at 2. For example, Cigna now covers

rhinoplasty for several medical reasons but not for gender

affirming care.

Defendants argue that Plaintiffs’ allegations amount to

“speculation that their future patients’ health insurers will

change their policies in a manner that harms them due to the 2020

Rule, which . . . is not predictable.” Dkt. 33 at 19–20. Further,

Defendants argue that because “there was no gender-affirming care

standard mandate of coverage before the 2020 Rule,” Plaintiffs

“cannot plausibly contend [they] face[] a substantial likelihood

of a discernable increase in administrative costs due to this

portion of the 2020 Rule.” Dkt. 33 at 19-20. They push back on the

Out2Enroll report because Plaintiffs failed to show a personal

injury from any of these plans or that any of the Plaintiffs

experienced a decrease in reimbursement because of these policies,

or a nexus between the exclusion and the repeal of the 2016 Rule’s

prohibition.

Here, Plaintiffs have shown a substantial risk that insurers

will deny reimbursement for treatment they previously covered

based on the elimination of the prohibition on categorical coverage

exclusions. Out2Enroll’s analysis indicates that “the number of

insurers using transgender-specific exclusions . . . more than

doubled” after HHS promulgated the 2020 Rule. Dkt. 56-1 ¶ 10. For

example, Plaintiffs submit that CresentCare has a patient who “was

unable to get coverage for gender affirming treatment because their

plan, offered by the Louisiana Office of Group Benefits, had a

categorical exclusion for treatment related to gender dysphoria.”

Dkt. 27-7 at 10. Defendants are correct that the 2016 Rule did not

mandate coverage of gender-affirming care, but it did forbid

categorical coverage exclusions for care related to gender

transition. The elimination of the prohibition on categorical

coverage exclusions will likely cause some insurers to deny

coverage on a sweeping basis. See Whitman-Walker Clinic, 485 F.

Supp. 3d at 29–30; but see Washington, 482 F. Supp. 3d at 1117.

Plaintiff healthcare facilities thus have standing.

iv. Change to Enforcement Scheme

Plaintiffs challenge the 2020 Rule’s elimination of the

unified enforcement scheme that allowed plaintiffs to bring

discrimination claims under § 1557 through the enforcement

mechanism of any of the four referenced civil rights statutes. The

2016 Rule provided:

(a) The enforcement mechanisms available for and

provided under Title VI of the Civil Rights Act of 1964,

Title IX of the Education Amendments of 1972, Section

504 of the Rehabilitation Act of 1973, or the Age

Discrimination Act of 1975 shall apply for purposes of

Section 1557 as implemented by this part.

(b) Compensatory damages for violations of Section 1557

are available in appropriate administrative and judicial

actions brought under this rule.

81 Fed. Reg. at 31,472 (formerly codified at 45 C.F.R. § 92.301).

The 2020 Rule instead provides:

(a) The enforcement mechanisms provided for, and

available under, [the referenced statutes], including

under the Department’s regulations implementing those

statutes, shall apply for purposes of violations of

§ 92.2 of this part.

(b) The Director of the Office for Civil Rights has been

delegated the authority to enforce 42 U.S.C. 18116 and

this part, which includes the authority to handle

complaints, . . . make enforcement referrals to the

Department of Justice, in coordination with the Office

of the General Counsel and the relevant component or

components of the Department, and take other appropriate

remedial action as the Director deems necessary, in

coordination with the relevant component or components

of the Department, and as allowed by law to overcome the

effects of violations of 42 U.S.C. 18116 or of this part.

85 Fed. Reg. at 37,245.

Plaintiffs allege that “it will be more difficult for

Plaintiffs’ patients and clients to bring claims of

“intersectional discrimination”4 because of the elimination of [the

uniform enforcement] scheme.” Dkt. 27 at 30. This provides a basis

for both representational and organizational standing, in

Plaintiffs’ view, because Plaintiff healthcare facilities and

advocacy organizations “serve . . . people who have experienced

intersectional discrimination in the past and are likely to

experience intersectional discrimination in the future” and

“Plaintiff Healthcare Facilities have limited resources to provide

assistance with coverage denials, case management, and legal

services to their patients in order to remedy discriminatory

treatment and health care coverage.” Dkt. 27 at 40. Plaintiffs

also point to Plaintiff Darren Lazor’s past experience of

discrimination as evidence of a substantial risk of future

discrimination giving rise to a § 1557 claim. Defendants argue

that greater difficulty bringing claims of intersectional

4 To explain “intersectional discrimination” Plaintiffs use the

examples of Black transgender women, disabled Latinx immigrants,

or Indigenous pregnant people.

discrimination is “an impermissible generalized grievance . . .

because the impact on plaintiffs is plainly undifferentiated and

common to all members of the public.” Dkt. 33 at 20 (cleaned up).

Plaintiffs have not alleged sufficient facts to establish

standing. Without adequate explanation, they allege increased

difficulty for patients and clients who experience intersectional

discrimination.5 See Dkt. 27 at 40. However, Plaintiffs have not

demonstrated why the enforcement scheme in the referenced statutes

(like Title IX) are inadequate. As the court said in Whitman-

Walker Clinic:

[Plaintiffs] briefly reference excerpts from

declarations emphasizing the challenges posed by the

possibility of intersectional discrimination. . . .

Plaintiffs have not established that any future

discrimination — especially discrimination causing an

individual to actually sue under Section 1557 — would be

sufficiently imminent to qualify as a valid injury-in-

fact. Even if it were, Plaintiffs could not plausibly

allege that such discrimination would be fairly

traceable to HHS’s interpretation of Section 1557’s

legal standard in the 2020 Rule.

485 F. Supp. 3d at 33 (cleaned up). Moreover, Plaintiff Darren

Lazor’s past experience of discrimination does not constitute a

substantial risk of future discrimination which cannot be remedied

by existing statutory provisions. See City of Los Angeles v. Lyons,

5 Plaintiffs also challenge the 2020 Rule’s removal of compensatory

damages from the § 1557 enforcement scheme. Plaintiffs have not

alleged that any Plaintiff organization or member of a Plaintiff

organization faces a substantial risk of imminent injury due to

the unavailability of compensatory damages.

461 U.S. 95, 105 (1983) (holding that plaintiff’s past alleged

injury “does nothing to establish a real and immediate threat”

that the same injury would occur again). Nor have Plaintiffs shown

an organizational injury. Because Plaintiffs have not shown that

diversion of their resources “to provide assistance with coverage

denials, case management, and legal services to their patients,”

Dkt. 27 at 40, would be fairly traceable to the 2020 Rule’s change

to the enforcement mechanism, Plaintiffs have not demonstrated

standing.

v. “Association”

Section 1557 is silent as to whether it prohibits

discrimination based on association with someone who has a

protected characteristic. 42 U.S.C. § 18116(a). The 2020 Rule

eliminated the provision of the 2016 Rule that explicitly

prohibited association discrimination. The 2016 Rule provided:

A covered entity shall not exclude from participation

in, deny the benefits of, or otherwise discriminate

against an individual or entity in its health programs

or activities on the basis of the race, color, national

origin, sex, age, or disability of an individual with

whom the individual or entity is known or believed to

have a relationship or association.

81 Fed. Reg. at 31,472 (formerly codified at 45 C.F.R. § 92.209).

In support of this provision, HHS stated in the 2016 Rule that

§ 1557 “does not restrict [its] prohibition [of discrimination] to

discrimination based on the individual’s own [protected

characteristics],” and that “a prohibition on associational

discrimination is consistent with longstanding interpretations of

existing anti-discrimination laws . . . [and] with the approach

taken in the ADA.” Id. at 31,439. Cases challenging the 2020 Rule

have not addressed elimination of the association discrimination

provision. Plaintiffs argue that its elimination is “contrary to

case law and the underlying [civil rights] statutes, and therefore

is not in accordance with law.” Dkt. 18 ¶ 401.

Plaintiffs allege that Equality California and IWR have

representational standing to challenge the elimination of the

prohibition on association discrimination. According to

Plaintiffs, “two [Equality California] members previously suffered

discrimination by healthcare providers and insurers based upon

association with their transgender daughter, and thus reasonably

fear that they will face such discrimination again—in the form of,

for example, denials of care, higher out-of-pocket costs, and more—

because of the Rollback Rule.” Dkt. 27 at 44. They further allege

that many of IWR’s clients are represented by elders from their

Native American communities whose first language is not English,

and that discrimination against these representatives by

healthcare providers would harm IWR’s clients. “By removing

express protections against [associational] discrimination,”

Plaintiffs argue, “the Rollback Rule undermines their [members’ or

clients’] ability to obtain administrative or judicial redress

under Section 1557.” Dkt. 27 at 44.

Plaintiffs have not established any future discrimination

that would be sufficiently imminent to qualify as a valid injury-

in-fact. See Whitman-Walker Clinic, 485 F. Supp 3d at 33–34

(cleaned up); Already, LLC v. Nike, Inc., 568 U.S. 85, 98 (2013)

(“[W]e have never held that a plaintiff has standing to pursue

declaratory relief merely on the basis of being ‘once bitten.’

Quite the opposite.”); Lyons, 461 U.S. at 103 (“[P]ast wrongs do

not in themselves amount to that real and immediate threat of

injury necessary to make out a case or controversy.”).

vi. Notice and Taglines

The 2020 Rule removed a requirement that all covered entities

provide certain notices of prohibited discrimination and taglines

stating the availability of translation services in the top fifteen

languages spoken in each state. More generally, the 2020 Rule

continues to require covered entities to “take reasonable steps to

ensure meaningful access . . . by limited English proficient

individuals.” 85 Fed. Reg. at 37,245 (codified at 45 C.F.R.

§ 92.101).

Plaintiffs allege that the 2020 Rule’s elimination of the

notice and taglines requirement “will cause patients to be less

informed about applicable civil rights protections and cause

patients who seek care elsewhere to come to Plaintiff Healthcare

Facilities worse off than they would otherwise be because of

communication difficulties.” Dkt. 27 at 45-46 (cleaned up).

Defendants argue that Plaintiffs’ allegations are premised on a

chain of speculations: that some covered entities might change

their notices and taglines, that the change will negatively impact

limited English proficiency patients, and that patients receiving

those revised notices and taglines would switch to Plaintiff

healthcare facilities.

Plaintiffs have not demonstrated a sufficiently imminent

injury in fact to establish standing. The future harm Plaintiffs

allege is premised on actions of third parties. That alone does

not defeat standing, but the actions of a third party must be

predictable results of a defendant’s challenged action to support

standing. New York, 139 S. Ct. at 2566. Whether healthcare

providers and insurers will change their notice and taglines in

response to the elimination of the specific requirements,

healthcare providers will provide worse care due to the change,

and impacted patients will seek care at Plaintiff Healthcare

Facilities are speculative rungs on a speculative ladder of

causation.

Defendants point out that the link is particularly weak

because the 2020 Rule requires covered entities to “take reasonable

steps to ensure meaningful access to such programs or activities

by limited English proficient individuals.” 85 Fed. Reg. at 37,245.

While this standard provides less explicit guidance for entities

covered by § 1557 than the former notice and taglines requirement,

the results of this change are too speculative to support standing.

See Clapper, 568 U.S. at 401 (finding a “theory of future injury

. . . too speculative to satisfy the well-established requirement

that threatened injury must be certainly impending”) (cleaned up).

vii. Conforming Amendments to Related Regulations

Plaintiffs challenge the 2020 Rule’s elimination of

“protections against gender identity and sexual orientation

discrimination in regulations that implement statutes other than

Section 1557, such as Medicaid State Plans, Programs for All-

Inclusive Care for the Elderly (PACE), and the ACA state health

insurance marketplaces and plans.” Dkt. 27 at 46. They allege

“[t]he elimination of these protections will cut into the budgets

of [plaintiff healthcare] facilities because they rely, in part,

on insurance reimbursement to fund their operations.” Id. at 46–

47.

Plaintiffs’ allegation is vague and speculative—that insurers

and state programs will discriminate based on gender identity and

sexual orientation because of the change made to a variety of

related regulations—particularly in light of Bostock and the

President’s Executive Order. See 140 S. Ct. at 1731.

viii. Ripeness

The Government argues that prudential ripeness concerns

indicate that the Court should dismiss Plaintiffs’ challenge to

the 2020 Rule’s elimination of the definition of “on the basis of

sex.” As stated earlier, in an exercise of its own discretion, the

Court declines to address the definition of “on the basis of sex”

in light of the injunctions issued by sister courts and the

Executive Order. See Abbott Labs, 387 U.S. at 155. As to the

provisions for which the Court finds standing, each is ripe for

review. No court has enjoined the incorporation of Title IX’s

abortion exemption, the narrowing of the scope of covered entities,

or the elimination of the prohibition on categorical coverage

exclusions for care related to gender transition. Although HHS has

stated its intention to “initiate a [new] rulemaking proceeding on

Section 1557,” it has not yet done so at this juncture. See Dkt.

59 at 18 (alteration in original). Plaintiffs have shown changes

in coverage by several insurers and face a risk of economic injury

from reduced reimbursements now.

II. Count III: Violation Of The APA (Agency Action That Is

Contrary To Constitutional Right—Fifth Amendment Due Process

Clause, Equal Protection)

Plaintiffs claim that the 2020 Rule discriminates on the basis

of sex and was motivated by discriminatory animus against

transgender people. Therefore, Plaintiffs argue, it violates the

equal protection guarantee of the Fifth Amendment’s Due Process

Clause, and should be set aside under 5 U.S.C. § 706(2)(B)

(compelling courts to set aside agency action that is “contrary to

constitutional right, power, privilege, or immunity”).6 Defendants

have moved to dismiss Count III on the basis that Plaintiffs have

not pleaded a plausible equal protection claim. See Fed. R. Civ.

P. 12(b)(6).7

A. Rule 12(b)(6)

In analyzing whether a complaint states a claim under Rule

12(b)(6), the Court sets aside conclusory statements and examines

only the pleader’s factual allegations. See Ashcroft v. Iqbal, 556

U.S. 662, 679 (2009). “To survive a motion to dismiss, a complaint

must contain sufficient factual matter, accepted as true, to ‘state

a claim to relief that is plausible on its face.’” Id. at 678

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A

claim has facial plausibility when the plaintiff pleads factual

content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Id.

B. Standard of Review

Because the applicable standard of review will dictate what

the Plaintiffs must allege, the Court addresses this issue first.

6 Plaintiffs challenge the rule as a whole, rather than singling

out specific provisions.

7 The First Circuit has held that “the plausibility standard does

not apply to a complaint for judicial review of final agency

action." Atieh v. Riordan, 727 F.3d 73, 76 (1st Cir. 2013).

However, that holding was based on the premise that the scope of

review would be limited to the administrative record. See id. That

premise does not hold in this case, for reasons described below,

and Atieh’s holding is therefore inapplicable.

Generally, cases not involving “suspect” classifications are

subject to rational basis review, under which the challenged action

survives “so long as it bears a rational relation to some

legitimate end.” Romer v. Evans, 517 U.S. 620, 631 (1996). Gender-

based classifications, however, are subject to intermediate

scrutiny, and must be “substantially related to achieving an

important governmental objective.” Massachusetts v. U.S. Dep’t of

Health & Hum. Servs., 682 F.3d 1, 9 (1st Cir. 2012); see United

States v. Virginia (VMI), 518 U.S. 515, 532-33 (1996). Under

rational basis review, any legitimate government interest will

suffice, while under intermediate scrutiny “a tenable

justification must describe actual state purposes, not

rationalizations for actions in fact differently grounded.” VMI,

518 U.S. at 535–36; see also id. at 546 (requiring an “exceedingly

persuasive justification”).

Defendants argue that the Court is bound to apply rational

basis review, citing Massachusetts, 682 F.3d at 9, and Cook v.

Gates, 528 F.3d 42, 61-62 (1st Cir. 2008). The First Circuit in

these cases declined to designate sexual orientation a suspect

classification, but it did conclude that the Court should

“scrutinize with care the purported bases for the legislation”

including ordinarily affected groups that have been “long the

subject of discrimination.” Massachusetts, 682 F.3d at 11-12. It

did not address transgender status. As the Supreme Court recently

held, “discrimination based on . . . transgender status necessarily

entails discrimination based on sex.” Bostock, 140 S. Ct. at 1747.

And, as established, discrimination based on sex draws heightened

scrutiny.

Though Bostock was a Title VII case, the Supreme Court’s

reasoning applies equally outside of Title VII. And while the First

Circuit has not spoken on the subject, other circuits have held

that intermediate scrutiny applies to discrimination based on

transgender status in the equal protection context. See, e.g.,

Grimm v. Gloucester Cty. Sch. Bd., 972 F.3d 586, 608-09 (4th Cir.

2020), as amended (Aug. 28, 2020), cert. denied, No. 20-1163, 2021

WL 2637992 (U.S. June 28, 2021); Karnoski v. Trump, 926 F.3d 1180,

1201 (9th Cir. 2019); Whitaker By Whitaker v. Kenosha Unified Sch.

Dist. No. 1 Bd. of Educ., 858 F.3d 1034, 1051 (7th Cir. 2017).

Accordingly, the Court will apply intermediate scrutiny.

C. Scope of Review

The Plaintiffs’ claim hinges on allegations of discriminatory

animus toward transgender people. Defendants argue that the Court

must confine its search for discriminatory animus to the

administrative record. In challenges to agency action, review is

generally limited to the administrative record, Camp v. Pitts, 411

U.S. 138, 142 (1973) (per curiam), subject to a few narrow

exceptions, see Overton Park, 401 U.S. 402, 420 (1971). But this

challenge, although it arises under the Administrative Procedure

Act, is constitutional in substance. See 5 U.S.C. § 706(2)(B)

(requiring a court to set aside agency action that is “contrary to

constitutional right, power, privilege, or immunity”). The caselaw

on whether the APA’s scope of review limits apply to constitutional

claims is less settled.

As Defendants point out, some courts have held that

constitutional challenges to agency action are subject to the APA’s

scope of review restrictions. See Dkt. No. 22 at 43 n.9. However,

few of those cases involve allegations of illicit animus, and those

that do acknowledge that extra-record evidence may sometimes be

appropriate when evaluating a constitutional claim. See, e.g.,

Jarita Mesa Livestock Grazing Ass’n v. U.S. Forest Serv., 58 F.

Supp. 3d 1191, 1241 (D.N.M. 2014) (involving a First Amendment

retaliation claim).

Other courts have acknowledged that limiting the scope of

review to the administrative record makes little sense in the

context of an inquiry into illicit animus. “Most people know by

now that the quiet part should not be said out loud.” Cook County,

Illinois v. Wolf, 461 F. Supp. 3d 779, 794 (N.D. Ill. 2020), motion

to certify appeal denied, No. 19 C 6334, 2020 WL 3975466 (N.D.

Ill. July 14, 2020). The Cook County court, evaluating an equal

protection claim challenging the Department of Homeland Security’s

“public charge” rule, reasoned that “because evidence of racial

animus (if any) will reside outside the administrative record,

presumptively limiting discovery to the record can allow the racial

motivations underlying racially motivated policymaking to remain

concealed.” Id. at 795. Similarly, the district court in New York

v. United States Department of Commerce held that extra-record

discovery was appropriate when reviewing an equal protection

challenge to the Department of Commerce’s addition of a citizenship

question to the census, noting that limiting itself to the

administrative record “would prevent the Court from conducting the

more expansive and searching inquiry into ‘circumstantial and

direct evidence of intent’ that Arlington Heights requires.” 351

F. Supp. 3d 502, 668 (S.D.N.Y.), rev’d in part on other grounds,

139 S. Ct. 2551 (2019) (quoting Vill. of Arlington Heights v.

Metro. Hous. Dev. Corp., 429 U.S. 252, 266 (1977)). The Supreme

Court held that the extra-record discovery, while premature, “was

ultimately justified.” New York, 139 S. Ct. at 2574. Although both

New York and Cook County address allegations of illicit racial

animus, which receives strict (rather than intermediate) scrutiny,

the reasoning in those cases applies to allegations of sex-based

animus as well. Intermediate scrutiny (unlike rational basis

review but like strict scrutiny) mandates an inquiry into “actual

state purposes,” VMI, 518 U.S. at 535–36, so an analysis aimed at

“smoking out” illicit animus is appropriate, cf. New York, 351 F.

Supp. 3d at 667. See also Soto v. Flores, 103 F.3d 1056, 1066 (1st

Cir. 1997) (requiring evidence that gender discrimination is “a

motivating factor” in § 1983 equal protection claim brought by

survivors of domestic violence).

The Court’s scope of review on the constitutional claims,

therefore, is not limited to the administrative record.

D. Analysis

Because Plaintiffs have not alleged that the 2020 Rule

explicitly discriminates on the basis of sex, the Court must

examine both a discriminatory impact and discriminatory intent.

See Pers. Adm’r of Massachusetts v. Feeney, 442 U.S. 256, 273-75

(1979) (citing Washington v. Davis, 426 U.S. 229 (1976); Arlington

Heights, 429 U.S. 252 (1977)).

As to impact, the Plaintiffs have plausibly alleged that the

2020 Rule’s provisions regarding health insurance plans will cause

transgender patients to “experience significantly less

advantageous third-party reimbursement” for necessary healthcare

services. Dkt. No. 18 ¶ 223. “For example, some of Fenway Health,

Callen-Lorde, CrescentCare, and BAGLY patients’ third-party payors

will understand the Rollback Rule to mean that they may now offer

plans that categorically exclude gender-affirming care or other

sex-based treatments because HHS asserts they are not prohibited

by Section 1557.” Id.

The Plaintiffs also allege that the Rule was motivated by

discriminatory intent in the form of animus against transgender

people. Potential evidentiary sources for this claim include

“[t]he historical background of the decision . . . , particularly

if it reveals a series of official actions taken for invidious

purposes,” “[t]he specific sequence of events leading up to the

challenged decision,” and the “administrative history . . .

especially where there are contemporary statements by members of

the decisionmaking body.” Arlington Heights, 429 U.S. at 267-268.

Plaintiffs point to, among other things, statements by Roger

Severino before he was appointed as Director of OCR at HHS in

January 2017. For instance, as recently as summer of 2016, he

published pieces arguing that transgender people “us[e] government

power to coerce everyone, including children, into pledging

allegiance to a radical new gender ideology” and that transgender

military personnel serving openly “dishonors the[] sacrifice” of

veterans. Dkt. 18 ¶¶ 377, 379.

The government argues that the Supreme Court precluded

consideration of these statements in Department of Homeland

Security v. Regents of the University of California, when it

declined to consider “pre- and post-election statements” by then-

President Trump as “contemporary statements” probative of animus

motivating the DOJ’s decision to rescind DACA. 140 S. Ct. 1891,

1915-16 (2020). First, the relevant section of the Regents opinion

did not command a majority of the Court. Id. Moreover, the Supreme

Court noted that the cited statements in Regents were both “remote

in time and made in unrelated contexts” and not made by the

“relevant actors” (i.e., the acting secretary of DHS and the

Attorney General). Id. at 1916. But Severino, as Director of OCR

at HHS, was a relevant actor. Cf. Make the Rd. N.Y. v. Pompeo, 475

F. Supp. 3d 232, 266 (S.D.N.Y. 2020) (considering “statements by

high-level officials that are responsible for the . . . framework

represented by the government actions at issue,” including

statements from before their government appointments). The cited

statements, along with HHS’s deprioritizing of LGBTQ+ issues in

the leadup to the rulemaking (including by removing LGBTQ+ health

issues from its four-year strategic plan and instructing staff at

the Centers for Disease Control and Prevention not to use

“transgender” in its 2019 budget request), raise a plausible

inference that anti-transgender animus was a motivating factor in

the decision to promulgate the 2020 Rule.

ORDER

Defendants’ motion to dismiss for lack of jurisdiction (Dkt.

21) is ALLOWED in part as to the enforcement scheme, the

prohibition on association discrimination, the notice and taglines

requirement, and the amendments to related regulations and DENIED

in part as to the scope of covered entities, the prohibition on

categorical coverage exclusions, and Title IX’s abortion

exemption. Defendants’ motion to dismiss Count III for failure to

state a claim (Dkt. 21) is DENIED.

SO ORDERED.

/s/ PATTI B. SARIS

Hon. Patti B. Saris

United States District Judge