Courts Delay Implementation of Parts of New Federal Nondiscrimination Rules

Earlier this spring, the Biden Administration issued new rules to implement the Section 1557 healthcare nondiscrimination provisions of the Affordable Care Act (ACA), slated to take effect on July 5, 2024. They are the third iteration of the nondiscrimination rules and largely reverse the Trump Administration’s 2020 regulations and reinstate those adopted by the Obama Administration in 2016. However, the new rules make it clear that the ACA’s prohibition against discrimination based on sex includes pregnancy, sexual orientation, gender identity, and sex characteristics. This definition of sex discrimination has been challenged in federal court, and three federal judges have delayed the implementation of the new rules as the challenges work their way through the federal judicial system.

Those challenging the new rules argued the definition of sex discrimination is overreach and violates the federal Administrative Procedure Act. The federal Department of Health and Human Services (HHS) responded the rules follow the precedent set by the 2020 Supreme Court decision in Bostock v. Clayton County, which held that discrimination based on sexual orientation and gender status is a violation of Title VII of the Civil Rights Act. However, relying on the June 2024 Supreme Court decision in Loper Bright v. Raimondo, which overturned the legal precedent that federal judges uphold the administrative agency’s interpretation of the law if reasonable, three federal judges in three separate challenges to the new rules declined to defer to HHS’s interpretation.

A Mississippi federal judge then delayed the effective date of the new rule’s definition of sex discrimination and prohibited HHS from enforcing those provisions nationwide. Another federal judge in Florida prohibited HHS from enforcing the part of the rule that includes gender identity in the definition of sex discrimination in Florida. A third federal court blocked the new rule from being enforced in Texas and Montana. While HHS can appeal these decisions, the litigation could delay the full implementation of the new regulations for years. In addition, this action shows how the latest federal standard that judges must rely on their own interpretation of laws and not give any deference to the opinions of agency policy experts will affect health policy. Federal judges will likely continue to use this standard in other pending legal challenges to rules, such as the case challenging the ACA’s requirement to cover preventive care on a first-dollar basis.