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No immunity for health plan in transgender bias suit

Where enrollees in the North Carolina State Health Plan for Teachers and State Employees, or NCSHP, alleged that NCSHP violated the Affordable Care Act by categorically denying coverage for gender dysphoria treatments, NCSHP was not entitled to sovereign immunity.


Several NCSHP enrollees filed a three-count complaint alleging that NCSHP discriminates against its transgender enrollees by categorically denying coverage for gender dysphoria treatments. This, plaintiffs argue, violates § 1557 of the Affordable Care Act.

NCSHP filed a motion to dismiss, asserting that it was entitled to sovereign immunity under the 11th Amendment. The district court denied the motion, holding that NCSHP waived its immunity against this claim by accepting federal financial assistance.


Section 1557 of the Affordable Care Act forbids “any health program or activity” receiving federal financial assistance from “subject[ing]” an individual to discrimination on a “ground prohibited under title VI of the Civil Rights Act of 1964 [], title IX of the Education Amendments of 1972 [], the Age Discrimination Act of 1975 [], or section 794 of Title 2 . . . .” NCSHP therefore waived its sovereign immunity if (1) it received federal financial assistance, (2) it is a health program or activity and (3) suits for money damages are an “enforcement mechanism” that is “provided for and available under” Title VI, Title IX, 29 U.S.C. § 794 or the Age Discrimination Act.

It is undisputed that NCSHP receives federal funds. But, for the first time on appeal, NCSHP argues that it is not a health program or activity. Given NCSHP’s silence on this issue below, the district court had no reason to understand it as anything but undisputed. This court takes that same view.

This leaves the question of whether suits for money damages are an “enforcement mechanism provided for and available under” Title VI, Title IX, 29 U.S.C. § 794 or the Age Discrimination Act. There is no question that a plaintiff may enforce Title IX through a claim for money damages. But NCSHP contends that § 1557 did not incorporate this remedy because (1) a sovereign immunity waiver is not an “enforcement mechanism” and (2) even if it were, the immunity waiver that permits Title IX damages claims is not “available under” Title IX itself. The court rejects both efforts to introduce ambiguity into a statute where it would not otherwise exist.

Were there any doubt about whether § 1557 conditioned the receipt of federal funds upon states’ waiver of sovereign immunity against suits for money damages, it is remedied by reading the provision alongside the Civil Rights Remedies Equalization Act’s, or CRREA, residual clause. Plaintiffs argue, and the district court held, that § 1557 is a “provision[] of any other Federal statute prohibiting discrimination,” and thus falls within CRREA’s residual clause. In reaching its conclusion, the district court asked two questions: (1) whether § 1557 was a provision of a federal statute that prohibited discrimination and (2) whether § 1557 was “sufficiently similar” to the statutes that CRREA specifically listed. It answered both questions in the affirmative, finding that “[l]ike the four statutes named in CRREA, Section 1557 is a nondiscrimination provision which is directly aimed at recipients of federal funding.”

NCSHP argues that Congress could not have intended CRREA’s residual clause to cover § 1557, and that the “sufficiently similar” inquiry improperly substitutes the judicial for the legislative branch of government. Both arguments are unpersuasive.


Concurring opinion

Diaz, J., concurring in part:

Because I agree that § 1557 of the Affordable Care Act, when read in conjunction with the CRREA, constitutes a waiver of sovereign immunity for states (and state agencies) that choose to accept federal funds for a health program or activity, I’m pleased to join Chief Judge Gregory in affirming the district court’s judgment. I write separately to address some of the dissent’s contentions and highlight how § 1557 claims are categorically different from the claims in the cases our colleague relies on.

Dissenting opinion

Agree, J., dissenting:

The majority holds the residual clause in a single provision of the CRREA unambiguously requires the NCSHP to waive its sovereign immunity from suits brought under “the provisions of any other Federal statute prohibiting discrimination by recipients of Federal financial assistance.” The majority further posits that § 1557 of the ACA is one such law, so that the NCSHP is liable in private discrimination suits brought under § 1557 by operation of the residual clause.

The Fifth and Tenth Circuits, the only courts of appeals to consider the residual clause, plainly held that it cannot serve as waiver of state sovereign immunity from any discrimination statute. But here, the majority fails to give respect to a fundamental aspect of our constitutional design that provides the states “a residuary and inviolable sovereignty,” and does not “relegate[] [them] to the role of mere provinces or political corporations.” Compounding that error, the majority fails to recognize that the residual clause cannot serve as the requisite textual waiver of sovereign immunity from § 1557 claims. The Supreme Court should correct the majority’s errors without delay to ensure the preservation of the integrity of the 11th Amendment and the dignity of state sovereign immunity.

Kadel v. North Carolina State Health Plan for Teachers and State Employees, Case No. 20-1409, Dec. 2, 2021. 4th Cir. (Gregory) from MDNC at Greensboro (Biggs). John Guyton Knepper for Appellant. Omar Francisco Gonzalez-Pagan for Appellees. VLW 021-2-329. 83 pp.