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Eighth Circuit urged to restore rules for coverage of transgender surgery

The federal government argues Catholic employers and health care providers do not have standing to sue because there is no threat to enforce regulations regarding sex reassignment procedures.

(CN) — The U.S. Justice Department told a federal appeals court Wednesday that a North Dakota judge acted prematurely in blocking regulations that have not yet been fully adopted regarding insuring or providing gender-transition procedures.

U.S. District Judge Peter D. Welte ruled in January for two groups of Catholic employers and health care providers who object on the basis of their religious beliefs to being forced by the federal government to insure or provide gender-affirming surgeries and related services.

Welte permanently enjoined the U.S. Department of Human Services from “interpreting or enforcing” Section 1557 of the Affordable Care Act against the Catholic plaintiffs “in a manner that would require them to perform or provide insurance coverage for gender-transition procedures.” The Donald Trump-appointed judge also permanently enjoined the U.S. Equal Employment Opportunity Commission from similarly interpreting or enforcing Title VII of the Civil Rights Act of 1964 to require the Catholic plaintiffs as employers to provide insurance coverage for sex reassignments.

The government appealed Welte’s ruling to the St. Louis-based Eighth Circuit. The case was heard by a three-judge panel Wednesday consisting of U.S. Circuit Judges Judges Lavenski Smith and Raymond Gruender, both George W. Bush appointees, and Jonathan Kobes, a Trump appointee.

Justice Department attorney Ashley Cheung told the panel that the trial court’s injunction was based on positions that the government has not taken.

“The plaintiffs have not demonstrated a credible threat of enforcement,” she said. “The district court’s permanent injunction is based on the premise that HHS and EEOC have interpreted and will enforce Section 1557 of the Affordable Care Act and Title VII [of the Civil Rights Act] to mandate that these religious plaintiffs provide and cover gender transition services. This premise is incorrect.”

In fact, she said, “neither agency has ever taken any enforcement action against any entity for declining to cover transition services, let alone any objecting religious entity.”

Luke Goodrich, an attorney for the Becket Fund for Religious Liberty in Washington, argued on behalf of the Catholic groups that multiple courts have found credible threats to plaintiffs in pre-enforcement challenges such as this one.

The threat of enforcement is “a massive sword of Damocles over the head of religious employers and hospitals across the country” because they “must provide or insure gender-transition procedures or else be at risk of a multimillion-dollar” civil judgment, Goodrich said.

The question of how the Affordable Care Act and Civil Rights Act might apply to religious organizations has been a moving target in recent years.

HHS adopted a new rule in 2020 regarding the prohibition of sex discrimination under Section 1557 of the Affordable Care Act but without defining how that might apply to gender identity. After the U.S. Supreme Court subsequently ruled in Bostock v. Clayton County that Title VII of the Civil Right Act applies to sex discrimination on the basis of gender identity, HHS took the position that the ruling applies to Section 1557 of the Affordable Care Act.

Still, the government pointed out in its brief, “HHS and EEOC have not to date evaluated whether Section 1557 and Title VII require the provision and coverage of gender-transition procedures by entities with religious objections to providing or covering those procedures, or how [the Religious Freedom Restoration Act] and other religious exemptions might apply to such religious entities.”

The plaintiffs in two separate cases are combined in this appeal. The first group includes the Catholic Benefits Association, Catholic Charities North Dakota, the Diocese of Fargo, and the Catholic Medical Association. Plaintiffs in the other case include the Religious Sisters of Mercy, Sacred Heart Mercy Health Care Center, SMP Health System, and the University of Mary.

The Sisters of Mercy plaintiffs argue in their brief filed with the Eighth Circuit that they have sincerely held religious objection to aiding individuals in transitioning to a different sex to which they were born.

“Like the Catholic Church they serve, these plaintiffs believe that every man and woman is created in God’s image and reflects God’s image in unique and uniquely dignified ways,” the brief states. “In providing medical services, plaintiffs serve everyone in need, including transgender individuals. They also believe that gender-transition procedures can be deeply harmful to patients; thus, they do not perform or provide insurance coverage for those procedures, which would violate their religious beliefs and medical judgment.”

Doug Wilson, CEO of the Catholic Benefits Association, told Courthouse News he was pleased with the hearing and the plaintiffs’ position in the case.

“The reality is we won the case on the facts” regarding the applicability of the government’s regulations to the Religious Freedom Restoration Act, he said in an interview Wednesday. “This whole case today was about legal technicalities of justiciability and standing. The basic facts of the case hold.”

The HHS referred questions to the Department of Justice, which declined to comment.

The Eight Circuit judges did not indicate when they would issue a ruling in the case.

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