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Iowa seeks to reinstate ban on Medicaid coverage for sex reassignment surgery

Attorneys for the state told the Iowa Supreme Court that a district judge overstepped his authority when he struck down a state law amendment prohibiting Medicaid coverage for gender-affirming care.

DES MOINES, Iowa (CN) — The state of Iowa asked the Iowa Supreme Court on Wednesday to reverse a trial court ruling that found the state’s rules barring Medicaid coverage for sex reassignment surgery for transgender patients violate the Iowa Constitution.

The state’s counsel told the justices during oral arguments it was not unconstitutional for lawmakers to amend the Iowa Civil Rights Act to deny Medicaid coverage of gender-affirming surgeries. In response, the plaintiffs in the case argue the amendment on its face unconstitutionally discriminates against similarly situated Iowans.

Aiden Vasquez and Mika Covington sued after the Iowa Department of Human Services denied their application for Medicaid coverage for surgical procedures to affirm the gender they identify with.

The denial was based on DHS policy, which explicitly denies coverage of such surgeries, as well as on the Iowa Civil Rights Act, which had been recently amended to exclude such coverage.

That amendment came in response to a 2019 Iowa Supreme Court ruling that the state’s denial of Medicaid coverage of sex reassignment surgeries violated the Iowa Civil Rights Act. The GOP-controlled Iowa Legislature promptly passed an amendment to the Act that said: “This section shall not require any state or local government unit or tax-supported district to provide for sex reassignment surgery or any other cosmetic, reconstructive, or plastic surgery procedure related to transsexualism, hermaphroditism, gender identity disorder, or body dysmorphic disorder.”

Polk County District Judge William Kelly in Des Moines subsequently ruled in 2021 that both the DHS policy and the Iowa Civil Rights Act as amended are unconstitutional on their face and as applied to Vasquez and Covington. Kelly based his decision on the Iowa Constitution’s equivalent of the equal protection provision of the U.S. Constitution.

The DHS appealed that decision to the Iowa Supreme Court. The agency does not challenge the district court’s holding that the administrative rule banning gender-affirming surgeries is unconstitutional, but it argues the trial court did not have authority to declare the 2019 Civil Rights Act amendment unconstitutional in the case brought under the Administrative Procedure Act because the DHS decision was based not on the amendment but on the administrative rule.

In the hearing before the state’s top appellate court Wednesday, Assistant Attorney General Thomas Ogden told the justices the Iowa General Assembly has the ultimate authority to declare through rules or statutes what medical procedures it will pay for with Medicaid funds.

Several members of the high court wondered, however, why the case was not rendered moot by the state’s decision not to challenge the trial court’s finding that the department rule denying Medicaid coverage is unconstitutional.

“Right now there are two petitioners the state has agreed to fund the cost of the surgery they want,” Justice Thomas Waterman said. “Isn’t it game over on the state’s appeal?”

Ogden responded, “No, I don’t think so because the state is defending the constitutionality of a statute passed by the Legislature the [district court] declared unconstitutional.”

Chief Justice Susan Christensen pushed back.

“You’re saying, hey by the way, we’re going to pay for it but we want you to tell us we have to pay for it, or you don’t have to pay for it," she said. "Aren’t you asking us to do the heavy lifting?”

“I don’t think so, your honor," Ogden said. "Our position in this case is focused on the Legislature’s ability to define the scope of the Iowa Civil Rights Act. With respect to the Medicaid rule, the district court has already decided that, and as you know we are not appealing that decision.”

Seth Horvath, an attorney with Nixon Peabody in Chicago who argued Wednesday on behalf of Vasquez and Covington, agreed with the state on the mootness question.

“The state’s decision not to challenge the constitutionality of the regulation before this court doesn’t remove the need to address the constitutionality” of the amendment, he said.

Justice Christopher McDonald asked Horvath if he agreed with the state’s position that there doesn’t have to be an Iowa Civil Rights Act at all.

"From the beginning of time forward, if none were enacted, the state would not have to enact a civil rights act," Horvath replied.

McDonald pushed back, asking why the state can't define the scope of the law's application if it has the authority to repeal it entirely.

“There is an Iowa Civil Rights Act now," Horvath said. "It was amended to extend certain protections. Those protections are in place. The state has now enacted a law that would retract those protections as to a particular targeted group.”

The justices did not indicate when they would issue a ruling.

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