Kadel v. N.C. State Health Plan for Teachers & State Emps.

• Decision Date: 01 September 2021
• Docket Number: No. 20-1409,20-1409
• Citation: 12 F.4th 422
• Parties: Maxwell KADEL; Jason Fleck; Connor Thonen-Fleck, by his next friends and parents; Julia Mckeown; Michael D. Bunting, Jr.; C.B., by his next friends and parents; Sam Silvaine, Plaintiffs – Appellees, v. NORTH CAROLINA STATE HEALTH PLAN FOR TEACHERS AND STATE EMPLOYEES, Defendant – Appellant, and, Dale Folwell, in his official capacity as State Treasurer of North Carolina ; University of North Carolina at Chapel Hill ; North Carolina State University ; Dee Jones, in her official capacity as Executive Administrator of the North Carolina State Health Plan for Teachers and State Employees; University of North Carolina At Greensboro. Defendants. State of California; State of Colorado; State of Delaware; State of Hawaii ; State of Illinois ; State of Maine ; Commonwealth of Massachusetts; State of Minnesota ; State of Nevada ; State of New Jersey ; State of New Mexico ; State of New York; State of Oregon ; State of Rhode Island; State of Vermont; State of Washington ; State of Wisconsin ; District of Columbia; Equality North Carolina; Clearinghouse on Women's Issues; Feminist Majority Foundation; Gender Equality Law Center; Harvard Law School LGBTQ+Advocacy Clinic; Legal Voice; Naral Prochoice America; National Center for Lesbian Rights; National Health Law Program; National Women's Law Center; North Carolina Aids Action Network; Planned Parenthood South Atlantic ; Women's Bar Association of the District of Columbia; Women's Bar Association of the State of New York, Amici Supporting Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

12 F.4th 422

Maxwell KADEL; Jason Fleck; Connor Thonen-Fleck, by his next friends and parents; Julia Mckeown; Michael D. Bunting, Jr.; C.B., by his next friends and parents; Sam Silvaine, Plaintiffs – Appellees,

v. NORTH CAROLINA STATE HEALTH PLAN FOR TEACHERS AND STATE EMPLOYEES, Defendant – Appellant,and,Dale Folwell, in his official capacity as State Treasurer of North Carolina ; University of North Carolina at Chapel Hill ; North Carolina State University ; Dee Jones, in her official capacity as Executive Administrator of the North Carolina State Health Plan for Teachers and State Employees; University of North Carolina At Greensboro. Defendants.State of California; State of Colorado; State of Delaware; State of Hawaii ; State of Illinois ; State of Maine ; Commonwealth of Massachusetts; State of Minnesota ; State of Nevada ; State of New Jersey ; State of New Mexico ; State of New York; State of Oregon ; State of Rhode Island; State of Vermont; State of Washington ; State of Wisconsin ; District of Columbia; Equality North Carolina; Clearinghouse on Women's Issues; Feminist Majority Foundation; Gender Equality Law Center; Harvard Law School LGBTQ+Advocacy Clinic; Legal Voice; Naral Prochoice America; National Center for Lesbian Rights; National Health Law Program; National Women's Law Center; North Carolina Aids Action Network; Planned Parenthood South Atlantic ; Women's Bar Association of the District of Columbia; Women's Bar Association of the State of New York, Amici Supporting Appellees.

No. 20-1409

United States Court of Appeals, Fourth Circuit.

Argued: March 11, 2021

Decided: September 1, 2021

ARGUED: John Guyton Knepper, LAW OFFICE OF JOHN G. KNEPPER, LLC, Cheyenne, Wyoming, for Appellant. Omar Francisco Gonzalez-Pagan, LAMBDA LEGAL DEFENSE & EDUCATION FUND, INC., New York, New York, for Appellees. ON BRIEF: Mark A. Jones, Kevin G. Williams, BELL, DAVIS & PITT, PA, Winston-Salem, North Carolina, for Appellant. Samuel R. Bagenstos, Ann Arbor, Michigan; Tara L. Borelli, Atlanta, Georgia, Carl S. Charles, LAMBDA LEGAL DEFENSE AND EDUCATION FUNC, INC., New York, New York; Amy E. Richardson, Lauren E. Snyder, HARRIS, WILTSHIRE & GRANNIS LLP, Washington, D.C.; David P. Brown, TRANSGENDER LEGAL DEFENSE & EDUCATION FUND, INC., New York, New York, for Appellees. Xavier Becerra, Attorney General, Renu R. George, Senior Assistant Attorney General, Kathleen Boergers, Supervising Deputy Attorney General, Nicole Ries Fox, Deputy Attorney General, OFFICE OF THE ATTORNEY GENERAL OF CALIFORNIA, San Diego, California, for Amicus State of California. Philip J. Weiser, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF COLORADO, Denver, Colorado, for Amicus State of Colorado. Kathleen Jennings, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF DELAWARE, Wilmington, Delaware, for Amicus State of Delaware. Clare E. Connors, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF HAWAII, Honolulu, Hawaii, for Amicus State of Hawaii. Kwame Raoul, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF ILLINOIS, Chicago, Illinois, for Amicus State of Illinois. Aaron M. Frey, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF MAINE, Augusta, Maine, for Amicus State of Maine. Maura Healy, Attorney General, OFFICE OF THE ATTORNEY GENERAL FOR THE COMMONWEALTH OF MASSACHUSETTS, Boston, Massachusetts, for Amicus Commonwealth of Massachusetts. Keith Ellison, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF MINNESOTA, St. Paul, Minnesota, for Amicus State of Minnesota. Aaron D. Ford, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF NEVADA, Carson City, Nevada, for Amicus State of Nevada. Gurbir S. Grewal, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF NEW JERSEY, Trenton, New Jersey, for Amicus State of New Jersey. Hector Balderas, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF NEW MEXICO, Santa Fe, New Mexico, for Amicus State of New Mexico. Letitia James, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF NEW YORK, New York, New York, for Amicus State of New York. Ellen F. Rosenblum, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF OREGON, Salem, Oregon, for Amicus State of Oregon. Peter F. Neronha, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF RHODE ISLAND, Providence, Rhode Island, for Amicus State of Rhode Island. Thomas J. Donovan, Jr., Attorney General, OFFICE OF THE ATTORNEY GENERAL OF VERMONT, Montpelier, Vermont, for Amicus State of Vermont. Robert W. Ferguson, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF WASHINGTON, Olympia, Washington, for Amicus State of Washington. Joshua L. Kaul, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF WISCONSIN, Madison, Wisconsin, for Amicus State of Wisconsin. Karl A. Racine, Attorney General, OFFICE OF THE ATTORNEY GENERAL FOR THE DISTRICT OF COLUMBIA, Washington, D.C., for Amicus District of Columbia. Ames Simmons, EQUALITY NORTH CAROLINA, Raleigh, North Carolina; Michael W. Weaver, Chicago, Illinois, Michael S. Stanek, Sarah P. Hogarth, Gilbert T. Smolenski, MCDERMOTT WILL & EMERY LLP, Washington, D.C., for Amicus Equality North Carolina. Kevin Barry, QUINNIPIAC UNIVERSITY SCHOOL OF LAW LEGAL CLINIC, Hamden, Connecticut; Kevin Costello, Maryanne Tomazic, Center for Health Law & Policy Innovation, HARVARD LAW SCHOOL, Cambridge, Massachusetts, for Amici Nonprofit Civil Rights, Advocacy, and Public Interest Organizations.

Before GREGORY, Chief Judge, AGEE, and DIAZ, Circuit Judges.

Affirmed by published opinion. Chief Judge Gregory wrote the opinion, in which Judge Diaz concurred in part. Judge Diaz wrote a concurring opinion and Judge Agee wrote a dissenting opinion.

GREGORY, Chief Judge:

In March 2019, several enrollees in the North Carolina State Health Plan for Teachers and State Employees (NCSHP) filed a three-count complaint against the State Health Plan and other State defendants. Plaintiffs allege that NCSHP discriminates against its transgender enrollees by categorically denying coverage for gender dysphoria

treatments like counseling, hormone therapy, and surgical care. This, Plaintiffs argue, violates § 1557 of the Patient Protection and Affordable Care Act. NCSHP filed a motion to dismiss, asserting that it was entitled to sovereign immunity under the Eleventh Amendment. The district court denied the motion, holding that NCSHP waived its immunity against this claim by accepting federal financial assistance. We affirm.

I.

North Carolina provides its employees and their dependents with health care through a self-funded plan, the North Carolina State Health Plan. NCSHP covers nearly three-quarters of a million teachers, state employees, retirees, current and former lawmakers, state university personnel, community college personnel, hospital staff members, and their dependents. Directed by North Carolina State Treasurer Dale Folwell, NCSHP has the power to "determine, define, adopt, and remove health care benefits and exclusions." J.A. 23. Relevant here, NCSHP has adopted an exclusion that denies coverage to all forms of gender-confirming health care—important and sometimes lifesaving care sought by state employees across North Carolina, including Plaintiffs.

A.

Maxwell Kadel, Jason Fleck, Connor Thonen-Fleck, Julia McKeown, Sam Silvaine, C.B., and Michael D. Bunting, Jr. filed this suit against NCSHP for declaratory and injunctive relief, as well as money damages.¹ Plaintiffs are NCSHP enrollees. They are also transgender or serve as a legal guardian to a transgender dependent.

People identify as transgender when their gender identity—their inherent and deeply felt sense of their gender—does not align with the sex they were assigned at birth. We have previously noted what should by now be uncontroversial: "Just like being cisgender, being transgender is natural and is not a choice." Grimm v. Gloucester County Sch. Bd. , 972 F.3d 586, 594 (4th Cir. 2020), cert. denied , No. 20-1163, ––– U.S. ––––, ––––, ––– S.Ct. ––––, ––– L.Ed.2d ––––, 2021 WL 2637992, at *1 (June 28, 2021). Nor is someone's transgender status a "psychiatric condition" that implies any "impairment in judgment, stability, reliability, or general social or vocational capabilities." Id.

For some who identify as transgender, the "incongruence between gender identity and the body's other sex characteristics can result in gender dysphoria

." J.A. 26. Gender dysphoria is a medical condition recognized in the DSM-V that often manifests as "a feeling of clinically significant stress and discomfort born out of experiencing that something is fundamentally wrong." Id. Left untreated, gender dysphoria "often intensifies," leading to "severe anxiety, depression, and suicidal ideation or suicide." Id.

The World Professional Association for Transgender Health has formulated STANDARDS OF CARE that have been adopted by health organizations across the country. These standards recognize that "[t]he ability to live in a manner consistent with one's gender identity is critical to the health and well-being of transgender individuals and is a key aspect in the treatment of gender dysphoria

." Id. What it means to "live in a manner consistent with one's gender identity" varies from person to person. For transgender individuals, it "typically include[s] social, legal, and medical transition." J.A. 27. The medical component, in particular, can be "a critical part of transitioning," as it "includes treatments that bring the sex-specific characteristics of a transgender individual's body into alignment with their gender identity." Id. Medical transition may require counseling, hormone replacement therapy, or surgical care. These treatments "are not ‘cosmetic,’ ‘elective,’ or ‘experimental.’ " J.A. 29. Rather, they are safe, effective, and often medically necessary.

NCSHP offers three health care plans to eligible state employees. Each plan purports to cover "medically necessary pharmacy benefits, mental health benefits, and medical care." J.A. 30. But since 2018, every plan has excluded coverage for gender-confirming...