Court Ruling on Anti-Discrimination Regulations

A U.S. District Court judge has issued a nationwide preliminary injunction prohibiting the U.S. Department of Health and Human Services (HHS) from enforcing certain provisions of the rules in Section 1557 of the Affordable Care Act (ACA).

The plaintiffs, eight states1 and three private entities2, argued the rules extending antidiscrimination protections to transgender individuals and allegedly requiring the performing of and coverage of pregnancy terminations conflict with their beliefs. The federal government argued that the rules do not mandate any particular procedure, rather the rules require only that covered entities provide nondiscriminatory health services and health insurance in a nondiscriminatory manner.

Court ruling
On Dec. 31, 2016, the preliminary injunction was issued after the judge determined that the federal government exceeded its authority with rules that extended anti-discrimination protections to transgender individuals and that the rules likely violated certain laws, including religious freedom protections for the private entities regarding pregnancy terminations. Other provisions of the anti-discrimination rules issued under Section 1557 of the ACA were not affected by the preliminary injunction.

More on the ACA’s anti-discrimination regulations
The U.S. Office for Civil Rights issued anti-discrimination rules under the ACA’s Section 1557 that prohibit covered entities from discriminating in the provision of a health program or activity based on race, color, national origin, sex, age or disability.

Section 1557 rules apply to the following “covered entities”:

  • health plans, insurers, hospitals, doctors and other medical providers that receive federal funding from HHS, including Medicaid and Medicare Parts A, C and D payment (prescription-drug subsidies) but not Medicare Part B;
  • qualified health plans offered on either state or federal Health Insurance Marketplaces, also known as exchanges; and
  • all of a health insurance issuer’s operations, including the issuer’s third-party administrator services or ASO services, if an issuer receives federal financial assistance from HHS.

A covered entity that does not comply with Section 1557 may face:

  • enforcement mechanisms under federal law that ultimately may result in loss of federal funding, and
  • lawsuits from individuals, with the potential for compensatory damages.

Moving forward
CoreSource clients should consult with their attorney regarding compliance with Section 1557 rules before making any changes to their previously decided course of action.

For more information on Section 1557 rules, follow this link.

1Plaintiffs include eight states: Arizona, Kansas, Kentucky, Louisiana, Mississippi, Nebraska, Texas and Wisconsin.

2Plaintiffs also include three religiously affiliated private entities: Franciscan Alliance, Inc., its wholly owned entity Specialty Physicians of Illinois, LLC, and the Christian Medical & Dental Society.