195 F. Supp. 3d 554
S.D.N.Y.2016Background
- Plaintiffs (Medicaid recipients with gender dysphoria) challenge 18 N.Y.C.R.R. § 505.2(Z) on two grounds: (1) an Age Exclusion—categorical denial of certain treatments (hormones, surgeries) to persons under 18; (2) a Cosmetic Exclusion—categorical ban on coverage of cosmetic procedures (defined as those solely to improve appearance).
- DOH issued March 2015 guidance barring cosmetic procedures, then June 2015 guidance allowing medically necessary cosmetic procedures with prior authorization; plaintiffs filed a facial challenge to the regulation itself.
- Court previously held the regulation facially bars cosmetic procedures; defendant sought reconsideration relying on the June Guidance and argued plaintiffs’ claims might be unripe or moot.
- The Court considered deference principles but held § 505.2(Z)’s plain text unambiguously bars cosmetic procedures, so the June Guidance is not entitled to deference and cannot defeat the facial challenge.
- The Court certified two subclasses (Cosmetic Subclass: >=18; Age Subclass: <18), denied decertification, resolved several standing and ripeness disputes (dismissing one named plaintiff for lack of admissible proof of individualized medical necessity), and ruled on multiple statutory claims, granting relief for cosmetic-exclusion challenges under Medicaid Availability and Comparability provisions but leaving Age-Exclusion claims (especially regarding surgeries and hormone therapy for minors) for trial due to genuine factual disputes about medical necessity and Compendia/FDA coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 505.2(Z) facially bans coverage of cosmetic procedures | §505.2(Z) expressly bars cosmetic procedures and thus is invalid to the extent it denies medically necessary care | June Guidance allows medically necessary cosmetic procedures with prior authorization, so no facial ban exists | Court: text of §505.2(Z) unambiguous; June Guidance not controlling; facial ban stands for purposes of challenge |
| Class certification (single class vs subclasses; typicality/adequacy) | A single class is appropriate; injuries derive from unitary course of conduct | Different legal/factual issues for cosmetic vs age claims require decertification | Court: certifies class but creates two subclasses (Cosmetic >=18; Age <18); named plaintiffs adequately represent subclasses after amendment |
| Medicaid Availability & Comparability (Cosmetic Exclusion) — whether categorical ban on cosmetic procedures violates 42 U.S.C. §1396a(a)(10)(A),(B) | Categorical bans on medically necessary treatments are impermissible; cosmetic procedures can be medically necessary | DOH says regulation and guidance limit coverage appropriately; selective approvals show no facial injury | Court: grants plaintiffs summary judgment re Cosmetic Exclusion under Availability and Comparability provisions (cosmetic ban unlawful) |
| Medicaid Availability & Comparability and EPSDT (Age Exclusion) — coverage of surgeries and hormone therapies for minors | Many experts and WPATH/Endocrine guidelines support some treatments for minors; categorical exclusion unlawful | Compendia/FDA rules allow exclusion of non–medically accepted drug uses; DOH contends lack of FDA/Compendia support and disputed medical consensus | Court: summary judgment denied on Age Exclusion claims; issues of medical necessity, safety/efficacy, and whether DOH consistently enforces a Compendia-based drug policy are triable factual issues |
Key Cases Cited
- Cruz v. Zucker, 116 F. Supp. 3d 334 (S.D.N.Y. 2015) (prior opinion in same litigation addressing scope of §505.2(Z))
- Barnhart v. Walton, 535 U.S. 212 (2002) (agency deference to interpretation of its own regulation)
- Auer v. Robbins, 519 U.S. 452 (1997) (deference to agency interpretation of ambiguous regulation)
- Christensen v. Harris Cty., 529 U.S. 576 (2000) (Auer deference limited to ambiguous regulations)
- Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012) (agency interpretation plainly erroneous and not entitled to deference)
- Florez ex rel. Wallace v. Callahan, 156 F.3d 438 (2d Cir. 1998) (when interpretation is "plainly erroneous")
- Marisol A. v. Giuliani, 126 F.3d 372 (2d Cir. 1997) (class certification standards and use of subclasses)
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (commonality requirement under Rule 23)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing at summary judgment)
- Desiderio v. Nat’l Ass’n of Sec. Dealers, Inc., 191 F.3d 198 (2d Cir. 1999) (no futile gesture required before suit)
- DeSario v. Thomas, 139 F.3d 80 (2d Cir. 1998) (scope of Medicaid obligations and medical-necessity standard)
- Alexander v. Choate, 469 U.S. 287 (1985) (services must be sufficient to achieve purpose; limits must not frustrate provision of necessary care)
- Northeast Fla. Chapter of Associated Gen. Contractors v. City of Jacksonville, 508 U.S. 656 (1993) (voluntary cessation and standing principles)
- City of Mesquite v. Aladdin’s Castle, 455 U.S. 283 (1982) (repeal does not necessarily moot challenge)
- Davis v. Shah, 821 F.3d 231 (2d Cir. 2016) (Comparability Provision prohibits discrimination among individuals with same medical needs)