620 F.Supp.3d 339
M.D.N.C.2022Background
- Plaintiffs are current or former North Carolina state employees or their dependents who are transgender; NCSHP denied coverage based on a longstanding exclusion for “treatment or studies leading to or in connection with sex changes or modifications.”
- Plaintiffs allege the exclusion violates the Equal Protection Clause, the ACA, and (for plaintiff Caraway) Title VII; Plaintiffs sought declaratory, injunctive, and monetary relief.
- NCSHP briefly removed the exclusion and covered medically necessary gender‑affirming care in 2017, then reinstated the categorical exclusion in 2018; Plan administrators (Blue Cross/CVS) implemented denials for hormones and surgeries tied to codes for trans care.
- Extensive expert conflict: Plaintiffs’ experts and major medical associations support gender‑affirming care as medically necessary in many cases; several defense experts were limited or excluded under Daubert for lack of qualification, relevance, or reliable methodology.
- The court granted Plaintiffs summary judgment on the Equal Protection claim, granted Caraway summary judgment on her Title VII claim against DPS (but not NCSHP), permanently enjoined enforcement of the exclusion and ordered reinstatement of coverage for "medically necessary services for the treatment of gender dysphoria;" the ACA claim was reserved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Equal Protection — level of scrutiny / facial discrimination | Exclusion facially discriminates on basis of sex and transgender status; intermediate scrutiny applies | Exclusion targets diagnosis or cost control, not sex; analogous to pregnancy exclusion in Geduldig | Court: exclusion facially discriminates; intermediate scrutiny applies; Defendants failed to show exclusion substantially related to an important interest; summary judgment for Plaintiffs |
| Justification — government interest (effectiveness/cost) | Cutting off ineffective treatments is not needed when narrower, sex‑neutral alternatives exist; coverage is medically necessary for many | Exclusion saves Plan costs and protects members from ineffective/unsafe treatments | Court: protecting public from ineffective treatments is important, but admissible evidence did not show categorical exclusion substantially related to that interest; less‑restrictive alternatives (medical‑necessity review) exist |
| Title VII — is NCSHP Caraway’s employer / agent or joint employer? | Caraway: NCSHP exerts control over benefits and so is an employer/agent/joint employer | NCSHP: not Caraway’s employer; no hiring/firing or day‑to‑day control | Court: on summary judgment record, NCSHP is not Caraway’s employer or DPS’s agent; NCSHP granted summary judgment on Caraway’s Title VII claim |
| Title VII — DPS liability & standing | Caraway: DPS provided and administered the Plan to its employees and partially funded it; DPS’ provision caused injury | DPS: only ministerial role and no authority to set Plan coverage; thus not fairly traceable | Court: Caraway has standing; DPS provided the discriminatory benefit as part of compensation and is a but‑for cause; summary judgment for Caraway against DPS (liability); damages reserved |
| ACA — applicability of §18116 to NCSHP | Plaintiffs: Plan discriminates in a federally assisted health program/activity | NCSHP: not a "health program or activity" under HHS’s 2020 rule (excluded entities principally providing insurance) | Court: reserved judgment on ACA claim pending developments and potential changes in HHS rulemaking |
| Expert testimony (Daubert challenges) | Plaintiffs moved to exclude several defense experts as unqualified, irrelevant, or unreliable | Defendants relied on experts to show treatments ineffective/unsafe | Court: excluded or limited multiple defense experts (Robie excluded; Hruz, McHugh, Lappert, Levine admitted in part and limited) — much defense proof excluded for summary judgment purposes |
| Remedy — injunction requested | Plaintiffs: irreparable harm; injunction to reinstate coverage for medically necessary treatment (2017 status) | Defendants: fiscal, administrative concerns | Court: permanent prohibitory injunction entered; Defendants enjoined from enforcing exclusion and ordered to reinstate coverage for medically necessary treatment for gender dysphoria; damages set for trial |
Key Cases Cited
- Grimm v. Gloucester Cty. Sch. Bd., 972 F.3d 586 (4th Cir. 2020) (intermediate scrutiny applies to sex/transgender classifications and facial discrimination analysis)
- Bostock v. Clayton Cty., 140 S. Ct. 1731 (2020) (discrimination because of transgender status is discrimination "because of sex")
- City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432 (1985) (Equal Protection framework and rational basis default)
- United States v. Virginia, 518 U.S. 515 (1996) ("exceedingly persuasive justification" standard for sex‑based classifications)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment burden shifting principles)
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993) (trial court gatekeeping for expert testimony under Rule 702)
- Geduldig v. Aiello, 417 U.S. 484 (1974) (pregnancy exclusion analysis relied on by defendants but distinguished by court)
- Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U.S. 669 (1983) (fringe benefits and compensation fall within anti‑discrimination statutes)