M.H. v. Jeppesen, 677 F.Supp.3d 1175

Background

Plaintiffs MH and TB are transgender women enrolled in Idaho Medicaid who sought prior authorization for medically recommended genital reconstruction surgeries to treat gender dysphoria.
IDHW (and Medical Director Dr. Magni Hamso) denied or indefinitely delayed coverage: MH was initially denied for purported failure to show 12 months of hormone therapy and later told surgeries are "cosmetic"; MH’s appeal was preliminarily remanded but renewed requests remain unresolved; TB’s requests remain pending without final decisions despite supporting medical letters.
Plaintiffs sued under Section 1557, multiple provisions of the Medicaid Act, and the Fourteenth Amendment (Equal Protection and Due Process), seeking injunctive relief and damages; they proceeded using pseudonyms.
Defendants moved to dismiss limited issues: (1) viability of the Equal Protection claim; (2) availability of compensatory damages under the Medicaid Act against Dr. Hamso individually; and (3) whether Dr. Hamso is entitled to qualified immunity for the constitutional claims.
The Court denied dismissal of the Equal Protection claim and denied dismissal on qualified immunity at the pleadings stage for both Equal Protection and Due Process claims, but held compensatory damages under the Medicaid Act are not available against Dr. Hamso individually and dismissed those claims against her.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Viability of Equal Protection claim (facial and as‑applied)	IDHW’s exclusion of genital reconstruction for gender dysphoria is proxy or direct discrimination against transgender people who alone have that diagnosis; similarly situated cisgender patients receive coverage for materially identical surgeries for other indications.	The policy is facially neutral and treats a medical condition/treatment (gender dysphoria surgery) not a protected class; Geduldig permits exclusion of a condition (like pregnancy) without sex‑based scrutiny.	Court: Plaintiffs plausibly alleged either proxy discrimination or facial sex‑based discrimination; Geduldig does not control at pleading stage — Equal Protection claim survives.
Recoverability of compensatory (emotional distress) damages under the Medicaid Act against Dr. Hamso individually	Plaintiffs initially sought such damages against Dr. Hamso.	Defendants argued compensatory damages are not recoverable under the Medicaid Act (citing Cummings).	Court: Plaintiffs conceded they cannot recover emotional distress damages under the Medicaid Act; Medicaid Act claims dismissed as to Dr. Hamso individually.
Whether Dr. Hamso entitled to qualified immunity on Equal Protection claim	Plaintiffs: discrimination against transgender persons is sex‑based/quasi‑suspect and was clearly established; pleadings allege plausible constitutional violation.	Defendants: Geduldig shows no constitutional violation and thus no clearly established law was violated.	Court: On the record, violation is plausibly alleged and the right was sufficiently established; qualified immunity at dismissal stage is premature — claim proceeds against Dr. Hamso individually.
Whether Dr. Hamso entitled to qualified immunity on Due Process claim (property interest in Medicaid benefits)	Plaintiffs allege a legitimate entitlement to Medicaid benefits and that IDHW’s denials/delays deprived them without process; past coverage of similar surgeries for cisgender patients supports property interest.	Defendants argue Medicaid coverage scope is discretionary and no clearly established property interest in genital reconstruction surgery existed.	Court: Plaintiffs plausibly alleged a protected property interest in continuing Medicaid benefits and procedural deprivation; qualified immunity denied at this stage (may be revisited later).

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (pleading must state a plausible claim)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
Geduldig v. Aiello, 417 U.S. 484 (upheld exclusion of pregnancy‑related condition from benefits program)
Karnoski v. Trump, 926 F.3d 1180 (heightened scrutiny applies to transgender status discrimination)
Bostock v. Clayton County, 140 S. Ct. 1731 (discrimination against transgender persons is discrimination based on sex)
Pearson v. Callahan, 555 U.S. 223 (qualified immunity two‑step framework)
Ashcroft v. al‑Kidd, 563 U.S. 731 (clearly established rights standard for qualified immunity)
Goldberg v. Kelly, 397 U.S. 254 (government benefits can create protected property interests requiring due process)
Mathews v. Eldridge, 424 U.S. 319 (balancing test for procedural due process)