State of Washington v. United States Department of Health and Human Services, 482 F.Supp.3d 1104

Background

HHS promulgated a revised Section 1557 nondiscrimination rule in 2020 (the "2020 Rule") that: (1) omitted the 2016 Rule’s regulatory definition of "on the basis of sex," (2) incorporated the Title IX religious exemption, and (3) narrowed the definition/scope of covered entities (notably excluding entities "principally engaged" in providing health insurance).
The 2016 Rule had defined "sex" to include gender identity and had declined to adopt the Title IX religious exemption; portions of the 2016 Rule were enjoined and later vacated in Franciscan Alliance litigation.
Washington sued and moved for a preliminary injunction challenging three aspects of the 2020 Rule: omission of a definition of "sex," incorporation of the Title IX religious exemption, and the Rule’s scope of covered entities.
Washington primarily asserted state injuries from anticipated increased discrimination or reduced coverage for certain Washingtonians (≈1.58M covered by federal law), and increased state administrative/enforcement costs and harm‑mitigation expenses.
The district court concluded Washington lacked Article III standing: (a) asserted future harms from increased discrimination or coverage loss were speculative and unsupported by concrete evidence that third parties would change conduct, and (b) purported administrative costs were voluntary/self‑inflicted and not fairly traceable to the 2020 Rule.
The court denied the preliminary injunction for lack of standing and ordered Washington to show cause within 10 days why the case should not be dismissed for lack of subject‑matter jurisdiction.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether omission of a regulatory definition of "sex" will harm Washington	Omission will permit discrimination against LGBTQ persons and reduce coverage, causing state economic and public‑health costs	The Rule defers to Title IX statutory text and courts; Bostock and other law affect scope; harms speculative	No standing—Washington’s evidence of increased discrimination/coverage loss was speculative and insufficient
Whether incorporation of Title IX religious exemption injures Washington	The exemption will allow providers/insurers to refuse care, forcing state mitigation and administrative costs	The Rule merely recognizes statutory exemptions; no showing providers will refuse care	No standing—no concrete evidence that providers/insurers will change conduct; mitigation costs voluntary
Whether 2020 Rule’s scope of covered entities injures Washington	Narrowing coverage (e.g., excluding insurers) will enable discrimination and raise state costs	Rule reflects statutory text and does not override state law protections; speculative effect on conduct	No standing—alleged chain of causation to state harms is too tenuous and speculative
Are Washington’s administrative costs traceable and redressable	State will incur costs updating materials and responding to affected residents; injunction would avoid costs	Costs are voluntary and not mandated by the Rule; state can choose not to incur them	No standing—administrative costs are self‑inflicted and not fairly traceable to HHS action

Key Cases Cited

Bostock v. Clayton County, 140 S. Ct. 1731 (2020) (Supreme Court held Title VII "sex" discrimination includes sexual orientation and gender identity; discussed by parties re Title IX/Section 1557)
Franciscan Alliance, Inc. v. Azar, 414 F. Supp. 3d 928 (N.D. Tex. 2019) (vacated portions of 2016 Rule and remanded to HHS)
Franciscan Alliance, Inc. v. Burwell, 227 F. Supp. 3d 660 (N.D. Tex. 2016) (entered preliminary injunction against 2016 Rule’s definition of sex)
California v. Azar, 911 F.3d 558 (9th Cir. 2018) (states found to have standing where agency regulatory impact analysis and specific employers supported a predictable chain to state injuries)
Department of Commerce v. New York, 139 S. Ct. 2551 (2019) (standing where evidence showed likely undercount and predictable state harms)
Clapper v. Amnesty Int’l USA, 568 U.S. 398 (2013) (future injury must be certainly impending; plaintiffs cannot manufacture standing by incurring self‑inflicted harms)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements)
Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (injury‑in‑fact must be concrete and particularized)
DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006) (standing must be established for each claim and form of relief)
Susan B. Anthony List v. Driehaus, 573 U.S. 149 (2014) (requirement that future injury be "certainly impending" or present substantial risk)
City & County of San Francisco v. United States Citizenship & Immigration Servs., 944 F.3d 773 (9th Cir. 2019) (agency estimate of disenrollment provided basis for state standing where harms had begun)