Court Blocks Enforcement of Certain ACA Section 1557 and Title VII Nondiscrimination Rules Against Christian Employers Group

A federal trial court has blocked HHS and the EEOC from enforcing certain agency interpretations of Section 1557 of the Affordable Care Act (ACA) and Title VII of the Civil Rights Act against a Christian employers group. The group assists member employers to provide health or other employment benefits to their employees, consistent with the employers’ Christian values. Among other nondiscrimination provisions, Title VII bans employers with 15 or more employees from engaging in sex discrimination, and Section 1557 prohibits sex discrimination in “any health program or activity.” The EEOC has interpreted Title VII to protect against gender identity discrimination (see, e.g., our Checkpoint article), a position bolstered by the U.S. Supreme Court’s Bostock decision (see our Checkpoint article). HHS regulations issued in 2016 interpreted Section 1557 as prohibiting discrimination based on gender identity and termination of pregnancy (see our Checkpoint article). Legal actions followed, resulting in comprehensively revised Section 1557 regulations in 2020. Among other things, the 2020 regulations repealed significant portions of the 2016 regulations, including the protections based on gender identity and termination of pregnancy (see our Checkpoint article). However, courts have since blocked enforcement of the 2020 rules removing gender identity and termination of pregnancy from the nondiscrimination protections (see our Checkpoint article), and HHS has announced that it will interpret Section 1557 as applying to discrimination based on sexual orientation and gender identity (see our Checkpoint article).

In its lawsuit against HHS and EEOC, the Christian employers group argued that the agencies’ interpretation and implementation of Section 1557 and Title VII violate their members’ free exercise of religion and free speech rights under the U.S. Constitution and religious rights under the Religious Freedom Restoration Act. Concluding that the group likely faces irreparable injury from compliance with the rules and has demonstrated a likelihood of success on the merits, the court issued a preliminary injunction enjoining HHS from interpreting or enforcing Section 1557 and its regulations against the group’s present or future members in a manner that would (1) require them to provide, offer, perform, facilitate, or refer for gender transition services, or (2) prevent, restrict, or compel the group members’ speech on gender identity issues. Furthermore, the EEOC is enjoined from interpreting or enforcing Title VII against the group, its insurers, or third-party administrators (TPAs) in a manner that would require the group’s present or future members to provide insurance coverage for gender transition services.

EBIA Comment: This preliminary injunction appears to cover only the group involved in the litigation, and the application of Section 1557 and Title VII to employer-sponsored health plans remains in flux, now more than ever. As we await guidance from the agencies, plan sponsors, insurers, and TPAs should monitor developments (new proposed regulations under Section 1557 are anticipated in Spring 2022) and be mindful of plan provisions that could invite costly legal challenges. For more information, see EBIA’s Health Care Reform manual at Section XXXIV.A (“Section 1557 Nondiscrimination: Grounds Prohibited Under Federal Laws”) and EBIA’s Group Health Plan Mandates manual at Sections XXI.C (“EEOC’s Position on Title VII and Health Coverage”) and XXI.M.1 (“Interaction of Title VII and Section 1557”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.D.5 (“Section 1557 Nondiscrimination: Nondiscrimination in Health Programs and Activities”).

Contributing Editors: EBIA Staff.