Full federal Appeals Court will rehear case of State Health Plan transgender treatment

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  • The full 4th U.S. Circuit Court of Appeals will hold an "en banc" hearing of a case challenging the N.C. State Health Plan's exclusion of treatment for transgender services.
  • The court decided on its own to hold the "en banc" hearing, more than two months after a three-judge panel considered the case.

The full 4th U.S. Circuit Court of Appeals will rehear a case involving the N.C. State Health Plan’s exclusion of treatment for transgender patients. A three-judge panel had heard oral arguments in the case in January.

“Upon a sua sponte poll of the court, a majority of judges in regular active service and not disqualified voted to rehear this case en banc. It is ordered that rehearing en banc is granted,” according to a court order issued Wednesday. “The parties shall file 16 additional paper copies of their briefs and appendices previously filed in this case within 10 days.”

“En banc” refers to a hearing before the full court, rather than the standard three-judge panel for federal Appeals Court cases. “Sua sponte” means that the court took the action voluntarily, without a request from either party in the case.

Chief Judge Roger Gregory and Judges Albert Diaz and Steven Agee initially heard the case titled Kadel v. Folwell on Jan. 25. Gregory, who joined the Appeals Court as a recess appointment from President Bill Clinton, later secured renomination from President George W. Bush. Bush also nominated Agee, while President Barack Obama nominated Diaz.

State Treasurer Dale Folwell, who oversees the State Health Plan, is working with the plan’s executive administrator to overturn a June 2022 trial court order. That order called on the plan to pay for “medically necessary services” for transgender employees and their dependent children. Those services include hormone therapy and some surgeries. A 2019 lawsuit challenged the plan’s policy denying coverage.

The plan provides medical coverage for more than 750,000 teachers, state employees, retirees, lawmakers, and their dependents. It provides counseling for gender dysphoria and other diagnosed mental health conditions. Prior to the trial court ruling, it did not cover treatment “in connection with sex changes or modifications and related care.”

The trial court ruling from U.S. District Judge Loretta Biggs prompted the State Health Plan to reinstate excluded coverage in July 2022. Coverage had been provided for a single year in 2017 before the plan adopted its challenged policy.

Biggs ruled that the plan unlawfully discriminated against transgender people. She determined that the plan violated both the equal protection clause of the Constitution and Title VII of the Civil Rights Act on the basis of sex.

Seventeen other states and Washington, D.C., filed a friend-of-the-court brief supporting the plaintiffs. Those states pay for the type of care involved in the N.C. dispute.

“We obviously disagree with the judge’s order that is, in essence, assuming responsibility for determining plan benefits for sex transition operations,” Folwell said in a July news release. “We’re also disappointed the court decided to stop the case from being heard by a jury of North Carolinians. However, I’ve always said that if the legislature or the courts tell me we have to provide for sex transition operations and treatments, I would.” 

“Since my first day in office, we’ve been trying to lower health care costs for those that teach, protect, and otherwise serve,” Folwell said. “We’ve been battling the hospital cartel to provide transparent pricing to our members so that they can actually understand what they’re paying for health care. The Board has rightly been about reducing costs and limiting spending to those benefits that do the most good for the most members. This case has always been about protecting the authority of the Board to sustain the Plan for current, future, and retired members and nothing else.” 

“I strongly respect the rule of law,” Folwell added. “So, until it is no longer in force, I must comply with the court’s order.”