The decision comes as the Trump administration seeks to supplant the Obama-era rule with a version that excludes gender identity protections.
A federal judge in Texas ruled Tuesday that a rule the Obama administration finalized in 2016 to prohibit gender identity discrimination in healthcare violated the Administrative Procedure Act (APA) and the federal Religious Freedom Restoration Act (RFRA).
U.S. District Judge Reed O'Connor's decision came more than two and a half years after he issued a preliminary injunction in the case to prevent the government from implementing the policy, which is based on Section 1557 of the Affordable Care Act.
O'Connor—the same federal judge who ruled late last year that the entire ACA is invalid—vacated the 2016 rule and sent it back to Health and Human Services for further consideration.
"The Court granted HHS two years to complete its review and amend the Rule at issue," O'Connor wrote in his order. "Despite HHS's better efforts, the rule remains on the books."
Under the Trump administration, the HHS Office for Civil Rights has moved to supplant the Obama administration's reading of Section 1557, which prohibits discrimination in certain health programs on the basis of several characteristics, including sex. While the prior administration had interpreted the statute as implicitly prohibiting discrimination on the basis of gender identity or termination of pregnancy, the current administration proposed its own rule last May that interprets sex discrimination more narrowly.
Related: HHS OCR Moves to Roll Back ACA's Nondiscrimination Regulations
Some healthcare providers had complained that the Obama administration's interpretation of the ACA's nondiscrimination provisions would coerce them into providing healthcare services that contradicted their own medical judgment regarding what care their patients need, such as services related to gender affirmation or transition.
The Becket Fund for Religious Liberty—which represents plaintiffs Franciscan Alliance Inc., the Christian Medical and Dental Society, and Specialty Physicians of Illinois LLC—said in a statement Tuesday that O'Connor's decision means doctors who object to performing gender-transition procedures cannot be forced out of the profession.
"It is critically important that doctors are able to continue serving patients in keeping with their consciences and their professional medical judgment, especially when it comes to the personal health choices of families and children," said Becket vice president and senior counsel Luke Goodrich in the statement. "Doctors cannot do their jobs if government bureaucrats are trying to force them to perform potentially harmful procedures that violate their medical and moral judgment."
"Our clients look forward to joyfully continuing to serve all patients, regardless of their sex or gender identity, and continuing to provide top-notch care to transgender patients for everything from cancer to the common cold," Goodrich added.
When the Trump administration's proposal was released, HHS OCR Director Roger Severino said the change was needed to bring federal policy into compliance with federal law, but he acknowledged that the dispute over what precisely constitutes sex discrimination is pending before the U.S. Supreme Court. The justices heard oral arguments last week over whether Title VII's prohibition of employment discrimination "on the basis of sex" includes sexual orientation and gender identity. The outcome of that case could color the way HHS must interpret other nondiscrimination laws.
"We intend to abide by the injunction and are committed to vigorously enforcing all of the civil rights laws as entrusted to us by Congress, before, during, and after any rulemaking," Severino said in a statement released in response to HealthLeaders' questions.
A spokesperson said HHS OCR is carefully reviewing public comments on the Trump administration's proposed rule.
O'Connor's decision says it severs the plaintiffs' APA and RFRA claims from their claims related to Title VII, the Spending Clause, and the First, 10th, and 11th Amendments to the U.S. Constitution. He stayed the case as it relates to those severed claims.
In addition to vacating the rule Tuesday, O'Connor granted a request from the American Civil Liberties Union of Texas and River City Gender Alliance to intervene as defendants. The intervenors didn't answer questions from HealthLeaders.
The decision to vacate the 2016 rule drew condemnation from LGBTQ rights advocates. Tyunique Nelson, a YouthResource activist who identifies as nonbinary, said their right to healthcare shouldn't even be up for public debate.
"As trans and gender-nonconforming young people, it's bad enough every day we have to deal with people who violate our rights and treat us as lesser human beings," Nelson said in a statement released to HealthLeaders. "Allowing health care providers to deny us care is a danger to our health and a direct threat to our lives. I have the right not to experience discrimination when I'm going to the doctor, and so does every other trans and gender-nonconforming young person."
Related: Final Rule Bolsters Providers' Right to Refuse Services They Deem Objectionable
Related: HHS Policy Pendulum Swinging Back Toward Providers' Rights of Conscience
Related: Meeting the Need for Gender-Affirmation Services
Editor's note: This article was updated Wednesday, October 16, with additional commentary from HHS OCR and a YouthResource activist.
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.