A federal judge on Friday expanded and tailored an order protecting federally funded health care providers and state insurance plans from a U.S. Department of Health and Human Services (HHS) rule that would require them to provide gender transition procedures. The initial order, issued July 3, applied only to Texas and Montana. However, at the states’ request, Judge Jeremy D. Kernoble applied the order nationwide, reasoning that “the provisions of the Final Rule challenged here are unlawful as to all participants, not just the Plaintiffs in this case.”

On May 6, 2024, HHS released a final rule, “Nondiscrimination in Health Programs and Activities,” that “would require healthcare providers and States to perform and pay for so-called ‘gender-transition’ procedures — or else lose federal funding,” Kernoble summarized.

The federal government provides roughly two-thirds of the funding for Medicaid, although the program is administered at the state level. Under this rule, states that refused to cover gender transition procedures through their Medicaid program would lose their share of federal funding, forcing them to choose between dramatically curtailing coverage or crippling their state budget to cover the difference. The rule would also disqualify health care providers who were unwilling to provide gender transition procedures, such as faith-based hospital systems, for Medicaid or any other federally funded health coverage.

HHS claimed the authority for this rule rested in federal statutes that prevent discrimination “on the basis of sex,” such as Title IX of the Education Amendments of 1972 and Section 1557 of the Affordable Care Act (ACA).

“Although the Final Rule specifically declines to define ‘sex,’” the judge noted, “it expands the definition of ‘discrimination on the basis of sex’ to a non-exhaustive list that includes discrimination on the basis of: ‘(i) Sex characteristics, including intersex traits; (ii) Pregnancy or related conditions; (iii) Sexual orientation; (iv) Gender identity; and (v) Sex stereotypes.’”

Thus, the rule “attempt[ed] to impose a sweeping new social policy by manipulating and perverting the statutory text that constrains them,” wrote Kernoble, a Trump-appointed federal judge in the Eastern District of Texas. “Nothing in these statutes authorizes HHS — or any federal official — to require healthcare providers to perform novel ‘gender-transition’ procedures or force States to subsidize them.”

In fact, the judge continued, “When Congress enacted the ACA in 2010, no agency — or court — had ever interpreted ‘on the basis of sex’ to mean ‘on the basis of gender identity.’” Since HHS first attempted to redefine discrimination “on the basis of sex” to include gender identity in 2016, federal courts have rejected their interpretation of the law no less than three times, he reviewed.

If anything, HHS’s case has only weakened since then, Kernoble argued. In June, the Supreme Court overturned the longstanding Chevron doctrine, which had granted administrative agencies substantial “deference” in interpreting congressional statutes. With Chevron struck down, “a court should no longer defer to an agency’s interpretation of a statute but should decide for itself ‘whether the law means what the agency says,’” he quoted from the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo (2024). “The Court thus owes no deference to HHS’s interpretation of the governing statutes, but rather ‘begins with the text’ of the statute — as all courts do.”

The HHS rule not only misinterpreted civil rights law but also threatened principles of federalism, Kernoble continued. Texas and Montana sued to block the rule because both states exclude gender transition procedures from state Medicaid coverage, and both prohibit these procedures for minors. However, he said, the HHS rule “purports to override and preempt all State laws to the contrary,” effectively “requiring states to pay for ‘transition’ and other ‘gender-affirming’ procedures.”

Consequently, Judge Kernoble issued a stay on July 3, indefinitely postponing the HHS’s rule’s effective date in Texas and Montana.

On August 30, the judge agreed with Texas and Montana that the stay “should apply nationwide” because it was “unlawful as to all participants, not just the Plaintiffs in this case.”

At the same time, he granted a government motion to tailor the stay so that certain portions of the 182-page regulation could take effect. “The Court’s review of the Final Rule confirms that only certain sections of the Final Rule’s codified regulations rely on the challenged interpretation,” he wrote. “The remaining sections of the Final Rule are unrelated to Plaintiffs’ challenge and should not be included in the stay.”

“By blocking this destructive policy, which would have forced taxpayer-funded hospitals to conduct unproven and dangerous ‘gender transition’ procedures, Texas has delivered a major victory for Americans across the country,” Texas Attorney General Ken Paxton (R) responded to the latest ruling. “When Biden and Harris sidestep the Constitution to force their unlawful, extremist agenda on the American public, we are fighting back and stopping them.”