Defense Department’s insurance program ordered to cover gender-affirming surgery

Chief Judge Nancy Torresen of the US District Court for Maine ruled on Nov. 1 that the Defense Department violated the Fifth Amendment of the Constitution when the department’s health program, TRICARE, informed two transgender women who get their health insurance through TRICARE that the program would not cover their gender-affirming surgery. This denial was based on legislative and regulatory language which appears to forbid the TRICARE program from paying for such surgery. The court held that this denial violates equal protection as applied to the plaintiffs.

In what is apparently a case of “first impression” because neither the Supreme Court nor that U.S. Court of Appeals for the First Circuit has directly addressed the issue, the court granted summary judgment to the plaintiffs on their “as-applied” equal protection claim, issuing a declaratory judgment that the exclusionary policy violates the plaintiffs’ constitutional rights. The court directed the parties to “meet and confer” and inform the court by Nov. 15 whether injunctive relief is necessary. This signals the judge’s hope that the Defense Department will react to the judgment by abandoning enforcement of the exclusion without being explicitly ordered to do so in an injunction.

According to Judge Sorensen’s opinion, TRICARE “delivers services through US Department of Defense facilities and participating civilian health care providers” and is the source of insurance coverage for “over 9.6 million active-duty servicemembers, retirees, and their families.” In this case, the plaintiffs are dependents of former servicemembers who have been diagnosed with gender dysphoria and who were informed that coverage for their intended gender-affirming surgery would not be provided. Both of them have been receiving cross-sex hormones covered by TRICARE, and they went ahead with the surgery without the insurance coverage while seeking a judgment from the court. Their complaint sought damages to cover their costs of having the surgery.

The statute establishing TRICARE provides that coverage will not be provided for any surgery that “improves physical appearance” without “significantly restoring functions” and the exclusion includes “sex gender changes.” A regulation issued under the statute repeats this exclusion, stating that TRICARE does not cover “any procedures related to sex gender changes” and another regulation bars any “surgery performed primarily for psychological reasons (such as psychogenic).” The plaintiffs argue that the exclusion discriminates against them because of their sex and transgender status, since gender-affirming surgery is available under TRICARE for cisgender individuals who require it for other reasons. For example, somebody identified as female at birth who seeks breast removal as part of treatment for breast cancer is covered, but removal as part of gender transition is not covered. The prohibition extends only to surgery, however. Hormone treatment is not excluded, even if it is for purposes of gender transition.

The court rejected the government’s argument that gender transition would be excluded from coverage as “cosmetic surgery” intended to deal with a psychological problem rather than a medical one, crediting expert testimony that gender identity is “innate, impervious to external influences, and cannot be changed by medical or psychological intervention,” and that “there is a scientific consensus that gender identity is biologically based.” As such, treating gender dysphoria surgically is not, in the court’s view, just a psychological procedure.

The court considered arguments that the exclusion was facially unconstitutional as written or, alternatively, unconstitutional as applied to persons in the position of these plaintiffs. Judge Sorensen wrote that “the Plaintiffs’ facial challenge fails because, as they acknowledge, there is an interpretation of the Statutory Exclusion that does not violate their Equal Protection rights. Specifically, the Plaintiffs argue that the ‘plain language’ of the Statutory Exclusion does not encompass medially necessary gender transition surgeries, which ‘significantly restore functions and are not designed to improve physical appearance.’” This is one plausible interpretation of the statutory language once one accepts the expert testimony submitted by the Plaintiffs about the nature of gender dysphoria and the methods of treating it.

On the other hand, this is not how the Defense Department is interpreting the statute or the regulations, since they denied coverage for the Plaintiffs. Thus, the argument can be made that their interpretation of the regulation and its application to the plaintiffs are unconstitutional.

To get to that point, the court has to decide the standard of judicial review to apply to the case. Judge Sorensen found that cases from other circuit and district courts have applied “heightened scrutiny” in cases challenging government discrimination because of the plaintiff’s transgender status, following the logic of the Supreme Court’s 2020 ruling in Bostock v. Clayton County, where the court found that discrimination because of transgender status is a form of “discrimination because of sex.” Judge Torresen found that this approach should apply to the present case. Applying “heightened scrutiny” places the evidentiary burden on the government to show that that government has an important policy that is substantially advanced by denying this coverage.

The court found that the government failed to do this. Instead, it focused its arguments on claiming that the plaintiffs lacked ‘standing’ to challenge the statutory and regulatory provisions and that the plaintiffs had never expressly challenged the regulation, stating that surgery for psychological reasons was not covered. Since the court accepted the evidence that gender-affirming surgery for persons with gender dysphoria is not excluded by the psychological exclusion provision, and the denial of coverage certainly supported the plaintiffs’ standing, the court rejected the government’s argument.

The bottom line is that the court granted summary judgment to the plaintiffs on their equal protection “as applied” challenge and issued a declaratory judgment to that effect, while ruling in favor of the government on its summary judgment motion to dismiss the “facial unconstitutionality” challenge, and refrained from ruling on the plaintiffs’ request for a permanent injunction, waiting to see whether the government will change its interpretation of the statute and regulation to cure the constitutional problem.

Plaintiffs are represented by attorneys from Orrick, Herrington & Sutcliffe, LLP (Boston), the Columbia Center (Washington, D.C.), and GLBTQ Legal Advocates & Defenders (Boston).

Judge Torresen was appointed by President Barack Obama. An appeal to the First Circuit Court of Appeals would come to the only federal circuit court with no Republican appointees among its active judges.