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From Health Law Daily, April 26, 2019

Transgender plaintiffs denied surgery under Medicaid entitled to injunction

By Robert B. Barnett, Jr., J.D.

A Wisconsin federal court has agreed to class certification and to extend a preliminary injunction prohibiting the Wisconsin Medicaid agency from enforcing two exclusions denying coverage for transgender surgeries and drug treatments pending the individual’s lawsuit.

A group of Wisconsin transgender individuals wanting gender-confirming surgeries to cure their gender dysphoria were entitled to certification as a class in their suit, which was brought against the Wisconsin Medicaid agency seeking to overturn a state administrative rule excluding transgender surgeries from Medicaid coverage. In effect, the suit raises the question whether a state may refuse medical procedures based on sex rather than on medical efficacy. The court also agreed to extend a preliminary injunction the transgender individuals had obtained to stop the Wisconsin Medicaid agency from enforcing the exclusion. The injunction does not necessarily entitle the transgender individuals to the gender-confirming surgeries; it merely requires that Wisconsin evaluate their requests on medical necessity pending completion of the suit (Flack v. Wisconsin Department of Health Services, April 23, 2019, Conley, W.).

Background. Several transgender individuals living in Wisconsin suffered from gender dysphoria and anxiety. They received hormone therapy that did not cure the dysphoria. Their physicians recommended gender-confirming surgery and related procedures, which the physicians said were medically necessary to treat their ailments. They sought coverage for the procedures through Medicaid. And, in all cases, the Wisconsin Department of Health Services denied those claims, citing two Wisconsin code provisions. Those two provisions, which are part of a long list of exclusions from coverage, apply to "Drugs, including hormone therapy, associated with transsexual surgery or medically unnecessary alteration of sexual anatomy or characteristics" and "Transsexual surgery." The individuals brought suit in Wisconsin federal court against the Medicaid agency, asking the court to invalidate the two exclusions. The court granted their request to preliminarily enjoin the Medicaid agency from enforcing those exclusions. They then filed two motions: (1) a motion certify a class and (2) a motion to amend the preliminary injunction.

Removal impact. Prior to addressing the issues raised in the motion, the court addressed the potential financial impact on Wisconsin’s Medicaid budget if the exclusions were removed. The Medicaid agency contended that the impact would be severe, if it were suddenly required to pay for numerous expensive treatments. The court, however, seemed to side with the transgender individuals’ medical expert, who testified that it would involve minimal short-term costs and possible long-term savings from the reduced ongoing costs in treating these ailments that the surgeries were designed to eliminate.

Class certification. The court evaluated whether the class certification requirements of numerosity, commonality, typicality, and adequacy were satisfied. Because the claims were so similar, with only minor differences in some of the ancillary treatments some individuals sought, the court rather easily satisfied itself that those requirements were satisfied. The only real question was numerosity. The court concluded, that approximately 5,000 Wisconsin Medicaid enrollees were transgender. Some unknown subset of that group would suffer from gender dysphoria, which should be too many to join in a single lawsuit. Thus, numerosity was satisfied.

As for commonality, among the common issues to be resolved were: (1) whether the exclusions violated an existing prohibition on sex discrimination in federally funded programs, (2) whether the exclusions violated the Medicaid Act’s availability or comparability requirements, and (3) whether the exclusions violated the Equal Protection Clause.

As for adequacy, on the representation side, the various lawyers pursuing this claim were experienced in class actions and in transgender issues. In a final matter, after concluding that Rule 23(a) was satisfied, the court had to satisfy itself that one of Rule 23(b) conditions was also met. It chose Rule 23(b)(2), which provides that class certification is appropriate where a single injunction or declaratory judgment would provide relief to each member of the class. As a result, the court certified a class of all transgender individuals who were enrolled in Wisconsin Medicaid, who have or who will be diagnosed with gender dysphoria, and who have or who will seek surgical or medical services to treat gender dysphoria.

Preliminary injunction. The transgender individuals made the same arguments for extending the preliminary injunction through the end of the case that they made in obtaining the injunction initially. The court, therefore, once again looked to evidence of (1) irreparable harm, (2) inadequate legal remedies, (3) likelihood of success, and (4) balance of harms. The court concluded that the first two requirements had met been met by a combination of the agency’s refusal to provide coverage and the high costs of the treatment outside of Medicaid. "Overwhelming evidence" exists, the court said, that the surgeries are medically necessary. The larger medical community already recognizes the surgeries as valid aspects of medical care. Even the agency acknowledged that gender dysphoria is a serious medical condition. As a result, a blanket exclusion was likely to harm class members. Furthermore, having surgery later on, after trial, would not cure the harm that these transgender individuals will experience while they wait.

Turning to the likelihood of success, the transgender individuals had only to establish that their chances of success were better than negligible. Such a likelihood had clearly been established, the court said. As for the balance of harms, the agency argued that extending the injunction would force it to pay for surgeries that cost between $240,000 and $960,000. The transgender individuals argued that, given the relatively small number of Wisconsin Medicaid recipients who need the surgery, the costs amount to nothing more than a rounding error in the state’s $3.9 billion portion of annual Medicaid spending. The court also harkened back to the medical expert’s testimony that the long-term effects might save the state money. Although the court agreed to extend the injunction, questions remained about the scope, with the agency contending that some of the ancillary procedures that the transgender individuals sought, such as electrolysis and voice therapy, were not denied because of the exclusions. The court agreed with the agency, reminding everyone that an extension of the injunction did not mean that the individuals were entitled to all the services they sought; it meant only that Wisconsin was required to base its determination on medical necessity.

Bond. As a final matter, the court ruled that the transsexual individuals were not required to post a bond as a condition of obtaining the injunction because the potential outlays by Wisconsin were likely to be insufficient to justify it.

The case is No. 18-cv-309-wmc.

Attorneys: Joseph J. Wardenski (Relman, Dane & Colfax PLLC) for Cody Flack. Steven Carl Kilpatrick, Wisconsin Department of Justice, for Wisconsin Department of Health Services.

Companies: Wisconsin Department of Health Services

MainStory: TopStory CaseDecisions CMSNews MedicaidNews EligibilityNews MICNews ProgramIntegrityNews WisconsinNews

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