North Carolina Health Care Discrimination Suit Can Move Forward

Plaintiffs include (from left) Max Kadel and Julia McKeown. Courtesy Lambda Legal/TLDEF

The Supreme Court has declined to hear an appeal from the North Carolina State Health Plan, therefore letting stand a lower court's ruling that the plan can indeed be sued over denial of gender-affirming health care to state employees and their dependents.

Lambda Legal and the Transgender Legal Defense and Education Fund are suing the plan on behalf of several state employees over its blanket exclusion of such care, saying the plan violates the Affordable Care Act's ban on discrimination. State officials contended the plan was protected from such suits because of sovereign immunity, "the legal doctrine that precludes bringing a lawsuit against the state without its consent," as Lambda Legal explains. The state also claimed the ACA's discrimination ban was unclear.

In 2020, the U.S. District Court for the Middle District of North Carolina ruled that the plan could be sued, saying the state had waived its sovereign immunity by accepting federal funds. The U.S. Court of Appeals for the Fourth Circuit upheld that ruling last September, in the first decision of its kind by a federal appeals court.

The Supreme Court declined the health plan's appeal Tuesday. It did so without comment, which is usually the practice. The decision means the Lambda-TLDEF suit, filed in 2019, will go forward. The case is known as Kadel v. Folwell.

"We are pleased that the Supreme Court decided not to review this case and that we can now focus on holding North Carolina's State Health Plan accountable for its discriminatory and harmful refusal to provide comprehensive health care coverage -- including for gender-affirming care -- to all its state employees and their dependents," Lambda Legal Senior Attorney and Health Care Strategist Omar Gonzalez-Pagan said in a press release. "The court's denial leaves in place a court of appeals decision strongly affirming that it is unlawful and dangerous for state entities receiving federal funding to engage in discrimination in health care and that they are not immune from accountability in court. Entities, like the State Health Plan, must be held accountable when they discriminate and violate people's rights. Today's decision protects the rights of marginalized people, including LGBTQ people and people living with HIV, to seek justice and obtain relief in court if they are subjected to health care discrimination."

"The Fourth Circuit got it right with its carefully considered September 2021 opinion deciding that states receiving federal funding can be sued if they discriminate," added TLDEF Legal Director David Brown. "It's disappointing that the State of North Carolina is wasting resources on Hail Mary passes, having now spent years in court to defend its ongoing discrimination, but we are determined to win a favorable outcome for our clients along with all state employees and their families this year."

"I am pleased with today's decision, and I look forward for our case to prevail in court moving forward," said one of the plaintiffs, Julia McKeown, an assistant professor at North Carolina State University. "Transgender state employees, like myself, deserve the same access to benefits and equal treatment as any other employee. We dedicate our time and talent to improve the well-being of the state and our neighbors, yet we are deprived of medically necessary and often lifesaving health care services. This is an injustice."