Court Hits Pause on OCRs Section 1557 Rules

As discussed in a prior blog post, the Department of Health and Human Services’ Office for Civil Rights’ (“OCR’s”) issued its revised interpretation of Section 1557 of the Affordable Care Act (“ACA”). OCR’s revised interpretation eliminated “gender identity” from the list of protected classes. As At almost the same time, the U.S. Supreme Court decided Bostock v. Clayton County, Georgia which found that “gender identity” was protected under Title VII of the Civil Rights Act of 1964. OCR’s new provisions were set to become effective on August 18. However, on August 17, 2020, Judge Frederic Block, a senior judge in the eastern district of New York, issued a preliminary injunction against OCR preventing their interpretation from taking effect.

The new rule under Section 1557 contained several changes, but the preliminary injunction was limited to the changes regarding “gender identity” and LGBTQ protections. The injunction was issued on the basis of the Supreme Court case reaching the opposite interpretation of the OCR. In addition, the Judge criticized OCR for issuing the ruling when it new knew the Bostock decision was coming. In fact, the decision was issued three days after the OCR rule was announced but before it was actually published. The Judge also criticized OCR for using the arguments advanced by the Department of Justice, even though it lost at the Supreme Court. Knowing the Supreme Court decision, OCR should have paused on issuing its rules to consider the Court’s ruling.

Because the court ruling is only limited to the LGBTQ provisions of the 2016 and 2020 rule, all the other provisions, including the reduction in the paperwork under Section 1557, became effective on August 18, 2020. Right now employers do not need to do anything with regard to the court’s Court’s ruling. However, in light of the Bostock decision, employers should review all their policies and procedures to make sure that LGBTQ employees are not being adversely impacted.

If you have any questions about Section 1557 or about benefits in general, please contact any of Graydon’s employee benefits team.