North Carolina treasurer appeals order requiring state health plan to cover sex-change surgery

North Carolina Treasurer Dale Folwell is appealing a federal court order requiring the state health plan to fund sex-change operations.

Folwell announced Wednesday that the state health plan will not enforce a benefit exclusion for sex transitions, modifications or related care to comply with U.S. District Court Judge Loretta Biggs' June 10 order in Kadel v. Folwell.

"We obviously disagree with the judge's order that is, in essence, assuming responsibility for determining plan benefits for sex-transition operations," Folwell said. "We're also disappointed the court decided to stop the case from being heard by a jury of North Carolinians. However, I've always said that if the legislature or the courts tell me we have to provide for sex-transition operations and treatments, I would."

The recent ruling stems from a 2019 lawsuit from the Lambda Legal Defense and Education Fund and Transgender Legal Defense & Education Fund on behalf of several current and former state employees and their dependents.

The plan — which insures more than 750,000 teachers, state employees, the governor, legislators, state university personnel, non-Medicare retirees and dependents — included an exclusion for surgical and hormonal treatments "related to the diagnosis of gender dysphoria" that dates back to the 1990s.

Under Folwell's predecessor, the health plan board opted not to enforce the exclusion for a year, from December 2016 to 2017, in anticipation of federal regulations that never materialized. Folwell asked state Attorney General Josh Stein to represent the state health plan, but he refused, Folwell said.

The plaintiffs argued transition services are "medically necessary services" and that denying coverage for gender dysphoria is discrimination. Biggs agreed the health plan's exclusion "discriminates based on sex and transgender status in violation of the Equal Protection Clause of the U.S. Constitution and discriminates because of sex in violation of Title VII" of the federal Civil Rights Act, according to the Winston-Salem Journal.

Biggs wrote that "defendants have not submitted any admissible evidence to refute that these treatments were 'medically necessary,' and it appears both (the state health plan) and Blue Cross agree that they would have been covered in absence of the exclusion."

"Defendants' belief that gender-affirming care is ineffective and unnecessary is simply not supported by the record," Biggs wrote, according to the paper.

"Defendants are ... ordered to reinstate coverage for 'medically necessary services' for the treatment of gender dysphoria," the order read. "The issue of damages is reserved for trial."

"We believe the judge's order is legally incorrect; therefore it is now being appealed to the United States Court of Appeals for the Fourth Circuit," Folwell said.

Folwell contends the state health plan's exclusion for gender dysphoria is about cost savings and maximizing benefits, rather than discrimination.

"Since my first day in office, we've been trying to lower health-care costs for those that teach, protect and otherwise serve," he said. "We've been battling the hospital cartel to provide transparent pricing to our members so that they can actually understand what they're paying for health care. The Board has rightly been about reducing costs and limiting spending to those benefits that do the most good for the most members. This case has always been about protecting the authority of the Board to sustain the Plan for current, future and retired members and nothing else."