(Reuters) - A U.S. appeals court panel was sharply divided on Wednesday over whether North Carolina's health insurance plan for state workers can exclude coverage for gender reassignment surgery, hormone therapy and other treatments commonly sought by transgender people.
A lawyer for the state tried to convince a three-judge 4th U.S. Circuit Court of Appeals panel at oral arguments in Richmond, Virginia, that the exclusion did not amount to unlawful sex discrimination because it applied to specific procedures and not explicitly to transgender people.
North Carolina and at least 15 other states including Texas, Florida, Ohio and Georgia explicitly exclude coverage for gender transition-related procedures in their employee health plans. The lawsuit against North Carolina by a group of state employees is the first of its kind to reach a federal appeals court.
In a tense exchange with Circuit Judge Roger Gregory, the state's lawyer, John Knepper, insisted that the exclusion was not discriminatory because it applied equally to all plan members, and was necessary to contain skyrocketing insurance premiums for state employees.
"So you have to pick on somebody to do that?" asked Gregory, who was appointed by Democratic former President Bill Clinton.
"The plan is picking on everybody," Knepper replied.
"In this provision it's not," the judge said.
"The plan is refusing to add new benefits whenever it is asked," Knepper said.
Meanwhile, Circuit Judge G. Steven Agee, an appointee of Republican former President George W. Bush, appeared to side with the state.
Agee said the case seemed indistinguishable from Geduldig v. Aiello, in which the Supreme Court in 1974 said a state disability system's refusal to cover pregnancy-related disabilities was not discriminatory against women. And that ruling requires the plaintiffs to show a discriminatory intent in order to prevail, he said.
“You may be able to show there is a disproportionate impact (on transgender people), but that's not sufficient,” Agee said to Tara Borelli of LGBT rights group Lambda Legal, who argued for the plaintiffs.
Borelli told the panel that the exclusion was plainly targeted at transgender people, since it banned coverage for procedures such as hormone therapy when they are related to transitioning but approved them in other contexts. She said Geduldig did not apply because in that case, no one was receiving pregnancy-related disability benefits so there was no differential treatment.
U.S. District Judge Loretta Biggs in Greensboro, North Carolina, last June had agreed with the plaintiffs and ordered the state to begin offering medically necessary services for the treatment of gender dysphoria.
The 4th Circuit panel also includes Circuit Judge Albert Diaz, an appointee of former President Barack Obama who said little during the arguments.
The case is Kadel v. Folwell, 4th U.S. Circuit Court of Appeals, No. 22-1721.
For the plaintiffs: Tara Borelli of Lambda Legal Defense & Education Fund
For the state: John Knepper of Law Office of John G. Knepper