Dallas, TexasIn a decision impacting the interactive process, the Northern District of Texas held in EEOC v. Methodist Hospitals of Dallas, No. 3:2015-cv-03104 (N.D. Tex. Mar. 9, 2017), that employers do not violate the Americans with Disabilities Act (“ADA”) by requiring individuals with disabilities that need reassignment as a reasonable accommodation to compete for vacant positions.

Plaintiff, a former patient care technician, requested an accommodation after an on-the-job injury precluded her from performing the required duties of lifting and transporting patients. Though she met the minimum qualifications for two vacant positions, she was not chosen for the positions and was terminated. The EEOC alleged that the Hospital maintained an unlawful policy by requiring individuals with disabilities to compete for vacant positions where the individual was qualified for the position. The Hospital argued that the EEOC was attempting to mandate additional affirmative action not required by the ADA by asserting that the employer could not choose the most qualified applicant for a vacant position.

Central to the issue in this case, the ADA lists reassignment to a vacant position as a form of reasonable accommodation. 42 U.S.C. § 12111(9). The EEOC guidance on reasonable accommodation also states that an employee does not need to be the best qualified individual for the position in order to be reassigned to a vacant position. However, the circuits have split regarding whether an employer violates the ADA by requiring individuals with disabilities to compete with other candidates for reassignment to a vacant position. Although the Fifth Circuit has not directly addressed this issue, the court reviewed the authority in the Fifth Circuit regarding affirmative action for reassignment and determined that the Fifth Circuit would likely hold, similar to the Eleventh and Eighth Circuits, that the ADA does not require preferential treatment for reassignment and merely requires employers to allow individuals with disabilities to compete equally for vacant positions.  The court declined to follow contrary precedent in the Tenth and D.C. Circuits.

Employers should review their policies regarding reassignment for employees requesting an accommodation due to a disability and, as there is currently a circuit split, review the applicable law in their jurisdiction to ensure their policies are lawful. When an employee seeks reassignment to a vacant position as a reasonable accommodation, employers should work with counsel to determine whether they can require that employee to compete with other applicants for that position.

On December 31, 2016, the U.S. District Court for the Northern District of Texas issued a nationwide preliminary injunction that prohibits the U.S. Department of Health and Human Services (HHS) from enforcing certain provisions of its regulations implementing Section 1557 of the Affordable Care Act that prohibit discrimination on the basis of gender identity or termination of pregnancy. This ruling, in Franciscan Alliance v. Burwell (Case No. 7:16-cv-00108-O), a case filed by the Franciscan Alliance (a Catholic hospital system), a Catholic medical group, a Christian medical association, and eight states in which the plaintiffs allege, among other allegations, that the Section 1557 regulations force them to provide gender transition services and abortion services against their religious beliefs and medical judgment in violation of the Religious Freedom Restoration Act (“RFRA”).

By way of background, the Section 1557 regulations prohibit discrimination on the basis of gender identify, which regulations define to mean “an internal sense of gender, which may be male, female, neither, or a combination of male and female, and which may be different from an individual’s sex assigned at birth.”[i]  The regulations prohibit a categorical insurance coverage exclusion or limitation for all health services related to gender transition and requires providers to provide transition-related procedures if the provider performs an analogous service in a different context.  The plaintiffs also alleged that because they perform certain procedures for miscarriages, the Section 1557 regulations will require them to perform such procedures for abortions to avoid discriminating on the basis of termination of pregnancy.

The court held that the Section 1557 regulations failed to incorporate the exceptions for religious institutions and abortions services that Congress provided in Title IX. The court also found that Title IX, which is incorporated by Section 1557 statute, only prohibits discrimination on the basis of biological sex. The court further noted that “the government’s own health insurance programs, Medicare and Medicaid, do not mandate coverage for transition surgeries; the military’s health insurance program, TRICARE, specifically excludes coverage for transition surgeries. . .”[ii]

Specifically, the court concluded that “the regulation violates the Administrative Procedure Act (“APA”) by contradicting existing law and exceeding statutory authority, and the regulation likely violates the [RFRA] as applied to Private Plaintiffs.” The court also agreed that the plaintiffs would likely suffer irreparable harm without the injunction as “one of the State Plaintiffs is already undergoing investigation by the HHS’s OCR, and entities similarly situated to Private Plaintiffs have already been sued under the Rule since it took partial effect on May 18, 2016” (emphasis added).  Conversely, the court found that HHS will not suffer any harm by delaying implementation of this portion of the Section 1557 regulations.  It should be noted that this is a ruling granting a preliminary injunction and a final ruling on the merits of a permanent injunction is still to come.

While an HHS appeal of this order would normally be expected, the impending change of Administration—including new leadership at HHS and an expected early Congressional push to repeal and replace the Affordable Care Act—makes it very uncertain whether an appeal will be filed, or ruled upon, prior to any possible changes in the regulatory scheme or underlying statute.

Health care entities should take note, however, that the remaining provisions of the Section 1557 regulations, including those that prohibit discrimination on the basis of disability, race, color, age, national origin, or sex (other than gender identity), are not impacted by the nationwide injunction and HHS can still enforce such provisions.  Indeed, HHS has issued a broadcast email specifically stating that:

“[OCR] will continue to enforce the law—including its important protections against discrimination on the basis of race, color, national origin, age, or disability and its provisions aimed at enhancing language assistance for people with limited English proficiency, as well as other sex discrimination provisions—to the full extent consistent with the Court’s order.”

Health care entities should closely monitor this area of law for further developments and ensure that their operations are compliant with the remaining provisions of the Section 1557 regulations.

Further information regarding Section 1557 and its accompanying regulations can be found in EBG Client Alerts and Webinars.

[i] 45 C.F.R. § 92.4

[ii] The court cited Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2780 (2014).  The Supreme Court will consider whether Title IX covers gender identity in Gloucester Cty. School Bd. V. G.G., Sup. Ct. No. 16-273, during the current term.

Our colleague Michael S. Kun, national Chairperson of the Wage and Hour practice group at Epstein Becker Green, has a post on the Wage & Hour Defense Blog that will be of interest to many of our readers in the health care industry: “Stop! Texas Federal Court Enjoins New FLSA Overtime Rules.”

Following is an excerpt:

The injunction could leave employers in a state of limbo for weeks, months and perhaps longer as injunctions often do not resolve cases and, instead, lead to lengthy appeals. Here, though, the injunction could spell the quick death to the new rules should the Department choose not to appeal the decision in light of the impending Donald Trump presidency. We will continue to monitor this matter as it develops.

To the extent that employers have not already increased exempt employees’ salaries or converted them to non-exempt positions, the injunction will at the very least allow employers to postpone those changes. And, depending on the final resolution of this issue, it is possible they may never need to implement them.

The last-minute injunction puts some employers in a difficult position, though — those that already implemented changes in anticipation of the new rules or that informed employees that they will receive salary increases or will be converted to non-exempt status effective December 1, 2016. …

Read the full post here.