The US Supreme Court has vacated a lower court ruling against the North Carolina State Health Plan in a case dealing with coverage of medical treatments typically sought by transgender patients.
The high court issued an order Monday calling for the 4th US Circuit Court of Appeals to give the case “further consideration in light of United States v. Skrmetti.” That decision earlier this month upheld a Tennessee law banning puberty blockers and hormone therapy for transgender teens.
State Treasurer Brad Briner’s office issued a June 18 news release predicting that the Supreme Court would reverse earlier rulings against the State Health Plan in the case Folwell v. Kadel. That prediction was based on the court’s 6-3 ruling in Skrmetti.
“The Court’s ruling in Tennessee’s equal protection case upholds our arguments in the long-running Kadel v. Folwell case here in North Carolina,” Briner said in the news release. “In its simplest form, this case has always been about ensuring that the State Health Plan can conduct its business in a manner that best serves the members of the Plan. We are thankful that the Supreme Court has affirmed the ability of the Plan to do just that.”
The North Carolina case stemmed from the exclusion of “transition-related medical procedures and medications” from State Health Plan coverage. The exclusion dated back to the 1990s, with a one-year exception in 2016.
“Exclusions lists are commonplace in most insurance coverage,” according to the treasurer’s news release. “Lists include the procedures and medications your health plan will not pay for in an effort to ensure that members receive high-quality care and maintain affordable health coverage. For example, the Plan’s current exclusions list includes GLP-1s when used for weight loss, acupuncture, and durable medical equipment.”
A federal trial court ordered the State Health Plan to cover the transition-related services. The full 4th US Circuit Court of Appeals split, 8-6, in an April 2024 ruling favoring plaintiffs who challenged the exclusion.
Then-Treasurer Dale Folwell and the State Health Plan appealed to the US Supreme Court. The goal was to preserve the plan’s ability “to conduct its business according to the wishes of its members,” according to the treasurer’s news release.
“Based on the decision in Skrmetti today, it is expected the Supreme Court will issue an order in the Plan’s appeal in Kadel reversing the decision of the 4th Circuit and remanding the case,” the news release explained. “It is anticipated this order will also remove the injunction against the Plan, which would automatically and immediately reimplement the benefit exclusion and require compliance with HB 808/SL 2023-111.”
House Bill 808, approved over Gov. Roy Cooper’s veto in August 2023, prohibits gender transition procedures for minors in North Carolina.
“When the Supreme Court’s order is issued in Kadel, the Plan will evaluate the order and work with Aetna, Caremark, and the Plan’s other vendors to guarantee the Plan is following the law,” Briner’s news release explained.
The treasurer’s lawyers filed paperwork last November with the high court. They rebutted arguments plaintiffs made in October urging Supreme Court justices to reject the case.
“The en banc Fourth Circuit held that the North Carolina State Health Plan for Teachers and State Employees violated the Equal Protection Clause by refusing to provide insurance coverage for treatments ‘leading to or in connection with sex changes,’” the treasurer’s lawyers wrote. “That decision conflicts with decisions from several other circuits and is both profoundly wrong and profoundly important. It merits this Court’s review.”
The plaintiffs “come nowhere close to refuting any of those points,” the court filing continued. “They do not deny that courts are divided over whether laws that prohibit access to or restrict insurance coverage for sex-change treatments violate the Equal Protection Clause. And they have no persuasive argument that the Fourth Circuit lies on the right side of the divide. Nor do they deny that the equal-protection question is of national importance.”
“One way or another, the Court should not allow the Fourth Circuit’s flawed decision to be the last word on an issue that demands a sensible and uniform national answer,” the treasurer’s lawyers argued.
The plaintiffs, considered respondents in the case, offered their arguments to the Supreme Court in October 2024.
“North Carolina and West Virginia administer health plans to cover medically necessary healthcare for their state employees and indigent citizens, respectively. Both plans, however, contain a targeted exception: they categorically exclude medically necessary gender-affirming care for transgender recipients,” according to the respondents’ brief. “The same treatments are available to cisgender members, including for gender-affirming reasons.”
“These exclusions have serious consequences for the States’ transgender plan members: if untreated, gender dysphoria — the condition of marked incongruence between one’s gender and one’s sex assigned at birth — can have debilitating consequences, including depression, self-injury, and even suicide,” according to the court filing.
Twenty-four states filed a brief in August 2024 supporting North Carolina and West Virginia in their appeals to the US Supreme Court. The 4th Circuit had ruled against West Virginia in a case similar to the Kadel dispute.
In an 8-6 ruling, the 4th US Circuit Court of Appeals tossed out the North Carolina State Health Plan’s ban on covering sex-change surgeries and other treatments.
“Do healthcare plans that cover medically necessary treatments for certain diagnoses but bar coverage of those same medically necessary treatments for a diagnosis unique to transgender patients violate either the Equal Protection Clause or other provisions of federal law? We hold that they do,” wrote Judge Roger Gregory for the court majority.
The treasurer’s lawyers filed a petition with the US Supreme Court in July 2024.
“For decades, the North Carolina State Health Plan for Teachers and State Employees has chosen to exclude coverage for treatments ‘leading to or in connection with sex changes or modifications.’ That exclusion is one of many in the Plan, which also excludes coverage for cosmetic services, experimental treatments, surgery for psychological or emotional reasons, and more,” according to the petition. “Each of those choices is designed to ensure that the Plan can provide the best possible coverage for all 740,000 of its members at a reasonable cost.”
“In the decision below, the en banc Fourth Circuit concluded that North Carolina’s coverage choices violate the Equal Protection Clause and permanently enjoined the State from excluding coverage for sex-change treatments,” the Supreme Court petition continued. “That decision is seriously flawed. North Carolina’s exclusion of coverage for sex-change treatments does not draw any classifications based on any protected trait. It distinguishes between medical treatments.”
The 4th Circuit decision “deviates” from tradition, the treasurer’s lawyers wrote. “The decision deepens a conflict among the courts of appeals about whether laws targeting sex-change treatments trigger heightened scrutiny. The decision is egregiously wrong, and the question presented is profoundly important.”
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