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Flack v. Wis. Dept. of Health Servs.

United States District Court, W.D. Wisconsin

July 25, 2018

CODY FLACK and SARA ANN MAKENZIE, Plaintiffs,
v.
WIS. DEPT. OF HEALTH SERVS. and LINDA SEEMEYER, in her official capacity, Defendants.

          OPINION AND ORDER

          WILLIAM M. CONLEY DISTRICT JUDGE

         As a group, transgender individuals have been subjected to harassment and discrimination in virtually every aspect of their lives, including in housing, employment, education, and health care. Their own families, acquaintances and larger communities can be sources of harassment. For some transgender individuals, though certainly not all, the dissonance between their gender identity and their natally assigned sex can manifest itself in the form of “gender dysphoria, ” a serious medical condition recognized by both sides' experts and the larger medical community as a whole. Plaintiffs Cody Flack and Sara Ann Makenzie both have long-term gender dysphoria for which they have received previous treatments covered by Wisconsin Medicaid, including hormone therapy. However, Wisconsin Medicaid categorically denies coverage for medically-prescribed “[t]ranssexual surgery” and related drugs. Wis. Admin. Code § DHS 107.03(23)-(24). Plaintiffs filed suit challenging this exclusion under the Equal Protection Clause and the Affordable Care Act, and seek to preliminarily enjoin defendants from enforcing this exclusion against their requests for insurance coverage (dkt. #40). The court held oral argument on plaintiffs' motion for a preliminary injunction on July 19, 2018.

         As discussed below, plaintiffs have established a reasonable likelihood of prevailing on the merits of their ACA claim, as well as more than a negligible chance of prevailing on the merits of their equal protection claim. Moreover, the immediate consequence for both individuals is the effective denial of medical procedures that: (1) meet the prevailing standard of care; and (2) are specifically prescribed by their treatment providers to avoid further psychological harm caused by gender dysphoria. Accordingly, despite defendants' repeated assertions to the contrary, plaintiffs have established a material risk of irreparable harm and a reasonable likelihood of success on the merits. The court will, therefore, grant plaintiffs' motion for a preliminary injunction.

         UNDISPUTED FACTS[1]

         A. Gender Dysphoria

         Every person has a “gender identity.” For most people, their gender identity matches the natal sex assigned at birth. For transgender individuals, however, that is not true: their gender identity differs from the sex they were assigned at birth. Specifically, a transgender woman's birth-assigned sex is male, but she has a female gender identity; a transgender man's birth-assigned sex is female, but he has a male gender identity.[2]

         Gender dysphoria is a serious medical condition, which if left untreated or inadequately treated can cause adverse symptoms. The DSM-5 contains the psychiatric consensus as to the definition, diagnostic criteria and features for gender dysphoria.

Gender dysphoria refers to the distress that may accompany the incongruence between one's experienced or expressed gender and one's assigned gender. Although not all individuals will experience distress as a result of such incongruence, many are distressed if the desired physical interventions by means of hormones and/or surgery are not available. The current term is more descriptive than the previous DSM-IV term gender identity disorder and focuses on dysphoria as the clinical problem, not identity per se.

(DSM-5 Excerpt (dkt. #21-1) 5.)[3] It is worth emphasizing that not every transgender person has gender dysphoria. Adults with gender dysphoria “often” have “a desire to be rid of primary and/or secondary sex characteristics and/or a strong desire to acquire some primary and/or secondary sex characteristics of the other gender.” (Id. at 8.) Untreated, gender dysphoria can result in psychological distress: “preoccupation with cross-gender wishes often interferes with daily activities.” (Id. at 12.) Impairment -- such as the development of substance abuse, anxiety and depression -- is also a possible “consequence of gender dysphoria.” (Id. at 9.) Finally, gender dysphoria “is associated with high levels of stigmatization, discrimination, and victimization, leading to negative self-concept, increased rates of mental disorder comorbidity, school dropout, and economic marginalization, including unemployment, with attendant social and mental health risks . . . .” (Id. at 12.)

         Gender dysphoria can be alleviated through living consistently with one's gender identity, including being treated by others accordingly.[4] Likewise, “appropriate individualized medical care as part of their gender transitions” can mitigate or prevent symptoms of gender dysphoria. (Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶ 16.) In 2011, the World Professional Association of Transgender Health published the seventh version of Standards of Care for the Health of Transsexual, Transgender, and Gender Nonconforming People (the “WPATH Standards of Care”), which identifies psychotherapy, hormone therapy and various surgical procedures as treatment possibilities for gender dysphoria.[5]

         Before gender-confirming surgery, those with gender dysphoria “are at increased risk for suicidal ideation, suicide attempts, and suicides.” (DSM-5 Excerpt (dkt. #21-1) 8.) Defendant contends that even after surgery, gender dysphoria may still result in suicide, self-harm, or serious psychological distress. (See Mayer Dep. (dkt. #55-3) 54:18-20.) The parties agree that gender-confirming surgical procedures are not necessary to alleviate gender dysphoria for all transgender people. Plaintiffs, on the other hand, contend that surgery is the only effective treatment for many transgender people and that gender-confirming surgical procedures are “safe and effective treatments.” (Pls.' PFOF (dkt. #20) ¶¶ 18-19.) Defendants respond that “[t]here is inadequate evidence to conclude that surgical treatments are of proven medical value or usefulness for treating gender dysphoria.” (See e.g., Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶¶ 15, 18-19.)

         B. Wisconsin Medicaid

         Medicaid is a joint federal-state program to provide medical assistance to eligible low-income individuals; it was established in 1965 under Title XIX of the Social Security Act. Through Medicaid, the federal government generally reimburses a substantial portion of a state's expenditures to provide medical services to people whose resources and incomes are insufficient to afford necessary medical services.

         Like all its sister states, Wisconsin participates in Medicaid. The Wisconsin Department of Health Services (“DHS”) is the state agency charged with administering the Wisconsin Medicaid Program consistent with state and federal requirements. DHS receives federal funding for the program, including reimbursement of over half of the state's Medicaid expenditures from the U.S. Department of Health and Human Services. Defendant Linda Seemeyer is the DHS Secretary and she is responsible for implementing the Medicaid Act consistent with federal requirements. Wisconsin Medicaid provides coverage for “[p]hysician services, ” including “any medically necessary diagnostic, preventative, therapeutic, rehabilitative or palliative services . . . within the scope of the practice of medicine and surgery” that are “in conformity with generally accepted good medical practice” and provided by a physician or under one's direct supervision, unless otherwise excluded. See Wis. Admin. Code § DHS 107.06(1); see also id § 107.08(1)(a)-(b) (providing coverage for hospital inpatient and outpatient services that “are medically necessary” and provided under a doctor's direction). Wisconsin Medicaid has a budget of approximately $9.7 billion to provide for its roughly 1.2 million enrollees. Approximately 5, 000 of those enrollees are transgender, and some subset of this population suffers from gender dysphoria.

         In addition to the requirements of federal law, defendants' administration of Wisconsin Medicaid is governed by Wisconsin Statutes §§ 49.43-.65 and Wisconsin Administrative Code §§ DHS 101.01-.36. Included in the governing regulations is the “Challenged Exclusion, ” § 107.03(23)-(24), at issue in this case. The Challenged Exclusion provides that “The following services are not covered under MA: . . . (23) Drugs, including hormone therapy, associated with transsexual surgery or medically unnecessary alteration of sexual anatomy or characteristics; [and] (24) Transsexual surgery.” Wis. Admin. Code § DHS 107.03(23)-(24).[6] The Challenged Exclusion was adopted in 1996 and has remained in effect since February 1, 1997.[7]

         At the time of its adoption, DHS found these services were “medically unnecessary.” (Clearinghouse Rule 96-154 (dkt. #21-12) 2, 3.) Other coverage exclusions created by the 1996 amendments included “non-medical food, ” “ear lobe repair, ” “tattoo removal, ” and “services related to surrogate parenting.” (Id. at 3.) The parties disagree about whether potential cost savings motivated these exclusions (Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶ 45), although the fiscal estimate noted that “[t]he rule changes are expected to result in nominal savings for state government” (Fiscal Estimate (dkt. #21-14) 2).

         DHS's website includes the following notice:

For people who need medical interventions such as hormones or surgery, these might be covered under private insurance plans. Currently, Wisconsin BadgerCare, BadgerCare Plus, Medicaid, and State of Wisconsin employee health insurance (ETF) do not cover gender reassignment surgery or drugs related to gender reassignment or hormone replacement. Please contact your health insurance company to learn more details about what services are covered by your insurance.

LGBT Health - Transgender Persons, Wis. Dept. Health Servs. (Dec. 13, 2017), https://www.dhs.wisconsin.gov/lgbthealth/transgender.htm. Plaintiffs contend that “Wisconsin Medicaid covers the same services when medically necessary to treat conditions other than gender dysphoria, ” and defendants agree that “Medicaid may cover services as medically necessary when not excluded by law, and that such services may also be addressed by the Women's Health and Cancer Rights Act of 1998, ” but again challenge the “value or usefulness” of surgery to treat gender dysphoria, and specifically dispute the medical necessity of surgery for the named plaintiffs. (Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶ 47.)

         C. Plaintiffs' Medical Needs

         1. Cody Flack

         Cody Flack is an adult resident of Green Bay who suffers from gender dysphoria and identifies as male.[8] He is unable to work because of cerebral palsy and other disabilities for which he receives Supplemental Security Income and Wisconsin Medicaid. At birth, Cody was assigned the sex of female and subsequently raised as a girl. He became aware of his male gender identity when he was about four or five years old. As a teenager, Cody began his gender transition by seeing a gender therapist, adopting the traditionally male name Cody, and presenting as a man. However, he was unable to complete his transition for several years because he lacked financial resources, was without emotional support, and feared isolation.

         After relocating to Wisconsin in 2012, Cody found the wherewithal to resume his gender transition as he felt his gender identity was more supported, and he increasingly lived and presented as a man. He cut his hair, wore men's clothing, and exclusively went by Cody. He also legally changed his name to Cody Jason Flack to align with his male gender identity and obtained a Wisconsin state identification card, identifying him as male. His Medicaid enrollment now matches his gender identity as well.

         For the past several years, Cody has been receiving therapy and other medical care, both to treat his gender dysphoria and to aid his gender transition. Since 2015, Cody has been seeing psychotherapist Daniel Bergman for his gender dysphoria and other mental health conditions. Since August 2016, Cody has also been receiving testosterone hormone therapy under the supervision of an endocrinologist, Dr. Amy DeGueme. This hormone therapy has caused Cody to develop facial and body hair, a more masculine appearance, and a deeper voice. In October 2016, Cody had his uterus, fallopian tubes, ovaries and cervix removed through a hysterectomy with bilateral salpingo-oophorectomy. This procedure was paid for by Wisconsin Medicaid to treat dysmenhorrhea (lower abdominal or pelvic pain during menstruation) and premenstrual dysphoric disorder (a severe form of premenstrual syndrome). Plaintiffs contend that Cody's “surgery also helped significantly reduce his gender dysphoria by better aligning his body with his male identity, ” although defendants dispute this and argue that there is inadequate evidence to determine that surgical treatments have “medical value” or are “useful[]” in treating Cody's gender dysphoria. (See Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶ 62.)

         Despite these changes, Cody still has female-appearing breasts. Plaintiffs and their experts, as well as Cody's treating physicians, contend this causes him severe gender dysphoria, while defendants and their experts question generally whether there is sufficient evidence to conclude further surgical procedures are medically valuable or useful. (Id. ¶ 63.) At minimum, it appears undisputed that Cody's breasts cause him significant, personal distress, as they are a marker of the female sex often contributing to his being perceived as female. Cody is particularly ashamed of his breasts when in public and routinely avoids social situations as a result. In an effort to conceal his breasts, Cody has engaged in “binding, ” which flattens or reduces their appearance, but has difficulty binding his breasts himself due to his disabilities and finds the technique extremely painful. Binding has caused him sores, skin irritation and respiratory distress.

         Since early 2017, therefore, Cody has sought a double mastectomy and male chest reconstruction. He consulted with Dr. Clifford King, a plastic surgeon, whose specialty is transition-related surgeries. Cody provided King with letters of support from his primary care physician, his therapist, his endocrinologist, and the surgeon who performed his hysterectomy. These four letters each detailed that Cody has gender dysphoria, and he met the criteria for surgery. After determining that Cody met the criteria for a male chest reconstruction under the WPATH Standards of Care, Dr. King sought prior authorization on July 18, 2017, from DHS for Wisconsin Medicaid coverage for the procedure.

         On August 2, 2017, DHS denied Dr. King's prior authorization request without reviewing the medical necessity of his requested surgery as “a non-covered service” and a “not covered benefit” based on the Challenged Exclusion. (See Aug. 2, 2017 Letter (dkt. #21-18) 2 (capitalization altered); see also Not. Appeal Rights (dkt. #21-19) 3 (“The service requested is not a covered benefit. The request does not meet one or more of the criteria found in Wisconsin Administrative Code.” (capitalization altered)); Sept. 25, 2017 Letter (dkt. #21-22) 2 (explaining that Flack's “request was denied by DMS as Wis. Admin. Code DHS 107.03(24) specifically lists ‘transsexual surgery' as a non-covered service under medical assistance” while recognizing that “[t]he medical necessity of the services requested was not taken into account”).)

         Cody Flack appealed DHS's denial. During his appeal, DHS noted that “gender dysphoria . . . is an accepted medical indication for the surgical treatment requested.” (Sept. 25, 2017 Letter (dkt. #21-22) 2.) Nevertheless, an administrative law judge dismissed the appeal on November 21, 2017, on the basis that “the Wisconsin Administrative Code specifically defines transsexual surgery as not covered by [medical assistance].” (ALJ Decision (dkt. #21-20) 3.) Even so, the ALJ also noted that “the proposed surgery presumably would favorably address [Flack's] gender dysphoria.” (Id.) Cody's formal reconsideration request was denied by DHS on December 11, 2017.

         Because Cody is unable to pay for the surgery himself, he reports being profoundly depressed and feeling hopeless and distressed by his chest. While not acting on any such impulses, Cody has considered performing the chest reconstruction himself and contemplated suicide. Plaintiffs further claim that Cody's gender dysphoria has worsened greatly since being denied coverage for the surgery. Defendants purport to dispute these claims because “[t]here is no current mental status examination in Flack's medical records” and without it “there is an insufficient basis for any clinician to conclude that Flack faces an imminent risk of suicide or other self-harm.” (Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶ 81 (emphasis added).) Plaintiffs' retained expert, Stephanie L. Budge, PhD, LP, disagrees, having reviewed Cody Flack's treatment records and concluded that his treating therapist “routinely assessed his mental status during Mr. Flack's weekly therapy sessions.” (Budge Supp. Decl. (dkt. #60) ¶ 6.)

         Defendants further contend that the recent outpatient notes by Cody's treating physician “primarily focus on issues unrelated to gender reassignment surgery” and “do not indicate that he is so destabilized such that a substantial risk of imminent self-harm exists, ” arguing that Cody's “self-reports are insufficient . . . to conclude that a serious risk of self-harm exists, let alone that receiving the surgical procedures he seeks will eliminate that risk.” (Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶ 81.) Defendants add that Cody has been transitioning for years, which “further indicat[es that] he does not present a substantial risk of self-harm in the near term.” (Id.)[9] Dr. Budge disagrees with these assessments as well. (Budge Supp. Decl. (dkt. #60) ¶¶ 7-9.) She contends that “self-reports regarding suicidality and self-harm should be taken seriously” because Cody has a history of them, and “self-injurious thoughts and behaviors are risk factors for future suicidal ideation, attempts, and death from suicide.” (Id. ¶ 11.) The parties likewise disagree whether there is a substantial risk of harm to Cody's health and wellbeing, including worsening anxiety, depression, and thoughts of self-harm and suicide, without the chest reconstruction surgery. (Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶¶ 85-86.)

         2. Sara Ann Makenzie

         Sara Ann Makenzie is an adult resident of Baraboo and lifelong resident of Wisconsin. She also suffers from gender dysphoria after being assigned the male sex at birth and subsequently raised as a boy. Like Cody, Sara Ann has also been found to be disabled and receives Supplemental Security Income.[10] She has been eligible and enrolled in Wisconsin Medicaid for many years.

         Despite being assigned the male sex at birth, Sara Ann first identified as female as a child, and she has been diagnosed with gender dysphoria for most of her life. She has legally changed her name to Sara Ann Makenzie, uses feminine pronouns, and wears women's clothing to conform with her female gender identity. Her birth certificate, passport, driver's license and Medicaid enrollment all reflect her name and female identity.

         Sara Ann began seeking treatment for gender dysphoria in approximately 2012. She has been on hormone therapy since 2013, which has helped lessen her gender dysphoria. In 2014, she consulted with Dr. Trisha Schimek, her then primary care physician, about genital reconstruction surgery. Dr. Schimek informed her that Wisconsin Medicaid would not cover the surgery. She then sought a breast augmentation surgery because she was often misgendered due to her undeveloped chest. Having been told that Wisconsin Medicaid would not cover that cost either, Sara Ann took out a $5, 000 loan from her bank to pay for the procedure, which was performed by Dr. Venkat Rao at UW Health in Madison, Wisconsin, in August 2016. Since the procedure, she is less often mistaken for a man and less often mistreated for having masculine features. Plaintiffs contend that the procedure “has been an effective treatment for [her] gender dysphoria”; defendants dispute this, arguing that “there is inadequate evidence to conclude that surgical treatments are of proven medical value or usefulness for treating Makenzie's gender dysphoria.” (Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶ 103.)

         Sara Ann Makenzie reports great distress upon seeing her male-appearing genitalia, which negatively affects her occupational functioning, sexuality and social life. She finds showering or seeing her body in a mirror painful; she lives in constant fear that someone will be able to see her male genitals through her clothing; and she is concerned that she may be attacked or mistreated by someone who recognizes her as transgender. Accordingly, she tries to minimize the appearance of her genitals by wearing multiple pairs of underwear at a time and engaging in “tucking, ” which is uncomfortable and very painful. She also does not have sex with her fiancée, which adds to her depression and anxiety. Sara Ann's treating physicians have recommended that she have surgery to create female-appearing external genitalia, specifically a bilateral orchiectomy and vaginoplasty. The parties dispute whether these surgical procedures “are of proven medical value or usefulness for treating gender dysphoria.” (Id. ¶ 106.)

         As her current primary care physician, Dr. Beth Potter referred Sara Ann to a plastic surgeon at UW Health in February 2018, for possible genital reconstruction surgery. Dr. Katherine Gast specializes in treating transgender individuals, and she informed Sara Ann of her eligibility for genital reconstruction after submitting two letters of support from mental health providers. However, she also advised that Wisconsin Medicaid would not pay for the procedure. While Sara Ann was prepared to obtain and submit the requisite letters, she was greatly distressed that Medicaid would not pay for the surgery because she could not afford it otherwise so she did not request the letters at that time. (See Makenzie Supp. Decl. (dkt. #61) ¶ 3.) Sara Ann has thoughts of removing her genitals on her own and of committing suicide. As a result, plaintiffs contend that her gender dysphoria has worsened.

         Her psychotherapist, Jessica Bellard, notes that Sara Ann “continues to report symptoms of anxiety, depression, anger, and distress in response to the stressors of transitioning prior to completing gender reassignment surgery” and that she “has expressed a persistent desire for surgery since our original meeting.” (Ballard Letter (dkt. #67) 1.) Sara Ann's independent evaluating therapist, Chelsea O'Neal Karcher, opined that “Sara's hope that the surgery will help lessen symptoms of anxiety and depression, increase happiness, help to increase her confidence, and align her body more fully with her identity” were “realistic expectations for the procedure” and that she “has met all the eligibility and readiness criteria outline[d] in the [WPATH Standards of Care].” (Karcher Letter (dkt. #61-2) 2.) Her former primary care physician opined that “genital reconstruction is a medically necessary treatment for Ms. Makenzie's gender dysphoria as it would treat the excessive mental distress that she experiences every day because she lives with genitals that do not match her gender.” (Schimek Decl. (dkt. #31) ¶ 9 (emphasis added).) At oral argument, the parties agreed that: (1) her surgeon had not yet sought prior authorization for this surgery; and (2) before that request could be considered by DHS, it would need to be considered by her third-party HMO.

         Because Sara Ann Makenzie's medical records lack a current mental status examination, defendants contend that “there is insufficient basis for any clinician to conclude that Makenzie faces an imminent risk of suicide or other self-harm”; indeed, defendants point to a June 14, 2018, letter, which describes her psychiatric symptoms as “appear[ing] . . . quite stable” and records her denying “current or recent history of self-harming behaviors and/or suicidal thoughts.” (Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶ 104.) Plaintiffs' expert, Dr. Budge, again disagrees about the importance of locating a formal mental status exam, because “changes in mental status would be charted by the provider” recording “any changes in mental status from week to week.” (Budge Supp. Decl. (dkt. #60) ¶ 5.) Likewise, Dr. Budge explains that “[p]sychological stability does not indicate that one does not currently experience significant distress, nor does it indicate that one will not experience continuing or worsening distress.” (Id. ¶ 10.)

         As with Cody Flack, defendants assert that “Makenzie's own self-reports are an insufficient basis to conclude that a serious risk of self-harm exists, let alone that receiving the surgical procedures she seeks will reduce or eliminate that risk, ” in part because she has been transitioning for several years and lacks any evidence of prior self-harm.[11] (Defs.' Resp. to Pls.' PFOF (dkt. #54) ¶ 104.) Likewise, defendants contend that there is not enough evidence to conclude that surgery is “of proven medical value or usefulness for treating Makenzie's gender dysphoria.” (Id. ¶ 111.) The parties also dispute whether Sara Ann Makenzie has engaged in self-harm: cutting in her genital area; and whether her short- and long-term health and well-being are at risk. (Id. ¶¶ 119-20.)

         OPINION

         Plaintiffs seek a preliminary injunction enjoining defendants from enforcing the Challenged Exclusion against them. As “an extraordinary remedy, ” preliminary injunctions are “never awarded as a matter of right.” Whitaker by Whitaker v. Kenosha Unified Sch. Dist. No. 1 Bd. of Ed., 858 F.3d 1034, 1044 (7th Cir. 2017), cert. dismissed 138 S.Ct. 1260 (2018). The moving party must “mak[e] a threshold showing: (1) that he will suffer irreparable harm absent preliminary injunctive relief during the pendency of his action; (2) inadequate remedies at law exist; and (3) he has a reasonable likelihood of success on the merits.” Id. (citing Turnell v. CentiMark Corp., 796 F.3d 656, 661-62 (7th Cir. 2015)). Once the moving party has done so, the court “determine[s] whether the balance of harm favors the moving party or whether the harm to other parties or the public sufficiently outweighs the movant's interests.” Id. (citing Jones v. Markiweicz-Qualkinbush, 842 F.3d 1053, 1058 (7th Cir. 2016)).

         I. Irreparable Harm & ...


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