Parties seek pause in State Health Plan transgender care case

All parties are seeking a pause in a federal lawsuit challenging the North Carolina State Health Plan’s exclusion of coverage for treatments typically sought by transgender patients. Plaintiffs and defendants agree they should wait for an appellate ruling in a similar case from West Virginia.

The parties in Kadel v. Folwell filed a joint status report Monday in a North Carolina federal court. The case returned to a trial court after the 4th US Circuit Court of Appeals issued a September order vacating an earlier ruling against the State Health Plan.

The parties “agree that a stay is appropriate,” according to the five-page document.

“Two claims remain pending in this case,” the status report explained. “Plaintiffs argue that the North Carolina State Health Plan’s exclusion of gender-affirming care for transgender participants violates (i) the Equal Protection Clause of the Fourteenth Amendment, and (ii) Section 1557 of the Affordable Care Act. The Court previously granted Plaintiffs summary judgment on the Equal Protection claim, partial summary judgment on the Affordable Care Act claim, and entered a permanent injunction on the equal protection claim, which has now been vacated. The parties agree that further consideration of both claims should be stayed.”

The 4th Circuit is scheduled to hear arguments on Dec. 9 in Anderson v. Crouch, “presenting the same claims in a case challenging a similar exclusion of gender-affirming care in West Virginia’s Medicaid program.” the document explained.

As in the North Carolina case, the Anderson case addresses the impact of the US Supreme Court’s ruling earlier this year in a Tennessee case known as Skrmetti. “Given this issue overlap, the Fourth Circuit’s decision in Anderson will thus likely clarify the impact of Skrmetti on claims in this case,” according to the status report.

The plaintiffs and defendants agree that any action in the Kadel case should remain on hold until the 4th Circuit finishes its work on the West Virginia case. The parties plan to file another status report 14 days after final action in the Anderson case.

The North Carolina State Health Plan announced on Oct. 15 the reinstatement of its “longstanding exclusion of transition-related treatments” typically sought by transgender patients. The announcement arrived on the same day a court case challenging the exclusion officially returned to a federal trial court from the 4th Circuit.

The 4th Circuit issued a Sept. 23 order vacating US District Judge Loretta Biggs’ 2022 decision to block the exclusion. Biggs had required the State Health Plan to provide coverage for the disputed treatments.

The 4th Circuit’s decision “reinstates” the State Health Plan’s exclusion of transition-related treatments, according to a news release from State Treasurer Brad Briner’s office. Briner oversees the State Health Plan. “The exclusion dates back to the 1990s, and while litigation has been ongoing it has continued to appear in the annual list of exclusions for Plan members, even though it was inactive.”

“The Court’s decision to vacate the district court’s earlier ruling means the exclusion becomes active again,” according to the release. “The Plan communicated this anticipated action in June.”

“Generally, the exclusion does not prevent the treatment of any infection, injury, disease, disorder or complication that has been caused by or exacerbated by the performance of gender transition medical or pharmaceutical procedures,” the news release explained. “Additionally, in 2021, the Plan’s Board of Trustees affirmed continued coverage for psychological assessment and psychotherapy treatment in conjunction with a diagnosis of or connected to gender dysphoria. The reimplemented benefit exclusion does not exclude psychological assessment and psychotherapy treatment in these cases.” 

Biggs issued a 2022 injunction forcing the health plan to provide the disputed coverage. A split 4th US Circuit Court of Appeals voted, 8-6, to affirm Biggs’ decision in 2024.

But the US Supreme Court issued an order in June vacating the 4th Circuit’s ruling. The high court called on the 4th Circuit to revisit Kadel v. Folwell in light of a Supreme Court ruling in the Tennessee case United States v. Skrmetti. In that case, justices upheld a Tennessee law banning puberty blockers and hormone therapy for transgender teens.

“On June 30, 2025, the Supreme Court entered an order vacating this court’s judgment in this case and remanding it for consideration in light of the Supreme Court’s opinion in United States v. Skrmetti,” according to the 4th Circuit’s September order. “This court now vacates the district court’s judgment and remands this case to the district court for further consideration in light of Skrmetti.”

Court Clerk Nwamaka Anowi entered the order “at the direction of” 4th Circuit Chief Judge Albert Diaz.

It’s not clear which US District Court judge will hear the case moving forward. An Aug. 25 trial court text order indicated that Biggs is “no longer assigned to the case.” It remains unassigned.

Parties in the case had offered competing arguments to the 4th Circuit in September about how the case should proceed.

Lawyers representing the health plan sent Anowi a Sept. 11 letter urging the Appeals Court to vacate Biggs’ 2022 injunction. The letter also called on appellate judges to require the trial court to deny the plaintiff’s motion for summary judgment in the case.

The plaintiffs responded with a Sept. 16 letter urging the 4th Circuit to reject the health plan’s request.

The high court’s June order called for the 4th Circuit to give the case “further consideration in light of United States v. Skrmetti.”

“Kadel v. Folwell has always been about one question. Do the people of North Carolina, through their elected representatives, get to ultimately manage the State Health Plan? Or can plaintiffs dictate what procedures we cover? We are gratified that the Supreme Court has agreed with our strongly held belief in the State Health Plan Board of Trustees’ authority in this matter,” Briner’s office said in a news release responding to the Supreme Court decision. 

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.”

The plaintiffs offered their arguments against the State Health Plan exclusion 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.

“Parties seek pause in State Health Plan transgender care case” was originally published on www.carolinajournal.com.