Franciscan Alliance Et Al v. Burwell Et Al - Complaint

Case 7:16-cv-00108-O Document 1 Filed 08/23/16
Page 1 of 79 PageID 1
IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS
WICHITA FALLS DIVISION
FRANCISCAN ALLIANCE, INC.;
SPECIALTY PHYSICIANS OF
ILLINOIS, LLC,;
CHRISTIAN MEDICAL &
DENTAL ASSOCIATIONS;
- and STATE OF TEXAS;
STATE OF WISCONSIN;
STATE OF NEBRASKA;
COMMONWEALTH OF
KENTUCKY, by and through
Governor Matthew G. Bevin; and
STATE OF KANSAS,
Plaintiffs,
v.
SYLVIA BURWELL, Secretary
of the United States Department of
Health and Human Services; and
UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
Defendants.
Civ. Action No. ___________

COMPLAINT
INTRODUCTION AND NATURE OF THE ACTION

This lawsuit challenges a new Regulation (Regulation or Rule) issued by
the Department of Health and Human Services (HHS) that seeks to override the
medical judgment of healthcare professionals across the country. On pain of
significant financial liability, the Regulation forces doctors to perform controversial
and sometimes harmful medical procedures ostensibly designed to permanently
change an individuals sexincluding the sex of children. Under the new Regulation,
a doctor must perform these procedures even when they are contrary to the doctors
medical judgment and could result in significant, long-term medical harm. Thus, the
Regulation represents a radical invasion of the federal bureaucracy into a doctors
medical judgment.
HHS attempts to impose these dramatic new requirements by redefining a
single word used in the Affordable Care Act: sex. For decades, across multiple
federal statutes, Congress has consistently used the term sex to refer to an
individuals status as male or female, as determined by a persons biological sex at
birth. But in the Regulation, HHS redefines sex to include an individuals internal
sense of gender, which may be male, female, neither, or a combination of male and
female, and which may be different from an individuals sex assigned at birth. 45
C.F.R. 92.4. Thus, with a single stroke of the pen, HHS has created a massive new
liability for thousands of healthcare professionals unless they cast aside their medical
judgment and perform controversial and even harmful medical transition procedures.
And HHS has done this despite the fact that Congress has repeatedly rejected similar
attempts to redefine sex through legislation, and federal courts have repeatedly
rejected attempts to accomplish the same goal through litigation.
The Regulation not only forces healthcare professionals to violate their medical
judgment, it also forces them to violate their deeply held religious beliefs. Plaintiffs
include the Christian Medical & Dental Associations, which include over 17,000
healthcare professionals, and Franciscan Alliance, a network of religious hospitals
founded by the Sisters of St. Francis of Perpetual Adoration. These religious
organizations are deeply committed to the dignity of every human person, and their
doctors care for everyone with joy and compassion. They eagerly provide
comprehensive care to societys most vulnerable populations, but their religious
beliefs will not allow them to perform medical transition procedures that can be
deeply harmful to their patients. Tragically, the Regulation would force them to
violate those religious beliefs and perform harmful medical transition procedures or
else suffer massive financial liability.
The Regulation also undermines the longstanding sovereign power of the
States to regulate healthcare, ensure appropriate standards of medical judgment, and
protect its citizens constitutional and civil rights. Under this Rule, States are now
required to force all healthcare professionals at state-run facilities to participate in
medical transition procedures (including hormone therapy, plastic surgery,
hysterectomies, and gender reassignment surgery), and to cover those procedures in
the States health insurance plans, even if a doctor believes such procedures are
harmful to the patient. The Rule exposes the States to litigation by its employees and
patients, despite the fact that neither Congress nor the States expressed any intent
to waive the States sovereign immunity in this area. And the Rule threatens to strip
the States of billions of dollars in federal healthcare fundingover $42.4 billion a
year for Texas alonejeopardizing the availability of healthcare for the nations most
vulnerable citizens.
Ultimately, this case boils down to a very simple question of statutory
interpretation: Can HHS redefine the term sex to thwart decades of settled
precedent and impose massive new obligations on healthcare professionals and
sovereign States? The answer is no, and the new Regulation must be set aside as a
violation of the Administrative Procedure Act and multiple other federal laws and
constitutional provisions.
I. PARTIES
1.
Texas has a significant role to play in regulating and protecting the
integrity of the medical profession within its borders. Moreover, Texas zealously
protects the physician-patient relationship through numerous laws and regulations
ensure that physicians honor their duties to their patients and exercise appropriate
medical judgment when treating patients under their care. Texas also employs
thousands of healthcare employees through its constituent agencies. As an employer,
generally, Texas provides health benefits to hundreds of thousands of its employees
and their families through its constituent agencies. Moreover, Texas oversees and
controls several agencies and healthcare facilities that receive federal funding subject
to Title IX and the new Rule. Specifically, Texas operates healthcare facilities,
programs, and schools of health education that receive federal funding administered
by HHS. For example, North Texas State Hospital is a mental healthcare facility of
the State of Texas and the largest state hospital in the Texas mental health system.
It consists of two campuses in northern Texas. It provides psychiatric services for
mentally ill persons and persons with mental illness and mental retardation
throughout the North Texas area, as well as the entire State. The campus in Wichita
Falls serves patients with mental illness and mental illness/mental retardation who
have been screened and referred by their local mental health facility, and forensic
psychiatric patients primarily referred for competency restoration. The Wichita Falls
campus is also Medicare certified. The Vernon campus provides maximum security
adult forensic psychiatric services to adults and secured forensic services to
adolescents referred from throughout the State.
2.
The Plaintiffs State of Wisconsin, State of Nebraska, and State of
Kansas are all similarly situated to Texas in that they also have promulgated laws
and standards demonstrating their sovereign interest in the practice of medicine
within their borders. They are also subject to Title VII as the employers of thousands
of healthcare employees through their constituent agencies, oversee and control
several agencies and healthcare facilities that receive federal funding subject to Title
IX and the new Rule, and/or operate healthcare facilities, programs, and schools of
health education that receive federal funding administered by HHS.
3.
Governor Matthew G. Bevin brings this suit on behalf of the
Commonwealth of Kentucky pursuant to the Kentucky Constitution, which provides
that the supreme executive power shall be vested in the Governor. KY. CONST. 69.
The Commonwealth of Kentucky is similarly situated to Texas and the other Plaintiff
States in that it has promulgated laws and standards demonstrating its sovereign
interest in the practice of medicine within their borders. It is also subject to Title VII
as the employer of thousands of healthcare employees through its constituent
agencies, oversees and controls several agencies and healthcare facilities that receive
federal funding subject to Title IX and the new Rule, and/or operates healthcare
facilities, programs, and schools of health education that receive federal funding
administered by HHS.
4.
Plaintiff the Christian Medical & Dental Society is an Illinois non-profit
corporation doing business as the Christian Medical & Dental Associations. It has
many members who will be subject to the Regulation because they receive federal
funds, provide medical services that may be requested as part of a medical transition,
and provide health coverage for employees.
5.
The Franciscan Alliance (Franciscan) is a Roman Catholic nonprofit
hospital system founded by a Roman Catholic order, the Sisters of St. Francis of
Perpetual Adoration, and organized exclusively for charitable, religious, and
scientific purposes within the meaning of Section 501(c)(3) of the Internal Revenue
Code. Franciscan is incorporated in Indiana, with its principal place of business in
Mishawaka, Indiana.
6.
The Sisters of St. Francis of Perpetual Adoration were themselves
founded in 1863 by Mother Maria Theresia Bonzel in Olpe, Germany. Twelve years
later, in 1875, Mother Theresia sent six Sisters to Lafayette, Indiana, to bring St.
Francis of Assisis ministry of healthcare and education to the Midwest United States.
The first hospital building served as both a convent and a hospital. Three weeks after
their arrival, the Sisters admitted their first patient. They have continued their
healthcare ministry ever since.
7.
Franciscan is now one of the strongest health systems in the country.
Franciscan provides approximately 900 million dollars in Medicare and Medicaid

services annually to the poor, disabled, and elderly. Annually, it performs more than
4 million outpatient services and cares for more than 80,000 inpatients. Its major
service locations have at least 2,900 beds and have a significant presence in their
respective healthcare markets. Franciscan also receives annually approximately
$300,000 in HHS grants.
8.
Specialty Physicians of Illinois, LLC (Specialty Physicians) provide a
myriad of physician specialist services in the South Suburban Chicago area. Specialty
Physicians is a nonprofit Illinois limited liability company with its principal place of
business in Chicago Heights, Illinois. Specialty Physicians is a member managed
limited liability company, of which Franciscan is the sole member. Specialty
Physicians is organized exclusively for charitable, religious, and scientific purposes
within the meaning of Section 501(c)(3) of the Internal Revenue Code. Specialty
Physicians provides over $6 million dollars in Medicare and Medicaid services
annually to the poor, disabled, and elderly. Annually, it performs approximately
90,000 outpatient services.

9.
United
Defendants are appointed officials of the United States government and

States
governmental
agencies
responsible
for
the
issuance
and
implementation of the challenged Regulation.

10.
Defendant Sylvia Burwell is the Secretary of the United States
Department of Health and Human Services. She is sued in her official capacity only.
11.
Defendant the United States Department of Health and Human
Services is the agency that promulgated and now enforces the challenged Regulation.
II. JURISDICTION AND VENUE
12.
The Court has subject matter jurisdiction pursuant to 28 U.S.C. 1331
and 1361.
13.
Venue lies in this district pursuant to 28 U.S.C. 1391.

III. FACTUAL BACKGROUND
A.
The Affordable Care Act and Related Federal Statutes.
14.
In March 2010, Congress passed, and President Obama signed into law,
the Patient Protection and Affordable Care Act, Pub. L. 111-148 (March 23, 2010),
and the Health Care and Education Reconciliation Act, Pub. L. 111-152 (March 30,
2010), collectively known as the Affordable Care Act or ACA.
15.
Section 1557 of the ACA states that no individual can be denied certain
federally-funded health benefits because of the individuals race, color, national

origin, sex, age, or disability. 42 U.S.C.A. 18116. Section 1557 does not add a new
non-discrimination provision to the United States Code, but merely incorporates by
reference pre-existing provisions under Title VI, Title IX, the Americans with
Disabilities Act, and the Rehabilitation Act. Section 1557 does not independently
8
define terms such as sex. Section 1557s sole basis for prohibiting sex discrimination
is based on its reference to Title IX, 20 U.S.C.A. 1681 et seq.
16.
Title IX does not apply to covered entities controlled by a religious
organization if the application of this subsection would not be consistent with the
religious tenets of such organization. 20 U.S.C.A. 1681.
17.
Title IX also states that it cannot be construed to require or prohibit
any person, or public or private entity, to provide or pay for any benefit or service,
including the use of facilities, related to an abortion. 20 U.S.C.A. 1688.
18.
At the time that the ACA was enacted in 2010, no federal courts and no
federal agencies had interpreted sex in Title IX to include gender identity.

19.
At the time that the ACA was enacted, and to this day, Congress has
repeatedly rejected attempts to expand the term sex in Title IX. Lawmakers have
also rejected multiple attempts to amend the Civil Rights Act to add the new
categories of sexual orientation and gender identity. The first such attempt was
in 1974, and there have been dozens of such attempts since then. All have failed.
20.
The ACA states that nothing in this title (or any amendment made by
this title), shall be construed to require a qualified health plan to provide [abortion
coverage] as part of its essential health benefits for any plan year. 42 U.S.C.A.
18023.
21.
Federally-funded programs may not require an individual to perform
or assist in the performance of any sterilization procedure or abortion if his

performance or assistance in the performance of such procedure or abortion would be
contrary to his religious beliefs or moral convictions. 42 U.S.C. 300a-7(b). Congress

has also mandated that [n]o individual shall be required to perform or assist in the
performance of any part of a health service program or research activity funded in
whole or in part under a program administered by the Secretary of Health and
Human Services if his performance or assistance in the performance of such part of
such program or activity would be contrary to his religious beliefs or moral
convictions. 42 U.S.C. 300a-7(d).
B.
The Regulation.
22.
On September 8, 2015, HHS proposed a new rule to interpret Section
1557 of the Affordable Care Act (ACA), to extend Title IXs definition of sex to
include gender identity, sex stereotypes, and termination of pregnancy, among
other things. 45 C.F.R. 92.4.
23.
The Rule was published as final May 18, 2016, and it expanded the
definition of gender identity even further from the proposed definition to mean an
individuals internal sense of gender, which may be male, female, neither, or a
combination of male and female. Id. HHS stated in the Rule that gender identity
spectrum includes an array of possible gender identities beyond male and female,
and individuals with non-binary gender identities are protected under the rule.
Nondiscrimination in Health Programs and Activities, 81 Fed. Reg. 31375, 31392,
31384 (May 18, 2016). HHS cited as authority the Dear Colleague letter issued
10
jointly by the Department of Education (DOE) and Department of Justice (DOJ) just
five days earlier. 1
24.
The Rule also defines sex to include discrimination based upon
termination of pregnancy in covered programs. HHS declined to add an explicit

carve-out for abortion and abortion-related services parallel to the carve-out included
in Title IX; it merely noted the existence of conscience protections in federal law and
ACA limitations on requirement for abortion coverage. Id. at 31388.
25.
This new Regulation applies to any entities or individuals that operate,
offer, or contract for health programs and activities that receive any Federal financial
assistance from HHS. 2 In light of this sweeping application, HHS has estimated the
Rule will likely cover[] almost all licensed physicians because they accept Federal
financial assistance, including payments from Medicare and Medicaid. 3 Other
observers have estimated that the Rule will apply to over 133,000 (virtually all)
hospitals, nursing homes, home health agencies, and similar provider facilities, about
445,000 clinical laboratories, 1,200 community health centers, 171 health-related
schools, state Medicaid and CHIP programs, state public health agencies, federally
facilitated and state-based marketplaces, at least 180 health insurers that market
U.S. Dept of Justice & U.S. Dept of Educ., Dear Colleague Letter, May 13,
2016, http://www2.ed.gov/about/offices/list/ocr/letters/colleague-201605-title-ixtransgender.pdf.
1
45 C.F.R. 92.4.
80 Fed. Reg. 54171, 54195 (proposed Sept. 8, 2015); 81 Fed. Reg. at 31445.
11
policies through the FFM and state-based marketplaces, and up to 900,000

physicians. 4
26.
The new Rule requires covered entities to provide health programs or
activities in accordance with HHSs expansive and unwarranted definition of sex.

This includes a number of new requirements.
1.
27.
Healthcare professionals must perform or refer for

medical transition procedures.
The Rule requires covered employers, and their healthcare providers
and professionals, to perform (or refer for) medical transition procedures (such as
hysterectomies, mastectomies, hormone treatments, plastic surgery, etc.), if a
physician or healthcare provider offers analogous services in other contexts. For
example, in the preamble, HHS stated, A provider specializing in gynecological
services that previously declined to provide a medically necessary hysterectomy for a
transgender man would have to revise its policy to provide the procedure for
transgender individuals in the same manner it provides the procedure for other
individuals. 5 HHS explained that a hysterectomy in this medical transition context
would be medically necessary to treat gender dysphoria, 6 thereby declaring medical
Timothy Jost, Implementing Health Reform: HHS Proposes Rule Implementing

Anti-Discrimination ACA Provisions (Contraceptive Coverage Litigation Update),
Health Affairs Blog (Sept. 4, 2015), http://healthaffairs.org/blog/2015/09/04/
implementing-health-reform-hhs-proposes-rule-implementing-anti-discriminationaca-provisions/.
4
81 Fed. Reg. at 31455.
Id. at 31429.
12
necessity, benefit, and prudence as a matter of federal law, and without regard to the
opinions, judgment, and conscientious considerations of the many medical
professionals that hold views to the contrary.
28.
Despite the widespread, well-documented debate about the medical
risks and ethics associated with various medical transition procedures, even within
the transgender community itself, the new Rule attempts to preempt the serious
medical and moral debate by concluding in the context of physicians offering health
services that a categorization of all transition-related treatment . . . as
experimental, is outdated and not based on current standards of care. 7 The
Regulation also improperly preempts the prerogative of the States not only to
regulate the healing professions, but also to maintain standards of care that rely upon
the medical judgment of health professionals as to what is in the best interests of
their patients.
29.
Furthermore, a number of commenters requested that HHS make clear
that health services need only be covered if they are deemed to be medically
necessary or medically appropriate in the professional opinion of those charged
with the care of the patient at issue. But HHS refused to make this clarification,
stating that some procedures related to gender transition may be required even if
they were not strictly identified as medically necessary or appropriate. 8 Thus, under
the Regulation, if a doctor would perform a mastectomy as part of a medically-
Id. at 31435; see also id. at 31429.
Id.
13
necessary treatment for breast cancer, it would be illegal for the same doctor to
decline to perform a mastectomy for a medical transition, even if the doctor believed
that removing healthy breast tissue was contrary to the patients medical interest.
30.
Because Plaintiffs provide hysterectomies to patients diagnosed with
uterine cancer, the Regulations would simultaneously force them to provide a

hysterectomy (and remove an otherwise healthy uterus) for a medical transition,
notwithstanding the serious potential harm to the patient. Elective hysterectomies
increase a number of health risks for the patient. Moreover, such a procedure also
renders an individual permanently sterile. Nevertheless, the Regulations would
require Plaintiffs to perform that procedure even when they believed it was not in the
best interests of the patient. Such a standard turns the venerable medical oath to do
no harm on its head.
31.
And while Plaintiffs such as Franciscan provide hormone treatments to
patients for medical reasons, these health professionals have serious medical and
religious concerns with offering hormone treatment for a medical transition.
2.
32.
Healthcare facilities and professionals must alter their

speech and medical advice.
As discussed above, HHS has concluded, in the context of physicians
offering health services, that a categorization of all transition-related treatment .

. . as experimental, is outdated and not based on current standards of care. 9 In so
doing, HHS has seriously curbed a physicians ability to offer a contrary view, even if
Id.
14
such a view is based on the physicians professional training and best medical
judgment. This Regulation would thus force healthcare providers to alter speech and
medical advice to comply with the Rule.
33.
HHS stated that a covered entitys refusal to use a transgender
individuals preferred name and pronoun and insistence on using those corresponding
to the individuals sex assigned at birth constitutes illegal sex discrimination if such
conduct is sufficiently serious to create a hostile environment. 10
3.
34.
Certain employers and insurance providers must offer

employee
benefits
covering
medical
transition
procedures.
The Regulation prohibits certain employers, health programs, or
insurance plans from exercising judgment as to what they cover. HHS stated, [A]n
explicit, categorical (or automatic) exclusion or limitation of coverage for all health
services related to gender transition is unlawful on its face. 11
35.
For example, if a doctor concludes that a hysterectomy is medically
necessary to treat gender dysphoria, the patients employer or insurance plan would
be required to cover the procedure on the same basis that it would cover it for other
conditions (like cancer). 12 HHS also stated that the range of transition-related
services, which includes treatment for gender dysphoria, is not limited to surgical
10
Id. at 31406.
11
Id. at 31429.
12
Id.
15
treatments and may include, but is not limited to, services such as hormone therapy
and psychotherapy, which may occur over the lifetime of the individual. 13 As such,
coverage is required under the new Rule notwithstanding the rights of employers that
only offer employee health benefits consistent with the religious beliefs and values of
their organization.
36.
This conflict with religious or otherwise conscientious employers
extends beyond treatment surrounding gender dysphoria, because some required

procedures (such as elective hysterectomies) result in sterilization, and the new Rule
also extends to termination of pregnancy. 45 C.F.R. 92.4. Although HHS states
that laws protecting religious objections to abortion (or termination of pregnancy)
will apply, HHS recently approved California forcing all insurers to include abortion
coverage, even for objecting religious institutions. And HHS could have included, but
explicitly chose to exclude, a clear regulatory carve-out for services related to abortion
that parallels the carve-out in Title IX.
37.
This health benefit requirement of the new Rule applies to any of the
following types of employers who receive HHS funding: 1) any entity principally
involved in providing or administering health services (including hospitals, nursing
homes, counseling centers, physicians offices, etc.), 2) any type of employer who
receives HHS funding for the primary purpose of funding an employee health benefit
program, or 3) any entity such as a university with a health training or research
13
Id. at 31435-36.
16
program that receives Federal financial assistanceincluding student Pell grants

for that health program or activity. 14
38.
Thus, employers who have always offered employee health benefits that
reflect their religious or conscientious beliefs, and excluded medical transition

procedures from employee benefits, will now be considered discriminatory under the
Regulation.
4.
39.
Sex-specific healthcare facilities or programs, including

shower facilities or hospital wards, must be opened to
individuals based on gender identity.
With regard to facilities, the new Rule states that even for sex-specific
facilities such as shower facilities offered by healthcare providers, individuals may

not be excluded based on their gender identity. 15
40.
When Title IXthe foundation for the new Rulewas enacted,
Congress was significantly concerned about protecting and preserving the privacy
rights of individuals in intimate areas. See 20 U.S.C. 1686, 117 Cong. Rec. 30407
(1971), 117 Cong. Rec. 39260 (1971), 117 Cong. Rec. 39263 (1971), and 118 Cong. Rec.
5807 (1972). And the predecessor agency of HHS, the Department of Health,
Education, and Welfare (HEW), promulgated regulations guaranteeing the privacy of
individuals in intimate areas. See 34 C.F.R. 106.32(b); 34 C.F.R. 106.33 (A
recipient may provide separate toilet, locker room, and shower facilities on the basis
14
Id. at 31472, 45 C.F.R. 92.208; see also 81 Fed. Reg. at 31437.
15
81 Fed. Reg. at 31409.
17
of sex . . . .). Yet, HHS wholly disregarded any legal right to privacy that could be
violated simply by permitting another person access to a sex-specific program or
facility which corresponds to their gender identity. 16
41.
With regard to other health programs, HHS stated that sex-specific
health programs or activities are allowable only where the covered entity can
demonstrate an exceedingly persuasive justification, i.e., that the sex-specific
program is substantially related to the achievement of an important health-related
or scientific objective. HHS stated that it will expect a covered entity to supply
objective evidence, and empirical data if available, to justify the need to restrict
participation in the program to only one sex, and in no case will [HHS] accept a
justification that relies on overly broad generalizations about the sexes. 17
5.
42.
Covered entities must provide assurances of compliance

and post notices of compliance.
Through HHS-690 Form, which now references Section 1557, a covered
entity seeking federal financial assistance must now certify, in relevant part, that no
person in the United States shall, on the ground of race, color, national origin, sex,
age, or disability be excluded from participation in, be denied the benefits of, or be
subjected to discrimination under any health program or activity for which the
Applicant receives Federal financial assistance from the Department. 18
16
Id. at 31389, 31409.
17
Id. at 31409.
HHS, Assurance of Compliance, https://www.hhs.gov/sites/default/files/hhs690.pdf.

18
18

43.
The Rule will require covered entities to post notices regarding
compliance with the Rule in conspicuous locations by October 16, 2016 (90 days from
the effective date). HHS provided a sample notice in Appendix A to the new Rule,
which states in relevant part that the covered entity does not exclude people or treat
them differently because of race, color, national origin, age, disability, or sex. 19
6.
44.
Enforcement Mechanisms and Remedial Measures.
Covered entities are required to record and submit compliance reports
to HHSs Office of Civil Rights (OCR) upon request. 20

45.
Covered entities that are found to violate the Regulation may lose their
federal funding, be barred from doing business with the government, or risk false
claims liability. 21
46.
Covered entities are subject to enforcement proceedings by the
Department of Justice. 22
47.
Covered entities are also subject to individual lawsuits from patients
who believe the covered entity has violated the new Rule. 23
Id. at 31472, 45 C.F.R. 92, App. A, https://www.federalregister.gov/articles/

2016/05/18/2016-11458/nondiscrimination-in-health-programs-and-activities#h-139.
19
20
81 Fed. Reg. at 31439, 31472, 45 C.F.R. 92.301.
81 Fed. Reg. at 31472, 45 C.F.R. 92.301 (The enforcement mechanisms

available for and provided under Title VI of the Civil Rights Act of 1964 . . . shall
apply for purposes of Section 1557.)
21
22
81 Fed. Reg. at 31440.
23
Id. at 31472, 45 C.F.R. 92.301.

19
7.
48.
No Religious Exemption.
Section 1557 does not independently prohibit discrimination on the
basis of sex. Instead, Congress specifically invoked Title IX, 20 U.S.C.A. 1681 et
seq., which includes both a ban on sex discrimination and a generous carve-out for
religious organizations. In this Regulation interpreting Section 1557, however, HHS
has interpreted Congresss reference to Title IX to include the ban, but not the
religious exemption.
49.
Although HHS was asked to include a religious exemption in the
Regulation due to the obvious implications for religious healthcare providers, HHS
declined to do so, stating instead that religious objectors could assert claims under
existing statutory protections for religious freedom. 24 HHS also failed to provide any
mechanism by which a religious entity could determine if it was entitled to any
existing religious protections under the law.
C.
The New Rules Impact on States.
50.
The new Regulation runs headlong into established standards of
medical care, usurps the States legitimate authority over its medical facilities, and
makes it impossible for States to comply with conflicting federal law, among other
harms.
1.
51.
Standard of Care.
[T]he State has a significant role to play in regulating the medical
profession, Gonzales v. Carhart, 550 U.S. 124, 157 (2007), as well as an interest in
24
81 Fed. Reg. at 31376.

20
protecting the integrity and ethics of the medical profession. Washington v.

Glucksberg, 521 U.S. 702, 731 (1997). This includes maintaining high standards of
professional conduct in the practice of medicine. Barsky v. Bd. of Regents of Univ. of
N. Y., 347 U.S. 442, 451 (1954).
52.
For
example,
Texas
zealously
protects
the
physician-patient
relationship. Numerous Texas laws and regulations ensure that physicians honor
their duties to their patients. The statewide standard of medical practice rests on the
principle that Texas doctors must exercise independent medical judgment when
treating patients under their care. See, e.g., Murk v. Scheele, 120 S.W.3d 865, 867
(Tex. 2003) (per curiam).
53.
Amid increasing consolidation in the healthcare industry caused by the
ACA, the Texas Legislature redoubled its longstanding commitment to physicianpatient autonomy. See Garcia v. Tex. State Bd. of Med. Examrs, 384 F. Supp. 434,
439 (W.D. Tex. 1974) (upholding regulations designed to preserve the vitally
important doctor-patient relationship). In 2011, the Legislature prohibited medical
organizations from interfering with, controlling, or directing a physicians
professional judgment, Tex. Occ. Code 162.0021, and it mandated that they permit
physicians to exercise independent medical judgment when providing care to
patients, Id. 162.0022.
54.
In furtherance of these objectives, Texas hospitals must appoint a chief
medical officer to supervise all matters relating to the practice of medicine. Tex.
Health & Safety Code 311.083. The chief medical officer is responsible for adopting
21
policies to ensure that physicians have the ability to exercise independent medical
judgment. Id. This officer must report to the Texas Medical Board (TMB)the
executive agency responsible for regulating the practice of medicine in Texasany
action or event that constitutes a compromise of the independent medical judgment
of a physician in caring for a patient. Id.
55.
TMB has reaffirmed the standard of practice provided through its
rulemaking authority. TMB regulations provide that doctors retain independent

medical judgment and discretion in providing and supervising care to patients, and
may not be disciplined for reasonably advocating for patient care. 22 Tex. Admin.
Code 177.5. In addition, they reserve important decisions concerning quality
assurance, the medical necessity of treatment, credentialing and peer review to the
physician-only boards that direct health organizations. Id. 177.3, 177.5.
56.
Every person should be treated with dignity and respect, especially
when in need of medical attention. The standard of care established in Texas, and
around the country, enables patients to obtain quality healthcare as determined by
medical professionals, and not those outside the doctor-patient relationship. The
Regulation, however, usurps this standard of care. It discards independent medical
judgment and a physicians duty to his or her patients permanent well-being and
replaces them with rigid commands.
57.
The Regulation will force physicians to subject their patients to
procedures that permanently alter or remove well-functioning organs, even though

the physicians independent medical judgment advises against such a course of
22
action. And beyond compelling physicians to act against their medical judgment, the
Regulation requires them to express opinions contrary to what they deem to be in the
patients best interest or to avoid even describing medical transition procedures as
risky or experimental. Yet, physicians are under a duty to make reasonable
disclosure of that diagnosis, and risk of the proposed treatment . . ., as would have
been made by a reasonable medical practitioner under the circumstances. Jacobs v.
Theimer, 519 S.W.2d 846, 848 (Tex. 1975) (citing Wilson v. Scott, 412 S.W.2d 299 (Tex.
1967); W. M. Moldoff, Annotation, Malpractice: physician's duty to inform patient of
nature and hazards of disease or treatment, 79 A.L.R.2d 1028 (1961)). Patients
deserve betterand are treated more humanelyunder State law.
2.
58.
Control over Facilities.
Every State provides healthcare services directly to citizens through
various mechanisms of government. Texas, for example, provides health services

directly to patients through the Health and Human Services Commission (HHSC).
Tex. Govt Code 531.0055; Tex. Health & Safety Code 12.0115. HHSC
superintends operations and resource allocation at many healthcare facilities, which
are owned by Texas and receive federal funding administered by HHS, Tex. Govt
Code 531.008, 531.0055, including the North Texas State Hospital.
59.
These covered entities, which exist across the country, will now be
covered under the Regulation with respect to all of the operations of such entities.
Thus, these entities will have to offer all manner of (and referrals for) medical
transition procedures and treatments. As a result, Texas and other States will be
23
forced to allocate personnel, resources, and facility spaces to offer and accommodate
the myriad medical transition procedures now required to be performed under the
new Rule. Healthcare facilities will also be required to open up sex-separated
showers, locker rooms, or other facilities based on individual preference. This is true
even in controlled medical locations where patient access to intimate facilities is often
under the control of healthcare professionals that are supposed to act in the best
interests of the patient. Thus, the requirements of the new Rule amount to a
substantial interference in the control that Texas and other States legitimately
exercise over their healthcare facilities.
3.
60.
Conflicting Federal Law.
Title VII of the Civil Rights Act of 1964 (Title VII) prohibits
employment discrimination based on religion. 42 U.S.C. 2000e-2. To comply with

Title VII, employers must reasonably accommodate an employees religious belief,
observance, or practice unless such accommodation imposes an undue hardship on
the employers business. Id. at 2000e-1; EEOC v. Abercrombie & Fitch Stores, Inc.,
135 S. Ct. 2028, 2032 (2015) (providing that Title VII requires reasonable religious
accommodations).
61.
But the Regulation in many circumstances makes such accommodation
illegal, placing employers between a legal Scylla and Charybdis. On the one hand,
employers are required under Title VII to reasonably accommodate their employees
religious and conscientious objections. On the other hand, the Regulation requires
medical employers to provide (or refer for) medical transition procedures even when
24
doing so would violate the religious or conscientious objections or concerns of its

employees. HHS refused to affirm the principles of religious accommodation in its
new Rule even when asked to do so. Thus, it forces employers, like Texas and the
North Texas State Hospital, to choose between violating the Regulation or violating
Title VII.
4.
62.
Additional Harms.
The Regulation is costly and burdensome on Texas and other States for
a variety of additional reasons, to wit:

63.
Texas and other States operate as employers that offer covered health
benefits to hundreds of thousands of its employees and their families through its
constituent agencies. The new Rule will require Texas and other States to provide
insurance coverage for medical transition procedures.
64.
The new Rule also purports to require Texas and other States to provide
abortion coverage through its employee health benefits. HHS states that a States
Medicaid program constitutes a covered health program or activity under the Rule.
Thus, the State will be governed by Section 1557 in the provision of employee health
benefits for its Medicaid employees. 81 Fed. Reg. at 31437. Texas and other States
will also have to offer these types of employee benefits to employees at other statecontrolled healthcare entities.
65.
The exclusions Texas and other States currently possess in their
employee insurance policies related to pregnancy termination and medical transition
25
procedures will now be illegal under the new Rule. As a result, Texas and other States
will be required to change their insurance coverage. 25
66.
must
In order to receive federal healthcare funding, Texas and other States
submit
assurances,
notices
of
compliance,
and
other
information,
demonstrating that their health programs and activities satisfy the requirements
imposed by the Regulation. 81 Fed. Reg. at 31392, 31442.
67.
The costs of personnel training will be significant, even by HHSs very
modest estimates. HHS estimates that 7,637,306 state workers will need to receive
training under the new Rule, and that the cost of this training in the first two years
of implementation alone will be $17.8 million.
68.
The penalties for noncompliance are so severe as to make the Regulation
coercive. Texas, as an example, faces the loss of over $42.4 billion a year in healthcare
funding to serve its most vulnerable citizens. 26 For example, the Medicaid program
pays for more than half of all births in Texas, a cost that otherwise would be
shouldered primarily at the local and provider level, and the Emergency Medicaid
program pays for the emergency conditions of indigent noncitizens (undocumented
Texas and other States do not provide health coverage to their employees
for the termination of a pregnancy, absent certain medically compelled
circumstances. See, e.g., HealthSelect of Texas, Master Benefit Plan Document, at
pp. 8788 (effective Jan. 1, 2016), http://healthselectoftexas.welcometouhc.com/
assets/pdf/HS%20In-Area%201-2016%20MBPD%20Revised%20FINAL.pdf.
25
Tex. Health and Human Servs. Commn, Texas Medicaid and CHIP in
Perspective 8-9 (10th ed. 2015), http://www.hhsc.state.tx.us/medicaid/about/PB/
PinkBook.pdf.
26
26
immigrants and LPRs) who meet all Medicaid eligibility criteria other than
citizenship. 27
69.
Finally, the new Rule could subject Texas and other States to private
lawsuits for damages and attorneys fees, even though Texas and other States did not
and could not have known or consented to this waiver of their sovereign immunity.
D.
The effect on the Christian Medical & Dental Association.
70.
Founded in 1931, and with a current membership of over 17,000, the
Christian Medical & Dental Association (CMDA) provides a variety of programs and
services supporting its mission to change hearts in healthcare. CMDA promotes
positions and addresses policies on healthcare issues; serves others through overseas
medical mission projects; coordinates a network of Christian healthcare professionals
for fellowship and professional growth; sponsors student ministries in medical and
dental schools; distributes educational resources; provides continuing education for
doctors serving missions in developing countries; and conducts academic exchange
programs overseas. Its members sign a statement of faith to join CMDA and allow
CMDA to serve as a voice for membership values.
71.
On the issue of sexual identity, CMDAs National Convention recently
adopted an Ethics Statement that was approved by its House of Delegates
Tex. Health and Human Servs. Commn & Tex. Dept of Ins., Impact on
Texas If Medicaid Is Eliminated 20 (2009), http://www.hhsc.state.tx.us/hb497_122010.pdf.
27
27
unanimously. 28 In this Statement, CMDA affirms the obligation of Christian

healthcare professionals to care for patients struggling with gender identity with
sensitivity and compassion. The Statement also makes clear that attempts to alter
gender surgically or hormonally for psychological indications, however, are medically
inappropriate, and CMDA opposes medical assistance with gender transition for a
number of medical, ethical, and religious reasons.
72.
Regarding medical concerns, the Statement observes that [h]ormones
prescribed to a previously biologically healthy child for the purpose of blocking

puberty inhibit normal growth and fertility. Continuation of cross-sex hormones, such
as estrogen and testosterone, during adolescence is associated with increased health
risks including, but not limited to, high blood pressure, blood clots, stroke, and some
types of cancer. In addition, Although current medical evidence is incomplete and
open to various interpretations, some studies suggest that surgical alteration of sex
characteristics has uncertain and potentially harmful psychological effects and can
mask or exacerbate deeper psychological problems. Furthermore, Many diseases
affect men and women differently, according to biological sex phenotype. Transgender
designations may conceal biological sex differences relevant to medical risk factors,
recognition of which is important for effective healthcare and disease prevention.
Finally, [w]hereas treatment of anatomically anomalous sexual phenotypes is
Christian Medical & Dental Associations, Transgender Identification

Ethics Statement, https://cmda.org/resources/publication/transgender-identificationethics-statement (last visited Aug. 22, 2016).
28
28
restorative, interventions to alter normal sexual anatomy to conform to transgender

desires are disruptive to health.
73.
Regarding ethical concerns, the CMDA Ethics Statement observes that
CMDA is especially concerned about the increasing phenomenon of parents of

children who question their gender intervening hormonally to inhibit normal
adolescent development. Children lack the developmental cognitive capacity to assent
or request such interventions, which have lifelong physical, psychological, and social
consequences. Thus, CMDA states that prescribing hormonal treatments to
children or adolescents to disrupt normal sexual development for the purpose of
gender reassignment is ethically impermissible, whether requested by the child or
the parent. Id.
74.
healthcare
In its Ethics Statement, CMDA expresses concern that efforts to compel

professionals
to
affirm
transgender
ideology,
provide
medical
legitimization for transgender psychology, or cooperate with requests for medical or

surgical sex reassignment threaten professional integrity. In addition, CMDA is
concerned that efforts to impose transgender ideology on all society by excluding,
suppressing, marginalizing, intimidating, or portraying as hateful those individuals
and organizations which, on scientific, moral, or religious grounds, reasonably
disagree, are contrary to the freedoms of speech and religious liberty that lie at the
very foundation of a just and democratic society. Id.
75.
As a result of medical, ethical, and religious concerns, CMDA affirms
that healthcare professionals should not be coerced or mandated to provide or refer
29
for services that they believe to be morally wrong or harmful to patients. CMDA also
makes clear that [t]o decline to provide a requested gender-altering treatment that
is harmful or is not medically indicated does not constitute unjust discrimination
against persons. Id.
76.
Many of CMDAs members will be impacted by this Rule, both based on
their ability to engage in speech advising patients of their medical judgment with
regard to gender transition procedures, as well as to avoid being forced to offer
services or facilities in furtherance of gender transitions.
77.
CMDA has members who object to participation in medical transitions
and who provide services such as hysterectomies, breast reconstruction, and hormone
therapy for other medical reasons. Those members would be required to provide those
services as part of a medical transition procedure under the Regulation.
78.
CMDA has members who currently provide healthcare coverage for
employees, coverage which excludes medical transition procedures. Those members

will be impacted by the Regulation.
79.
CMDA has members who have treated or currently treat transgender
individuals, and who may be liable for failure to provide or refer for medical transition
procedures.
E.
The Effect on Franciscan Alliance.
80.
Since its founding over 140 years ago, Franciscan Alliance has
remained fully committed to continuing the ministry of Jesus Christ through

healthcare. Each of Franciscans hospitals provides resources to accommodate the
30
spiritual needs of employees, patients, and their families. For instance, St.
Anthonys hospital at Crown Point administers sacraments daily upon request,
provides daily Mass, and maintains 24-hour access to the Corpus Christi Chapel to
provide a sacred space for individuals of all faiths to pray and meditate.
Franciscans hospital in Munster, Indiana, provides spiritual care staff to visit with
all newly admitted patients, offers opportunities for prayer and spiritual support,
and maintains a Franciscan priest on staff for Catholic patients and staff who wish
to participate in Catholic Mass or receive the sacraments of Holy Communion,
Reconciliation, or Anointing of the Sick.
81.
Franciscan serves and respects individuals of all faith communities,
seeking to ensure that patients and their families can access the resources of their
own faith traditions to assist in the healing and recovery process, and to make
critical decisions about matters such as end-of-life care and clinical ethics.
82.
Franciscans infusion of faith into healthcare is not limited to spiritual
support. All of Franciscans healthcare services, and all of Franciscans physicians

and employees, follow the values of the Sisters of St. Francis.
83.
These values include:
Respect for life: treating each person with respect, dignity, fairness,
and compassion so that each person is consciously aware of being
loved.
Fidelity to Franciscans mission: in the tradition of St. Francis of

Assisi, bringing Christs ministry of healing care to each patient, coworker, and hospital visitor.
Compassionate concern: caring for the welfare of patients, especially

the aged, the poor, and the disabled.
31
Christian stewardship: providing a just and fair allocation of human,

spiritual, physical, and financial resources in a manner that respects
the individual, serves societys needs, and follows the teaching of the
Church.
84.
In accordance with these values, all Franciscan facilities are operated
in a manner that abides by The Ethical and Religious Directives for Catholic
Healthcare Services, as promulgated by the United States Conference of Catholic
Bishops and interpreted by the local Bishop.
85.
Franciscan strives to provide top-quality care to its patients. Its
facilities have earned designations as Centers of Excellence, Five-Star Awards, and

top state and national rankings. In December of 2011, Franciscan was selected by
the Center for Medicare & Medicaid Services (CMS) as one of thirty-two Pioneer
Accountable Care Organizations (ACOs). ACOs are groups of doctors, hospitals,
and other healthcare providers who work together voluntarily to give coordinated,
high-quality care to their Medicare patients. The goal of the program is to ensure
patients get timely, accurate care while preventing medical errors and unnecessary
duplicative services. The 2014 Quality Performance Report by CMS showed
Franciscan placing in the top 6 for quality scores among all Pioneer ACOs.
86.
One of Franciscans specialties is in Womens and Childrens
healthcare, a specialty which Franciscan advances in part by its Spirit of Women

program. The program provides innovative clinical care, education, and wellness
services.
32

87.
Franciscan provides a wide variety of services specifically for women,
such as obstetrics and gynecology services, hysterectomies, hormone treatments,

and reconstructive surgery.
88.
Franciscan is also affiliated with pediatric providers.
89.
This new Rule will impact Franciscan by 1) requiring Franciscan to
offer medical services that violate its best medical judgment and religious beliefs,
and 2) requiring Franciscan to provide insurance coverage for services that violate
its religious beliefs.
1.
90.
Compulsory Medical Services.
Franciscan provides all of its standard medical services to every
individual who needs and qualifies for its care, including to individuals who identify
as transgender. Thus, for instance, if a transgender individual required cardiac
care, Franciscan would provide the same full spectrum of compassionate care for
that individual as it provides for every other cardiac patient. And, just as it does for
every other cardiac patient, Franciscan would appropriately tailor that care to the
biologically sex-specific health needs of the patient.
91.
But Franciscan holds religious beliefs that sexual identity is an
objective fact rooted in nature as male or female persons. Like the Catholic Church
it serves, Franciscan believes that a persons sex is ascertained biologically, and not
by ones beliefs, desires, or feelings. Franciscan believes that part of the image of
God is an organic part of every man and woman, and that women and men reflect
33
Gods image in unique, and uniquely dignified, ways. Franciscan does not believe
that government has either the power or the authority to redefine sex.
92.
Further, in its professional medical judgment, Franciscan believes that
optimal patient careincluding in patient education, diagnosis, and treatment

requires taking account of the biological differences between men and women. For
instance, optimal prevention of and treatment for heart disease in women requires
monitoring for different warning signs, accounting for different risk factors, and
providing different counseling than it would for men. Part of the success of
Franciscans award-winning heart-health treatment program is driven by its
recognition that women have unique biological composition and health needs that
require different diagnosis and treatment than men.
93.
In Franciscans best medical judgment, providing or assisting with
gender transition services is not in keeping with the best interests of its patients.
Franciscan does not offer the full continuum of care related to gender transition
procedures, and thus would not be able to provide ideal care to patients seeking that
care.
94.
Providing such services would also substantially burden the religious
exercise of Franciscan.
95.
Accordingly, after careful review of this issue, Franciscan developed
the following policy entitled the Sex Reassignment Interventions Policy: Sexual
reassignment interventions require a complex set of psychological, psychiatric and
ancillary care services that are not available at Franciscan facilities. Therefore, it
34
would be medically imprudent to perform or otherwise facilitate any clinical

interventions addressing sexual re-assignment needs. To provide or otherwise
facilitate these services would also violate our deeply held religious beliefs.
96.
Franciscan employs physicians who offer endocrinology hormone
services, hysterectomies, mastectomies, and psychiatric support. The new Rule

would force Franciscan to offer these services as part of a medical transition, which
would violate both Franciscans best medical judgment and its religious beliefs.
97.
Some of the procedures required under the Rule, including
hysterectomies for gender transition, would result in the sterilization of the patient.
Since Franciscan does not believe such a hysterectomy is medically necessary, being
forced to provide such a sterilization procedure would violate Franciscans best
medical judgment and religious beliefs.
98.
The Rule also prohibits discrimination on the basis of termination of
pregnancy. Franciscan performs surgical procedures for women who have

miscarried a baby, such as dilation and curettage (D&C) procedures. However,
Franciscan would be unwilling to offer the same service if the goal of the procedure
was to terminate a pregnancy. The Rule forces Franciscan to provide abortionrelated procedures in violation of Franciscans best medical judgment and religious
beliefs.
35
2.
99.
Required Insurance Coverage.
Franciscan has over 17,000 employees, over 500 of which are
physicians. Approximately 15,000 of these employees are eligible for health

insurance benefits from Franciscan.
100.
Franciscan has a health benefits plan that is administered by a third
party administrator.
101.
In accordance with Franciscans religious beliefs, Franciscans
employee health benefit plan specifically excludes coverage for:
102.
any [t]reatment, drugs, medicines, services, and supplies related to

gender transition;
Sterilizations;
Abortions.
Franciscan sincerely believes that providing insurance coverage for
gender transition, sterilization, and abortion would constitute impermissible

material cooperation with evil.
103.
Franciscan must now choose between (a) following its faith and its best
medical judgment, or (b) following the Regulation. If it follows its faith and its
medical judgment, Franciscan will be subject to lawsuits and penalties. Most
significantly, Franciscan annually provides approximately 900 million dollars in
Medicare and Medicaid services to the poor, disabled, and elderly, and it also
receives approximately $300,000 in HHS grants. If Franciscan refuses to both deny
its faith and lower its standard of care, it risks losing that funding and suffering a
36
corresponding severe reduction in its capacity to carry out its religious mission to
serve the poor, disabled, and elderly.
104.
The Regulation also makes it more expensive for Franciscan to do
business with its third party administrator. The Regulation subjects the third party
administrator to potential liability for administering Franciscans religious health
plan, and thus Franciscan will be forced to indemnify its third party administrator
from this liability. This constitutes an additional substantial burden on its religious
exercise.
F.
The Effect on Specialty Physicians.
105.
Specialty Physicians is a member managed limited liability company,
of which Franciscan is the sole member. Specialty Physicians shares Franciscans

religious beliefs. As such, all of Specialty Physicians facilities are operated in a
manner that abides by The Ethical and Religious Directives for Catholic Health
Care Services as promulgated by the United States Conference of Catholic Bishops
and interpreted by the local Bishop and as modified from time to time.
106.
Specialty Physicians has also approved the same Sex Reassignment
Intervention Policy as Franciscan.

107.
Specialty Physicians provides over $6 million in Medicare and
Medicaid services annually to the poor, disabled, and elderly. Annually, it performs
approximately 90,000 outpatient services.
108.
Specialty Physicians offers many services, such as endocrinology
services, which will result in Specialty Physicians being impacted by the Regulation
37
in the same manner as Franciscan, in that it will be forced to offer medical services
that violate its religious beliefs under the new Regulation.
109.
Specialty Physicians has approximately 300 employees who are eligible
for health insurance benefits. Of those employees, approximately 60 are physicians

and 15 are advanced practice providers.
110.
Specialty Physicians will likely have the same insurance plan as
Franciscan as of January 1, 2017, with the same exclusions related to gender

transition, abortion, and sterilization. Thus, Specialty Physicians will face the same
penalties as Franciscan for exercising its religious beliefs regarding its insurance
policy under the Regulation.
IV. CLAIMS
A. Alleged by All Plaintiffs.
COUNT I
Violation of the Administrative Procedure Act
Agency Action Not in Accordance with Law
111.
The Plaintiffs incorporate by reference all preceding paragraphs.
112.
Defendants are agencies under the APA, 5 U.S.C. 551(1), and the
new Regulation complained of herein is a rule under the APA, id. 551(4), and
constitutes [a]gency action made reviewable by statute and final agency action for
which there is no other adequate remedy in a court. Id. 704.
113.
The APA prohibits agency actions that are not in accordance with law.
5 U.S.C. 706(2)(A). Under the APA, courts review questions of law freely and are
under no obligation to defer to the agencys legal conclusions. Inst. for Tech. Dev. v.
38
Brown, 63 F.3d 445, 450 (5th Cir. 1995). In such a context, a courts review is
effectively de novo. Id.; see also Velasquez-Tabir v. I.N.S., 127 F.3d 456, 459 n.9 (5th
Cir. 1997) (under the APA, [r]eview of a question of law is de novo); Meadows v.
S.E.C., 119 F.3d 1219, 1224 (5th Cir. 1997) (noting that when reviewing agency
action, legal conclusions are for the courts to resolve (internal quotation mark
omitted)). The Regulation is not in accordance with law for a number of independent
reasons.
114.
HHS has explained that the Regulation will require physicians to
perform medical transition procedures regardless of whether those procedures are

medically necessary or even medically appropriate. It is not in accordance with
law, within the meaning of 5 U.S.C. 706(2)(A), for the federal government to require
medical professionals to perform procedures that may not be necessary or
appropriate, and may in fact be harmful to the patients. This violates constitutional
and statutory rights of medical professionals, including substantive due process
rights and freedom of speech protections, as well as the sovereign prerogatives of the
States, which play a significant role in overseeing the promulgation and
administration of appropriate standards of care within the healthcare community.
Courts scrutinize particularly closely agency action that raises constitutional
concerns.
115.
The Regulation also states that a physicians view of medical transition
procedures as experimental is outdated and not based on current standards of

care. 81 Fed. Reg. at 31435; see also id. at 31429. It is not in accordance with law,
39
within the meaning of 5 U.S.C. 706(2)(A), for the federal government to dictate
appropriate medical views on the necessity and experimental nature of medical
transition procedures, and to dictate what constitutes best standards of care in an
area of science and medicine that is being hotly debated in the medical community.
This violates constitutional and statutory rights of medical professionals, including
substantive due process rights and freedom of speech protections.
116.
The Regulation is not in accordance with Section 1557 of the Affordable
Care Act (42 U.S.C. 18116) or Title IX of the Education Amendments of 1972, 20
U.S.C. 1681 et seq. Section 1557 does not, on its own terms, prohibit discrimination
on the basis of sex. Instead, it prohibits discrimination on the ground prohibited
under . . . title IX of the Education Amendments of 1972. 42 U.S.C. 18116(a). Title
IX, in turn, prohibits discrimination on the basis of sex . . . except that . . . this section
shall not apply to an educational institution which is controlled by a religious
organization if the application of this subsection would not be consistent with the
religious tenets of such organization. 20 U.S.C. 1681(a), (a)(3).
117.
Neither Section 1557 nor Title IX uses the term sex to include gender
identity. Thus, HHSs attempt to expand the definition is not in accordance with law
within the meaning of 5 U.S.C. 706(2)(A).
118.
HHSs failure to include in the Regulation a religious exemption that
parallels the religious exemption in Title IX is also not in accordance with law within
the meaning of 5 U.S.C. 706(2)(A).
40

119.
HHSs failure to include an exclusion for sterilization and sterilization-
related services is not in accordance with law within the meaning of 5 U.S.C.
706(2)(A) because it is inconsistent with the Church Amendments, 42 U.S.C. 300a7(b), which protect the right of healthcare entities who receive federal funding to
refuse to participate in or assist with sterilizations.
120.
HHSs failure to include an exclusion for abortion and abortion-related
services is not in accordance with law within the meaning of 5 U.S.C. 706(2)(A)
because it is inconsistent with the plain language of Title IX, which prohibits
requiring coverage, payment, or the use of facilities for abortion.
121.
because it is inconsistent with the Church Amendments, 42 U.S.C. 300a-7(b), which
protect the right of healthcare entities who receive federal funding to refuse to
participate in or assist with abortions.
122.
because it is inconsistent with Section 245 of the Public Health Service Act, 42 U.S.C.
238(n), which prohibits the federal government and any state or local government
receiving federal financial assistance from discriminating against any healthcare
entity on the basis that the entity refuses to perform abortions, provide referrals for
abortions, or to make arrangements for such abortions.
41

123.
because it is inconsistent with the Weldon Amendment, which has been readopted or
incorporated by reference in every HHS appropriations act since 2005, 29 and provides
that no funds may be made available under HHS appropriations act to a government
entity that discriminates against an institution or individual physician or healthcare
professional on the basis that the entity or individual does not provide, pay for,
provide coverage of, or refer for abortions.
124.
because it is inconsistent with Section 1303(b)(4) of the ACA, 42 U.S.C. 18023,
which states that [n]o qualified health plan offered through an Exchange may
discriminate against any individual health care provider or health care facility
because of its unwillingness to provide, pay for, provide coverage of, or refer for
abortions.
125.
The Regulation is not in accordance with Title VII of the Civil Rights
Act of 1964 (42 U.S.C. 2000e et seq.). Title VII prohibits employers from
discriminating against employees on the basis of religion. 42 U.S.C. 2000e-2. This
means that employers, including Plaintiffs, have a duty to reasonably accommodate
their employees religious practices unless doing so would cause undue hardship to
See Consolidated Appropriations Act, 2016, H.R. 2029, 114th Cong.

507(d) (2015).
29
42
the employer. Plaintiffs employ individuals who have religious or conscientious

objections to performing medical transition procedures. It should not be an undue
hardship on Plaintiffs to accommodate these employees religious beliefs, but the new
Regulation will in many cases make it illegal for Plaintiffs who receive HHS funds to
accommodate their employees in accordance with Title VII. Thus, the Regulation is
not in accordance with Title VII.
126.
The Regulation states that a physicians view of medical transition
procedures as experimental is outdated and not based on current standards of

care. 81 Fed. Reg. at 31435; see also id. at 31429. It is not in accordance with law
within the meaning of 5 U.S.C. 706(2)(A) for the federal government to dictate
appropriate medical views on the necessity and experimental nature of medical
transition procedures, and to dictate what constitutes best standards of care and
what services physicians must offer in an area of science and medicine that is being
hotly debated in the medical community. This violates constitutional and statutory
rights of medical professionals, including a medical professionals freedom of speech
to offer candid professional advice about the experimental nature and dangerous
health outcomes associated with medical transition procedures, and freedom not to
be compelled to speak in favor of or make referrals for such procedures.
127.
The Regulation also forces physicians to provide medical services related
to gender transition. This is not in accordance with substantive due process rights
protecting a medical professionals right to not perform a procedure he or she believes
to be experimental, ethically questionable, and potentially harmful.
43

128.
The Regulation is not in accordance with the First Amendment because
the Regulation is overbroad and not narrowly tailored to a compelling governmental

interest.
129.
The Regulation is not in accordance with the First Amendment and
Fifth Amendment because it is void for vagueness.

130.
The Regulation is not in accordance with the First Amendment because
it violates Plaintiffs rights not to be subjected to a system of unbridled discretion

when engaging in speech or religious exercise.
131.
The Regulation is not in accordance with the Tenth Amendment, which
prohibits the federal government from co-opting a states control over budgetary
processes and legislative agendas.
132.
The Regulation is contrary to the First Amendment because it imposes
an unconstitutional condition on Plaintiffs receipt of federal funding. See Agency for

Intl Dev. v. Alliance for Open Socy Intl, Inc., 133 S. Ct. 2321, 2331, 186 L. Ed. 2d 398
(2013).
133.
The Regulation is contrary to the First Amendment because violates
Plaintiffs freedom of association protections.

134.
The Regulation is contrary to law because it violates the Religious
Freedom Restoration Act.

135.
The Regulation is contrary to law because it violates the Free Exercise
clause of the First Amendment.
44

136.
The Regulation is contrary to law because it violates the Fifth
Amendment Due Process and Equal Protection clauses.

137.
The Regulation is contrary to the protections of the Spending Clause.
138.
The Regulation is an unlawful abrogation of sovereign immunity.
139.
The Regulation is contrary to the protections of the Tenth Amendment.
140.
Plaintiffs have no adequate or available administrative remedy, or, in
the alternative, any effort to obtain an administrative remedy would be futile.

141.
Plaintiffs have no adequate remedy at law.
142.
Absent injunctive and declaratory relief against the Regulation, the
Plaintiffs have been and will continue to be harmed.

COUNT II
Agency Action In Excess of Statutory Authority and Limitations
143.
144.
145.
The APA prohibits agency actions that are in excess of statutory
jurisdiction, authority, or limitations. 5 U.S.C. 706(2)(C). The Regulation is in

excess of statutory jurisdiction, authority, and limitations for a number of reasons.
146.
For the reasons described above, there is no statutory authority or
jurisdiction for HHS to require medical professionals and facilities to perform
45
procedures (or refer for the same) that may not be necessary or appropriate, and may
in fact be harmful to the patients.
147.
For the reasons described above, there is no statutory authority or
jurisdiction for HHS to dictate appropriate medical views on the necessity and
experimental nature of medical transition procedures, or to dictate what constitutes
best standards of care in an area of science and medicine that is being hotly debated
in the medical community.
148.
For the reasons described above, HHSs decision to interpret Section
1557s reference to sex discrimination to include gender identity is in excess of

statutory jurisdiction, authority, and limitations within the meaning of 5 U.S.C.
706(2)(C).
149.
For the reasons described above, HHSs failure to include a religious
exemption in the Regulation that parallels the religious exemption in Title IX is in

excess of statutory jurisdiction, authority, and limitations within the meaning of 5
U.S.C. 706(2)(C).
150.
For the reasons discussed above, HHSs failure to include an exclusion
for sterilization and sterilization-related services is in excess of statutory jurisdiction,

authority, and limitations within the meaning of 5 U.S.C. 706(2)(C) because it is
inconsistent with the Church Amendments, 42 U.S.C. 300a-7(b).
151.
for abortion and abortion-related services is in excess of statutory jurisdiction,

46
inconsistent with the plain language of Title IX, which prohibits requiring coverage,
payment, or the use of facilities for abortion.
152.

inconsistent with the Church Amendments, 42 U.S.C. 300a-7(b).
153.

inconsistent with Section 245 of the Public Health Service Act, 42 U.S.C. 238(n),
154.

inconsistent with the Weldon Amendment, which has been readopted or incorporated
by reference in every HHS appropriations act since 2005. 30
155.

inconsistent with Section 1303(b)(4) of the ACA, 42 U.S.C. 18023.
See Consolidated Appropriations Act, 2016, H.R. 2029, 114th Cong.

507(d) (2015).
30
47

156.
For the reasons described above, HHSs decision to require Plaintiffs to
act in violation of Title VII by not accommodating their employees religious and
conscientious objections to participating in (or referring for) medical transition
treatment or procedures is in excess of statutory jurisdiction, authority, and
limitations within the meaning of 5 U.S.C. 706(2)(C).
157.
For the reasons discussed above, the Regulation is in excess of statutory
jurisdiction, authority, and limitations within the meaning of 5 U.S.C. 706(2)(C) as

it violates Plaintiffs freedom of speech.
158.

it violates Plaintiffs substantive due process rights.
159.

it violates the First Amendment because it is overbroad and not narrowly tailored to
a compelling governmental interest.
160.

it violates the First Amendment because it is overbroad and not narrowly tailored to
a compelling governmental interest.
161.
jurisdiction, authority, and limitations within the meaning of 5 U.S.C. 706(2)(C)

because it is void under the First and Fifth Amendment for vagueness.
48

162.

because it violates Plaintiffs rights not to be subjected to a system of unbridled
discretion when engaging in speech or when engaging in religious exercise, as secured
to them by the First Amendment of the United States Constitution.
163.

because it co-opts states control over budgetary processes and legislative agendas
contrary to the Tenth Amendment.
164.

because it imposes an unconstitutional condition on Plaintiffs receipt of federal
funding contrary to the First Amendment.
165.

because it violates Plaintiffs First Amendment freedom of association.
166.

because it violates the Religious Freedom Restoration Act.
167.

because it violates the Free Exercise clause of the First Amendment.
49

168.

because it violates the Fifth Amendment Due Process and Equal Protection clauses.
169.

because it is contrary to the protections of the Spending Clause.
170.

because it is an unlawful abrogation of sovereign immunity.
171.

because it is contrary to the protections of the Tenth Amendment.
172.

173.
174.

COUNT III
Agency Action that is Arbitrary, Capricious and an Abuse of Discretion
175.
176.
50
177.
The APA prohibits agency actions that are arbitrary, capricious, [or] an
abuse of discretion. 5 U.S.C. 706(2)(A). The Regulation is arbitrary and capricious

agency action for a number of reasons.
178.
HHS has explained that the Regulation will require physicians to
perform medical transition procedures regardless of whether those procedures are

medically necessary or even medically appropriate. It is arbitrary and capricious
for the federal government to require medical professionals to perform (or refer for)
procedures that the physician believes may not be necessary or appropriate, and that
may even be harmful to the patient.
179.
For the reasons discussed above, it is arbitrary and capricious for HHS
to dictate appropriate medical views on the necessity and experimental nature of

medical transition procedures, and to dictate what constitutes best standards of care.
180.
For the reasons discussed above, HHSs inclusion of gender identity in
its interpretation of sex is an arbitrary and capricious interpretation of Section 1557

of the Affordable Care Act (42 U.S.C. 18116) and Title IX of the Education
Amendments of 1972, 20 U.S.C. 1681 et seq.
181.
For the reasons discussed above, HHSs failure to include a religious
exemption in the Regulation that parallels the religious exemption in Title IX is

arbitrary and capricious within the meaning of 5 U.S.C. 706(2)(A).
51

182.
for sterilization and sterilization-related services is arbitrary and capricious within

the meaning of 5 U.S.C. 706(2)(A) because it is inconsistent with the Church
Amendments, 42 U.S.C. 300a-7(b).
183.
for abortion and abortion-related services is arbitrary and capricious within the
meaning of 5 U.S.C. 706(2)(A).
184.
For the reasons described above, HHSs decision to require Plaintiffs to
act in violation of Title VII by not accommodating their employees religious

objections to participating in medical transition procedures is arbitrary and
capricious within the meaning of 5 U.S.C. 706(2)(A).
185.
For the reasons discussed above, the Regulation is arbitrary and
capricious within the meaning of 5 U.S.C. 706(2)(A) as it violates Plaintiffs freedom

of speech.
186.
capricious within the meaning of 5 U.S.C. 706(2)(A) as it violates Plaintiffs

substantive due process rights.
187.
capricious within the meaning of 5 U.S.C. 706(2)(A) as it violates the First

Amendment because it is overbroad and not narrowly tailored to a compelling
governmental interest.
52

188.
capricious within the meaning of 5 U.S.C. 706(2)(A) because it is void under the
First and Fifth Amendment for vagueness.
189.
capricious within the meaning of 5 U.S.C. 706(2)(A) because it violates Plaintiffs

rights not to be subjected to a system of unbridled discretion when engaging in speech
or when engaging in religious exercise, as secured to them by the First Amendment
of the United States Constitution.
190.
capricious within the meaning of 5 U.S.C. 706(2)(A) because it co-opts States control
over budgetary processes and legislative agendas contrary to the Tenth Amendment.
191.
capricious within the meaning of 5 U.S.C. 706(2)(A) because it imposes an

unconstitutional condition on Plaintiffs receipt of federal funding contrary to the
First Amendment.
192.
The Regulation is arbitrary and capricious within the meaning of 5
U.S.C. 706(2)(A) because it violates Plaintiffs First Amendment freedom of

association.
193.
capricious within the meaning of 5 U.S.C. 706(2)(A) because it violates the Religious
Freedom Restoration Act.
53

194.
capricious within the meaning of 5 U.S.C. 706(2)(A) because it violates the Free
Exercise Clause of the First Amendment.
195.
capricious within the meaning of 5 U.S.C. 706(2)(A) because it violates the Fifth
Amendment Due Process and Equal Protection clauses.
196.
capricious within the meaning of 5 U.S.C. 706(2)(A) because it is contrary to the

protections of the Spending Clause.
197.
capricious within the meaning of 5 U.S.C. 706(2)(A) because it is an unlawful

abrogation of sovereign immunity.
198.
capricious within the meaning of 5 U.S.C. 706(2)(A) because it is contrary to the

protections of the Tenth Amendment.
199.

200.
201.
54
B. Alleged by CMDA, Franciscan, and Specialty Physicians only

COUNT IV
Violation of the First Amendment of the United States Constitution
Freedom of Speech
Compelled Speech and Compelled Silence
202.
203.
The Plaintiffs plan to continue using their best medical and ethical
judgment in treating and advising patients. Performing (or referring for) medical
transition procedures is contrary to their best medical and/or ethical judgment.
204.
The Regulation states, in the context of physicians offering health

experimental, is outdated and not based on current standards of care. 81 Fed. Reg.
at 31435; see also id. at 31429.
205.
The Regulation would prohibit the Plaintiffs from expressing their
professional opinions that medical transition procedures are not the best standard of
care or are experimental.
206.
Performing (or referring for) medical transition procedures is also
contrary to the religious and conscientious beliefs of the Plaintiffs, and their beliefs
prohibit them from conducting, participating in, or referring for such procedures.
207.
The Regulation would compel the Plaintiffs to conduct, participate in,
refer for, or otherwise facilitate medical transition procedures.
55

208.
religious views that medical transition procedures are not the best standard of care
or are experimental.
209.
The Regulation would compel the Plaintiffs to speak in ways that they
would not otherwise speak.

210.
The Regulation thus violates the Plaintiffs right to be free from
compelled speech as secured to them by the First Amendment of the United States
Constitution.
211.
The Regulations compelled speech requirement is not justified by a
compelling governmental interest.

212.
Even if HHS has a compelling government interest, the Regulation is
not narrowly tailored to achieve that interest.

213.

COUNT V
Freedom of Speech and Free Exercise Clause
Viewpoint Discrimination
214.
215.
The Plaintiffs sincere religious and conscientious beliefs prohibit them
from facilitating or participating in medical transition procedures.

216.
The Plaintiffs medical judgment is that, in general, it is harmful to
encourage a patient to undergo medical transition procedures.
56

217.
services that a categorization of all transition-related treatment, for example as

218.
religious or conscientious viewpoint that medical transition procedures are not the
best standard of care.
219.
The Regulation withholds funding based on an intent to restrict
Plaintiffs speech.
220.
The Regulations viewpoint discrimination is not justified by a
compelling governmental interest.

221.

222.
Defendants actions thus violate the Plaintiffs rights as secured to them
by the First Amendment of the United States Constitution.

223.

COUNT VI
Violation of the First and Fifth Amendments of the United States
Constitution
Freedom of Speech and Due Process
Overbreadth
224.
Plaintiffs incorporate by reference all preceding paragraphs.
225.
The Regulation regulates protected speech.
57

226.

227.
This exposes the Plaintiffs to penalties for expressing their medical and
moral views of medical transition procedures. It also prohibits Plaintiffs from using
their medical judgment to determine the appropriate standard of care for interactions
with their patients.
228.
Plaintiffs believe that the Regulation restricts their speech regarding
the best standard of care for patients.

229.
The Regulation states: The determination of whether a certain practice
is discriminatory typically requires a nuanced analysis that is fact-dependent.

230.
The Regulation chills the Plaintiffs speech.
231.
The Regulations overbreadth is not justified by a compelling
governmental interest.
232.

233.
Defendants have therefore violated the Plaintiffs rights secured to
them by the Free Speech Clause of the First Amendment and the Due Process Clause
of the Fifth Amendment by prohibiting speech that would otherwise be protected.
234.
58
COUNT VII
Violation of the First and Fifth Amendments of the United States
Constitution
Freedom of Speech and Due Process
Void for Vagueness
235.
236.
The Regulation requires that a covered entity apply neutral,
nondiscriminatory criteria that it uses for other conditions when the coverage
determination is related to gender transition and decline[s] to limit application of
the rule by specifying that coverage for the health services addressed in
92.207(b)(3)(5) must be provided only when the services are medically necessary
or medically appropriate. 81 Fed. Reg. at 31435.
237.
Without allowing Plaintiffs to use their judgment about what is
medically necessary or appropriate, the Regulation is ambiguous in the types of

services Plaintiffs are required to provide and perform.
238.
Requiring the Plaintiffs apply neutral, nondiscriminatory criteria that
it uses for other conditions is a subjective standard without a limiting construction.

Id.
239.
services that a categorization of all transition-related treatment, for example as

experimental, is outdated and not based on current standards of care. Id.; see also
id. at 31429.
59

240.
The Regulation does not provide a limiting construction for what the
current standard of care is, nor does it provide guidance as to how physicians can rely
on their best medical judgment when it conflicts with the Regulation.
241.
The Regulation is not justified by a compelling governmental interest.
242.

243.
Because Plaintiffs are unable to determine what kind of procedures and
services they will be required to provide and perform, Defendants have violated the
Plaintiffs rights secured to them by the Free Speech Clause of the First Amendment
and the Due Process Clause of the Fifth Amendment.
244.

COUNT VIII
Free Exercise Clause and Freedom of Speech
Unbridled Discretion
245.
246.
The Regulation applies to every health program or activity, any part of
which receives Federal financial assistance provided or made available by the

Department; every health program or activity administered by the Department; and
every health program or activity administered by a Title I entity. 45 C.F.R. 92.2(a).
60

247.
The Regulation also states: The determination of whether a certain
practice is discriminatory typically requires a nuanced analysis that is factdependent. 81 Fed. Reg. at 31377.
248.
The Regulation also says: Insofar as the application of any requirement
under this part would violate applicable Federal statutory protections for religious
freedom and conscience, such application shall not be required. 45 C.F.R. 92.2(b)(2).
249.
Because the Defendants have sole discretion over financial assistance
provided or made available, and because Defendants have sole discretion over the
application of the Regulation and any religious freedom protection that applies, the
Regulation vests unbridled discretion over which organizations will have their First
Amendment interests accommodated.
250.
In Title IX of the Education Amendments of 1972, Congress precluded
discrimination on the basis of sex in federally funded education programs, except

that . . . this section shall not apply to an educational institution which is controlled
by a religious organization if the application of this subsection would not be consistent
with the religious tenets of such organization. 20 U.S.C. 1681(a)(3). Defendants
have exercised unbridled discretion by declining to apply the clear religious freedom
protections of Title IX.
251.
In Title IX of the Education Amendments of 1972, Congress banned sex
discrimination in federally funded education programs, except that it made clear that
Nothing in this chapter shall be construed to require or prohibit any person, or public
or private entity, to provide or pay for any benefit or service, including the use of
61
facilities, related to an abortion. Nothing in this section shall be construed to permit

a penalty to be imposed on any person or individual because such person or individual
is seeking or has received any benefit or service related to a legal abortion. 20 U.S.C.
1688. Defendants have exercised unbridled discretion by declining to apply the clear
abortion protections of Title IX.
252.
Defendants actions therefore violate the Plaintiffs rights not to be
subjected to a system of unbridled discretion when engaging in speech or when

engaging in religious exercise, as secured to them by the First Amendment of the
United States Constitution.
253.
Absent injunctive and declaratory relief against the Regulation,

COUNT IX
Violation of the First Amendment to the United States Constitution
Free Speech Clause
Unconstitutional Conditions
254.
255.
The Regulation imposes an unconstitutional condition on Plaintiffs
receipt of federal funding. See Agency for Intl Dev. v. Alliance for Open Socy Intl,
Inc., 133 S. Ct. 2321, 2331 (2013).
256.
The Regulation applies to any healthcare provider who accepts federal
funding from any source for any program.

257.
The Regulation requires the Plaintiffs to adopt policies regarding
standards of care for patients that violate Plaintiffs religious and conscientious
62
beliefs, as well as their medical judgment, and also interfere with the Plaintiffs
practice of medicine.
258.
Defendants actions therefore impose an unconstitutional condition on
Plaintiffs receipt of federal funding and violate Plaintiffs rights as secured to them
by the First and Fourteenth Amendments of the United States Constitution.
259.

COUNT X
Violation of the First Amendment
Freedom of Speech
Expressive Association
260.
261.
The Plaintiffs believe and teach that participating in actions,
procedures, and services with the goal of transitioning from one sex to another violate
their religious beliefs.
262.
procedures, and services that result in elective sterilizations violate their religious
beliefs.
263.
procedures, and services related to abortion violate their religious beliefs.

264.
The Transgender Mandate would compel the Plaintiffs to participate in
procedures, services, and activities that contradict the Plaintiffs religious beliefs and
message.
63

265.
The Transgender Mandate would compel the Plaintiffs to offer
insurance coverage for procedures, services, and activities that violate Plaintiffs
religious beliefs and message.
266.
Defendants actions thus violate Plaintiffs rights of expressive
association as secured to them by the First Amendment of the United States

Constitution.
267.
Absent injunctive and declaratory relief against the Transgender
Mandate, the Plaintiffs have been and will continue to be harmed.

268.
The Regulation exposes the Plaintiffs to civil suits that would hold them
liable for practicing and expressing their sincerely held religious beliefs.
269.
The Regulation furthers no compelling governmental interest.
270.
The Regulation is not the least restrictive means of furthering
Defendants stated interests.

COUNT XI
Violation of the Religious Freedom Restoration Act
Compelled Medical Services
271.
272.
The Religious Plaintiffs sincerely held religious beliefs prohibit them
from deliberately offering services and performing (or referring for) operations or
other procedures required by the Regulation. The Plaintiffs compliance with these
beliefs is a religious exercise.
64

273.
The Plaintiffs sincerely held religious beliefs prohibit them facilitating
medical transition procedures. The Plaintiffs compliance with these beliefs is a

religious exercise.
274.
sterilization procedures. The Plaintiffs compliance with these beliefs is a religious

exercise.
275.
abortion-related services. The Plaintiffs compliance with these beliefs is a religious

exercise.
276.
The Regulation creates government-imposed coercive pressure on the
Plaintiffs to change or violate their religious beliefs.

277.
The Regulation chills the Plaintiffs religious exercise.
278.
The Regulation exposes the Plaintiffs to the loss of substantial
government funding as a result of their religious exercise.

279.
The Regulation exposes the Plaintiffs to substantial penalties under the
False Claims Act, 31 U.S.C. 3729 et seq.

280.
The Regulation exposes the Plaintiffs to criminal penalties under 18
U.S.C. 1035.
281.
liable for practicing their sincerely held religious beliefs.

282.
The Regulation thus imposes a substantial burden on the Plaintiffs
religious exercise.
65
283.
284.

285.
The Regulation violates the Plaintiffs rights secured to them by the
Religious Freedom Restoration Act, 42 U.S.C. 2000bb et seq.

COUNT XII
Violation of the Religious Freedom Restoration Act
Compelled Insurance Coverage
286.
287.
For the same reasons discussed above, Plaintiffs sincerely held religious
beliefs prohibit them from deliberately offering health insurance that would cover
gender
transition
procedures,
sterilization
procedures,
or
abortion-related
procedures.
288.
Plaintiffs specifically exclude coverage of any services related to gender
transition procedures, sterilization procedures, or abortion-related procedures in

their insurance plans.
289.
The Plaintiffs compliance with these beliefs by maintaining these
exclusions is a religious exercise.

290.
Under the Regulation, insurance exclusions related to gender transition
are facially invalid.

291.
Under the Regulation, insurance exclusions related to sterilization are
facially invalid.
66

292.
Under the Regulation, insurance exclusions related to abortion services
are facially invalid.

293.
The Regulation exposes the Plaintiffs to the loss of substantial
government funding as a result of their religious exercise.

294.
The Regulation also makes it much more expensive for Franciscan and
Specialty Physicians to do business with a third party administrator for a health

benefits plan. The Regulation subjects third party administrators to potential
liability for administering religious health plans like Franciscans, and thus
Franciscan and Specialty Physicians will be forced to indemnify any third party
administrator from this liability. This constitutes an additional substantial burden
on its religious exercise.
295.
The Regulation exposes the Plaintiffs to substantial penalties under the
False Claims Act, 31 U.S.C. 3729 et seq.

296.
The Regulation exposes the Plaintiffs to criminal penalties under 18
U.S.C. 1035.
297.
liable for practicing their sincerely held religious beliefs.

298.
The Regulation thus imposes a substantial burden on the Plaintiffs
religious exercise.
299.
300.
67

301.
The Regulation violates the Plaintiffs rights secured to them by the
Religious Freedom Restoration Act, 42 U.S.C. 2000bb et seq.

COUNT XIII
Violation of the First Amendment to the United States Constitution
Free Exercise Clause
302.
303.
Plaintiffs object to providing, facilitating, or otherwise participating in
medical transition procedures.

304.
The Regulation imposes substantial burdens on the Plaintiffs by forcing
them to choose between federal funding and their livelihood as healthcare providers
and their exercise of religion.
305.
The Regulation seeks to suppress the religious practice of individuals
and organizations such as the Plaintiffs, while allowing exemptions for similar
conduct based on secular and non-religious reasons. Thus, the Regulation is neither
neutral nor generally applicable.
306.
307.

308.
Defendants actions thus violate the Plaintiffs rights secured to them by
the Free Exercise Clause of the First Amendment of the United States Constitution.
309.
68
COUNT XIV
Violation of the Fifth Amendment to the United States Constitution
Due Process Clause
Substantive Due Process
310.
311.
The United States has a deeply rooted tradition of honoring physicians
rights to provide medical treatment in accordance with their moral and religious
beliefs.
312.
Plaintiffs possess a fundamental right of liberty of conscience.
313.
Plaintiffs possess a fundamental right not to be coerced to provide
medical procedures and services in violation of their conscience.

314.
The Regulation coerces Plaintiffs to provide medical procedures and
services in violation of their conscience.

315.
Defendants conduct cannot be justified by a compelling governmental
interest.
316.
317.

318.
Defendants actions therefore violate Plaintiffs rights to substantive
due process.
319.
69
COUNT XV
Violation of the Fifth Amendment to the United States Constitution
Due Process and Equal Protection
320.
321.
The Due Process Clause of the Fifth Amendment mandates the equal
treatment of all religious faiths and institutions without discrimination or preference.

322.
The Regulation discriminates on the basis of religious views or religious
status by refusing to recognize religious exemptions that exist in the law.

323.
The Regulation discriminates on the basis of religious views or religious
status by refusing to recognize valid medical views of religious healthcare

professionals on medical transition procedures.
324.
The Defendants actions thus violate the Plaintiffs rights secured to
them by the Fifth Amendment of the United States Constitution.

325.
C. Alleged by Government Plaintiffs Only.

COUNT XVI
Violation of Constitutional Standards of Clear Notice
Under the Spending Clause
326.
327.
When Congress exercises its Spending Clause power against the States,
the United States Supreme Court has held that principles of federalism require
70
conditions on Congressional funds given to States must enable a state official to

clearly understand, from the language of the law itself, what conditions the State
is agreeing to when accepting the federal funds. Arlington Cent. Sch. Bd. of Educ. v.
Murphy, 548 U.S. 291, 296 (2006). The legitimacy of Congresss exercise of the
spending power thus rests on whether the [entity] voluntarily and knowingly accepts
the terms of the contract. NFIB v. Sebelius, 132 S. Ct. 2566, 2602 (2012) (quoting
Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17 (1981)). Defendants expost Regulation is not in accord with the understanding that existed when the States
chose to begin accepting Medicare and Medicaid as payment for medical services
provided. Bennett v. New Jersey, 470 U.S. 632, 638 (1985) (providing that a states
obligation under cooperative federalism program generally should be determined by
reference to the law in effect when the grants were made).
328.
The text employed by Congress does not support understanding the
term sex in the manner put forth by Defendants. While Congress has expressed its
intent to cover gender identity, as a protected class, in other pieces of legislation,
see, e.g., 18 U.S.C. 249(a)(2)(A); 42 U.S.C. 13925(b)(13)(A), it has not done so
regarding Title IX. In other legislation, Congress included gender identity along
with sex, thus evidencing its intent for sex in Title IX to retain its original and
only meaningones immutable, biological sex as acknowledged at or before birth.
329.
The Regulation was passed under the authority Congress delegated to
HHS in Section 1557 of the Affordable Care Act. Section 1557 does not add a new
non-discrimination provision to the federal code, but merely incorporates by reference
71
pre-existing provisions under Title VI, Title IX, the Americans with Disabilities Act,
and the Rehabilitation Act. Section 1557 does not independently define terms such
as sex.
330.
At the time that the ACA was passed in 2010, no federal courts or
agencies had interpreted sex in Title IX to include gender identity.

331.
Title IX also provides that Nothing in this chapter shall be construed
to require . . . any person, or public or private entity, to provide or pay for any benefit
or service, including the use of facilities, related to an abortion. 20 U.S.C.A. 1688.
332.
Thus, no State could fathom, much less clearly understand, that the
ACA would impose on it the conditions created by HHSs new Regulationnamely, a

new gender identity requirement, as well as a provision to require coverage,
funding, or facilities for abortion. Accordingly, the new Regulation violates the
Spending Clause.
333.
Moreover, Defendants are agencies under the APA, 5 U.S.C. 551(1),
and the new Regulation complained of herein is a rule under the APA, id. 551(4),
and constitutes [a]gency action made reviewable by statute and final agency action
for which there is no other adequate remedy in a court. Id. 704. The APA requires
the Court to hold unlawful and set aside any agency action that is contrary to
constitutional right, power, privilege, or immunity or in excess of statutory
jurisdiction, authority, or limitations, or short of statutory right. Id. 706(2)(B)(C).
Thus, the Spending Clause violations articulated herein provide the Court with an
additional basis to set aside the new Rule under the APA.
72
COUNT XVII
Unlawful Abrogation of Sovereign Immunity
334.
335.
The federal government may not abrogate a states sovereign immunity
unless it makes that intention to abrogate unmistakably clear in the language of the
statute and acts pursuant to a valid exercise of its power under 5 of the Fourteenth
Amendment. See, e.g., Nevada Dep't of Human Res. v. Hibbs, 538 U.S. 721, 726, 728
n.2 (2003).
336.
The abrogation referenced herein was not unmistakably clear in the
language of the relevant statutes, and Defendants did not act pursuant to a valid
exercise of federal power under 5 of the Fourteenth Amendment.
337.
In enacting Section 1557 of the ACA, Congress did not make findings
regarding gender identity, but merely incorporated existing law under Title IX,
which does not extend to gender identity. Congress has in fact declined to pass
specific gender identity legislation on numerous occasions.
338.
The Regulation abrogates the sovereign immunity of the States by
subjecting them to lawsuits from their employees. It does so without clear

authorization from Congress, and its expansion of the definition of sex to include
gender identity is not supported by Congressional findings.
339.
The Regulation abrogates the sovereign immunity of the States by
subjecting them to lawsuits from non-employees, including spouses and dependents

of its employees, students at health-related schools run by the States, and patients
73
at state-run hospitals and medical facilities. It does so without clear authorization

from Congress, and its expansion of the definition of sex to include gender identity
is not supported by Congressional findings.
340.
Thus, the improper abrogation of the States sovereign immunity articulated herein
provides the Court with an additional basis to set aside the new Rule under the APA.
COUNT XVIII
Violation of the Spending Clause
The Regulation is Unlawful and Unconstitutionally Coercive
341.
342.
The federal government cannot use its Spending Clause powers to coerce
the States, even when proper notice procedures are followed.

343.
The Supreme Court struck down a similar attempt under the ACA
because such conditions take the form of threats to terminate other significant
independent grants, and are therefore properly viewed as a means of pressuring the
States to accept policy changes. NFIB, 132 S. Ct. at 2604.
74

344.
The Regulation threatens other independent grants, such as general
Medicare and Medicaid funds, as well as other health-related grants.

345.
By placing in jeopardy a substantial percentage of the States budget if
it refuses to comply with the Regulation, Defendants have left the State no real choice
but to acquiesce in such policy. See NFIB, 132 S. Ct. at 2605 (The threatened loss of
over 10 percent of a States overall budget, in contrast, is economic dragooning that
leaves the States with no real option but to acquiesce. . . .).
346.
Such compulsion is excessive under the Spending Clause, even in the
presence of clear notice. Congress may use its spending power to create incentives
for [entities] to act in accordance with federal policies. But when pressure turns into
compulsion, the legislation runs contrary to our system of federalism. NFIB, 132 S.
Ct. at 2602 (quoting Steward Machine Co. v. Davis, 301 U.S. 548, 590 (1937))
(internal citation omitted). That is true whether Congress directly commands a State
to regulate or indirectly coerces a State to adopt a federal regulatory system as its
own. Id.
347.
The compulsion is also improper because the Regulation changes the
conditions for the receipt of federal funds after the States had already accepted
Congresss original conditions. But [t]he legitimacy of Congresss exercise of the
spending power thus rests on whether the [entity] voluntarily and knowingly accepts
the terms of the contract. NFIB, 132 S. Ct. at 2602 (quoting Pennhurst State Sch.
& Hosp. v. Halderman, 451 U.S. 1, 17 (1981)).
75

348.
Thus, the Spending Clause violations articulated herein provide the Court with an
additional basis to set aside the new Rule under the APA.
COUNT XIX
The Regulation Unlawfully Commandeers the States
349.
350.
With the Regulation, Defendants have commandeer[ed] a States
legislative or administrative apparatus for federal purposes. NFIB, 132 S. Ct. at

2602.
351.
Such commandeering exceeds powers delegated to Congress under
Article I and invades the powers reserved to the States in the Tenth Amendment.
COUNT XX
Unconstitutional Exercise of Federal Power in Violation of the Tenth
Amendment
352.
353.
State Plaintiffs cannot afford the exorbitant and unfunded costs of the
Regulation, but has no choice other than to participate.
76

354.
By effectively co-opting the Plaintiffs control over their budgetary
processes and legislative agendas through compelling them to assume costs they
cannot afford, the new Rule invades their sovereign sphere.
355.
The new Rule violates the Tenth Amendment of the Constitution of the
United States, and runs afoul of the Constitutions principle of federalism, by

commandeering the State Plaintiffs and their employees as agents of the federal
governments regulatory scheme at the States own cost.
V. PRAYER FOR RELIEF
Wherefore, Plaintiffs pray the Court:
a.
Declare that the challenged Regulation is invalid under the

Administrative Procedure Act;
b.
Declare that the challenged Regulation is invalid under the Religious

Freedom Restoration Act;
c.
Declare that the challenged Regulation is invalid under the First

Amendment to the United States Constitution;
d.
Declare that the challenged Regulation is invalid under the Fifth

Amendment of the United States Constitution;
e.
Declare that the challenged Regulation is invalid under the Fourteenth

Amendment of the United States Constitution;
f.
Issue a permanent injunction enjoining Defendants from enforcing the

challenged Regulations against Plaintiffs, those acting in concert with
Plaintiffs, and all States;
77
g.
Award actual damages;
h.
Award nominal damages;
i.
Award Plaintiffs the costs of this action and reasonable attorneys fees;
and
j.
Award such other and further relief as it deems equitable and just.
VI. JURY DEMAND
Plaintiffs hereby request a trial by jury on all issues so triable.
78
Respectfully submitted this the 23rd day of August, 2016.

/s/ Luke W. Goodrich
Luke W. Goodrich
DC Bar No. 977736
(N.D. Tex. admission pending)
The Becket Fund for Religious Liberty
1200 New Hampshire Ave. NW
Suite 700
Washington, DC 20036
(202) 955-0095
(202) 955-0090
[email protected]
Counsel for Plaintiffs Christian
Medical & Dental Associations,
Franciscan Alliance, Inc., Specialty
Physicians of Illinois, LLC
KEN PAXTON
Attorney General of Texas
JEFFREY C. MATEER
First Assistant Attorney General
BRANTLEY STARR
Deputy First Assistant Attorney General
PRERAK SHAH
Senior Counsel to the Attorney General
ANDREW D. LEONIE
Associate Deputy Attorney General for
Special Litigation
AUSTIN R. NIMOCKS
Associate Deputy Attorney General for
Special Litigation
/s/ Austin R. Nimocks
AUSTIN R. NIMOCKS
Texas Bar No. 24002695
[email protected]
MICHAEL C. TOTH
Senior Counsel for Special Litigation
Special Litigation Division
P.O. Box 12548, Mail Code 009
Austin, Texas 78711-2548
(512) 936-1414
ATTORNEYS FOR PLAINTIFFS
STATE OF TEXAS; STATE OF
WISCONSIN; STATE OF
NEBRASKA; COMMONWEALTH
OF KENTUCKY, by and through
Governor Matthew G. Bevin; and
STATE OF KANSAS
79

Franciscan Alliance Et Al v. Burwell Et Al - Complaint

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Case 7:16-cv-00108-O Document 1 Filed 08/23/16

IN THE UNITED STATES DISTRICT COURT

Civ. Action No. ___________

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

INTRODUCTION AND NATURE OF THE ACTION

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

Texas has a significant role to play in regulating and protecting the

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

The Plaintiffs State of Wisconsin, State of Nebraska, and State of

Governor Matthew G. Bevin brings this suit on behalf of the

Commonwealth of Kentucky pursuant to the Kentucky Constitution, which provides

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

Plaintiff the Christian Medical & Dental Society is an Illinois non-profit

The Franciscan Alliance (Franciscan) is a Roman Catholic nonprofit

The Sisters of St. Francis of Perpetual Adoration were themselves

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

Franciscan is now one of the strongest health systems in the country.

Franciscan provides approximately 900 million dollars in Medicare and Medicaid

Specialty Physicians of Illinois, LLC (Specialty Physicians) provide a

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

Defendants are appointed officials of the United States government and

implementation of the challenged Regulation.

Defendant Sylvia Burwell is the Secretary of the United States

Defendant the United States Department of Health and Human

The Court has subject matter jurisdiction pursuant to 28 U.S.C. 1331

Venue lies in this district pursuant to 28 U.S.C. 1391.

The Affordable Care Act and Related Federal Statutes.

federally-funded health benefits because of the individuals race, color, national

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

Title IX does not apply to covered entities controlled by a religious

Title IX also states that it cannot be construed to require or prohibit

federal agencies had interpreted sex in Title IX to include gender identity.

Federally-funded programs may not require an individual to perform

or assist in the performance of any sterilization procedure or abortion if his

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

contrary to his religious beliefs or moral convictions. 42 U.S.C. 300a-7(b). Congress

On September 8, 2015, HHS proposed a new rule to interpret Section

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

The Rule also defines sex to include discrimination based upon

termination of pregnancy in covered programs. HHS declined to add an explicit

This new Regulation applies to any entities or individuals that operate,

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

policies through the FFM and state-based marketplaces, and up to 900,000

The new Rule requires covered entities to provide health programs or

activities in accordance with HHSs expansive and unwarranted definition of sex.

Healthcare professionals must perform or refer for

The Rule requires covered employers, and their healthcare providers

Timothy Jost, Implementing Health Reform: HHS Proposes Rule Implementing

81 Fed. Reg. at 31455.

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

Despite the widespread, well-documented debate about the medical

Furthermore, a number of commenters requested that HHS make clear

Id. at 31435; see also id. at 31429.

Case 7:16-cv-00108-O Document 1 Filed 08/23/16

Because Plaintiffs provide hysterectomies to patients diagnosed with

uterine cancer, the Regulations would simultaneously force them to provide a

And while Plaintiffs such as Franciscan provide hormone treatments to

Healthcare facilities and professionals must alter their