Managed Care Outlook 2024

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Since 2022, five states – Alabama, Idaho, Florida, North Dakota, and Oklahoma – have enacted laws criminalizing the provision of gender-affirming care (GAC) to minors in the form of puberty blockers, hormone therapy, and/or surgery. Each of these bans is being challenged in either state or federal court. Although each of these bans targets the performing provider and carries a low risk of direct criminal liability for managed care organizations (MCOs) and their employees, the bans’ broad language and the respective states’ derivative criminal liability statutes could potentially create criminal exposure for MCOs operating both in and out of the state. On the other hand, some states have enacted shield laws that could protect MCOs from a criminal ban’s extraterritorial reach.

While other states’ civil statutes prohibiting GAC may also impose potential liability on MCOs aiding in the provision of GAC, this article focuses solely on states with criminal statutes and the challenges to and implications of those statutes.

Key stat - Nearly half of U.S. states have enacted bans on GAC, including bans that make the provision of GAC a crime. In response, 15 states have enacted shield laws or executive orders that among other things, protect residents of the state from enforcement of other states' GAC bans.Legal battles

All five states with criminal gender-affirming care bans – Alabama, Idaho, Florida, North Dakota, and Oklahoma – face lawsuits challenging the enforceability of the bans. Challenges to the criminal bans (and often other states’ non-criminal bans, such as those with medical licensure consequences) predominantly rely on the U.S. Constitution’s Due Process and Equal Protection Clauses. Frequently, these suits allege that the ban violates the fundamental right of parents to make decisions concerning the care of their children under the Due Process Clause and that it discriminates on the basis of sex and transgender status in violation of the Equal Protection Clause. The Eleventh Circuit has been at the center of these challenges since its jurisdiction includes two states with criminal GAC bans (Florida and Alabama). Citing to Dobbs, the Eleventh Circuit reversed a preliminary injunction on Alabama’s GAC ban because it did not consider that the plaintiffs had a high likelihood of prevailing on their constitutional challenges. Notably, the Circuit applied a rational-basis standard of review, whereas the district court had applied a heightened standard of scrutiny. However, despite the Circuit’s ruling, Alabama’s ban remains partially enjoined while the Eleventh Circuit considers plaintiffs’ request for en banc review. The criminal ban in Indiana is currently on appeal in the Seventh Circuit, which may reach the opposite conclusion. Thus, the question over the constitutionality of GAC bans may soon reach the U.S. Supreme Court. As a result of these challenges, including those at the district court level, some GAC criminal bans are enjoined in whole or in part. Still, MCOs must evaluate their potential liability under each of these bans until and unless a court decides to permanently enjoin the criminal GAC laws.

Key takeaways
  • MCOs in some states might suffer derivative liability for facilitating care that’s proscribed under bans on gender-affirming care
  • MCO-employed clinicians may have greater risk
  • State laws criminalizing gender-affirming care may have extraterritorial reach, implicating potential liability for MCOs even when they operate outside of the state
  • Shield laws may protect MCOs in some states from extraterritorial reach of other states’ criminal bans
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