Cruz et al v. Zucker

Filing 134

OPINION AND ORDER: re: 81 MOTION for Summary Judgment Notice of Motion for Summary Judgment filed by Howard Zucker, 77 MOTION for Reconsideration re; 52 Memorandum & Opinion, #105720. filed by Howard Zucker, 79 MOTION to Amend/Correct 23 Stipulation and Order,,, 64 Notice (Other) Motion to Decertify the Plaintiff Class. filed by Howard Zucker. Accordingly, the Court denies both parties' motions for summary judgment on plaintiffs 9; ESPDT claims. The question to be resolved at trial on the EPDST Provision claims is also presented by plaintiffs' other claims, namely, what treatments, including surgeries or hormone therapies, are medically necessary for the treatment of ge nder dysphoria in minors? In sum, for the foregoing reasons, the Court denies defendant's motion for reconsideration, denies defendant's motion to decertify the plaintiff class, denies defendant's motion for summary judgment in part an d grants it in part, and denies plaintiffs' motion for summary judgment in part and grants it in part. This case will proceed to trial to determine (1) what treatments are medically necessary for individuals under 18 with gender dysphoria and (2 ) to what extent DOH has consistently followed a bona fide policy of limiting coverage of drug uses to those listed in the Medicaid Compendia in the context of treatments for gender dysphoria. The parties are directed to jointly telephone Chambers by no later than July 8, 2016, to schedule a trial date.The Clerk of Court is directed to close documents numbered 77, 79, and 81 on the docket of this case. (And as set forth herein.) SO ORDERED. (Signed by Judge Jed S. Rakoff on 7/05/2016) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

------------------------------------- x
ANGIE CRUZ, I.H., AR'ES KPAKA, and
PIVA CWUIQ~IQ, ~n b~h~lf of
themselves and all others similarly
situated,
Plaintiffs,
14-cv-4456

(JSR)

-vOPINION AND ORDER
HOWARD ZUCKER, as Commissioner of the
Department of Health [of the State of
New York],
Defendant.
------------------------------------- x
JED S. RAKOFF, U.S.D.J.
Plaintiffs claim that New York wrongly denies Medicaid
coverage for treatment of gender dysphoria in two material
respects.
18,

First, they challenge N.Y.

Comp.

Codes R.

& Regs.

tit.

§ 505.2(1), which provides coverage for gender reassignment

surgery and hormone therapy but excludes coverage for individuals
under eighteen (the "Age Exclusion") . 1 Second, plaintiffs also
claim that§ 505.2(1) wrongfully imposes a blanket ban on
coverage of cosmetic procedures related to gender dysphoria,
including medically necessary cosmetic procedures

(the "Cosmetic

Exclusion").
The details of this case are discussed in greater detail in

1

§ 505.2(1) previously excluded coverage of gender reassignment
surgery for individuals under twenty-one if it resulted in
sterilization. However, effective April 27, 2016, § 505.2(1) was
amended to establish a minimum age of 18 for gender reassignment
surgery, even when the surgery would result in sterilization. See
Notice of Adoption dated April 12, 2016, 2016 N.Y. Reg. 407920.
Plaintiffs' claims against the earlier prohibition on surgeries
resulting in sterilization for individuals under 21 are therefore
dismissed as moot.

Cruz v. Zucker, 116 F. Supp. 3d 334, 337-41

(S.D.N.Y. 2015),

familiarity with which is here presumed. The Court now has four
motions before it. First, defendant asks the Court to reconsider
its decision on his motion to dismiss. Specifically, he wants the
Court to revisit its conclusion that§ 505.2(1)

imposes a blanket

ban on cosmetic procedures. Second, the defendant asks the Court
to decertify the plaintiff class. Finally, both parties move for
summary judgment. For the following reasons, the Court denies
defendant's motions except for parts of his motion for summary
judgment, and grants plaintiffs' motion for summary judgment in
part.
First, defendant moves for reconsideration of this Court's
decision on his motion to dismiss. Specifically, defendant argues
that§ 505.2(1) does allow cosmetic procedures when they are
medically necessary. He bases his argument on guidance released
by the New York Department of Health ("DOH")

in June 2015

(the

"June Guidance"). See New York Department of Health Medicaid
Program, Medicaid Update Vol.

31 No.

6 (June 2015). The June

Guidance explicitly supersedes earlier DOH guidance, published in
March 2015,

(the "March Guidance") which stated that "payment

will not be made for

[a list of cosmetic surgeries that can be

used to treat gender dysphoria.]" See New York Department of
Health Medicaid Program, Medicaid Update Vol.

31 No.

3 (March

2015). Although the June Guidance still states that "[p]ayment
2

will not be made for any procedures that are performed solely for
the purpose of improving an individual's appearance," it
implicitly allows coverage of some cosmetic procedures when
"justification of medical necessity is provided and prior
authorization is received." New York Department of Health
Medicaid Program, Medicaid Update Vol.

31 No.

6 at 7 (June 2015).

Specifically, the June Guidance recasts the March Guidance's list
of prohibited cosmetic surgeries as "procedures [that] will be
presumed to be performed solely for the purpose of improving
appearance and will not be covered, unless justification of
medical necessity is provided and prior authorization is
received." Id. Defendants argue that the June Guidance should
effectively end plaintiffs' facial attack on the Cosmetic
Exclusion because, if the June Guidance were a proper
interpretation of§ 505.2(1), it would show that§ 505.2(1)
allows coverage for medically necessary cosmetic surgeries.
Defendants also argue that the June Guidance affects the
Court's consideration of the ripeness of plaintiffs' claims. "A
claim is not ripe for adjudication if it rests upon contingent
future events that may not occur as anticipated," such as the
denial of coverage for medically necessary cosmetic surgeries.
Texas v. United States,

523 U.S. 296,

300

(1998)

(internal

quotation marks omitted). However, the Second Circuit does not
require "a futile gesture as a prerequisite for adjudication in
3

federal court." Desiderio v. Nat'l Ass'n of Sec. Dealers,
191 F.3d 198, 202

(2d Cir. 1999)

Inc.,

(quoting Williams v. Lambert,

46

F.3d 1275, 1280 (2d Cir. 1995)). Although plaintiffs did not
plead that they had requested and been denied cosmetic surgeries,
the Court held that their claims were nonetheless ripe because
the plain language of§ 505.2(1) bars coverage of cosmetic
surgeries and so requests for such surgeries pursuant to §
505.2(1) would be futile.
relied,

In reaching this conclusion the Court

in part, on the March Guidance. See Opinion dated July 29

at 28, ECF No. 52. But, according to the June Guidance,
plaintiffs'

request for cosmetic surgeries under§ 505.2(1) would

not necessarily be futile,

and defendants'

ripeness arguments

would rest on a stronger foundation.
In response to these various points, plaintiffs first argue
that the Court should not take the June Guidance into account
because it was released after the Court made its decision denying
defendant's motion to dismiss. However, there is no rule
requiring that, on a motion for reconsideration, the Court must
limit itself to facts or evidence existing at the time of its
initial decision. "[T]he major grounds justifying reconsideration
are 'an intervening change of controlling law, the availability
of new evidence, or the need to correct a clear error or prevent
manifest injustice.'" Virgin Atl. Airways, Ltd. v. Nat'l
Mediation Bd.,

956 F.2d 1245, 1255 (2d Cir. 1992)
4

(quoting 18 C.

Wright, A. Miller & E. Cooper,

Federal Practice & Procedure §

4478 at 790). The Court will therefore consider the June Guidance
to ensure that its past decision was not clear error or manifest
injustice.
The June Guidance is significant because,

in many

circumstances, a court is bound to give deference to an agency's
interpretation of its own ambiguous regulation. See Barnhart v.
Walton,

535 U.S. 212,

221

(2002)

(upholding deference to agency

interpretation of regulations even when agency recently enacted
the regulations in response to litigation); Auer v. Robbins,
U.S.

452,

461-63

(1997)

519

(deferring to agency interpretation

submitted in amicus brief). Defendant argues that the Court
should defer to the June Guidance as the authoritative
interpretation of§ 505.2(1) because both were promulgated by
DOH.
However, deference to an agency's interpretation of its own
regulation is not always warranted.

For one thing,

"Auer

deference is warranted only when the language of the regulation
is ambiguous." Christensen v. Harris Cty.,
(2000). Moreover,

529 U.S.

576,

588

"[d]eference is undoubtedly inappropriate

when the agency's interpretation is plainly erroneous or
inconsistent with the regulation." Christopher v. SmithKline
Beecham Corp., 132 S. Ct. 2156,

2166

(2012)

(internal quotation

marks omitted). The Second Circuit has explained that an
5

interpretation is "'plainly erroneous'

. where the plain

language of the regulation itself or some other indication of the
agency's intent at the time of promulgation compels a different
result." Florez ex rel. Wallace v. Callahan,

156 F.3d 438,

442

(2d Cir. 1998).
Here, the Court will give no deference to the June Guidance
because the plain language of§ 505.2(1) unambiguously forecloses
its interpretation. The Court already held as much in its earlier
decision on defendant's motion to dismiss. See Opinion dated July
29, 2015, at 28, ECF No.
terms,

28

("Section 505.2(1), by its plain

excludes coverage for the procedures deemed 'cosmetic.'")

However, because the Court did cite the March Guidance in its
earlier analysis,

it now holds that the March Guidance was not

essential to its decision,

for which the text of§ 505.2(1)

provides a sufficient foundation.
Section 505.2(1)
Subsections

( 1),

consists of five relevant subsections.

( 2), and ( 3) provide coverage for medically

necessary hormone therapy and gender reassignment surgery for
Medicaid recipients over 18. 18 N.Y.C.R.R.
Subsection (4)

505.2(1) (1)-(3)

§

specifically excludes a list of services and

procedures from coverage,

including "cosmetic surgery,

services,

and procedures" and provides a non-exhaustive list of explicitly
excluded cosmetic procedures. 18 N.Y.C.R.R.

§

505.2(1) (4) (v).

Subsection (5) defines "cosmetic surgery, services, and
6

procedures" to mean "anything solely directed at improving an
individual's appearance." 18 N.Y.C.R.R. § 505.2(1) (5). Defendant
argues that Subsection (5)

should be construed not as an

elaboration of the items excluded by (4), but as an allowance for
provision of coverage for cosmetic procedures that would
otherwise be excluded outright by (4). See Memorandum of Law in
Support of Defendant's Motion to Dismiss the Amended Class Action
Complaint at 22-23, ECF No. 30. However, no provision of §
505.2(1) states that coverage will be provided for cosmetic
procedures of any kind. Defendant's argument would be on surer
footing - and§ 505.2(1) would be at least ambiguous - if§
505.2(1) contained a catch-all provision establishing coverage
for all medically necessary treatments of gender dysphoria. It
does not. Instead, § 505.2(1) carefully provides for only two
treatments for gender dysphoria, hormone therapy and gender
reassignment surgery, and states outright that "[p]ayment will
not be made for
[or]

breast augmentation,

facial bone reconstruction,

. electrolysis,

reduction, or sculpturing" -

procedures plaintiffs allege they need.§ 505.2(1)(4). This
unambiguous language renders the June Guidance clearly erroneous
and undeserving of deference.

2

Because§ 505.2(1)

categorically

2 Because the unambiguous language of§ 505.2(1)
is a sufficient
basis to deny defendant's motion for reconsideration, the Court
need not reach plaintiffs' other arguments against giving
deference to the June Guidance, including the inconsistency

7

bars coverage for cosmetic surgeries, plaintiffs need not be
required to attempt to gain approval for these surgeries under §
505.2(1). Their facial challenge to the regulation is ripe
without such futile gestures.
It is of no moment that two named plaintiffs, Kpaka and
Christie, have received prior approval of Medicaid coverage for
cosmetic surgeries under the June Guidance. See Declaration of
Ronald J. Bass in Support of Defendant's May 11, 2016, Letter,
Exs. 1-7, ECF No. 122. Plaintiffs' claims are directed solely at
§

505.2(1), and, as defendant himself has argued, the

implementation of the June Guidance is irrelevant to their suit.
See Declaration of Zoey S. Chenitz dated Aug. 17, 2015
ECF No.

59

~~

3, 7,

(explaining that plaintiff's pre-enforcement facial

challenge has nothing to do with how§ 505.2(1) has been
"operationalized" and that defendant's present motion for
reconsideration turns on the purely legal question of the
interpretation of§ 505.2(1)). The questions of whether
plaintiffs have benefited from defendant's publication of
guidance that contradicts a duly promulgated regulation and under
what authority he undertook that publication are not before the
Court. Plaintiffs do not share defendant's apparent ability to

between the March and June Guidances, material from§ SOS.2(1)'s
promulgation suggesting DOH intended a blanket ban on cosmetic
procedures, and the convenience of the June Guidance as a
litigating position. See Plaintiffs' Memorandum of Law in
Opposition to Defendant's Motion for Reconsideration at 11-13,
8

disregard duly promulgated regulations and allege that any valid
application of the plain language of§ 505.2(1) would stop them
from receiving coverage for medically necessary cosmetic
surgeries. Because these allegations continue to state a valid
claim for relief, the Court denies defendant's motion for
reconsideration of his motion to dismiss.3
Second, the Court denies defendant's motion to decertify the
plaintiff class. On August 22,

2014, before§ 505.2(1) was

amended to provide coverage of some medically necessary
treatments for gender dysphoria,

the parties entered a

Provisional Stipulation and Order of Class Certification,
certifying a class consisting of:
All New York State Medicaid recipients who have been
diagnosed with Gender Identity Disorder or Gender
Dysphoria, and whose expenses associated with medically
necessary
Gender
Identity
Disorderor
Gender
Dysphoria-related treatment are not reimbursable by
Medicaid pursuant to 18 N.Y.C.R.R. § 505.2(1).
ECF No. 92.
3 Relatedly, defendant argues that plaintiffs' Cosmetic Exclusion
claims have been mooted by DOH's issuance of a Notice of Proposed
Rule Making ("NPRM") amending§ 505.2(1) to track the language of
the June Guidance. Compare New York Department of Health Notice
of Proposed Rule Making dated April 26, 2016 with New York
Department of Health Medicaid Program, Medicaid Update Vol. 31
No. 6 (June 2015). The NPRM does not moot plaintiffs' claims
because it is not a final rule and is not binding. In addition,
under N.Y. APA Law§ 202, DOH must respond to public comments on
the NPRM and undertake other procedural steps before the NPRM is
finalized. The Court cannot base its decision on a document
subject to change. The Court also declines to stay the case until
the NPRM is finalized. The present motions have been pending for
months and, while the Court has entertained several rounds of
supplemental briefing, delaying its decision any further would be
unfair to the parties and the public.
9

Stipulation and Order dated August 22,
DefendctnL

now

urguco

requirements of 23(a)

Lhot

th~s

2014, ECF No. 23.

clnoo dccs not moot tho

or 23(b) (2).

First, defendant argues that a

single class containing members challenging solely the Cosmetic
Exclusion and members challenging solely the Age Exclusion cannot
satisfy the typicality requirement of Rule 23(a) (3). Typicality
"is satisfied when each class member's claim arises from the same
course of events, and each class member makes similar legal
arguments to prove the defendant's liability.u Marisol A. v.
Giuliani, 126 F.3d 372, 376

(2d Cir. 1997)

(internal quotation

marks omitted). Defendant argues that the claims of class members
challenging solely the Cosmetic Exclusion do not arise from the
same course of events as those challenging the Age Exclusion
because gender dysphoria works differently in children and
adolescents than in adults. The World Professional Association
for Transgender Health Standards of Care
Careu)

4

("WPATH Standards of

state that "[t]here are a number of differences in the

4

The Court puts significant weight on the WPATH Standards of
Care. Plaintiffs' expert Dr. Nicholas Gorton stated in his expert
report that
there are many local standards of care, but the most
widely recognized and utilized international standard
for treating transgender people is the Standards of
Care
of
the
World
Professional
Association
for
Transgender
Health
(WPATH
SOC),
which
provides
practical clinical guidance for heal th care providers
treating transgender patients.
WPATH SOC has been
internationally recognized by much of the developed
10

phenomenology, developmental course, and treatment approaches for
gender dysphoria in children, adolescents, and adults."
Declaration of John Gasior dated Aug. 28, 2015, Ex. 14

("WPATH

Standards of Care") at 10, ECF No. 83. Defendant also points out
that any class member older than eighteen will not be directly
affected by any legal judgment pertaining to the Age Exclusion.
Plaintiffs respond that defendant has overstated the
typicality requirement. They also rely on Marisol A. but point
out that the Second Circuit affirmed class certification in that
case, even though the district court "conceptualiz[ed] the common
legal and factual questions at
Marisol A.,

[a] high level of abstraction."

126 F.3d at 377. Marisol A. involved a class of

essentially all children who were in the custody of or should
have been in the custody of New York City's child welfare system.
Although "no single plaintiff [was] affected by each and every
legal violation alleged in the complaint, and .
specific legal claim .

. no single

affect[ed] every member of the class,"

the Second Circuit recognized that the plaintiffs' "injuries
derive[d]

from a unitary course of conduct by a single system."

western nations for decades and is more recently being
adopted by insurers in the U.S.
Expert Report of Nicholas Gorton, MD, DABEM, Declaration of
Christopher J. McNamara dated August 28, 2015, 38, ECF No. 74.
Defendant does not meaningfully attack the authority of the WPATH
Standards of Care and indeed relies in part on them.
11

Id. at 377. Plaintiffs contend that the reasoning of Marisol A.
calls for class certification in this case.
The Court reads Marisol A. a third way.

Plaintiffs are

correct that a faithful application of Marisol A. allows class
certification here. However, in Marisol A., the Second Circuit
also directed the district court to create subclasses under Fed.
R. Civ. P. 23(c) (4). The Second Circuit suggested that the
district court "divide the .

. class based on the commonality

of the [plaintiffs'] particular circumstances, the type of harm
the plaintiffs allegedly have suffered, and the particular
systemic failures which the plaintiffs assert have occurred." Id.
at 379. The Court concludes that this is also the best approach
in the present case. Defendant is correct that the claims of
class members solely challenging the Cosmetic Exclusion - i.e.
any class member over the age of eighteen - are typical of the
claims of members challenging solely the Age Exclusion only at a
"high level of abstraction," with the claims of each group
implicating different legal and factual questions. Marisol A.,
126 F.3d at 377. For instance, DOH's publication of the June
Guidance raised legal questions specific to members challenging
the Cosmetic Exclusion (discussed above) but also resolved key
factual questions pertinent to that group's claims

(discussed

below). Meanwhile, the factual questions surrounding the claims
of class members challenging the Age Exclusion remain unresolved.
12

These differences are not fatal to the certification of the
overall class, but they do suggest a natural division into two
subclasses: the first consisting of all class members aged
eighteen and older (the "Cosmetic Subclass") and the second
consisting of all class members younger than eighteen (the "Age
Subclass") .
Defendant objects that the creation of subclasses is
inappropriate here because the Age Subclass would lack an
adequate class representative. To be an adequate class
representative, a named plaintiff must,
member of the class. See Bailey v.

at the very least, be a

Patterson,

369 U.S. 31, 32-33

(1962). Three of the named plaintiffs, Angie Cruz, Ar' es Kpaka,
and Riya Christie, are over the age of 18. Therefore, they are
not members of the Age Subclass and cannot serve as class
representatives for it. However, with the Court's permission,
plaintiffs filed a Second Amended Complaint ("SAC")

adding two

new named plaintiffs, A.B. as parent and natural guardian of M.B.
and N.V. as legal guardian of S.V. See SAC

~~

164-87, ECF No.

114; Order dated April 1, 2016, ECF No. 113. M.B. is a fourteenyear-old, categorically needy Medicaid recipient with gender
dysphoria; she allegedly applied for and was denied Medicaid
coverage of pubertal suppressants,

5

5

which two physicians

"Pubertal suppressants" are hormones that can delay the onset
of puberty until further medical decisions are made, thereby
sparing adolescents with gender dysphoria the anguish of going
13

recommended she begin taking. See SAC

~~

164-76. S.V. is a

thirteen-year-old, categorically needy Medicaid recipient with
gender dysphoria; she allegedly applied for and was denied
Medicaid coverage of pubertal suppressants, which a physician
prescribed for her. See SAC

~~

177-87. Plaintiffs submitted a

Declaration from a physician treating M.B. and S.V., attesting to
their medical need for pubertal suppressants and that she
prescribed pubertal suppressants to each of them. See Declaration
of Dr. Carolyn Wolf-Gould dated April 21, 2016, ECF No. 115. A.B.
as parent and natural guardian of M.B. and N.V. as legal guardian
of S.V. are adequate class representatives of the Age Subclass.
Defendant makes one more argument based on the differences
between the Cosmetic Subclass and the Age Subclass, under Rule
23 (b) (2). Rule 23 (b) (2)

requires that "the party opposing the

class has acted or refused to act on grounds that apply generally
to the class, so that final injunctive relief or corresponding
declaratory relief is appropriate respecting the class as a
whole." Defendant argues that the Court could award final relief
with respect to the Cosmetic Exclusion, but not the Age
Exclusion, or vice versa. Defendant is correct that the differing
legal and factual questions implicated by the Cosmetic and Age
Exclusion make this a possibility. However, the creation of

through puberty in the wrong gender. Expert Report of Johanna
Olson, M.D., Declaration of Christopher J. McNamara Ex. 27 ~ 16,
ECF No. 94.
14

subclasses cures this defect and is a more appropriate course
than decertification. See Marisol A. v. Giuliani, 126 F.3d 372,
378

(2d Cir. 1997). Accordingly, the Court certifies the Cosmetic

Subclass and the Age Subclass.
Defendant raises one additional argument against both
subclasses under Rule 23 (b) (2). Defendant invokes a line of
Second Circuit cases approving denials of class certification
when defendants are public officials. See,
Heckler, 771 F.2d 1556, 1566-67

(2d Cir. 1985). This doctrine

first took definite shape in Galvan v. Levine,
1261

(2d Cir. 1973)

Berger v.

~'

490 F.2d 1255,

(Friendly, J.), where the Second Circuit

explained that in such cases "what is important .

. is that the

judgment run to the benefit not only of the named plaintiffs but
of all others similarly situated." However,

in Galvan,

State ha[d] made clear that it [understood] the

"[t]he

[court's]

judgment to bind it with respect to all claimants; indeed even
before entry of the judgment, it withdrew the challenged policy
even more fully than the court ultimately directed and stated it
did not intend to reinstate the policy." Id. at 1261. Defendant
has not taken such steps here. Moreover, the Galvan doctrine has
generally been applied to denials of class certification in the
first instance.
1566-67

See,

~'

Berger v. Heckler,

771 F.2d 1556,

(2d Cir. 1985). A doctrine that rests on a public

official's acceptance of the applicability of a judgment to a
15

broad group does not apply when the public official has moved to
decertify an existing class and thereby attacks the broad
applicability of a judgment. Accordingly, defendant's 23(b) (2)
argument fails.
Defendant also raises several arguments directed either at
the Cosmetic Subclass or the Age Subclass. To begin with,
defendant argues that the Cosmetic Subclass fails the commonality
requirement of Rule 2 3 (a) ( 2) . Under Rule 2 3 (a) ( 2) , there must be
"questions of law or fact common to the class." In particular,
plaintiffs' "claims must depend upon a common contention
such a nature that it is capable of classwide resolution

of
which

means that determination of its truth or falsity will resolve an
issue that is central to the validity of each one of the claims
in one stroke." Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541,
2551

(2011). Defendant argues that the Cosmetic Subclass runs

afoul of Dukes because each class member's individual medical
circumstances will determine whether specific treatments are
medically necessary and available under§ 505.2(1). This argument
would have more force if plaintiffs were challenging the
implementation of a regulation that allowed any coverage of
cosmetic procedures, in line with the June Guidance. However,
plaintiffs have brought a facial challenge against a regulation
that unequivocally bans all cosmetic procedures. See supra.
Section 505.2(1)'s ban is the "glue" holding together plaintiffs'
16

claims as required by Dukes: if the ban violates the federal law,
each of the claims brought by members of the Cosmetic Subclass
will be resolved "in one stroke." Dukes, 131 S. Ct. at 2551,
2552.
Further, defendant argues that named plaintiffs Cruz and
Kpaka fail the typicality requirement of Rule 23(a) (3) because
they have failed to show that the cosmetic treatments they seek
are medically necessary for them. Typicality does "require[] that
the claims of the class representatives be typical of those of
the class." Marisol A. v. Giuliani,

126 F.3d 372,

376

(2d Cir.

1997). However, Cruz and Kpaka have adequately demonstrated
medical necessity for purposes of class certification. See In re
IPO Sec. Litig.,

471 F.3d 24,

41

(2d Cir. 2006)

("[T]he district

judge must receive enough evidence, by affidavits, documents, or
testimony, to be satisfied that each Rule 23 requirement has been
met."). Cruz submitted a declaration stating that her doctor has
determined that breast augmentation is medically necessary for
her. See Declaration of Angie Cruz dated Sept. 8, 2015
No.

~

10, ECF

96. Defendants do not point to any evidence contradicting

Cruz's declaration, apart from an absence of documents in Cruz's
medical records that state the medical necessity of cosmetic
surgeries. See Declaration of John Gasior dated Aug.
1, ECF No. 83.

28,

2015 Ex.

In light of Cruz's declaration, the Court cannot

rely on an absence of unspecified documents in Cruz's medical
17

records - which otherwise confirm that Cruz was diagnosed with
gender identity disorder - to conclude that cosmetic treatments
are not medically necessary for her. Cruz's claims are
sufficiently typical for her to serve as class representative.
Defendant also points out that Kpaka's medical records do
not contain documents specifically certifying that cosmetic
procedures are necessary for her. See Declaration of John Gasior
dated Aug. 28, 2015 Ex. 2, ECF No.

83. However, he does not

dispute that Kpaka has received prior approval for coverage of
breast augmentation and facial feminizing surgeries. See Reply
Memorandum of Law in Further Support of Defendant's Motion for
Summary Judgment at 6, ECF No.

98. Under the terms of the June

Guidance, Kpaka could only have received prior approval if the
surgeries were medically necessary. See New York Department of
Health Medicaid Program, Medicaid Update Vol.

31 No.

6 (June

2015). Given this uncontested evidence of medical necessity, the
Court concludes that Kpaka's claim are sufficiently typical for
her to serve as class representative.
It should be noted that defendant does not challenge the
medical necessity of cosmetic procedures for Christie.
Accordingly, even if (contrary to fact)

Cruz and Kpaka had failed

to demonstrate the typicality of their claims, the appropriate
response would be the dismissal of Cruz and Kpaka as class

18

~~-.

--··------------~

representatives,

rather than the decertification of the entire

class.
Further still, defendant argues that Cruz and Kpaka fail the
adequacy requirement of Rule 23 (a) (4). "Rule 23 (a) (4)

requires

that plaintiffs demonstrate that class counsel is qualified,
experienced, and generally able to conduct the litigation.
Plaintiffs must also demonstrate that there is no conflict of
interest between the named plaintiffs and other members of the
plaintiff class." Marisol A. v. Giuliani,
Cir. 1997)

126 F.3d 372,

378

(2d

(citation and internal quotation marks omitted).

Defendant claims that his typicality arguments also apply to the
adequacy requirement. See Memorandum of Law in Support of
Defendant's Motion to Decertify the Plaintiff Class at 12-13, ECF
No. 80. But lack of medical necessity would not bear on the
adequacy of plaintiffs'

counsel nor on any conflict of interest

between Cruz, Kpaka, and other Cosmetic Subclass members.
Plaintiffs'

counsel has repeatedly demonstrated it is qualified,

experienced, and able to conduct this litigation, and the Court
sees no conflict of interest between Cruz, Kpaka, and other
Cosmetic Subclass members. Defendant's adequacy arguments fail.
Additionally, defendant raises an argument against the
Cosmetic Subclass under Rule 23 (b) (2).

Defendant argues that he

has not acted on grounds that apply to the entire Cosmetic
Subclass and,

instead, any denials of coverage to class members
19

are the result of individual factors.

Defendant's argument on

this point proceeds similarly to his commonality arguments and
meets the same fate: because§ 505.2(1)

categorically bans

coverage for cosmetic surgeries, defendant has acted on grounds
that apply to the entire Cosmetic Subclass.

Injunctive relief

dissolving§ 505.2(1)'s ban would resolve all claims of the
members of the Cosmetic Subclass. Accordingly, the Cosmetic
Subclass satisfies Rule 23 (b) (2).
Finally, defendant raises an argument directed at the Age
Subclass. After plaintiffs filed the SAC, the Court received
supplemental briefing from the parties regarding the addition of
the two new named plaintiffs.

In his supplemental briefing,

defendant objects that A.B. as parent and natural guardian of
M.B. and N.V. as legal guardian of S.V. lack class standing. "[A]
plaintiff has class standing if he plausibly alleges
'personally has suffered some actual .

that he

injury as a result of

the putatively illegal conduct of the defendant,'
such conduct implicates

(1)

and (2)

that

'the same set of concerns' as the conduct

alleged to have caused injury to other members of the putative
class by the same defendants." NECA-IBEW Health & Welfare Fund v.
Goldman Sachs & Co.,

693 F.3d 145, 162

(2d Cir. 2012)

(citations

omitted). Defendant does not dispute that the new named
plaintiffs satisfy the first prong but argues that they fail the
second prong because they have demonstrated only a medical need
20

for pubertal suppressants, while the claims of Age Subclass
members are also based on bans on coverage for gender
reassignment surgery and cross-sex hormone therapies. However,
the conduct of defendant that caused the new named plaintiffs'
injuries, namely the denial of Medicaid coverage for prescribed
pubertal suppressants, was his enforcement of § 505.2(1) 's
complete ban on any coverage of treatments for individuals under
18. This conduct does not merely implicate the same set of
concerns as the conduct underlying the other Age Subclass
members' claims, it is in fact the same. All members of the Age
Subclass have allegedly been injured by defendant's enforcement
of§ 505.2(1)'s ban on under-18 coverage. As such, the new named
plaintiffs have class standing to assert the claims of the Age
Subclass.
Based on the foregoing analysis, the Court denies
defendant's motion to decertify the plaintiff class.
Third, the Court denies in part defendant's motion for
summary judgment on standing grounds. Article III standing
requires an "injury in fact," "a causal connection between the
injury and the conduct complained of," and redressability, such
that "the injury will be redressed by a favorable decision."
Lujan v. Defenders of Wildlife,

504 U.S.

555,

560-61

(1992)

(internal quotation marks omitted). To satisfy these requirements
at the summary judgment stage, a plaintiff "must 'set forth'
21

by

affidavit or other evidence 'specific facts,'

which for purposes

of the summary judgment motion will be taken to be true." Id.
(citation omitted).
Defendant claims that named plaintiffs Cruz, Kpaka, and
Christie lack standing.

First, defendant argues that Christie's

claims are either unripe or moot. Defendant's ripeness arguments
are directed at Christie's claim for electrolysis procedures, for
which she has demonstrated medical necessity, but which she has
not applied for and been denied coverage. See Declaration of John
Gasior dated Aug. 28, 2015 Ex. 3 at CRUZ00002625-26, ECF No. 83
(documenting Christie's medical need for electrolysis and facial
feminizing surgery) . The Second Circuit does not require "a
futile gesture as a prerequisite for adjudication in federal
court." Desiderio v. Nat'l Ass'n of Secs. Dealers,
198, 202

Inc.,

191 F.3d

(2d Cir. 1999). Because§ 505.2(1) bans coverage of

electrolysis, Christie does not need to go through the futile
process of applying for and being denied coverage.
The fact that Christie has received approval for other
procedures banned by§ 505.2(1), ostensibly pursuant to the June
Guidance, has no bearing on whether her attempts to receive
coverage for electrolysis would be futile. This is because the
plain language of§ 505.2(1) bars coverage of these procedures
and the Court is bound to apply the language of a duly
promulgated regulation as opposed to non-binding guidance that
22

defendant can change at his discretion. Compare New York
Department of Health Medicaid Program, Medicaid Update Vol. 31
No. 3 (March 2015)

(no coverage for electrolysis) with New York

Department of Health Medicaid Program, Medicaid Update Vol. 31
No.

6 at 7 (June 2015)

(coverage for medically necessary

electrolysis). Whatever murky largesse may have motivated the
June Guidance and approval of Christie's other procedures cannot
be relied upon to defeat the futility of opposing the plain
language of a regulation. Christie has standing to bring her
claims even without denials in hand.
Defendant also argues that Christie's other claims are moot
because she has received prior approval for coverage of
mammoplasty and facial feminization surgeries. See Declaration of
Ronald J. Bass in Support of Defendant's May 11, 2016, Letter,
Exs. 1-4, ECF No. 122. These approvals were ostensibly granted
pursuant to the June Guidance. With respect to the procedures for
which Christie has won approval, the Court applies "the 'well
settled' rule that a defendant's voluntary cessation of a
challenged practice does not deprive a federal court of its power
to determine the legality of the practice." Ne Fla. Chapter of
Associated Gen. Contractors of Am. v. City of Jacksonville,
U.S. 656,

662

(1993)

508

(internal quotation marks omitted). In the

context of a challenged statute on appeal, the Supreme Court has
explained that repeal of an unconstitutional statute does not
23

moot a plaintiff's claim because a repeal "would not preclude
[the promulgating body]

from reenacting precisely the same

provision if the District Court's judgment were vacated." City of
Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 289

(1982). In

the same way, without a judgment in this case there is nothing to
stop defendant from revoking the June Guidance and denying
coverage of all cosmetic procedures.

Indeed, because§ 505.2(1)

is a duly promulgated regulation while the June Guidance is nonbinding guidance, the June Guidance need not even be revoked defendant could simply begin to enforce his own regulation again.
Medicaid recipients should not be forced to suffer through a
cloud of uncertainty when requesting medically necessary
procedures and hope that defendant will continue to defy his own
regulation. Christie's claim is not moot, and she has standing.
Defendant also argues that Kpaka lacks standing because she
has failed to show that any cosmetic procedures are medically
necessary for her. This is an odd argument for defendant to make
because he simultaneously argues that Kpaka's claims are moot
because she has received prior approval for mammoplasty and
facial feminization surgeries. Compare Reply Memorandum of Law in
Further Support of Defendant's Motion for Summary Judgment at 4,
ECF No. 98 with Reply Memorandum of Law in Further Support of
Defendant's Motion for Summary Judgment at 6, ECF No.

98.

Ostensibly, Kpaka could only have received prior approval if,
24

under the terms of the June Guidance,

she had provided

"justification of medical necessity." New York Department of
Health Medicaid Program, Medicaid Update Vol.
2015). With respect to Kpaka,

then,

31 No.

6 (June

it appears defendant has

taken three contradictory positions at once: under§ 505.2(1)'s
ban on coverage of cosmetic procedures, Kpaka's medical necessity
is irrelevant; under defendant's standing argument, Kpaka's
medical necessity has not been established; and, under
defendant's mootness argument, Kpaka's medical necessity was
established and addressed. The undisputed facts are consistent
only with defendant's third argument, on mootness,

see Memorandum

of Law in Opposition to Defendant's Motion for Summary Judgment
at 8 n.4, ECF No.

95; Reply Memorandum of Law in Further Support

of Defendant's Motion for Summary Judgment at 6, ECF No.

98, but

defendant's mootness argument fails for the reasons explained
above: defendant cannot short-circuit a plaintiff's standing by
gratuitously approving some medically necessary procedures in
contravention of the plain language of his own regulation. There
is no factual dispute that Kpaka has standing and, as a legal
matter, her claims are not moot.
Further, defendant argues that Cruz lacks standing because
she has failed to document that a mammoplasty is medically
necessary for her. Cruz's medical records do not contain any
document stating that a mammoplasty is medically necessary, nor
25

has she received prior approval for a mamrnoplasty. See
Declaration of John Gasior dated Aug. 28, 2015, Ex. 1, ECF No.
83. Instead, Cruz has submitted a declaration stating that her
doctor "has determined breast augmentation to be medically
necessary for
2015,

~

[Cruz]." Declaration of Angie Cruz dated Sept. 8,

10, ECF No.

96. Although the Court could rely on this

declaration for purposes of class certification, on a motion for
summary judgment the Court cannot consider material that would
not be admissible under the Federal Rules of Evidence. Fed. R.
Ci v. P. 5 6 ( c) ( 2) . Cruz's declaration that her doctor determined
breast augmentation was medically necessary for her is
inadmissible hearsay because it offers her doctor's statement for
its truth. See Fed. R. Evid.

801, 802. Cruz cannot testify

directly to the medical necessity of breast augmentation surgery
because she is not a medical expert. See Fed. R. Evid. 701.
Accordingly, plaintiffs' have not raised a triable question of
fact as to whether breast augmentation surgery is medically
necessary for Cruz: apart from the diagnoses of gender identity
disorder that are present in Cruz's medical records, admissible
evidence of medical necessity is lacking.
Plaintiffs argue that this lack of evidence is irrelevant
because they can establish standing without demonstrating medical
necessity. Specifically, they argue that because they have raised
a facial challenge to§ 505.2(1), named plaintiffs need not show
26

medical necessity.

Plaintiffs claim they are situated similarly

to plaintiffs challenging racial quotas in public contracting and
racial-based admissions policies; the Supreme Court has held that
such plaintiffs need not show that they would have been awarded
contracts or gained admission in absence of the challenged
policies. See Ne Fla. Chapter of Associated Gen. Contractors of
Am. v. City of Jacksonville,
Univ. of Cali. v. Bakke,

508 U.S.

656,

666

438 U.S. 265, 280 n.14

(1993); Regents of
(1978). But this

overextends plaintiffs' valid defense to defendant's ripeness
argument. Although Cruz does not need to go through the futile
process of opposing§ 505.2(1)'s plain language in an attempt to
redress her alleged injury, if she does not establish that some
cosmetic surgeries are medically necessary for her, she has no
definite injury in the first place. Thus, Cruz is differently
situated from the plaintiffs in Northeastern Florida Chapter and
Bakke, who had established they were members of a group that had
suffered a denial of equal treatment.

Plaintiffs have not

alleged, nor have they produced any evidence indicating, that
cosmetic surgeries are medically necessary for every person with
gender dysphoria. Accordingly, not every individual with gender
dysphoria is injured by§ 505.2(1).

In the absence of admissible

evidence of the medical necessity of mammoplasty procedures for
Cruz, she has not demonstrated she is a member of the group
harmed by§ 505.2(1). Accordingly, the Court dismisses Cruz's
27

claim on standing grounds, but otherwise denies defendant's
motion for summary judgment on standing grounds.
Fifth, on plaintiffs' first claim,
U.S.C. § 1396a(a) (10) (A)

for violations of 42

(Medicaid's "Availability Provision"),

the Court denies defendant's motion for summary judgment and
grants plaintiffs' motion with respect to the Cosmetic Exclusion,
but grants defendant's motion in part and denies plaintiffs'
motion with respect to the Age Exclusion. The Availability
Provision requires that a state Medicaid plan "must provide
for making medical assistance available [to all categorically
needy individuals],

including at least" certain enumerated types

of care and services, including inpatient hospital services and
physicians'

services.

42 U.S.C. §§ 1396a(a) (10) (A), 1396d(a). The

statute does not clearly delimit the exact extent of the services
it requires, although its implementing regulations provide some
more detail. See,

~'

42 C.F.R. § 440.210

(requiring provision

of certain services, including those "defined in [42] C.F.R. §§
440.10 through§ 440.50,

440.70").

For instance,

42 C.F.R. §

440.50(a) defines "physicians' services" as "services furnished
by a physician .

[w]ithin the scope of practice of medicine

or osteopathy as defined by State law; and

[b]y or under

the personal supervision of an individual licensed under State
law to practice medicine or osteopathy." More broadly, "[e]ach
service must be sufficient in amount, duration, and scope to
28

reasonably achieve its purpose." 42 C.F.R. § 440.230(b). Although
"[t]he [Medicaid] agency may place appropriate limits on a
service based on criteria such as medical necessity or on
utilization control procedures," it "may not arbitrarily deny or
reduce the amount, duration, or scope of a required service .
solely because of the diagnosis, type of illness, or condition."
42 C.F.R.

§

440.230(c),

(d).

The Supreme Court has implied, but not held, that the
Medicaid Act requires states to provide medically necessary care,
see Beal v. Doe,

432 U.S.

438,

444

(1977)

("[S]erious statutory

questions might be presented if a state Medicaid plan excluded
necessary medical treatment from its coverage."); and several
circuits have held that medical necessity is the appropriate
standard to determine the scope of services required by the
Medicaid Act,

see,

~·

Hern v. Beye, 57 F.3d 906,

Cir. 1995); Dexter v. Kirschner,
1992); Pinneke v.

Preisser,

984 F.2d 979,

983

911

(10th

(9th Cir.

623 F.2d 546, 549 (8th Cir. 1980)

The Second Circuit previously rejected this approach as "baseless
and unworkable," but the Supreme Court vacated its judgment in
light of guidance issued by the Health Care Financing
Administration. DeSario v. Thomas, 139 F.3d 80,
1998), vacated sub nom. Slekis v. Thomas,

96

(2d Cir.

525 U.S. 1098

(1999)

Although vacated, however, DeSario is still a useful guide. The
Second Circuit there held that "the state must extend coverage
29

through reasonable standards with .

. the

'general aim of

assuring that individuals will receive necessary medical care'
and each category of service must be sufficient in amount,
duration, and scope to adequately (although not fully)

meet the

needs of the Medicaid population of the state." Id. at 96
(quoting Alexander v. Choate,

469 U.S. 287,

303

(1985)).

It seems

that DeSario must be correct that coverage of every single
medically necessary treatment is not automatically required by
the Availability Provision. After all,

a Medicaid "agency may

place appropriate limits on a service based on criteria such as
medical necessity or on utilization control procedures." 42
C.F.R.

§

440.230(d)

(emphasis added).

Proper utilization control

procedures, as distinct from medical necessity, may limit the
provision of services. See,
America v. Walsh,

538 U.S.

~,

644

Pharm. Research and Mfrs. of

(2003)

(plurality opinion)

(upholding prior authorization processes). But any limiting
criteria other than medical necessity must ultimately serve the
broader aim of "assuring that individuals will receive necessary
medical care." Alexander v. Choate,

469 U.S. 287,

303

(1985).

Against the background of this somewhat fractured legal
regime, plaintiffs ask the Court to adopt a rule that a state may
not place an outright ban on medically necessary treatments for a
particular diagnosis. See Hern v. Beye,
Cir. 1995)

("[A]

57 F.3d 906,

911

(10th

state law that categorically denies coverage for
30

a specific, medically necessary procedure except in those rare
instances when the patient's life is at stake is not a
'reasonable standard [ ]

consistent with the objectives of

[the Act],' but instead contravenes the purposes of Title XIX."
(citation omitted)

(quoting 42 U.S.C.

Beal, 555 F.2d 1146, 1151

§

1396a(a) (17))); White v.

(3d Cir. 1977). Defendant does not

meaningfully oppose this rule, preferring instead to argue that

§

505.2(1) does not impose any outright bans and that the June
Guidance's prior authorization requirements are acceptable
limitations on coverage.
The Court therefore adopts this "never-say-never" rule. The
Availability Provision and its implementing regulations do allow
a state to say "only sometimes" and to limit coverage of specific
treatments when the state has good reasons for doing so - reasons
that ultimately uphold the provision of necessary medical care to
needy individuals. But a state cannot say "never" when it comes
to medically necessary treatments, because there are no such
reasons justifying categorical bans on medically necessary
treatment. A categorical ban on medically necessary treatment for
a specific diagnosis would not "adequately .

. meet the needs

of the Medicaid population of the state." DeSario v. Thomas, 139
F.3d 80,

96

(2d Cir. 1998).

With respect to the Cosmetic Exclusion, there are no genuine
factual disputes material to the determination that defendant has
31

enacted a categorical ban on medically necessary treatments for a
specific diagnosis. Specifically, "[d]efendant does not contest
that presumptively cosmetic procedures listed in§ 505.2(1) may
be medically necessary for some patients diagnosed with GD."
Defendants Response and Counter-Statement to Plaintiffs'
Statement of Material Facts Pursuant to Local Rule 56.1

~

138,

ECF No. 87. Moreover, by publishing the June Guidance and
approving cosmetic procedures for Christie and Kpaka, defendant
has demonstrated that cosmetic procedures can be medically
necessary for individuals with gender dysphoria. See New York
Department of Health Medicaid Program, Medicaid Update Vol.
No.

31

6 (June 2015); Declaration of Ronald J. Bass in Support of

Defendant's May 11, 2016, Letter, Exs. 1-7, ECF No. 122;
Declaration of John Gasior dated Aug.

28,

2015, Ex.

3 at

CRUZ00002625-26, ECF No. 83. As discussed above, § 505.2(1)
enacts a categorical ban on coverage for cosmetic procedures. See
supra. As such, plaintiffs prevail on their § 1983 claim that §
505.2(1) violates the Availability Provision.

6

Accordingly, the

Court grants plaintiffs' motion and denies defendant's motion for

6

Plaintiffs also argue that the June Guidance's restrictions on
eligibility for breast augmentation surgery violate the
Availability Provision. See Memorandum of Law in Support of
Plaintiffs' Motion for Summary Judgment at 6-7, ECF No. 76.
However, the June Guidance - and therefore this issue - is not
presently before the Court. § 50 5. 2 ( 1) ( 4) (v) (b) states
unequivocally that "[p]ayment will not be made for .
. breast
augmentation."
32

summary judgment on plaintiffs' Availability Provision claim with
respect to the Cosmetic Exclusion.
With respect to the Age Exclusion, the Court denies
plaintiffs' motion for summary judgment on their Availability
Provision claims and grants defendant's motion in part. To begin
with, part of defendant's motion must be granted as a matter of
law.

Plaintiffs seek treatments of two kinds: surgeries and

hormone therapies,

including pubertal suppressants and cross-sex

hormone therapies. There is no dispute that§ 505.2(1)
categorically bans coverage for all of these treatments for
individuals younger than 18. See§ 505.2(1) (2)-(3). However,
under 42 U.S.C. § 1396r-8(d)(l)(B)(i)

(the "Compendia

Requirement"), "[a] State may exclude or otherwise restrict
coverage of a covered outpatient drug if

. the prescribed use

is not for a medically accepted indication," defined as any use
approved by the FDA or included in the Medicaid Compendia.

7

See

42 U.S.C. § 1396r-8(k)(6). There is no dispute that the hormone
therapies sought by plaintiffs are neither approved by the Food
and Drug Administration ("FDA")

nor listed in the Medicaid

Compendia for the purpose of treating gender dysphoria in minors.
See Plaintiff's Opposition to Defendant's Local Rule 56.1

The "Medicaid Compendia" are drug information databases,
consisting of the "(I) American Hospital Formulary Service Drug
Information; (II) [the] United States Pharmacopeia-Drug
Information (and its successor publications), and (III) the
DRUGDEX Information System". 42 U.S.C. § 1396r-8(g) (1) (B) (i)
33

7

Statement of Material Facts

~

67, ECF No.

93. As such,

for

purposes of plaintiffs' Availability Provision claims, the
Compendia Requirement allows defendant to exclude coverage of
them.
Plaintiffs argue that the Compendia Requirement does not
apply to the hormone therapies they seek because they are not
"covered outpatient drugs." In particular, plaintiffs argue that,
to the extent hormone therapies are provided in the context of a
physician visit, they are not covered outpatient drugs because,
under 42 U.S.C. § 1396r-8(k) (3),
[t] he term 'covered outpatient drug' does not include
any drug
provided as part of, or as incident to
and in the same set ting as, any of the following (and
for which payment may be made under this subchapter as
part of payment for the following and not as direct
reimbursement for the drug) :
(A)
Inpatient hospital
services
(D) physicians' services. (E) Outpatient
hospital services.
§

1396r-8 (k) (3)

not include .

continues on to state that "[s]uch term also does
. a drug

. used for a medical indication

which is not a medically accepted indication." Thus, plaintiffs'
argument regarding the context of when the hormone therapies are
provided is unnecessary because the Medicaid Act explicitly
excludes "off-label" hormone therapies from the definition of
"covered outpatient drugs."
Although plaintiffs' argument does highlight the inartful
drafting of the Medicaid Act - if the term "covered outpatient

34

drug" does not include a drug used for a non-medically accepted
indication, how can the Compendia exclude or restrict coverage of
a covered outpatient drug's use for a non-medically accepted
indication? - nonetheless, reading the statute as a whole, the
Court concludes that the definition of "covered outpatient drug"
reinforces the Compendia Requirement because "[r]eimbursement
under Medicaid is, in most circumstances, available only for
'covered outpatient drugs.'" United States ex rel.

Franklin v.

Parke-Davis, Div. of Warner-Lambert Co., 147 F. Supp. 2d 39,
45

(D. Mass. 2001).

44-

In short, defendant may exclude coverage of

the hormone therapies under either the Compendia Requirement of

§

1396r-8 (d) (1) (B) (i) or the definition of covered outpatient drugs
of

§

1396r-8 (k) (3). As such, the Court grants defendant's motion

for summary judgment on plaintiffs' Availability Provision claims
with respect to hormone therapies and dismisses these claims.
Genuine disputes of material fact prevent the Court from
granting either party's motion for summary judgment on
plaintiffs' Availability Provision claims with respect to
surgeries.

In particular, the medical necessity of surgeries as

treatments for gender in individuals under 18 is genuinely
disputed. Before discussing this factual dispute, however, the
Court must resolve a preliminary matter: the parties dispute what
facts are relevant to a determination of medical necessity.
Plaintiffs argue that physicians "have 'primary responsibility'
35

to determine what treatment patients should receive." Reply
Memorandum of Law in Further Support of Plaintiffs' Motion for
Summary Judgment at 3 n.3, ECF No. 104. Defendant claims that
DeSario v. Thomas, 139 F.3d 80

(2d Cir. 1998), "[took]

issue with

the view that a Medicaid beneficiary's physician 'deserves almost
complete deference in determining medical necessity'" and that
"prevailing medical knowledge and scientific evidence" should
control. Defendant's Memorandum of Law in Opposition to
Plaintiffs' Motion for Summary Judgment at 6, 7, ECF No. 86
(quoting DeSario, 139 F.3d at 95). Defendant also frames the
inquiry not as a determination of whether a treatment is
medically necessary but instead as a question of whether the
state's determination of medical necessity is reasonable. Id.
The differences between the parties' positions are
artificial. Although the medical community is not a monolith,
individual physicians, as members of a self-regulating
professional community, are expected to adhere to standards of
"prevailing medical knowledge and scientific evidence." Put
another way, "prevailing medical knowledge" is largely defined by
the practice of individual physicians. As such, testimony of
individual physicians as well as any other evidence of prevailing
medical knowledge is relevant to a court's determination of
medical necessity. Moreover, because of the way New York has
defined "medical necessity" and because it has enacted a
36

categorical ban on the treatments at issue,

there is no

difference between determining the medical necessity of a
treatment and evaluating the reasonableness of the state's
determination of whether a treatment is medically necessary. See
N.Y. Comp. Codes R.

& Regs. tit. 18, § 500.l(b)

("The department

will limit the amount, duration and scope of medical assistance
authorized to be provided .

to medical care, services and

supplies which are medically necessary and appropriate,
consistent with quality care and generally accepted professional
standards."); Declaration of Constance Donohue dated Sept. 11,
2015,

~

10, ECF No.

88

(stating that the DOH adopted the Age

Exclusion on the basis of§ 500.l(b)). As an administrative
matter,

the state makes "determinations" of medical necessity,

consistent with its power under the Medicaid regulations to
"place[s] appropriate limits on a service based on criteria such
as medical necessity." 42 C.F.R. § 440.230(d). But when the state
makes such determinations,

it is simply synthesizing an

administrative rule based on the accumulated knowledge of the
medical community. The Department of Health cannot assemble
evidence from the medical community but then,
some of the substantive results.

on its own, alter

See, e.g., N.Y. Comp. Codes R.

Regs. tit. 18, § 513.6(e). The grounds for finding a treatment
medically necessary or for finding the state's determination of
lack of necessity unreasonable will be therefore be same: the
37

&

testimony of physicians and evidence of prevailing medical and
scientific knowledge.
DeSario is not to the contrary. DeSario did not actually
"take issue" with the unremarkable notion that physicians should
be the primary arbiters of medical necessity.
out that,

Instead,

it pointed

if the Medicaid Act did obligate states to cover every

last medically necessary treatment,

such that an individual

physician could legally obligate the state to cover a treatment
simply by writing a prescription, then states would be severely
limited in their efforts to control costs. See DeSario,
at 95-96

139 F.3d

(observing that the only cost control measures available

to states in such a scenario would be to cut back on any optional
services). The Second Circuit's solution in DeSario was not to
take determinations of medical necessity out of the hands of
medical professionals, where they rightfully belong.
discussed above,

Instead, as

the Second Circuit held that the Medicaid Act

does not obligate states to cover all medically necessary
treatments: proper utilization control procedures can be used to
control costs, if they ultimately "assur[e] that individuals will
receive necessary medical care." Alexander v. Choate,
287,

303

469 U.S.

(1985).

Plaintiffs have produced two reports from expert witnesses
testifying that the same treatments that are effective for adults
with gender dysphoria can be effective and medically necessary
38

for minors with gender dysphoria. See Expert Report of Johanna
Olson, M.D.,
Aug.

Declaration of Christopher J. McNamara dated Sept.

28, 2015, Ex.

27

Nicholas Gorton, MD,
McNamara dated Aug.

~~

14-22, ECF No.

DABEM,
28,

74; Expert Report of

Declaration of Christopher J.

2015, Ex.

38 at 15-17, ECF No.

74.

Indeed, one expert concludes that "treatment of youth is more
effective in many ways than treatment of transgender adults"
because gender dysphoria is exacerbated over time by repeated
traumas and because puberty causes significant physical changes
that can be difficult to reverse or mask later in life.

Id. at

16.
Defendant claims that the medical community has not yet
reached a consensus on the safety and efficacy of the treatment
of gender dysphoria in minors. He primarily relies on the
testimony of one expert witness,

John W. Williams, M.D., and a

fact witness, a representative of DOH. However,

Dr. Williams did

not address the safety or efficacy of treatments for gender
dysphoria for minors in his expert report.

Instead,

Dr. Williams

drew conclusions regarding the quality of two literature reviews
submitted by defendant, one compiled by a private health
consultancy, Hayes,

Inc.,

(the "Hayes report")

and the other

compiled by the Oregon Health & Science University Center for
Evidence-based Policy (the "OHSU report").

In particular,

Dr.

Williams stated that "[b]ased on my experience in working with
39

and/or utilizing research reports from OHSU and Hayes

I am

confident that these reports represent scientifically valid
work." Expert Report of John W. Williams Jr, MD, MHSc, Second
Declaration of Zoey S. Chenitz in Further Support of Defendant's
Motion for Summary Judgment Ex. A at 5, ECF No. 112.
The Hayes report and the OHSU report, as well as the studies
cited therein, are inadmissible hearsay.

Defendant has not

offered the authors of the reports or any of the underlying
studies they cite as witnesses.

Defendant also has not offered

any expert witnesses who reasonably relied on the reports within
the meaning of Fed. R. Evid. 703 or 803(18) (A).

Dr. Williams did

not rely on the contents of the reports; he evaluated their
methodology. The reports are also not admissible as learned
treatises under Fed. R. Evid. 803(18) (B). No expert has
established the reports as reliable authority.

Indeed, because

Dr. Williams is not an expert on treatments of gender dysphoria,
he cannot competently testify about the authority of the reports.
Defendant's Response and Counter-Statement to Plaintiffs'
Statement of Material Facts Pursuant to Local Rule 56.1

~

150,

ECF No. 87. Moreover, defendant has offered no reasonable basis
for the Court to take judicial notice of the reports' authority.
For instance, they have not been peer-reviewed by the wider
medical community. Accordingly, the Court excludes the Hayes and
OHSU reports as inadmissible hearsay and concludes that Dr.
40

Williams'

report has no bearing on the question of the medical

necessity of specific treatments of gender dysphoria in minors.
Apart from Dr. Williams, defendant primarily relies on the
testimony of a representative of the DOH, Constance Donohue.a She
affirms that,

in deciding that no treatments for gender dysphoria

in minors were medically necessary,

the DOH relied on the WPATH

Standards of Care, the Hayes report,
and journal articles related to [the]

the OHSU report,

"studies

topic," and guidelines

prepared by the Endocrine Society. See Declaration of Constance
Donohue dated Sept. 11, 2015,
above,

~

9, ECF No.

the Hayes report and the OHSU report are inadmissible

hearsay.

Defendant has not produced any of the "studies and

journal articles related to [the]
record,

8

88. As explained

topic" and,

on the present

they would also be inadmissible hearsay.

Defendant's own

After full briefing on the present motions, defendant also
submitted a proposed decision memorandum issued by the Centers
for Medicare & Medicaid Services ("CMS"). The memorandum proposes
to maintain the status quo regarding Medicare coverage of genderreassignment surgeries, namely, that CMS will not issue a
National Coverage Determination and instead leave coverage
determinations to local Medicare Administrative Contractors on an
individual claim basis. It bases this proposal on the conclusion
that there is insufficient evidence to determine whether coverage
of gender reassignment surgery by Medicare would be beneficial
and asks for further studies to be conducted on the issue. This
document is of little relevance to the present inquiry and the
Court gives it little weight. The proposed decision memorandum is
not a binding document and is primarily a literature review of
studies that are inadmissible hearsay. Most importantly, it
focuses on Medicare recipients, i.e. individuals 65 years and
older, a necessarily significantly different population than
members of the Age Subclass.
41

30(b) (6) testimony concerning the contents of these absent
studies is inadmissible hearsay.
That leaves the WPATH Standards of Care and the guidelines
prepared by the Endocrine Society, each of which raise a genuine
dispute over whether surgeries are medically necessary treatments
for minors with gender dysphoria. Both sides, as well as
plaintiffs' experts, rely on these texts, and the Court concludes
they are sufficiently authoritative to allow their admissibility
under Fed. R. Evid. 803(18). See Expert Report of Jack Drescher,
M.D.,

P.C.,

Declaration of Christopher J. McNamara dated Aug. 28,

2015, Ex. 22 at 11, ECF No. 74; Expert Report of Johanna Olson,
M.D., Declaration of Christopher J. McNamara dated Aug. 28, 2015,
Ex. 27

~~

17, 22, 25, ECF No. 74; Expert Report of Nicholas

Gorton, MD,

DABEM, Declaration of Christopher J. McNamara dated

Aug. 28, 2015, Ex. 38 at 3, ECF No. 74. As a general matter, the
WPATH Standards of Care encourage treatment of minors with gender
dysphoria and even warn of the consequences of delaying
treatment. See WPATH Standards of Care at 21. However, the WPATH
Standards of Care state that
[ g] eni tal surgery should not be carried out until []
patients reach the legal age of majority to give
consent for medical procedures in a given country [18,
under N.Y. Public Health Law§ 2504.1]
. The age
threshold should be seen as a minimum criterion and not
an indication in and of itself for active intervention.
Id. at 21. The WPATH Standards of Care do state that "[c]hest
surgery in FtM patients could be carried out earlier." Id. The
42

Endocrine Society guidelines state that "[w]e suggest deferring
surgery until the individual is at least 18 years old."
Declaration of John Gasior dated Aug.
ECF No.

28,

2015 Ex.

15 at 4

~

2.6,

83. These materials create a genuine dispute of material

fact that must be resolved at trial: what surgeries are medically
necessary treatments for minors with gender dysphoria? As such,
the Court denies both parties' motion for summary judgment on
plaintiffs' Availability Provision claims against the Age
Exclusion with respect to surgeries.
Sixth, on plaintiffs'
U.S.C. § 1396a(a)(10)(B)

second claim,

for violations of 42

(Medicaid's "Comparability Provision"),

the Court denies defendant's motion for summary judgment with
respect to the Cosmetic Exclusion, grants plaintiffs' motion with
respect to the Cosmetic Exclusion, and grants defendant's motion
in part and denies plaintiffs' motion with respect to the Age
Exclusion. The Comparability Provision requires that "the medical
assistance made available to any [categorically needy]
. shall not be less in amount,

duration,

individual

or scope than the

medical assistance made available to any other such
[categorically needy]

individual." 42 U.S.C. §

1396a (a) (10) (B) (i). The Second Circuit has explained that "[the
Comparability Provision] prohibits discrimination among
individuals with the same medical needs stemming from different

43

medical conditions." Davis v. Shah, 821 F.3d 231, 258

(2d Cir.

2016) .
With respect to the Cosmetic Exclusion, there is no genuine
dispute that DOH covers the cosmetic surgeries excluded by §
505.2(1)

for individuals with diagnoses other than gender

dysphoria.

Defendant claims that there is a dispute over which

cosmetic surgeries are covered for other diagnoses. However,
defendant's position is belied by his own admissions that New
York's Medicaid program covers breast reconstruction,

facial

feminizing surgery, chondrolaryngoplasty, electrolysis, and bodysculpting procedures. See Defendant's Responses to Plaintiffs'
First Set of Requests for Admission,
J. McNamara dated Aug.

Declaration of Christopher

28, 2015, Ex. 4 at 14-15, ECF No. 74. In

addition, defendant does not contest that the New York State
Medicaid Program Physician Procedure Code, 2015 Version,

(the

"Physician's Manual") which contains billing instructions for
physicians regarding treatments covered by Medicaid, contains
billing instructions, including billing codes,

for essentially

all the cosmetic procedures. See Defendant's Response and
Counter-Statement to Plaintiffs' Statement of Material Facts
Pursuant to Local Rule 56.1

~~

154, 155, ECF No. 87. The one item

barred by the Cosmetic Exclusion which is not addressed in some
form by defendant's admissions, the Physician's Manual, or both
is "drugs to promote hair growth or loss," barred by§
44

505.2 (1) (4) (v) (f). Neither side presents evidence particularly
addressed to this item. Moreover, as discussed above,

there is no

dispute that the cosmetic procedures and services barred by the
Cosmetic Exclusion can be medically necessary. Defendant's
Response and Counter-Statement to Plaintiffs'
Material Facts Pursuant to Local Rule 56.l

~

Statement of
138, ECF No.

87.

Accordingly, the Court grants plaintiffs' motion for summary
judgment on their Comparability Provision claims with respect to
the Cosmetic Exclusion, except with respect to drugs promoting
hair growth or loss, and denies the corresponding part of
defendant's motion.
With respect to the Age Exclusion, there is no dispute that
the cosmetic and gender reassignment surgeries sought by
plaintiffs are covered by New York's Medicaid program.

See supra

(discussing coverage of cosmetic procedures); Defendant's
Response and Counter-Statement to Plaintiffs' Statement of
Material Facts Pursuant to Local Rule 56.1

~

188, ECF No.

87

(defendant admitting that New York provides Medicaid coverage of
the components of gender reassignment surgeries). However, this
is not the end of the Comparability Provision inquiry. The Second
Circuit has stated that "[the Comparability Provision] prohibits
discrimination among individuals with the same medical needs
stemming from different medical conditions." Davis v.
F.3d 231, 258

(2d Cir. 2016)

Shah, 821

(emphasis added). Thus, the
45

Comparability Provision incorporates a medical necessity
requirement. Otherwise, any categorically needy individual,
regardless of medical need for a procedure, could seek coverage
of a procedure provided to other categorically needy recipients
under the Comparability Provision. As discussed above, it is
disputed whether the surgeries sought by the Age Subclass members
are medically necessary for individuals under 18. This question
must be resolved at trial with respect to plaintiffs'
Comparability Provision claims as well as their Availability
Provision claims. Accordingly, the Court denies both parties'
motions for summary judgment on plaintiffs' Comparability
Provision claims with respect to surgeries.
With respect to hormone therapies, defendant argues that the
Compendia Requirement blocks plaintiffs' Comparability Provision
claims.

Plaintiffs respond that the Compendia Requirement does

not apply to their Comparability Provision claims because
defendant provides hormone therapies to other categorically needy
individuals with gender dysphoria, even though all uses of
hormones to treat gender dysphoria lack FDA support. See
Defendant's Response and Counter-Statement to Plaintiffs'
Statement of Material Facts Pursuant to Local Rule 56.1

~

226,

ECF No. 87.
Plaintiffs' argument points to a tension within the Medicaid
Act between the Compendia Requirement
46

(and§ 1396r-8 (k) (3) 's

definition of a "covered outpatient drug")

and the Comparability

Provision. The Supreme Court has identified as "one of the most
basic interpretive canons, that '[a]

statute should be construed

so that effect is given to all its provisions, so that no part
will be inoperative or superfluous, void or insignificant.'"
Corley v. United States, 556 U.S. 303, 314
quotation marks omitted)

(2009)

(alteration in original)

(internal
In this case,

defendant's reading of the Medicaid Act would render the
Comparability Provision inoperative. Accordingly, the Court
adopts a reading that gives both the Compendia Requirement and
the Comparability Provision force: although defendant may, under
the Compendia Requirement, exclude coverage of uses of hormone
therapies without FDA or Compendia support to all categorically
individuals with gender dysphoria, nonetheless,

if defendant does

cover unapproved uses of hormone therapies for some categorically
needy individuals with gender dysphoria, under the Comparability
Provision, he must then cover unapproved uses of hormone
therapies for all categorically needy individuals with gender
dysphoria. Essentially, the provisions work together to present
defendant with an "all-or-nothing" choice: he can either cover
hormone therapies for gender dysphoria or not, but he cannot
cover them selectively.
Defendant argues that, as a factual matter, he has chosen
not to cover unapproved hormone therapies at all. He claims that
47

DOH has a policy in place to deny coverage of all drug uses not
covered in the Medicaid Compendia. See Declaration of Norman P.
Ostrove dated Sept. 18, 2015, Ex.

66, ECF No. 103. Plaintiffs

respond that defendant fabricated this policy for purposes of the
present litigation and, to the extent it was a bona fide policy,
it has been selectively enforced, such that New York does cover
drug uses that lack FDA or Compendia support in some
circumstances. See id.

(showing a prominent "DRAFT" watermark on

defendant's policy); 30(b) (6)

Deposition of Constance Donohue,

Declaration of Christopher J. McNamara dated Aug. 28, 2015, Ex.
19 at 142:15-23, 162:22-163:3. Because the Court has conflicting
evidence before it, the provenance of defendant's policy and
whether it has been consistently enforced cannot be resolved on
summary judgment and must be dealt with at trial. Relatedly, the
Court notes that§ 505.2(1) states that "payment is available for
medically necessary hormone therapy .
gender dysphoria .

for the treatment of

. for individuals 18 years of age or older."

Although plaintiffs have offered uncontroverted expert testimony
that no uses of hormone therapy to treat gender dysphoria (for
adults or minors)

have been approved by the FDA,

see Deposition

of Johanna Olson, M.D., Declaration of Christopher J. McNamara
dated Aug. 28, 2015, Ex. 50 at 214:18-21, ECF No. 74, the Court
cannot discern from the present record whether hormone therapies
for adults are listed in the Medicaid Compendia.
48

If they are not,

the language of§ 505.2(1) approving hormone therapy for adults
would fly in the face of defendant's alleged policy limited
coverage to uses with Compendia support. However, the question of
whether hormone therapies for adults with gender dysphoria are
listed in the Medicaid Compendia must be resolved at trial.
addition,

In

if the Compendia Requirement does not defeat

plaintiffs' Comparability Provision claims against the Age
Exclusion, the parties need also address at trial which types of
hormone therapies defendant has covered for adults.
particular,

In

it is not clear from the present record if pubertal

suppressants for individuals 18 years or older have been or ever
would be covered under§ 505.2(1) . 9 Depending on the resolution
of this factual question,

it is possible that plaintiffs'

Comparability Provision claims would only survive the Compendia
Requirement with respect to cross-sex hormones and not with
respect to pubertal suppressants.
Even assuming that the Compendia Requirement is not a bar to
plaintiffs' Comparability Provision claims for hormone therapies
for minors - i.e. that the factual disputes discussed above are
resolved in plaintiffs'

favor - to prevail on their Comparability

Provision claims, plaintiffs would still need to show that
pubertal suppressants and cross-sex hormones are medically

9

Pubertal suppressants are typically administered when individual
reaches Tanner Stage II, the second of five stages of puberty.
49

necessary for minors. See Davis v. Shah,

821 F.3d 231, 258

(2d

Cir. 2016). Plaintiffs' experts report that the use of cross-sex
hormones and pubertal suppressants for minors with gender
dysphoria is safe, effective, and medically necessary. See Expert
Report of Johanna Olson, M.D.,

Declaration of Christopher J.

McNamara dated Sept. Aug. 28, 2015, Ex. 27
Expert Report of Nicholas Gorton, MD,

~~

DABEM,

15-20, ECF No.

74;

Declaration of

Christopher J. McNamara dated Aug. 28, 2015, Ex. 38 at 16-18, ECF
No. 74. Defendant claims that hormone therapies for minors with
gender dysphoria are experimental and that there is no medical
consensus that they are safe and effective. However, as discussed
above in the context of the factual dispute over surgeries for
minors with gender dysphoria, much of what defendant has offered
in support of his position is inadmissible hearsay and
defendant's sole expert witness did not opine on the efficacy of
treatments for individuals with gender dysphoria. The non-hearsay
WPATH Standards of Care and Endocrine Society guidelines endorse
the use of hormone therapies to treat gender dysphoria in minors.
See WPATH SOC at 18-20; Declaration of John Gasior dated Aug. 28,
2015, Ex. 15 at 11-17, ECF No. 83. Nonetheless, the Court
concludes that there is a genuine factual dispute over the safety
and efficacy of hormone therapies for minors with gender
dysphoria because of the lack of FDA or Medicaid Compendia

Deposition of Johanna Olson, M.D.,
50

Declaration of Christopher J.

approval. The lack of regulatory approval means that this issue
must be resolved at trial. Accordingly, the Court denies both
parties' motions for summary judgment on plaintiffs'
Comparability Provision claims. The trial must resolve the
following two questions with respect to these claims:
treatments,

first,

what

including surgeries or hormone therapies, are

medically necessary for the treatment of gender dysphoria in
minors? Second, does DOH have a bona fide policy to exclude
coverage of drug uses not listed in the Medicaid Compendia, and
to what extent has this policy been applied consistently in the
context of the provision of hormone therapies to treat
individuals with gender dysphoria?
Seventh, on plaintiffs'

fifth claim,

1557 of the Affordable Care Act

("ACA"),

10

for violations of

42 U.S.C.

§

§

18116, the

Court denies defendant's motion for summary judgment in part and
grants it in part.

§

1557 of the ACA incorporates the standards

of, among other statutes, Title IX of the Education Amendments of
1972, 20 U.S.C.

§

1681, and

1973, 29 U.S.C.

§

794. See 42 U.S.C.

§

504 of the Rehabilitation Act of
§

18116. Title IX forbids

discrimination on the basis of sex. 20 U.S.C.

§

1681. Section 504

prohibits discrimination on the basis of disability. 29 U.S.C.

§

McNamara dated Aug. 28, 2015, Ex. 50 at 190:22-191:3, ECF No. 74.
1 0 The Court previously dismissed plaintiffs' third and fourth
claims. See Order dated June 29, 2015, ECF No. 46. Plaintiffs did
not move for summary judgment on their fifth claim.
51

794. Plaintiffs claim that§ 505.2(1) discriminates against them
on the basis of sex and disability.
The Court grants defendant's motion for summary judgment
with respect to plaintiffs' disability discrimination claims.
Section 504 states that
[n] o otherwise qualified individual with a disability
in the United States, as defined in section 705(20) of
this title, shall, solely by reason of her or his
disability, be excluded from the participation in, be
denied
the
benefits
of,
or
be
subjected
to
discrimination under any program or activity receiving
Federal financial assistance.
29 U.S.C. § 794. Section 705(20) (F)
purposes of section[]

states that "[f]or the

794 of this title, the term

'individual with a disability' does not include an individual on
the basis of .

gender identity disorders not resulting from

physical impairments." 29 U.S.C.

§

705(20) (F). Even if this

carveout did not apply here, 29 U.S.C.

§

705(20) (B)

the definition of "disability" given in 42 U.S.C.

§

incorporates
12102: "a

physical or mental impairment that substantially limits one or
more major life activities of such individual" with "major life
activities includ[ing], but .

not limited to, caring for

oneself, performing manual tasks,

seeing, hearing, eating,

sleeping, walking, standing, lifting, bending, speaking,
breathing,

learning, reading, concentrating, thinking,

communicating, and working." Defendant argues that plaintiffs
have failed to produce any significant evidence that all
52

individuals with gender dysphoria are limited in the performance
of major life activities, such that gender dysphoria can be
identified as a disability. See,
Olson, M.D.,

~'

Deposition of Johanna

Declaration of John Gasior dated Aug. 28, 2015, Ex.

12 at 109:3-110:6 ("I think that gender dysphoria can be
disabling.

I don't know that I would call it a disability."), ECF

No. 83. Plaintiffs do not oppose defendant's arguments. See
Memorandum of Law in Opposition to Defendant's Motion for Summary
Judgment at 23-25, ECF No.

95. Accordingly, the Court grants

defendant's motion for summary judgment and dismisses plaintiffs'
disability discrimination claim.
The Court denies, however, defendant's motion for summary
judgment with respect to plaintiffs' sex discrimination claim.
Defendant originally argued that plaintiffs' sex discrimination
claim failed because gender dysphoria was not a proxy for sex
within the meaning of the ACA, § 505.2(1) did not treat
individuals with gender dysphoria differently from other
individuals, and Title IX, as incorporated into the ACA, does not
allow disparate impact claims. However, on May 18, 2016, the
Department of Health and Human Services

("HHS") promulgated

regulations explaining that the ACA's ban on discrimination "on
the basis of sex" includes discrimination on the basis of "gender
identity." Nondiscrimination in Health Programs and Activities,
81 Fed. Reg.

31376,

31467

(May 18, 2016). The regulation defines
53

"gender identity" as "an individual's internal sense of gender"
and states that "[a] transgender individual is an individual
whose gender identity is different from the sex assigned to that
person at birth." Id. It sets forth the following rules:
[a] covered entity [defined as an entity that operates
a health program or activity,
any part of which
receives Federal financial assistance] shall not, in
providing or administering health-related insurance or
other health-related coverage
(4)
Have or
implement
a
categorical
coverage
exclusion
or
limitation for all heal th services related to gender
transition; or (5) Otherwise deny or limit coverage,
deny or limit coverage of a claim, or impose additional
cost sharing or other limitations or restrictions on
coverage,
for specific health services related to
gender
transition
if
such denial,
limitation,
or
restriction
results
in
discrimination
against
a
transgender individual.
Id. at 31472. The supplementary information published with the
rule stated that "[the Office of Civil Rights]

interprets Section

1557 as authorizing a private right of action for claims of
disparate impact discrimination on the basis of any of the
criteria enumerated in the legislation." Id. at 31440.
After publication of this regulation, the Court received
supplemental briefing from the parties.

In his supplemental

briefing, defendant argued that§ 505.2(1) does not run afoul of
the ACA or the recent HHS regulation because it does not
implement a categorical exclusion on treatments of gender
dysphoria and allows coverage of medically necessary procedures.
As explained above, § 505.2(1) does categorically ban medically
necessary treatments for gender dysphoria. Accordingly, the Court
54

denies defendant's motion for summary judgment on plaintiffs'

sex

discrimination claim.
Eighth,

on plaintiffs'

U.S.C. §§ 1396a(a) (43),

sixth claim,

1396d(r)

for violations of 42

(Medicaid's "EPSDT Provision"),

the Court denies both parties' motions for summary judgment. The
EPSDT Provision requires states to "provid[e]

or arrang[e]

for

the provision of [early and periodic screening, diagnostic,
treatment services, described at § 1396d(r)]

and

in all cases where

they are requested" for Medicaid recipients under 21 and
"arrang[e]

for

.

. corrective treatment the need for which is

disclosed by such child health screening services." 42 U.S.C. §
1396 (a) (43) (B)-(C). Section 1396d(r) defines early and periodic
screening, diagnostic,

and treatment

("EPSDT")

services to

include a range of screening services, as well as "necessary
health care, diagnostic services, treatment,
assistance]

and [other medical

to correct or ameliorate defects and physical and

mental illnesses and conditions discovered by the screening
services, whether or not such services are covered under the
State plan." 42 U.S.C. § 1396d(r). The parties agree that the
EPSDT Provision requires states to provide all medically
necessary care to Medicaid recipients under 21, although states
may elect not to cover experimental treatments. Memorandum of Law
in Support of Defendant's Motion for Summary Judgment at 17-18,

55

ECF No.

82; Memorandum of Law in Support of Plaintiffs' Motion

for Summary Judgment at 19-21, ECF No.

76.

As discussed above, there is a genuine dispute over whether
the surgeries sought by plaintiffs are medically necessary and
not experimental. Accordingly, the Court denies both parties'
motions for summary judgment on plaintiffs' EPSDT Provision
claims with respect to surgeries.
With respect to the hormone therapies sought by plaintiffs,
defendant argues that the Compendia Requirement bars plaintiffs'
EPSDT claims because there is no FDA or Compendia support for
hormone therapies as treatments for gender dysphoria in minors.
However, the Compendia Requirement does not extend to the EPDST
Provision. The Compendia Requirement states that "[a] State may
exclude or otherwise restrict coverage of a covered outpatient
drug if

. the prescribed use is not for a medically accepted

indication." 42 U.S.C.

§

1396r-8 (d) (1) (B) (i). However, the EPDST

Provision defines EPSDT services, which states are required to
provide, to include "necessary health care, diagnostic services,
treatment,

and [other medical assistance]

to correct or

ameliorate defects and physical and mental illnesses and
conditions discovered by the screening services, whether or not
such services are covered under the State plan." 42 U.S.C. §
1396d(r) (5)

(emphasis added). Accordingly, the coverage carveout

offered by the Compendia Requirement does not lessen a state's
56

burden under the EPSDT Provision to provide all medically
necessary care.
Because they survive the Compendia Requirement in full,
plaintiffs' EPSDT Provision claims directly present the factual
questions that are only contingently presented by plaintiffs'
Comparability Provision claims, namely, whether hormone therapies
are medically necessary to treat gender dysphoria in minors. As
discussed above, because of the lack of regulatory approvals,
there are genuine disputes over whether hormone therapies, both
cross-sex hormones and pubertal suppressants, are safe,
effective, and medically necessary for minors with gender
dysphoria. Accordingly, the Court denies both parties' motions
for summary judgment on plaintiffs' ESPDT claims. The question to
be resolved at trial on the EPDST Provision claims is also
presented by plaintiffs' other claims, namely, what treatments,
including surgeries or hormone therapies, are medically necessary
for the treatment of gender dysphoria in minors?
In sum,

for the foregoing reasons, the Court denies

defendant's motion for reconsideration, denies defendant's motion
to decertify the plaintiff class, denies defendant's motion for
summary judgment in part and grants it in part, and denies
plaintiffs' motion for summary judgment in part and grants it in
part. This case will proceed to trial to determine

(1) what

treatments are medically necessary for individuals under 18 with
57

gender dysphoria and (2) to what extent DOH has consistently
followed a bona fide policy of limiting coverage of drug uses to
those listed in the Medicaid Compendia in the context of
treatments for gender dysphoria. The parties are directed to
jointly telephone Chambers by no later than July 8, 2016, to
schedule a trial date.
The Clerk of Court is directed to close documents numbered
77, 79, and 81 on the docket of this case.

SO ORDERED.

~~S.D.J

Dated: New York, New York
July£, 2016

58