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A federal court has held that New York state had the right to stop using Medicaid funds to cover the cost of gender reassignment treatments for a 48-year-old plaintiff who has been living as a woman since the age of 20. Southern District of New York Judge P. Kevin Castel dismissed the case of Terri Casillas, who contended that the state’s termination of Medicaid coverage after 24 years violated her federal and constitutional rights. The judge held in Casillas v. Daines, 07 Civ. 4082, that a state regulation prohibiting Medicaid reimbursements for treatments “for the purposes of gender reassignment” did not conflict with Casillas’ federal statutory or constitutional rights. While 42 U.S.C. §1983 allows a plaintiff to bring a claim for a violation of a right protected by a federal statute, Casillas failed to show that the federal Medicaid law obligated the state to pay for her gender reassignment treatments, Castel wrote. He also tossed out Casillas’ equal protection claim under the Fourteenth Amendment. According to the decision, Casillas, who was born a male, was diagnosed with gender identity disorder in 1978, which is defined by the Fourth Edition of the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders as “a condition characterized by a strong and persistent cross gender identification and discomfort about one’s assigned sex.” Casillas maintains that her depression lifted after she “developed breasts” and a “more traditionally female body” in response to hormone treatments. Medicaid began paying for the hormone therapy prescribed by Casillas’ doctors in 1980, but terminated coverage in September 2004. Casillas said she continued to receive intermittent therapy for two years through a discount medication plan. However, the complaint notes that when Casillas could not pay for the treatments, she “began to exhibit male characteristics.” Casillas, who alleges she “was horrified by these physical changes,” brought suit against the commissioners of the New York State Department of Health and the New York City Human Resources Administration. She voluntarily dismissed the action against the city in July 2007. Casillas maintained that a Department of Health regulation, originally issued in 1997, which prohibits Medicaid reimbursements for “case, services, drugs or supplies rendered for the purpose of gender reassignment,” conflicted with her right to receive coverage for gender reassignment treatments under the federal law. While Castel noted that the state regulation does not restrict all treatments stemming from a gender identity disorder, but only those “for the purpose of gender reassignment,” he disagreed that this limitation violated Casillas’ federal rights. In order to bring a §1983 action claim, a plaintiff must prove that a right “secured by a federal statute has been violated,” the judge noted. This involves showing that a statute “unambiguously” confers a right upon a particular plaintiff, he wrote. Under Blessing v. Freestone, 520 U.S. 329 (1997), a plaintiff needs also to demonstrate that the right is not unduly “vague and amorphous,” and that the federal statute is binding upon the states, rather than precatory. If a plaintiff meets this three-part test, a right is presumptively enforceable under §1983. Under federal law, a state’s Medicaid program must provide certain medical assistance, including inpatient and outpatient hospital services to eligible individuals [ 42 U.S.C. §1396a(a)(10)(A)], the judge wrote. According to the decision, Casillas alleged that her right to receive “feminizing hormones” and gender reassignment surgery was guaranteed by this provision. REASONABLE LIMITS However, Castel noted that 42 C.F.R. §440.230(d) permits a state agency to “place appropriate limits on a service based on such criteria as medical necessity or on utilization control procedures.” Since §1396a(a), “as authoritatively construed, allows for categorical limits on treatments, it follows that subdivision 10 of the statute cannot be said to have unambiguously conferred a right upon this plaintiff to a particular service or treatment,” the judge wrote. He added that the concept of “utilization control procedures,” although generally referring to control over a limited number of medical resources, lends itself to “multiple plausible interpretations” and qualifies as a “vague and amorphous” concept under Blessing. Castel held that this analysis “applie[d] with equal force” to 42 U.S.C. §1396a(a)(10)(B)(i), which obligates the state to provide equal medical benefits to all needy individuals. The judge disagreed that the regulation means that a treatment, such as a mastectomy, which is reimbursable for breast cancer, must also be reimbursed for a diagnosis of gender identity disorder. “Plaintiff has not cited to any authoritative interpretation by the Secretary [of Health and Human Services] … supporting her argument,” the judge wrote. He also refused to permit Casillas to proceed with her case under §1396a(a)(17), which permits a state to develop “reasonable standards” for its Medicaid plan. Section 440.230(d) of 42 C.F.R., which allows the state to place “appropriate limits on a service based on…medical necessity or on utilization control procedures,” the judge pointed out, “precludes a finding that the right that this plaintiff invokes is unambiguously conferred by this statute.” Finally, Castel granted the commissioner’s motion to dismiss the claim that New York’s bar on Medicaid reimbursements for gender reassignment surgery violated the right to equal protection under the Fourteenth Amendment. The state’s conclusion that “serious complications” can arise from hormone therapy and reassignment surgeries “provides a more than sufficient rational basis” to uphold the department of health regulation, Castel wrote. Assistant Attorney General Jennifer Lynn Johnson and former Assistant Attorney General Deborah Ellen Hochhauser handled the case for the commissioner. Jane Greengold Stevens of the New York Legal Assistance Group; Franklin Hafner Romeo and Pooja Sunder Gehi of the Sylvia Rivera Law Project; and Morton D. Dubin of Orrick, Herrington & Sutcliffe represented Casillas. Both Romeo and Stevens said they were “disappointed” by the decision. Stevens said she “is seriously considering” an appeal.

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