New Laws: New HHS Policy Makes Labs Potentially Liable for LGBTQ Discrimination

While it doesn’t directly relate to billing and reimbursement, federal civil rights laws have an impact on certain aspects of lab operations. These laws ban your lab from discriminating on the basis of protected personal characteristics, including sex. So, compliance managers need to be aware that on May 10, the Department of Health and Human Services (HHS) issued an important bulletin affecting how the ban on sex discrimination will be enforced from now. Specifically, sex discrimination will go beyond just a person’s sex or gender but also their sexual orientation and/or gender identity. Here’s a rundown of the law and how it might affect your operations.

Federal Discrimination Law, 101

The U.S. Civil Rights Act of 1964 makes it illegal to discriminate in different aspects of public activity, including employment and delivery of services, on the basis of a person’s race, color, national origin, age, disability or sex. As with federal fraud and abuse laws, participating in Medicare, Medicaid and other federal healthcare programs makes you legally bound to comply with the Civil Rights Act.

Notice that the federal law mentions sex but not sexual orientation or gender identity—although several states have adopted their own civil rights laws that do afford protection to those characteristics. However, it has long been argued that “sex” includes orientation and identity. And in a landmark June 15, 2020 ruling called Bostock v. Clayton County, the U.S. Supreme Court endorsed that view in the context of Title VII of the Act, which applies to employment. In other words, the ban on discrimination “because of sex” in employment under Title VII also means employers can’t discriminate against employees and job applicants based on their sexual orientation or gender identity.

On the first day President Biden took office, he issued an Executive Order calling on federal agencies to apply the Bostock reasoning to the parts of the Civil Rights Act in their own domain. Thus, for example, the Department of Housing and Urban Development (HUD), which administers federally assisted housing programs, issued guidelines stating that current Title VIII bans on housing discrimination by lenders, landlords and other participants in HUD programs based on sex would now be interpreted as also covering sexual orientation and gender identity.

The significance of the new HHS bulletin is that it extends the Bostock principles to Title IX of the Civil Rights Act, which covers education programs or activities receiving federal financial assistance, including labs that participate in Medicare and other healthcare programs. Justification: In explaining the new rules, HHS says that discrimination in health care impacts health outcomes, citing research showing that one quarter of LGBTQ people who faced discrimination postponed or avoided receiving needed medical care for fear of further discrimination. The new policy will protect these people and hold providers who fail to comply accountable.

Takeaway: Practical Impact on Labs

The impact of the new HHS policy is that it exposes you to a new kind of liability, namely, discrimination on the basis of sexual orientation and gender identity under Title IX. The HHS agency in charge of cracking down on providers that commit illegal discrimination, e.g., labs that refuse to treat minorities or charge higher rates to black people because they’re black, is the Office for Civil Rights (OCR), the same agency that enforces HIPAA.

Under the new policy, members of the LGBTQ community can file discrimination complaints against your lab. The OCR will investigate those complaints. If it finds evidence that your lab did, in fact, discriminate, it can initiate legal proceedings against you. In addition to money damages and potential corrective actions, this can lead to very unfavorable publicity against your lab.

Open Issue: Discrimination vs. Exercise of Religion?

One open question is how the new protections against discrimination on the basis of sexual orientation and gender identity will interact with the legal obligation of the OCR (under Section 1557 of the Affordable Care Act to enforce the civil rights rules in accordance with a law called the Religious Freedom Restoration Act which bans the government from unduly interfering with a person’s exercise of religion.