A case with a long procedural history in administrative and constitutional law that might have resolved the question of Medicaid coverage for gender-affirming surgery ended quietly May 12 when the Iowa Supreme Court declared the case moot. The matter was decided for the patients seeking coverage in this case, but the larger constitutional question awaits another case on another day, the Court said.

Two Iowans – Aiden Vasquez and Mika Covington – sued the State when they were denied Medicaid coverage for sex-reassignment surgeries. Vasquez was born female but expressed his male identity since age eight; Covington was born male but expressed her female identity since age six. Coverage for the cost of surgeries for each of them was denied by the State, which administers the federal Medicaid program that provides health care coverage for low-income persons.

The Iowa Department of Human Services (DHS) denied coverage to Vasquez and Covington on the basis of an administrative regulation prohibiting Medicaid coverage for sex-reassignment surgeries. This regulation was enacted in 1994 but was found to violate the Iowa Civil Rights Act (ICRA)’s prohibition on gender identity discrimination in a ruling from the Iowa Supreme Court in 2019. In response to this 2019 ruling, the Iowa Legislature amended the ICRA to explicitly allow DHS to prohibit Medicaid coverage for sex-reassignment surgeries as was done in the 1994 regulation.

Suing in Polk County District Court, Vasquez and Covington challenged the administrative regulation upon which DHS relied in denying coverage as well as the 2019 amendment to the ICRA as violating equal-protection rights guaranteed by the Iowa Constitution. The district court found that both the regulation and the ICRA amendment violated the Iowa Constitution.

The State chose not to appeal the District Court’s ruling on the constitutionality of the administrative rule, which it is in the process of being revised. In the meantime, the State approved Medicaid coverage for Vasquez and Covington’s surgeries. The State did, however, appeal the trial court’s ruling on the question of the constitutionality of the amendment to the ICRA.

Even though the State decided not to appeal the ruling declaring the administrative regulation unconstitutional, Vasquez and Covington urged the Court to affirm its finding that the ICRA amendment violated the Iowa Constitution, and to also find that the administrative regulation violated the ICRA in addition to the Iowa Constitution. The State argued that in light of its decision not to appeal the ruling relating to the regulation, any other issues relating to the regulation are moot.

The Court, in a unanimous decision written by Justice Thomas Waterman, found that the State’s entire appeal was moot because the plaintiffs had received the Medicaid coverage they were seeking in the lawsuit. The Court then determined that it should not decide the constitutionality of the ICRA amendment in light of the status of the case and the unclear record regarding the nature of regulations DHS will promulgate to implement the statute. “Our inability to decide the validity of this rule handicaps our review of the statute enacted to authorize it,” Waterman wrote. “The rule as applied in this case provides context; without it, we are deciding the constitutionality of the statute in a vacuum. DHS indicates it will enact a new and different rule. Why not wait for a proper challenge by new litigants to provide a ripe, concrete dispute?”

Because the State has decided to pay for the surgeries, and there is no longer a live controversy in this case, he added, “the parties to this appeal essentially ask for an advisory opinion on what is now an academic question of constitutional law. That is not our role.”

This case is a poor vehicle for deciding the constitutional question, the Court said, in part because the State failed to provide an adequate record for the argument that its sex-reassignment rule is justified by cost-saving concerns, and in part because the record “lacks any adversary-tested evidence concerning the efficacy of sex reassignment surgeries in improving the mental health of the recipients.”

For now, the decision of the Polk County District Court remains in place, but the larger constitutional questions await the State’s rewrite of its Medicaid rule regarding Medicaid coverage of transgender treatments.

“It may be a long wait,” the Court pointed out in a footnote, “in light of the current, multi-year moratorium of rulemaking during the reorganization of the Executive Branch,” which was set in motion by the Legislature in its recently-ended session.


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