By Julie Moreau

Judge Reed O’Connor, the Texas judge who last week struck down the Affordable Care Act, has given the green light on a lawsuit that could have profound implications for transgender patients and those seeking an abortion.

The suit — brought against the Department of Health and Human Services (HHS) by eight states, a religious hospital network and an association of Christian health care professionals — takes aim at an Obama-era rule issued by the HHS in 2016 that interprets “sex” discrimination in Section 1557 of the ACA to include discrimination on the basis of “gender identity” and “termination of pregnancy.”

“The rule would require Plaintiffs to perform and provide insurance coverage for gender transitions and abortions contrary to their religious beliefs and medical judgment,” the Dec. 11 filing states.

While the nondiscrimination rule in question has never officially been enforced, because of a December 2016 injunction by O’Connor, many insurers removed exclusions from their coverage in anticipation of its coming into effect, according to Out2Enroll, an organization that helps LGBTQ people enroll for coverage under Obamacare.

Proponents of the rule say if O’Connor finds in favor of the plaintiffs, it would signal to insurers and providers that they can refuse to cover or provide care related to gender transitions and abortions and gut the ability of the Office of Civil Rights at HHS to investigate discrimination claims made by anyone seeking these services. The ruling in this case also has the potential to influence how other courts interpret the meaning of “sex” discrimination.

“The regulation in question helps to ensure nearly 2 million transgender people have access to life-saving care,” Gillian Branstetter, a spokesperson for the National Center for Transgender Equality, told NBC News. “We believe very strongly rescinding this guidance could do substantial harm to the progress made with providers and insurers at the detriment of our well-being and our rights.”

FRANCISCAN ALLIANCE V. AZAR

The lawsuit was initially filed in August 2016 as Franciscan Alliance v. Burwell, when HHS was under the direction of Obama appointee Sylvia Mathews Burwell. The case was then put on hold until earlier this week, when both parties in the suit — the plaintiffs and the HHS, now led by Trump appointee Alex Azar — asked O’Connor to advance the case. This week O’Connor agreed and set a briefing schedule that could have him issue a final ruling next year.

When asked for comment on the case, an HHS spokesperson told NBC News the department could not provide further comment on ongoing litigation. However, the spokesperson confirmed HHS’s Office of Civil Rights would continue to abide by the December 2016 nationwide injunction issued by O’Connor blocking the nondiscrimination rule.

Under President Donald Trump, HHS has signaled its intent to roll back Obama-era gains for transgender people. Early this year, HHS created a new division to focus on protecting providers, such as the plaintiffs in this case, who cite religious grounds for refusing to treat certain patients. Then in October, The New York Times obtained a draft memo from HHS in which it argued that the government should adopt a “biological” definition of sex that would effectively erase any recognition of transgender individuals.

THE STAKES

Branstetter called the nondiscrimination measure a “huge step forward in making sure insurers and providers are aligned with the law” and pointed to insurance markets as an area where the presence or absence of such a regulation can have a real impact.

For example, the North Carolina state employee health plan included transition-related care in 2017 after HHS’s nondiscrimination regulation was finalized in May 2016. The state then removed the coverage for 2018 and has not reinstated it.

“If the Trump administration pulls the regulation from the books, it’s going to disrupt a lot of successes,” Branstetter said. “These providers are still on the hook.”

Jocelyn Samuels is a former director of HHS’s Office for Civil Rights and oversaw the writing of the nondiscrimination regulation that is currently under threat. She told NBC News the Obama-era rule was a result of “the best legal analysis that we could bring to bear” and criticized the current administration for ignoring the reality of health care discrimination that transgender people face.

“LGBT people generally have been subject of persistent and pervasive discrimination in health care,” Samuels explained. “The transgender community is particularly vulnerable to being refused service, experiencing harassment or mistreatment by providers, and misgendered on a repeated basis.”

A 2017 study by the Center for American Progress found that “23.5 percent of transgender respondents avoided doctors’ offices in the past year” for fear of negative treatment.

A ruling against the Obama-era regulation would mean transgender patients could not seek administrative redress through the HHS Office of Civil Rights, and would have to take their cases to court.

Samuels called litigation a “really inadequate enforcement mechanism” to combat discrimination because of substantial court fees and the protracted nature of the process. She also said this route would not enable patients to receive the benefits of the HHS Office of Civil Rights’ investigative or enforcement powers.

THE 'GO-TO-JUDGE'

O’Connor has a history of health care and nondiscrimination rulings that concern LGBTQ advocates. He issued an injunction in August 2016 against the Department of Education’s Title IX guidance that sought to protect transgender students. He wrote that at the time Title IX came into effect, “the plain meaning of the term sex … meant the biological and anatomical differences between male and female students as determined at their birth."

Justin Nelson, a law professor at the University of Texas, Austin, told NPR this week that O’Connor has been the “go-to judge” for conservative attorneys “who want to file ideological suits in any court across the country.”

O’Connor’s office did not immediately respond to NBC News’ request for comment on this article.

Samuels said if O’Connor decides the nondiscrimination regulation in Section 1557 of the Affordable Care Act is unlawful, it could potentially influence other courts’ interpretations of “sex” discrimination, an issue that many expect to make its way to the Supreme Court.

Currently, there are several cases pending before the Supreme Court regarding the definition of “sex” in Title VII of the 1964 Civil Rights Act, which prohibits employment discrimination on the basis of “race, color, religion, sex and national origin.”

Until the high court hears any of these cases, which Samuels thinks is quite possible this term, interpretation of “sex” discrimination law will remain a subject of dispute.

While the issue plays out in the courts, Branstetter stressed that discrimination is “an enormous problem that needs solutions.”

“Discrimination in health care against transgender people is not a hypothetical,” she said. “It’s unfortunately quite frequent.”

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