Introduction to Disparate-Impact Discrimination Claims in Healthcare: Sandoval (2001) and Section 1557 of the ACA
Disparate-impact claims of discrimination in healthcare are powerful and can be incredibly varied. These claims challenge facially neutral policies or practices that have a disproportionate effect on protected classes. These claims are often associated with “impact litigation” strategies, and historical examples include actions challenging the relocation of hospitals and the “redlining” of minority communities by long-term care facilities. These claims may also involve allegations concerning the failure to provide language-assistance services to individuals with Limited-English Proficiency.
These claims, however, have been exceedingly rare in healthcare since the U.S. Supreme Court’s 2001 decision in Alexander v. Sandoval, 532 U.S. 275 (2001), which held that Title VI of the Civil Rights Act of 1964 does not permit a private cause of action for discrimination claims based on disparate impact. Though the Sandoval decision does not bar the federal government from asserting disparate-impact claims under Title VI, the Office for Civil Rights at HHS has not prioritized or pursued these claims in the healthcare industry.
The enactment of Section 1557 of the Affordable Care Act has thus posed the vexing legal question of whether the ACA provides a work-around to Sandoval. In other words, courts and litigants have for several years now wrestled with the question of whether a private cause of action for disparate-impact discrimination is available under Section 1557 of the ACA.
In 2016, the Obama administration’s regulation under Section 1557 adopted an interpretation of the statutory text that endorsed this work-around view: that is, that Section 1557 provided a private cause of action for a disparate-impact claim of discrimination on the basis of any protected class listed in the statute. This momentous interpretation was nevertheless rejected by most federal courts—with one very notable exception. Compare Doe v. BlueCross BlueShield of Tennessee, Inc., 926 F.3d 235, 239 (6th Cir. 2019) (rejecting claim for disparate impact discrimination under Section 1557), with Rumble v. Fairview Health Servs., No. 14-CV-2037 SRN/FLN, 2015 WL 1197415, at *11 (D. Minn. Mar. 16, 2015) (“Here, looking at Section 1557 and the Affordable Care Act as a whole, it appears that Congress intended to create a new, health-specific, anti-discrimination cause of action that is subject to a singular standard, regardless of a plaintiff’s protected class status.”).
Moreover, in 2020, HHS reversed course and rescinded the Obama administration’s interpretation in its revised regulation under Section 1557. The Ninth Circuit Court of Appeals has nevertheless recently and explicitly left open the possibility that the Obama administration’s original interpretation of Section 1557’s text was correct. See Schmitt v. Kaiser Found. Health Plan of Washington, 965 F.3d 945, 954 (9th Cir. 2020) (finding it “unclear whether a disparate impact theory remains permissible under the Rehabilitation Act [which is incorporated into Section 1557’s statutory text] after Sandoval”—but not deciding the question).
In view of this back-and-forth, it may be fair to say that this critical legal question, whether Section 1557 permits private causes of action for disparate impact claims of discrimination, is not completely...
