Court Opinion

ID: 4375217
Source: CourtListenerOpinion
Date Created: 2019-03-08 15:02:52.832515+00
Date Added: 2024-06-11T14:22:30.232448
License: Public Domain

IN THE SUPREME COURT OF IOWA
                                No. 18–1158

                            Filed March 8, 2019

EERIEANNA GOOD and CAROL BEAL,

      Appellees,

vs.

IOWA DEPARTMENT OF HUMAN SERVICES,

      Appellant.

      Appeal from the Iowa District Court for Polk County, Arthur E.

Gamble, Judge.

      The Iowa Department of Human Services appeals a district court

decision striking down Iowa Administrative Code rule 441—78.1(4), which

prohibits Medicaid coverage for gender-affirming surgery. AFFIRMED.

      Thomas J. Miller, Attorney General, Matthew K. Gillespie and
Anagha Dixit, Assistant Attorneys General, for appellant.

      Rita Bettis Austen of ACLU of Iowa Foundation, Des Moines, John

Knight of ACLU Foundation LGBT & HIV Project, Chicago, Illinois, and

F. Thomas Hecht, Tina B. Solis, and Seth A. Horvath of Nixon Peabody

LLP, Chicago, Illinois, for appellees.

      Bob Rush of Rush & Nicholson, PLC, Cedar Rapids, and Steve

Sanders of Maurer School of Law, Indiana University, Bloomington,
                                    2

Indiana, for amici curiae Iowa Scholars of Law, History, Bioethics, Gender,

and Sexuality.

      Paige Fiedler of Fiedler Law Firm, P.L.C., Johnston, Robert R.

Stauffer and Lindsey A. Lusk of Jenner & Block LLP, Chicago, Illinois, and

Devi M. Rao of Jenner & Block LLP, Washington, D.C., for amici curiae

The American Medical Association, The Iowa Medical Society, The

American College of Physicians, Mental Health America, National

Association of Social Workers, and GLMA: Health Professionals Advancing

LGBT Equality.

      Sharon Malheiro and Katelynn T. McCollough of Davis Brown Law

Firm, Des Moines, for amici curiae One Iowa, Individual Transgender

Iowans, and Allies.

      Joshua Matz and John C. Quinn of Kaplan Hecker & Fink,

New York, New York, and Joseph C. Glazebrook, Des Moines, for amici

curiae Lambda Legal Defense and Education Fund, Inc., National Center

for Transgender Equality, Transgender American Veterans Association,

Transcend Legal, Transgender Legal Defense and Education Fund,

Transgender Allies Group, Transgender Resource Center of New Mexico,

and The Southern Arizona Gender Alliance.

      Roxanne Barton Conlin of Roxanne Conlin & Associates, P.C.,

Des Moines, and Matt M. Fogelberg, and Paul E. Bateman Jr. of Sidley

Austin LLP, Chicago, Illinois, for amici curiae National Health Law

Program, National Women’s Health Network, and Chicago Lawyers’

Committee for Civil Rights.
                                       3

      Katie   Ervin    Carlson    of       Timmer   &   Judkins,   P.L.L.C.,

West Des Moines, and Lindsay Nako and Daniel J. Nesbit of Impact Fund,

Berkeley, California, for amici curiae Impact Fund, et al.
                                     4

CHRISTENSEN, Justice.

      In 2007, the Iowa legislature amended Iowa Code chapter 216—the

Iowa Civil Rights Act (ICRA)—to add “gender identity” to the list of

protected characteristics. See 2007 Iowa Acts ch. 191, §§ 5, 6 (codified at

Iowa Code § 216.7(1)(a) (2009)).    We must now determine whether the

language of Iowa Administrative Code rule 441—78.1(4) pertaining to the

prohibition of Iowa Medicaid coverage of surgical procedures related to

“gender identity disorders” violates the ICRA or the Iowa Constitution. The

appellees are transgender women and Iowa Medicaid recipients who

sought Medicaid coverage for gender-affirming surgical procedures to treat

their gender dysphoria.     The appellees’ managed care organizations

(MCOs) denied coverage for their surgeries pursuant to rule 441—78.1(4).

An administrative law judge (ALJ) and the director of the Iowa Department

of Human Services (DHS) affirmed the MCOs’ decisions based on rule

441—78.1’s exclusion of coverage for gender-affirming procedures.

      After exhausting intra-agency appeals, the appellees sought judicial

review.   The district court consolidated their cases and concluded the

challenged portions of rule 441—78.1(4) violate the ICRA and the equal

protection clause of the Iowa Constitution.       The district court also

determined the DHS’s denial of Medicaid coverage for gender-affirming

surgeries was reversible because it would result in a disproportionate

negative impact on private rights and the decision was unreasonable,

arbitrary, and capricious. We retained the DHS’s appeal. On our review,

we affirm the judgment of the district court because the rule violates the

ICRA’s prohibition against gender-identity discrimination.     Because of

this, we adhere to the doctrine of constitutional avoidance and do not

address the constitutional claim.
                                     5

      I. Background Facts and Proceedings.

      EerieAnna Good and Carol Beal are transgender women who have

gender dysphoria.    Gender dysphoria is a diagnostic category in the

Diagnostic and Statistical Manual of Mental Disorders-V (DSM-V), codified

as diagnostic code section 302.85, which “refers to the distress that may

accompany the incongruence between one’s experienced or expressed

gender and one’s assigned gender.” Am. Psychiatric Ass’n, Diagnostic and

Statistical Manual of Mental Disorders 451 (5th ed. 2013). The DSM-V

provides the following diagnostic criteria for gender dysphoria in adults:

         A. A marked incongruence between one’s experienced/
            expressed gender and assigned gender, of at least 6
            months duration, as manifested by at least two of the
            following:
            1. A    marked     incongruence          between one’s
               experienced/expressed gender and primary and/or
               secondary sex characteristics . . . .
            2. A strong desire to be rid of one’s primary and/or
               secondary sex characteristics because of a marked
               incongruence with one’s experienced/expressed
               gender . . . .
            3. A strong desire for the primary and/or secondary sex
               characteristics of the other gender.
            4. A strong desire to be of the other gender (or some
               alternative gender different from one’s assigned
               gender).
            5. A strong desire to be treated as the other gender (or
               some alternative gender different from one’s
               assigned gender).
            6. A strong conviction that one has the typical feelings
               and reactions of the other gender (or some
               alternative gender different from one’s assigned
               gender).
         B. The condition is associated with clinically significant
            distress or impairment in social, occupational, or other
            important areas of functioning.

Id. at § 302.85, at 452–53.
                                      6

      At their administrative hearings, Good and Beal each entered into

the record an affidavit in support of their appeal from Dr. Randi Ettner,

Ph.D., a specialist and international expert in the field of gender dysphoria.

Dr. Ettner concluded that the findings of the Iowa Foundation Report, the

DHS Rulemaking Notice, and the DHS Rule Adoption Notice used to justify

rule 441—78.1(4) “are not reasonably supported by scientific or clinical

evidence, or standards of professional practice, and fail to take into

account the robust body of research that surgery relieves or eliminates

Gender Dysphoria.” She explained, “Without treatment, gender dysphoric

individuals   experience   anxiety,   depression,   suicidality,   and   other

attendant mental health issues.”       Dr. Ettner described the accepted

standards of medical care to alleviate gender dysphoria, which involve the

following options: socially transitioning to live consistently with one’s

gender identity, counseling, hormone therapy, and gender-affirming

surgery to conform one’s sex characteristics to one’s gender identity. The

State presented no evidence to the contrary.

      According to Dr. Ettner, “[o]f those individuals who seek treatment

for [g]ender [d]ysphoria, only a subset requires surgical intervention.”

Good and Beal are among the subset of individuals seeking treatment for

gender dysphoria whose physicians have concluded that gender-affirming

surgery is necessary to treat their gender dysphoria.

      Good is a twenty-nine-year-old transgender woman and Medicaid

recipient who was officially diagnosed with gender dysphoria in 2013,

though she began presenting herself as a female fulltime in 2010. Good

began hormone therapy in 2014 and legally changed her name, birth

certificate, driver’s license, and social security card to align with her

gender identity in 2016.       Good’s gender dysphoria intensifies her

depression and anxiety. After her healthcare providers determined that
                                     7

surgery was medically necessary to treat her gender dysphoria, Good

initiated the process to seek Medicaid coverage of her gender-affirming

orchiectomy procedure from her MCO, AmeriHealth Caritas Iowa

(AmeriHealth), in January 2017.

      Beal is a forty-three-year-old transgender woman and Medicaid

recipient who was officially diagnosed with gender dysphoria in 1989. Beal

began presenting herself as a female fulltime at the age of ten and began

hormone therapy in 1989. She legally changed her name, birth certificate,

driver’s license, and Social Security card to align with her gender identity

in 2014.   Beal experiences depression and anxiety due to her gender

dysphoria. Beal’s healthcare providers have concluded gender-affirming

surgery is medically necessary to treat her gender dysphoria. She began

seeking Medicaid coverage for a gender-affirming vaginoplasty, penectomy,

bilateral orchiectomy, clitoroplasty, urethroplasty, labiaplasty, and

preineoplasty from her MCO, Amerigroup of Iowa Inc. (Amerigroup), in

June 2017.

      Medicaid is a joint federal-state program established under Title XIX

of the Social Security Act that helps states provide medical assistance to

eligible low-income individuals. See Exceptional Persons, Inc. v. Iowa Dep’t

of Human Servs., 878 N.W.2d 247, 248‒49 (Iowa 2016); see generally Iowa

Code ch. 249A (2018). The Iowa DHS manages Iowa’s Medicaid program

consistent with state and federal requirements through a managed care

model that requires Medicaid recipients’ enrollment in an MCO.          See

Exceptional Persons, Inc., 878 N.W.2d at 248; Iowa Admin. Code r. 441—

73.3. The MCO is required to “provide, at a minimum, all benefits and

services deemed medically necessary that are covered under the contract

with the agency” in accordance with the DHS’s standards. Iowa Admin.

Code r. 441—73.6(1) (emphasis added).
                                     8

      Iowa Medicaid generally provides coverage for medically necessary

services and supplies provided by physicians subject to a few exclusions

and limitations.

      For the purposes of this program, cosmetic, reconstructive, or
      plastic surgery is surgery which can be expected primarily to
      improve physical appearance or which is performed primarily
      for psychological purposes or which restores form but which
      does not materially correct or materially improve the bodily
      functions. When a surgical procedure primarily restores
      bodily function, whether or not there is also a concomitant
      improvement in physical appearance, the surgical procedure
      does not fall within the provisions set forth in this subrule.
      Surgeries for the purpose of sex reassignment are not
      considered as restoring bodily function and are excluded from
      coverage.
            ....
            b. Cosmetic, reconstructive, or plastic surgery
      performed in connection with certain conditions is specifically
      excluded. These conditions are:
            ....
           (2) Procedures   related   to     transsexualism,
      hermaphroditism, gender identity disorders, or body
      dysmorphic disorders.
            (3) Cosmetic, reconstructive, or plastic surgery
      procedures performed primarily for psychological reasons or
      as a result of the aging process.
             (4) Breast augmentation mammoplasty, surgical
      insertion of prosthetic testicles, penile implant procedures,
      and surgeries for the purpose of sex reassignment.
            ....
            d. Following is a partial list of cosmetic, reconstructive,
      or plastic surgery procedures which are not covered under the
      program. This list is for example purposes only and is not
      considered all-inclusive.
            ....
            (2) Cosmetic, reconstructive, or plastic surgical
      procedures which are justified primarily on the basis of a
      psychological or psychiatric need.
            ....
            (15) Sex reassignment.

Iowa Admin. Code r. 441—78.1(4)(b)(2)–(4), (d)(2), (15) (emphasis added).
                                      9

      Good filed her request for Medicaid preapproval from AmeriHealth

to cover the expenses of her gender-affirming surgical procedure on

January 27, 2017. AmeriHealth denied Good’s request based on the rule

excluding any surgical procedure for the purpose of sex reassignment.

Good initiated an internal appeal, which AmeriHealth also denied. Good

subsequently appealed AmeriHealth’s denial of her preapproval request to

cover the expenses of her gender-affirming surgery to the DHS.             The

administrative law judge (ALJ) preserved Good’s constitutional challenge

to the rule excluding coverage for gender-affirming surgery and affirmed

AmeriHealth’s decision, noting the rule prohibited coverage for Good’s

requested procedure. Good appealed the ALJ decision to the director of

the DHS, who adopted the ALJ’s decision and determined the DHS lacked

jurisdiction to review Good’s constitutional challenge to the rule.

      Good filed a petition for judicial review in district court on

September 21, arguing Iowa Administrative Code rule 441—78.1(4)

violates the ICRA’s prohibitions against sex and gender identity

discrimination and the equal protection clause of the Iowa Constitution.

She   also   claimed   the   DHS’s   application   of   the   rule   creates   a

disproportionate negative impact on private rights and is arbitrary and

capricious. The DHS filed a preanswer motion to dismiss for failure to

state a claim upon which relief can be granted, which the district court

denied on November 27.

      Beal filed her request for Medicaid preapproval from Amerigroup to

cover the expenses of her gender-affirming surgical procedures on June 8.

Amerigroup denied Beal’s request based on the rule excluding surgical

procedures for the purpose of sex reassignment. Beal initiated an internal

appeal, which Amerigroup also denied.         Beal subsequently appealed

Amerigroup’s denial of her preapproval request to cover the expenses of
                                      10

her gender-affirming surgery to the DHS.         The ALJ preserved Good’s

constitutional challenges to the rule excluding coverage for gender-

affirming surgery and affirmed Amerigroup’s decision, noting the rule

prohibited coverage for Beal’s requested procedures. Beal appealed the

ALJ decision to the director of the DHS, who adopted the ALJ’s decision

and determined the DHS lacked jurisdiction to review Beal’s constitutional

challenge to the rule.

      Beal filed a petition for judicial review in district court on

December 15 presenting the same arguments as Good. The DHS also filed

a motion to dismiss on Beal’s case, claiming Beal failed to state a claim

upon which relief can be granted. The district court denied this motion

and consolidated Good’s case with Beal’s case on January 26, 2018.

      Following briefing on the merits and a hearing, the district court

reversed the DHS’s decision to deny Good and Beal Medicaid coverage for

their gender-affirming surgical procedures. The district court concluded

the DHS is a public accommodation under the ICRA, and rule 441—

78.1(4), which denies coverage for gender-affirming surgeries, violates the

ICRA’s prohibition on gender-identity discrimination.           However, the

district court rejected appellees’ claim that the rule also violates the ICRA’s

prohibition on sex discrimination, relying on our holding in Sommers v.

Iowa Civil Rights Commission, which held that sex discrimination under

the ICRA does not include “transsexuals.” 337 N.W.2d 470, 474 (Iowa

1983). The district court also concluded rule 441—78.1(4) violates the

equal protection clause of the Iowa Constitution. Moreover, the district

court determined the DHS’s decision to enforce rule 441—78.1(4) should

be reversed because it had a grossly disproportionate negative impact on

private rights and was arbitrary and capricious. The DHS appealed the

district court ruling, and we retained the appeal.
                                     11

      II. Standard of Review.

      “Iowa Code section 17A.19 governs judicial review of this agency

action.” Cox v. Iowa Dep’t of Human Servs., 920 N.W.2d 545, 549 (Iowa

2018); see also Iowa Code § 17A.19. “We apply the standards set forth in

Iowa Code chapter 17A in our judicial review of agency decision-making to

determine whether our conclusion is the same as the district court.”

Brewer-Strong v. HNI Corp., 913 N.W.2d 235, 242 (Iowa 2018). It is proper

for a district court to grant relief “if the agency action prejudiced the

substantial rights of the petitioner and if the agency action falls within one

of the criteria listed in section 17A.19(10)(a) through (n).”    Id. (quoting

Brakke v. Iowa Dep’t of Nat. Res., 897 N.W.2d 522, 530 (Iowa 2017)). The

burden is on the party challenging the agency action. Hawkeye Land Co.

v. Iowa Utils. Bd., 847 N.W.2d 199, 207 (Iowa 2014). “We affirm the district

court decision when we reach the same conclusion.” Brewer-Strong, 913
N.W.2d at 242.     “Although the DHS is the state agency administering

Medicaid benefits, we decline to give deference to the DHS interpretation

of the [Medicaid] Act and the DHS’s rules and regulations regarding

Medicaid.”    Cox, 920 N.W.2d at 549.         Thus, we review the DHS’s

interpretation of the law de novo. See Bearinger v. Iowa Dep’t of Transp.,

844 N.W.2d 104, 106 (Iowa 2014).

      III. Analysis.

      The DHS raises several challenges to the district court’s ruling on

appeal. First, the DHS argues it is not a public accommodation under the

ICRA. Second, the DHS maintains rule 441—78.1(4) does not violate the

ICRA. Third, the DHS claims rule 441—78.1(4) does not violate the equal

protection clause of the Iowa Constitution. Fourth, the DHS contends the

district court erred in reversing the DHS’s decision based on its finding

that rule 441—78.1(4) had a disproportionate negative impact on private
                                        12

rights. Finally, the DHS challenges the district court ruling that rule 441—

78.1(4) is arbitrary and capricious. We address these claims as necessary.

      A. Public Accommodations Under the ICRA. Iowa Code section

216.7 addresses “[u]nfair practices—accommodations or services.”               In

relevant part, this section provides,

      It shall be an unfair or discriminatory practice for any . . .
      manager . . . of any public accommodation or any agent or
      employee thereof . . . [t]o refuse or deny any person because
      of . . .sex . . . [or] gender identity . . . in the furnishing of such
      accommodations,           advantages,      facilities,   services,  or
      privileges.

Iowa Code § 216.7(1)(a).     Iowa Code section 216.2(13)(b) states that a

public accommodation “includes each state and local government unit or

tax-supported district of whatever kind, nature, or class that offers

services, facilities, benefits, grants, or goods to the public, gratuitously or

otherwise.” Id. § 216.2(13)(b). The DHS challenges the district court’s

conclusion that it is a “public accommodation.” It asserts that the term is

limited to physical places, establishments, or facilities.

      The ICRA does not define “government unit.” “If the legislature has

not defined words of a statute, we may refer to prior decisions of this court

and others, similar statutes, dictionary definitions, and common usage.”

State v. Romer, 832 N.W.2d 169, 179 (Iowa 2013) (quoting Jack v. P & A

Farms, Ltd., 822 N.W.2d 511, 516 (Iowa 2012)). Further, “[a]lthough the

title of a statute cannot limit the plain meaning of the text, it can be

considered in determining legislative intent.” State v. Tague, 676 N.W.2d
197, 201 (quoting T & K Roofing Co. v. Iowa Dep’t of Educ., 593 N.W.2d
159, 163 (Iowa 1999)). Here, our prior decisions, dictionary definitions,

and the title of the statute prohibiting public accommodations from certain

types of discrimination under the ICRA all support our conclusion that the
                                           13

DHS is a “government unit” within the ICRA’s definition of a “public

accommodation.”

       Our prior cases discussing a “government unit” are limited, but our

past    use    of   the    term    supports       our   interpretation    that   public

accommodations are not limited to a physical place, establishment, or

facility.     For example, in Warford v. Des Moines Metropolitan Transit

Authority, we noted Iowa’s statute governing tort liability of governmental

subdivisions “anticipates that a ‘municipality’ will be some unit of local

government.” 381 N.W.2d 622, 624 (Iowa 1986). Further, the dictionary

definitions of “unit” reinforce our holding that the DHS is a “government

unit” within the ICRA’s definition of a “public accommodation” when it

issues benefits determinations concerning Medicaid.                      Though the

dictionary has multiple definitions for the word “unit,” the most applicable

definition of “unit” defines it as “a single thing or person or group that is a

constituent and isolable member of some more inclusive whole.” Unit,

Webster’s Third New International Dictionary (unabr. ed. 2002).                   This

definition     aligns     with    the   Black’s    Law    Dictionary     definition   of

“governmental unit” as “[a] subdivision, agency, department . . . or other

unity of government of a country or state” because the DHS is a

government agency. Governmental Unit, Black’s Law Dictionary (10th ed.

2014) (emphasis added).

       Additionally, Iowa Code section 216.2(13)(b) makes clear that a

“public accommodation” includes a unit of state government that offers

“benefits [or] grants . . . to the public.” Medicaid is such a benefit or grant.

Government benefits and grants are not normally dispersed in person at

physical locations. This further undermines the DHS’s limited view of

what constitutes a public accommodation under the ICRA.
                                     14

        The title of the statute Good and Beal rest their ICRA claims on—

“Unfair    practices—accommodations       or   services”—also   informs   our

determination that the legislature intended to include the DHS as a “public

accommodation” under the ICRA. See Iowa Code § 216.7. The title of this

section and its definition of a “public accommodation” reveal the

legislature intended to include government agencies in its prohibition on

discriminatory practices based on gender identity “in the furnishing of [an

agency’s] accommodations, advantages, facilities, services, or privileges.”

See id. § 216.7(1)(a).   The DHS is an agency that furnishes Medicaid

services through its implementation and oversight of the Iowa Medicaid

services that MCOs provide.      Therefore, it is a public accommodation

under the ICRA.

        Finally, while the ICRA does define “covered multifamily” as “[a]

building consisting of four or more dwelling units if the building has one

or more elevators” or “the ground floor units of a building consisting of four

or more dwelling units,” this usage of “unit” does not conflict with our

interpretation of it in section 216.7 as the DHS claims.          Iowa Code

§ 216.2(4) (emphasis added.)     The use of the term “unit” to describe a

“covered multifamily dwelling” is vastly different from the use of

“government unit” within the definition of “public accommodation” given

the context in which both terms are used.            Thus, the legislature’s

references to the word “unit” to describe a structure does not inform or

limit our definition of “government unit.” For these reasons, we affirm the

district court’s ruling that the DHS is a public accommodation under the

ICRA.

        B. The ICRA’s Prohibition on Gender Discrimination. The DHS

maintains rule 441—78.1(4) does not discriminate based on gender

identity because transgender Medicaid beneficiaries and nontransgender
                                     15

Medicaid beneficiaries in Iowa alike are not entitled to gender-affirming

surgical procedures. This position is based on the DHS’s argument that

the   requested    surgical   procedures   are   performed    primarily    for

psychological purposes.       Further, the DHS claims the rule’s explicit

exclusion of gender-affirming surgeries and cosmetic surgery related to

“transsexualism” is merely a specified example within the broader category

of “cosmetic, reconstructive, and plastic surgeries” excluded from coverage

under the rule.

      In 2007, the Iowa legislature amended the ICRA to add “gender

identity” to the list of protected groups. See 2007 Iowa Acts ch. 191, §§ 5,

6 (codified at Iowa Code § 216.7(1)(a) (2009)). Section 216.7(1)(a) provides

that it is “unfair or discriminatory” for any “agent or employee” of a “public

accommodation” to deny services based on “gender identity.” Iowa Code

§ 216.7(1)(a).    The ICRA’s gender identity classification encompasses

transgender individuals—especially those who have gender dysphoria—

because discrimination against these individuals is based on the

nonconformity between their gender identity and biological sex.           This

prohibition against denying coverage for Good’s and Beal’s gender-

affirming surgical procedures extends to the director and staff of the DHS,

as well as its agents, the MCOs.

      The record does not support the DHS’s position that rule 441—

78.1(4) is nondiscriminatory because its exclusion of coverage for gender-

affirming surgical procedures encompasses the broader category of

“cosmetic, reconstructive, or plastic surgery” that is “performed primarily

for psychological purposes.” Iowa Admin. Code r. 441—78.1(4). The DHS

expressly denied Good and Beal coverage for their surgical procedures

because they were “related to transsexualism . . . [or] gender identity

disorders” and “for the purpose of sex reassignment.”           Id. r. 441—
                                     16

78.1(4)(b).   Moreover, the rule authorizes payment for some cosmetic,

reconstructive, and plastic surgeries that serve psychological purposes—

e.g., “[r]evision of disfiguring and extensive scars resulting from neoplastic

surgery” and “[c]orrection of a congenital anomaly.” Id. r. 441—78.1(4)(a).

Yet, it prohibits coverage for this same procedure if a transgender

individual. Id. r. 441—78.1(4)(b).

      Further, the history behind the rule supports our holding that the

rule’s express bar on Medicaid coverage for gender-affirming surgical

procedures discriminates against transgender Medicaid recipients in Iowa

under the ICRA. Nearly forty years ago, the United States Court of Appeals

for the Eighth Circuit ruled in Pinneke v. Preisser that it was improper for

the Iowa DHS to informally characterize sex reassignment surgery as

“cosmetic surgery” in its denial of sex reassignment surgery. 623 F.2d
546, 548 n.2 (8th Cir. 1980). Prior to Pinneke, the DHS had an unwritten

policy of excluding sex reassignment surgeries from Medicaid coverage

based on Medicaid’s coverage limitations on “cosmetic surgery” and

“mental diseases.” Id. at 548 n.2, 549–50. After the Eighth Circuit rejected

this informal policy, the DHS amended the rule to clarify that the rule

excluded Medicaid coverage for “sex reassignment procedures” and

“gender identity disorders.” 17 Iowa Admin. Bull. 730–34 (Nov. 9, 1994)

(effective Feb. 1, 1995); see also Smith v. Rasmussen, 249 F.3d 755, 760

(8th Cir. 2001). Consequently, the rule expressly excludes Iowa Medicaid

coverage for gender-affirming surgery specifically because this surgery

treats gender dysphoria of transgender individuals.          After the DHS

amended the rule to bar Medicaid coverage for gender-affirming surgery,

the legislature specifically made it clear that individuals cannot be

discriminated against on the basis of gender identity under the ICRA. See

2007 Iowa Acts ch. 191, §§ 5, 6 (codified at Iowa Code § 216.7(1)(a) (2009)).
                                    17

      C. Doctrine of Constitutional Avoidance. Given our holding that

rule 441—78.1(4)’s exclusion of Medicaid coverage for gender-affirming

surgery violates the ICRA as amended by the legislature in 2007, we need

not address the other issues raised on appeal. In doing so, we adhere to

the time-honored doctrine of constitutional avoidance. See, e.g., Hawkeye

Land Co. v. Iowa Utils. Bd., 847 N.W.2d 199, 219 (Iowa 2014); State v. Iowa

Dist. Ct., 843 N.W.2d 76, 85 (Iowa 2014); Mail Real Estate, LLC v. City of

Hamburg, 818 N.W.2d 190, 200 (Iowa 2012); L.F. Noll Inc. v. Eviglo, 816
N.W.2d 391, 398 (Iowa 2012); Simmons v. State Pub. Def., 791 N.W.2d 69,

73‒74 (Iowa 2010). This doctrine “instructs us that we should ‘steer clear

of “constitutional shoals” when possible.’ ” Nguyen v. State, 878 N.W.2d
744, 751 (Iowa 2016) (quoting Iowa Dist. Ct., 843 N.W.2d at 85). “Such

judicial restraint is an essential component of our system of federalism

and separation of powers.” State v. Williams, 695 N.W.2d 23, 30 (Iowa

2005). The doctrine of constitutional avoidance recognizes the wisdom of

this process, “and we continue to subscribe to it today.” Id.

      IV. Conclusion.

      For the aforementioned reasons, we affirm the district court

judgment.

      AFFIRMED.

      All justices concur except McDonald, J., who takes no part.