A federal judge in Raleigh has hit pause on the lawsuit challenging the North Carolina State Health Plan’s long‑standing exclusion of gender‑affirming care, putting the brakes on a high‑stakes fight over whether the plan must cover hormones, surgeries and other transition‑related treatments. For now, state employees and their families are stuck in limbo while appellate courts sort out how the law treats transgender health care.
According to Carolina Coast Online, the district judge in Kadel v. Folwell has "stayed all proceedings" after both sides jointly asked for a timeout. Their request urged the trial court to sit tight and wait for guidance from the U.S. Court of Appeals for the Fourth Circuit in a related West Virginia case before making any more moves.
How the case reached this point
The lawsuit was first filed in 2019. In 2022, a federal judge ordered the State Health Plan to restore coverage for medically necessary treatments for gender dysphoria, and the Fourth Circuit later affirmed that ruling en banc, according to the Associated Press. That appellate win did not last. The judgment was vacated and sent back after the U.S. Supreme Court’s 2025 decision in United States v. Skrmetti, which has reshaped how courts analyze state limits on transition‑related care, per LII / Cornell. With trial, appeals and Supreme Court decisions all colliding, both sides told the judge it made more sense to wait for the next round of appellate guidance before charging ahead.
What the pause means for State Health Plan members
The State Health Plan covers roughly 740,000 people, and its board voted last fall to bring back its "longstanding exclusion" on transition‑related treatments, according to Carolina Journal. Treasurer Brad Briner's office has said the ultimate call belongs to the elected trustees, and the revived exclusion bars certain transition‑related procedures while keeping coverage for mental‑health care and treatment of complications. For employees and dependents trying to plan their care, the stay means the real ground rules on what is and is not covered will stay murky until appellate judges speak more clearly.
What's next
Lawyers in Kadel have told the trial court that they expect the Fourth Circuit’s upcoming decision in Anderson v. Crouch, a West Virginia case that raises similar challenges to exclusions in public benefit plans, to shape what happens in North Carolina, according to case trackers. Around the region, courts have been regularly freezing lower‑court dockets while higher courts hammer out the legal standards in these high‑stakes, nationally watched battles over transgender health coverage.
Legal implications
The plaintiffs in Kadel argue that the State Health Plan’s exclusion violates the Equal Protection Clause and Section 1557 of the Affordable Care Act. The defendants counter that the trustees are within their authority to decide what benefits the plan will and will not cover. Court records show the district court had already ruled in favor of the plaintiffs on some claims before the appeals and remand orders scrambled the case posture, highlighting how the final outcome could determine whether state plans are allowed to categorically exclude gender‑affirming care, according to Justia.
