Gender-Affirming Care: Recent Regulatory and Enforcement Updates

DOJ announced its first resolution under its ongoing national investigation into the provision of gender-affirming care to minors, through agreements involving a Texas children’s hospital, DOJ, and the Texas attorney general. The settlement reflects recurring themes across recent federal and state activity in this area: fraud and drug-law theories, coordination between DOJ and state attorneys general, scrutiny of hospital and provider practices, and remedies that extend beyond payment. This LawFlash surveys significant regulatory and enforcement developments affecting providers, manufacturers, professional associations, and other stakeholders involved in or adjacent to gender-affirming care.

DOJ ANNOUNCES FIRST SETTLEMENT WITH TEXAS CHILDREN’S HOSPITAL

On May 15, 2026, the US Department of Justice (DOJ) announced the first resolution secured under its ongoing national investigation into alleged violations of federal law in connection with the provision of gender-affirming care to minors. According to DOJ, Texas Children’s Hospital (TCH) entered into agreements with DOJ and the Texas attorney general that include commitments not to perform certain procedures on minors.

DOJ also stated that TCH agreed to pay $10 million to resolve allegations that it submitted false billings to public and private payors to secure insurance coverage for gender-affirming procedures performed on minors. DOJ alleged that the billing conduct violated the Federal Food, Drug, and Cosmetic Act, the False Claims Act, and federal fraud and conspiracy laws.

The agreements also include remedial obligations beyond payment: TCH will dedicate additional funds to provide care to individuals seeking to detransition, including by establishing a first-of-its-kind clinic dedicated to that care. Separately, the Texas attorney general stated that the settlement requires TCH to terminate and revoke privileges of five physicians, implement compliance and ethics measures, and amend its bylaws to address violations of Texas’s prohibition on medical interventions to transition minors.

For stakeholders, the settlement is notable because it combines several enforcement tools and remedies in a single matter and provides context for the developments discussed below, including DOJ’s ongoing subpoena-enforcement efforts, federal scrutiny of professional standards of care, and state-level enforcement activity involving products and services associated with gender-affirming care.

SETTING THE STAGE

In January 2025, President Donald Trump issued an Executive Order (EO) 14187, "Protecting Children from Chemical and Surgical Mutilation,” that instructed the Secretary of the Department of Health and Human Services (HHS) to withdraw prior guidance regarding gender-affirming care.

In response to the EO, the US Department of Justice (DOJ) issued an internal Memorandum for Select Component Heads titled “Preventing the Mutilation of American Children” directing enforcement of federal laws—including those on drug misbranding, billing fraud, and female genital mutilation—against providers of transgender healthcare for minors. This resulted in subpoenas and other investigative actions directed towards providers and hospitals.

Earlier state-level restrictions, such as Texas’s 2023 SB 14, which banned gender-affirming care for minors, formed part of the broader legal backdrop, including a recent legal opinion from Texas Attorney General Ken Paxton on March 2, 2026, declaring that the bill’s prohibition on “transitioning” minors applies to mental health care providers licensed in the state.

FEDERAL POLICY DIRECTIVES AND REGULATORY SCRUTINY ON PROFESSIONAL STANDARDS OF CARE

On December 18, 2025, Secretary of HHS Robert F. Kennedy Jr. issued the “Kennedy Declaration,” asserting that gender-affirming care for minors failed to meet professional standards of care. The Declaration invoked the Secretary’s statutory authority to exclude healthcare providers from federal programs for not providing care in accordance with such professional standards.

The Declaration led to widespread suspension of gender-affirming care for minors by hospital systems and children’s hospitals as HHS’ General Counsel began referring providers and hospitals to the HHS Office of Inspector General (OIG) for exclusion for failing to meet professionally recognized standards of healthcare based upon the Kennedy Declaration.

After a swift challenge by 20 state attorneys general, on April 18, 2026, Judge Mustafa T. Kasubhai of the US District Court for the District of Oregon vacated the Kennedy Declaration, holding that Secretary Kennedy did not have the authority to unilaterally supersede statewide standards of care governing gender-affirming care. The court issued a declaratory judgment and entered a permanent injunction barring Secretary Kennedy and HHS from enforcing the Declaration.

The Kennedy Declaration, however, is not the only regulatory effort focusing on professional standards of care related to gender-affirming care. The Federal Trade Commission (FTC) issued investigative demands to two non-profit organizations, the Endocrine Society and the World Professional Association for Transgender Health (WPATH), earlier this year purportedly to determine how consumers may have been exposed to false or unsupported claims related to gender-affirming care from these organizations. The agency originally denied petitions to quash the investigative demands, and both non-profits appealed to federal district court. 

On May 7, 2026, US District Judge James Boasberg for the US District Court for the District of Columbia granted preliminary injunctions against the FTC, finding that the Endocrine Society and WPATH had established a likelihood that the investigative demands were issued in retaliation for protected First Amendment activity.

CHEST BINDERS – NEW FOCUS OF FDA REGULATION AND STATE ENFORCEMENT

On December 16, 2025, the FDA issued warning letters to 12 companies that manufacture chest binders used as part of gender-affirming care due to failure to register with the agency. Chest binders are a compression garment worn to flatten breast tissue and are classified as Class I low-risk medical devices typically exempt from premarket review.

After the warning letters, in February 2026, Texas Attorney General Ken Paxton sued a chest binder retailer, Lola Olivia, for allegedly failing to disclose the risks associated with chest binders and marketing the products as undergarments instead of Class I medical devices, in violation of the Texas Deceptive Trade Practices Act. The state’s application for a temporary restraining order preventing Lola Olivia from selling any chest binders within the state of Texas was granted by the state court judge on March 9, 2026.

The suit refers to the FDA warning letters and accuses Lola Olivia of failing to register with the FDA, in violation of the Federal Food, Drug and Cosmetic Act (FFDCA), and that failure means Lola Olivia is selling “misbranded” products. Attorney General Paxton’s use of the FDA’s warning letters and FFDCA compliance as purported evidence of state-consumer protection law violation may be used as a blueprint by other states to pursue similar actions against chest binder manufacturers.

DOJ TRIES NEW STRATEGY TO ENFORCE SUBPOENAS

The TCH settlement does not appear to have displaced DOJ’s parallel efforts to obtain information from other providers through subpoena enforcement; rather, the settlement and subpoena litigation reflect two related aspects of DOJ’s broader enforcement strategy.

In 2025 and 2026, the DOJ issued at least 20 subpoenas under the Health Insurance Portability and Accountability Act (HIPAA) to hospitals, clinics, and other providers suspected of providing gender-affirming care to minors. Many providers and hospital systems have successfully challenged the subpoenas, with courts finding them improper or pretextual, and not supported by the stated investigative goals of DOJ. In response to these losses at both the district and appellate court levels, DOJ may be considering a strategic shift to enforce its subpoenas.

On April 30, 2026, DOJ filed a petition in the Northern District of Texas to enforce one of its subpoenas related to gender-affirming care against Rhode Island Hospital (RIH). US District Judge Reed O’Connor granted DOJ’s petition the same day, which the hospital has appealed. Rhode Island’s Child Advocate, a state agency whose mission is to protect the legal rights of children in the state, and RIH both subsequently filed emergency motions in the District of Rhode Island to quash the subpoena. Following a four-hour hearing on May 12, 2026, Judge Mary McElroy granted both motions, enjoining DOJ from seeking and/or receiving any patient-identifying information or protected information. [1]

As a preliminary matter, Judge McElroy found that RIH and the Child Advocate were “deprived of any opportunity to argue the propriety of the subpoena” and, therefore, were not precluded from litigating subpoena enforcement in the District of Rhode Island, even after the order enforcing the subpoena from Judge O’Connor. Judge McElroy ultimately concluded that the HIPAA subpoena lacked a “congressionally authorized purpose” and that DOJ issued the subpoena for an improper purpose in bad faith.

Judge McElroy also had strong words for DOJ’s decision to try and enforce compliance with the subpoena in the Northern District of Texas. In the opinion, Judge McElroy explained that the record demonstrated RIH had made an initial production in response to the subpoena and had begun to negotiate further subpoena compliance with DOJ. But, as of February 2026, “DOJ appear[ed] to have inexplicably ceased communicating with RIH.” Judge McElroy explained that DOJ reinitiated contact with RIH’s counsel on April 28, 2026, stating that the “responsible prosecutor had ‘been out for a few weeks[,]’ and requested that the parties conference ‘this week’ regarding [RIH’s] next production.”

Two days later, DOJ filed the petition to enforce the subpoena in the Northern District of Texas, representing to Judge O’Connor that “the last such communication [between DOJ and RIH] was February 4, 2026.”

Judge McElroy’s opinion provides “[t]his omission leads the Court to conclude this request was a subterfuge to prevent RIH from realizing that DOJ had decided to go to Texas for an order compelling production of the very records that they had been discussing for months.”

The RIH case may indicate that DOJ will seek enforcement of its subpoenas in districts where it can expect potentially more favorable treatment compared to the districts where subpoena targets are actually located. Indeed, DOJ recently withdrew its appeal to the Third Circuit Court of Appeals of US District Judge Mark Kearney’s ruling that partially quashed a subpoena to a Pennsylvania-based children’s hospital. This withdrawal led that hospital to file a motion with Judge Kearney asking the court to “confirm that it retains jurisdiction over the subpoena in all respects,” in anticipation of DOJ seeking to enforce the subpoena in a different venue. [2]

It remains to be seen whether the rebuke from Judge McElroy will cause DOJ to consider similar strategic decisions in ongoing and future matters. Regardless, these and other ongoing matters regarding DOJ’s authority and subpoena compliance demonstrate DOJ’s continued focus on investigating providers and hospital systems.

STATE-LED CHALLENGES CONTINUE

On August 1, 2025, 16 Democratic-led state attorneys general filed a complaint in federal court in Massachusetts against the US administration seeking a declaratory judgment that President Trump’s EO 14187 violates states’ rights under the Tenth Amendment to the US Constitution, exceeds statutory authority, and violates the federal Administrative Procedure Act.

Judge Angel Kelley heard arguments on April 23, 2026 on DOJ’s motion to dismiss for lack of jurisdiction and for failure to state a claim. Judge Kelley appeared skeptical of DOJ’s arguments, specifically noting that providers have announced they are no longer providing gender-affirming healthcare for minors, demonstrating tangible harm as a result of the President’s EO and subsequent enforcement efforts.

KEY TAKEAWAYS

The landscape of gender-affirming care continues to evolve. But there are several tangible takeaways for organizations across the gender-affirming care spectrum:

• The US administration’s focus on gender-affirming care is not limited to DOJ, but rather a whole-of-government approach. Other agencies, like the FDA and the FTC, are squarely focused on probing all aspects of care, and their efforts expand the spectrum of industries that may be the subject of government scrutiny, including manufacturers of chest binding.
• The focus on professional standards of care is evidenced by the Kennedy Declaration and the FTC’s probe. The specific HHS exclusion authority cited in the Kennedy Declaration has not been historically utilized to a great extent by HHS OIG. Regardless of the court ruling vacating the Kennedy Declaration, HHS OIG may seek to use the permissive exclusion authority to exclude providers from federal healthcare programs that provide gender-affirming care to minors based upon other evidence and factors. The FTC has also issued more investigative demands to organizations involved with gender affirming care, demonstrating that agency’s continued investigative activities.
• DOJ’s enforcement efforts continue. DOJ has now announced its first settlement arising from its national investigation and, despite early losses, has continued its efforts to enforce subpoenas.
• The overlay of Democratic-state-led litigation challenging President Trump’s EO may be consequential. If that case results in a declaratory judgment, it may cause the US administration’s ongoing efforts and scrutiny to be put on pause until ultimately resolved through the appellate process. Regardless, any pause in federal enforcement efforts may not stop state actions against providers, manufacturers, and hospital systems.