DOJ and Texas AG Announce First Settlement in National Investigation of Gender-Affirming Care for Minors
On May 15, 2026, the U.S. Department of Justice (“DOJ”) and Texas Attorney General Ken Paxton announced agreements with Texas Children’s Hospital (“TCH”) resolving allegations related to TCH’s provision of gender-affirming care to minors. The matter marks the first publicly announced resolution arising from DOJ’s ongoing nationwide investigation into alleged federal-law violations associated with such care. The resolution is notable not only because of the subject matter involved, but also because of the enforcement architecture it reflects: coordination between DOJ and a state attorney general; reliance on False Claims Act (“FCA”) and Federal Food, Drug, and Cosmetic Act (“FDCA”) theories that remain largely untested in this context; and remedies that extend well beyond a monetary payment.
Fit Within DOJ’s Broader Enforcement Priorities
The settlement follows a series of federal policy directives focused on gender-affirming care to minors. Executive Order No. 14187, issued in January 2025 (“EO”), stated that “it is the policy of the United States that it will not fund, sponsor, promote, assist, or support the so-called ‘transition’ of a child from one sex to another.” The EO directed federal agencies to enforce laws that prohibit or restrict such procedures, and also instructed DOJ to prioritize investigations into entities misleading the public about the side effects of gender-affirming care.
In April 2025, DOJ issued a memorandum (“DOJ Memo”) emphasizing that the allegedly illegal provision of gender-affirming care to minors was a DOJ enforcement priority, which would include investigations under the FCA, FDCA, and federal laws prohibiting female genital mutilation targeting providers of pediatric gender-affirming care. Separately, as discussed in a prior Sidley Update, the DOJ Civil Division issued a memorandum in June 2025 which signaled potential FDCA scrutiny of pharmaceutical companies whose drugs are used in connection with gender-transition care.
The TCH resolution is another early indicator of how DOJ intends to operationalize these priorities. The case combines traditional health care fraud tools with policy-driven remedial measures more commonly seen in conduct-focused resolutions. It also shows DOJ’s willingness to coordinate with state attorneys general in areas where state law restricts particular medical services and where Medicaid billing may provide a parallel enforcement hook.
Settlement Terms
Under the terms of the agreements, TCH denied wrongdoing but agreed to pay more than $10 million in damages and civil penalties to resolve allegations that it submitted false billings to payors to secure insurance coverage for gender-affirming services. DOJ alleged that the conduct violated the FCA, FDCA, and other federal fraud and conspiracy laws. The Texas Attorney General’s announcement stated that the settlement addressed alleged billing to Texas Medicaid for “unallowable and illegal” gender-transition services, including through the alleged use of false diagnosis codes.
TCH also agreed to cease providing gender-affirming services to minors and committed to establishing what DOJ described as a first-of-its-kind clinic to provide care to individuals seeking to detransition. In addition, TCH agreed to dedicate additional resources to create a multidisciplinary “detransition” clinic, with services funded by TCH and provided free of charge for the first five years. TCH also agreed to discontinue certain services for minors, including the provision of puberty blockers and “cross-sex” hormones.
The agreement with the Texas Attorney General further requires TCH to terminate five physicians, implement compliance and ethics measures, and amend its bylaws to require automatic relinquishment of privileges for physicians who are deemed to have violated Texas’s prohibition on gender-affirming care to minors.
These non-monetary terms are notable and novel. They suggest that, in future matters involving restricted or prohibited healthcare services, enforcement authorities may seek wider clinical practice, operational and governance restrictions and undertakings in addition to repayment, penalties and other traditional remedial measures.
Key Takeaways
First, the resolution shows how federal and state enforcement theories may converge in areas of policy alignment. Together, DOJ and the Texas Attorney General could leverage the FCA, FDCA, federal fraud and conspiracy laws, billings to Texas Medicaid in alleged violation of Texas law, and Texas restrictions on gender-transition services for minors to put maximum pressure on TCH. Healthcare providers and life sciences companies should therefore review and assess whether their policies, procedures and controls sufficiently account for federal as well as state-by-state restrictions, specifically in areas that intersect with government funded programs and current areas of aligned state and federal enforcement focus.
Second, the non-monetary terms are significant. The announced remedies include the establishment of a first-in-kind clinic, provision free services for a defined period, termination of physician employment and privileges, and bylaw amendments. This suggests that future enforcement resolutions in similar areas may increasingly seek prospective conduct restrictions, governance changes and undertakings aligned to the government’s policy objectives.
Finally, the TCH resolution is not likely to be the end of federal or state enforcement in this area. DOJ has continued to pursue information from other providers through subpoenas, although several courts have narrowed or blocked certain demands for patient information. The EO and DOJ Memo themselves are also subject to various lawsuits challenging their constitutionality and statutory authority. Despite the broader enforcement framework remaining uncertain, the TCH resolution demonstrates DOJ’s willingness to pursue the EO’s goal of restricting gender-affirming care to minors.
This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.
