ID Reform Weblog by Kelley Winters, USA

February 6, 2010

A Taxing Question of Medical Necessity

Kelley Winters, Ph.D.
GID Reform Advocates
www.gidreform.org

Many trans and especially transsexual Americans were relieved this week by
the U.S. Tax Court decision<http://www.glad.org/work/cases/in-re-rhiannon-odonnabhain/>to
reverse earlier IRS positions <http://www.irs.gov/pub/irs-wd/0603025.pdf> and allow costs of
hormonal and surgical transition care to be deducted as medical expenses.
The ruling concluded:

Petitioner has shown that her hormone therapy and sex reassignment surgery
treated disease within the meaning of section 213 and were therefore not
cosmetic surgery. Thus petitioner’s expenditures for these procedures were
for “medical care” as defined in section 213(d)(1)(A), for which a deduction
is allowed under section 213(a).

However, this recognition of the legitimacy of medical transition came at a
cost to the dignity of transsexual women and men. It relied on the flawed
diagnostic nomenclature of Gender Identity Disorder (GID) in the *Diagnostic
and Statistical Manual of Mental Disorders* (DSM) and its implication of
mentally “disordered” gender identity. Paradoxically, this case fueled
opposition to medical transition access, based on the current wording of the
very same GID classification and its more virulent companion diagnosis of
Transvestic Fetishism. While the Tax Court decision underscored the utility
of some kind of diagnostic coding for those who need access to hormonal or
surgical transition care, it also illustrated the urgency of reforming the
GID diagnosis and removing the Transvestic Fetishism category in the next
revision of the DSM, published by the American Psychiatric Association
(APA).

Ms. Rhiannon O’Donnabhain underwent corrective genital surgery in 2001 and
claimed a tax deduction for surgical and hormonal treatment expenses as well
as the cost of a breast augmentation procedure. Her courageous nine year
battle with the IRS to affirm the medical legitimacy of her transition care
took a tortuous off-again, on-again path among the potholes of politics and
prejudice.

Although the IRS initially issued a full refund to Rhiannon, a tax examiner
denied her deduction in July, 2002. He declared her surgical and hormonal
care to be “cosmetic” and therefore excluded as a deductible medical expense
under section 231(d)(9) of the Internal Revenue Code. She appealed,
represented by Gay and Lesbian Advocates and
Defenders<http://www.glad.org/>(GLAD). Attorney Karen Loewy argued
that, <http://www.ftminfo.net/041130glad.html>

Any notion that medical treatment for a transgender person is purely
cosmetic is based on misunderstanding and prejudice, not medical science.

In November, 2004, the IRS reversed
<http://www.ftminfo.net/041130glad.html>the examiner’s decision and
allowed Rhiannon to deduct her surgical expenses
as medically necessary and professionally prescribed. However, political
extremist groups responded by pressuring the Bush Administration to deny tax
deductions for all medical transition care. They based their arguments on
the same psychiatric classification of GID that GLAD cited to win the
appeal. The following month, Rev. Louis Sheldon, chairman of the Traditional
Values Coalition (TVC),
wrote<http://www.christianpost.com/article/20041215/tvc-asks-irs-to-reverse…>
IRS Commissioner Mark Everson:

[B]y giving this tax deduction, your agency will be encouraging other
mentally disturbed individuals to consider such surgery as an unneeded
surgical procedure for what is a troubled mind–not a troubled body.

The IRS caved to political pressure in October, 2005. IRS Branch Chief
Thomas Moffitt issued a Memorandum of Chief Counsel
Advice<http://www.irs.gov/pub/irs-wd/0603025.pdf>that reversed the
decision of the appeals officer and once again denied
Rhiannon’s deduction of medical transition expenses. Moffitt demeaned
Rhiannon with maligning pronouns of her assigned birth sex and concluded,

In light of the Congressional emphasis on denying a deduction for procedures
relating to appearance in all but a few circumstances and the controversy
surrounding whether GRS is a treatment for an illness or disease, the
materials submitted do not support a deduction.

Astonishingly, Moffit based his ruling, not on respected medical literature,
but on a political magazine called *First Things*, published by the
Institute on Religion and Public Life. He cited an
article<http://www.firstthings.com/article/2009/02/surgical-sex–35>by
psychiatrist Paul McHugh, known for employing false stereotypes of
mental pathology to terminate gender confirming surgeries at John Hopkins Hospital
in the 1970s . McHugh mocked post-operative transsexual women as
“caricatures” and invoked the current classification of mental disorder to
discredit medical transition care:

Once again I concluded that to provide a surgical alteration to the body of
these unfortunate people was to collaborate with a mental disorder rather
than to treat it.

Finally, Chief Moffit erected an addition political barrier, unprecedented
for other minorities, to transsexual citizens seeking equal treatment under
the tax code:

Only an unequivocal expression of Congressional intent that expenses of this
type qualify under section 213 would justify the allowance of the deduction
in this case.

Civil justice advocates were outraged at such tactics by the Bush
Administration. Professor Lynn Conway
noted,<http://ai.eecs.umich.edu/people/conway/TS/Legal%20Issues/Taxes/IRS%20…>

To deny such people medical deductions for the medical correction of their
bodies – people who often face extreme financial and employment difficulties
during their transitions – is unfair and inhumane. The claim that such
people require a special “act of Congress” before being treated fairly
exudes not only ignorance and intolerance, but also open Executive Branch
hostility towards gender variant people.

Berkeley tax attorney Donald Read commented in the *San Francisco
Chronicle*<http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/200…>

The IRS should not allow religious views to impact the administration of our
tax laws… We all should be concerned about the politicization of the IRS,
not only against gay and transgender people, but in all its forms.

Rhiannon’s suit was heard by the U.S. Tax Court in July, 2007. She was again
represented by the GLAD legal staff as well as co-counsel from the Boston
firm of Sullivan & Worcester.

Senior IRS attorney John Mikalchus repeated the party line from the TVC and
Paul McHugh that transition in itself represents psychopathology, citing the
current GID diagnosis. He stated<http://www.edgeboston.com/index.php%20ch=news&sc=glbt&sc2=news&sc3=&i…>that surgery, hormones and other transition treatments do not cure cross-gender identification but “reinforce” it.

Mikalchus also invoked the second gender diagnosis of Transvestic Fetishism,
speculating that many transsexual women seeking corrective transition
surgeries are afflicted with a paraphilic sexual preoccupation with dressing
as women. The APA fueled this false stereotype with publication of the
DSM-IV in 1994, where TF was expanded<http://www.gidreform.org/blog2008Nov02.html>to specifically
include transsexual women who are attracted to other women.
Mikalchus further belittled
<http://www.edgeboston.com/index.php?ch=news&sc=glbt&sc2=news&sc3=&id=…>Rhiannon
with the term, “autogynephilia,” an unsupported derogatory
theory<http://www.gidreform.org/blog2008Nov10.html>promoted by Toronto
sexologist Raymond Blanchard, associating male-to-female
transition with a narcissistic sexual arousal at “the thought or image of
oneself as a woman.” Dr. Blanchard was largely responsible for the current
Transvestic Fetishism diagnosis in the DSM-IV. As chairman of the
APA’s Paraphilias
Subcommittee<http://www.psych.org/MainMenu/Research/DSMIV/DSMV/WorkGroups/SexualGI…>for
the pending DSM edition, he has recently
proposed <http://www.springerlink.com/content/9267212375m4n40r/> expanding
the TF diagnosis with the title, Transvestic Disorder, and adding
“Autogynephilia” as a diagnostic specifier.

Despite these barriers, the Tax Court ultimately rejected the IRS portrayal
of transition as pathological and its associated medical care as “cosmetic.”
On February 2, 2010, the Court ruled that Rhiannon’s hormonal and surgical
transition treatments –

were for the treatment of disease within the meaning of § 213(d)(1)(A) &
(9)(B), I.R.C. and thus not “cosmetic surgery” excluded from the definition
of deductible “medical care” by § 213(d)(9)(A), I.R.C.
[*paraphrased*<http://taxprof.typepad.com/taxprof_blog/2010/02/tax-court-gender.html>
]

A 69 page majority
opinion,<http://www.glad.org/uploads/docs/cases/odonnabhain-tax-court-decision…>authored
by Judge Joseph Gale, once again reversed the IRS denial and
allowed Rhiannon to deduct her expenses for hormonal medications and
corrective genital surgery (although it denied a deduction for her breast
augmentation expenses). Their decision rested upon an interpretation of the
GID diagnosis as “a serious, psychologically debilitating condition,” rather
than a demeaning indictment of “disordered” gender identity. Although
political extremists and the IRS attempted to exploit conflicting and
ambiguous language in the current GID nomenclature, the GLAD legal team and
expert witness Dr. George Brown successfully clarified that severe
persistent distress with current physical sex characteristics (often
termed anatomical
dysphoria <http://www.gidreform.org/wpath2009EWG.html>) is the true focus of
medical transition treatment. In spite of the shortcomings of the current
Gender Identity Disorder and Transvestic Fetishism diagnoses, they persuaded
the Court that the necessity and efficacy of these treatments in relieving
this debilitating distress is well established. Jennifer Levi, Director of
GLAD’s Transgender Rights Project,
noted,<http://www.glad.org/current/pr-detail/glad-wins-case-vs-irs-on-sex-re…>

In this landmark ruling, the Tax Court affirmed the consensus position of
the medical establishment that transition-related medical care is essential
for many transgender people.

However, the political fragility of this ruling and the contradictory role
of the GID and TF diagnoses in establishing the medical necessity of
transition treatments are underscored by the dissenting opinion (p.
119-139)<http://www.glad.org/uploads/docs/cases/odonnabhain-tax-court-decision…>of
Judge David Gustafson. Joined by four other judges, he opposed
allowing a
deduction for transition surgeries, stating:

One could analyze the GID patient’s problem in one of two ways: (1) His
anatomical maleness is normative, and his perceived femaleness is the
problem. Or (2) his perceived femaleness is normative, and his anatomical
maleness is the problem. If one assumes option 2, then one could say that
SRS does “treat” his GID by bringing his problematic male body into
simulated conformity (as much as is possible) with his authentic female
mind. However, the medical consensus as described in the record of this case
is in stark opposition to the latter characterization and can be reconciled
only with option 1: Petitioner’s male body was healthy, and his mind was
disordered in its female self- perception.

In its present form, the diagnostic criteria and supporting text of the GID
diagnosis can all too easily be inferred in Gustafson’s second context of
“disordered” gender identity, in contradiction to the medical necessity of
hormonal and surgical transition treatments. If the intention of the
Internal Revenue Service was to punish transsexual people for nonconformity
to their assigned birth roles, the American Psychiatric Association,
inadvertently or not, handed them blunt instruments of oppression with the
current GID and TF diagnoses. Rhiannon herself said
it<http://www.npr.org/templates/story/story.php?storyId=15327911>best,

It’s a Catch-22. I have to accept the stigma of being labeled as having a
disorder [or] a mental condition … in order to get benefits. I haven’t liked
this diagnosis from the very beginning. But I’ve got to play the game.

This week, on February 10, the American Psychiatric Association is scheduled
to release draft diagnostic criteria for the Fifth Edition of the DSM for
public review. In the DSM-V, the APA has an opportunity to correct the
shortcomings and ambiguities of the GID diagnosis that pose barriers to
civil justice and access to medical care: (1) clarifying distress as the
diagnostic focus rather than nonconformity to assigned birth sex roles; (2)
excluding from diagnosis those who suffer no distress or impairment with
their bodies or ascribed social gender; (3) clarifying that transition is
therapeutic and not pathological; and (4) removing maligning pronouns and
terms that disrespect the affirmed identities of transitioned individuals.
The APA also has an opportunity to remove the Transvestic Fetishism category
that is purely punitive and defamatory to many transwomen.

An American hero in the struggle for dignity and equality, Rhiannon
O’Donnabhain deserves better from mental health policymakers. We all do.

http://gidreform.wordpress.com/2010/02/06/a-taxing-question-of-medica…