Transgender advocacy group sues state over contract cancellation

On the same day South Dakota lawmakers sent a bill to bar certain kinds of health care for transgender youth to Gov. Kristi Noem’s desk, a transgender advocacy organization filed suit against the state over her abrupt cancellation of a Department of Health contract late last year.

The Transformation Project’s lawsuit, filed in the U.S. District Court for South Dakota on Thursday afternoon, alleges that the contract cancellation violated federal civil rights law by discriminating on the basis of gender.

It names Noem as a defendant, as well as Melissa Magstadt, the recently appointed head of the health department.

Lawmakers send transgender youth health care ban to Noem’s desk

The contract cancellation “was more than a wrong decision, it was unconstitutional and unlawful,” according to Brendan Johnson, the attorney representing the nonprofit group.

“Our state government is not above the rule of law, and we look forward to standing with The Transformation Project in this important constitutional challenge,” Johnson said in a prepared statement.

The Transformation Project was among several organizations awarded federal grant funds last year to hire and train a community health worker to serve South Dakota citizens. Transgender people were among those the grant funding was designed to help, along with rural Americans and members of other historically marginalized groups.

Gov. Kristi Noem canceled the $136,000 contract on Dec. 16, shortly after a reporter from a conservative news outlet contacted her office to inquire about it. 

Through spokesman Ian Fury, Noem told the outlet she was unaware of the contract’s existence.

The Department of Health, which had originally awarded the contract, released a statement shortly afterward alleging that The Transformation Project had failed to live up to its contractual obligations.

The nonprofit rejected those claims at the time, and Johnson announced within a week that his firm, Robins Kaplan, intended to sue.

The lawsuit disputes the state’s assertions about contractual errors and accuses the state of caving to political pressure.

The failures outlined in the state’s termination letter were “an attempt to apply a thin gloss of contract law to the State’s discriminatory actions,” the lawsuit says.

The Transformation Project, referred to as “TTP” throughout the text of the complaint, is named as one plaintiff. 

“South Dakota’s decision to cancel the Contract was based purely on national politics. The State knew about and initially supported TTP’s mission; in fact, the State told TTP to request more money than it originally sought,” the lawsuit reads.

It alleges that the contract cancellation was a violation of the federal Affordable Care Act’s non-discrimination policies. 

The other plaintiff in the case, Jack Fonder, is the community health worker hired with contract funds. He remains on staff, and the organization has asked for donations to fund his position.

The lawsuit argues that Fonder’s work is critical to the health of South Dakotans who are lesbian, gay, bisexual, transgender, queer or questioning or two-spirit (LGBTQ2S).

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“In South Dakota, 53% of LGBTQ2S youth have seriously considered suicide in the past year, and 19% report a suicide attempt in the last year. LGBTQ2S youth in South Dakota face staggeringly high rates of anxiety (75%), depression (58%), and threats of harm due to their sexual orientation or gender identity (40%). 80% experience discrimination; 59% desire mental health care but report not having access. LGBTQ2S adults similarly face discrimination and disparities in health care treatment and access,” the lawsuit says.

The Transformation Project initially requested around $46,000 in grant funding to hire a community health worker, the complaint says, but the state told the organization it could receive up to $136,000. The group resubmitted its application, and the contract was finalized Sept. 13.

The lawsuit also says Gov. Noem saw backlash in conservative circles after vetoing an “anti-trans youth sports bill” in 2021, noting that 47 conservative organizations publicly criticized her decision. The governor has since “attempted to portray herself as an opponent of transgender people,” and signed a bill barring transgender youth from participation in sporting activities that do not align with their sex at birth.

The issue of transgender rights has only heated up in South Dakota since the contract controversy emerged in mid-December. Lawmakers in Pierre advanced a bill restricting certain kinds of health care for transgender youth through the South Dakota Senate on Thursday.

The decision to sign it now lies with Noem, who has previously said that she is supportive of the legislation.

Transformation Project Executive Director Susan Williams responded to the legislation with a statement.

“Attacks from the SD State Legislature can make you forget that there are thousands of allies in this state who value you & want you to live a long & happy life right here in South Dakota. We love you & will continue fighting for you each & every day.” Williams wrote.

HB 1080 is one of dozens of gender-related proposals filed so far this year by lawmakers in state houses across the country. Utah Governor Spencer Cox signed a measure similar to HB 1080 into law last month.

The Transformation Project has urged supporters to attend “Trans Rights are Human Rights” protests prior to legislative coffee events Saturday morning in Sioux Falls, Rapid City, Brookings and Vermillion. It’s also among the groups urging people to come to the Capitol on Tuesday for “Visibility Day.”

Fury and Kieran Tate, spokesperson for the health department, did not immediately respond to requests for comment Thursday.