$10 Million Settlements with DOJ and Texas AG Include Creation of the First “Detransition Clinic” in the United States and Revocation of Physicians’ Hospital Privileges
On May 15, 2026, the U.S. Department of Justice (DOJ) and the Texas Attorney General (AG) announced first-of-their-kind settlements with Texas Children’s Hospital (TCH) regarding gender-related pediatric care. The settlements resolve allegations in parallel federal and state investigations that TCH submitted false claims to public and private insurers for what DOJ described as “pediatric sex-rejecting procedures,” often referred to as gender-related care.
According to DOJ, these procedures included “the administration of puberty blockers and cross-sex hormones.” DOJ alleged that TCH, by submitting health care claims for these services, violated the federal False Claims Act and the federal Food, Drug, and Cosmetic Act, among other laws. The Texas AG further alleged, in a press release, that TCH “bill[ed] Texas Medicaid for unallowable and illegal ‘gender-transition’ interventions, including by using false diagnosis codes.”
The settlements have three key components. First, TCH agreed to pay over $10 million in damages and civil penalties. Second, the Texas AG announced that the state settlement “compels the termination and revocation of privileges of multiple physicians,” along with required institutional compliance changes at TCH. Finally, DOJ and the Texas AG announced that the settlements required TCH to “establish the first-of-its-kind clinic dedicated to restorative care for detransitioners.”
Neither DOJ nor the Texas AG elaborated, in detail, on what services this “detransition clinic” would provide. The Texas AG noted, though, that “[f]or the first five years, all services provided through the Detransition Clinic will be funded by [TCH] and be free of charge to patients.” It appears that the costs of creating and providing services in this “detransition clinic” are in addition to the more than $10 million in damages and penalties that TCH will pay.
Key insights from these settlements — and the language DOJ and the Texas AG used in their press releases — include:
- Public and Private Insurers. While the federal False Claims Act concerns health care claims submitted to public payors like Medicare and Medicaid, state health care statutes can be broader and encompass claims or conduct involving private insurers. The reference to private-pay claims in a civil DOJ press release is notable. Health care providers should pay close attention to state law, state enforcement and the extent to which DOJ and CMS’s positions on gender-related care will be adopted or followed by private insurers in evaluating their own coverage determinations.
- Civil and Criminal Exposure. DOJ’s press release was issued by civil DOJ components; specifically, the Enforcement and Affirmative Litigation Branch and Commercial Litigation Branch, Fraud Section. The language of DOJ’s press release is therefore unusual to the extent it includes allegations that TCH’s billing for gender-related care violated unspecified “federal fraud and conspiracy laws,” which have criminal connotations.
Indeed, on May 7, 2026, NYU Langone Hospitals disclosed that it was one of several institutions that received a federal criminal grand jury subpoena from DOJ “pertaining to patients under the age of 18 who received gender affirming care . . . between 2020 and 2026, as well as the names of . . . providers and others who were involved in offering such care[.]” Health care providers should therefore be aware of the potential civil and criminal exposure in DOJ’s enforcement initiative.
- Allegations of Patient Harm. DOJ typically prioritizes health care enforcement matters that involve patient harm. In the TCH press release, Acting Attorney General Todd Blanche described recipients of gender-related care as victims and stated that the settlements “ensure[] those harmed receive the care they need.” DOJ made clear, through this language, that it considers gender-related care as inherently harmful to patients, making these investigations a top priority for federal health care enforcement.
- Consequences for Individuals. DOJ is focusing on both institutions and individuals, including individuals who are not licensed health care providers but may be involved in gender-related care. The NYU subpoena, for example, asks for complete personnel files for any individual who (1) “held authority to perform or order” gender-related care; (2) “conducted clinical evaluations related to” gender-related care; (3) “engaged in billing or coding activities related to” gender-related care; or (4) supervised those individuals.
The Texas AG cited the revocation of individual physicians’ privileges as part of TCH’s state settlement. His announcement further states that TCH agreed to “implement a host of compliance and ethics measures” that include “amend[ing] its bylaws to trigger automatic relinquishment of privileges for any physician who violates Texas’s prohibition on medical interventions to ‘transition’ kids.” Revoking privileges for individual practitioners has significant consequences — including through reporting to the National Practitioner Data Bank — that can impact individual practitioners’ credentialing and future employment prospects.
DOJ has a longstanding policy and practice of coordinating remedies between federal and state civil, criminal, and administrative components. Warner attorneys have deep experience in handling these parallel investigations and evaluating the scope of risk and potential downstream consequences for institutions and individuals.
Please contact Adam Townshend, Madelaine Lane or your Warner attorney if you have any questions.
