Was forwarded to me this morning:

High emotions were on display as trial got under way to decide whether a sex change operation constitutes a medical deduction undersection 213. O'Donnabhain v. Commissioner, U.S. Tax Court Docket No. 6402-06, commenced July 24 in Boston with Judge Joseph Gale presiding.

At issue is whether the taxpayer, Rhiannon O'Donnabhain, is allowed to take medical deductions on her return for over $ 25,000 in costs she incurred in 2001 related to a sex change operation to go from male to female. The IRS initially gave O'Donnabhain a refund on her 2001 return based on her claimed medical deductions. However, after a subsequent audit, the IRS disallowed her deductions relating to the sex change operation, based largely in part on a legal memorandum issued by the IRS Office of Chief Counsel that found such costs were not deductible under section 213.

The legal memorandum (ILM 200603025) inquired whether a taxpayer claiming a medical deduction for the expense associated with a sex change operation to treat gender identity disorder (GID) was allowed to take the deduction under section 213. The memorandum concluded that the operation constituted a "cosmetic surgery" that was exempted from the definition of medical care contemplated under the statute. The IRS's analysis held that the legislative intent of the statute, which had been amended in 1990 to specifically exclude cosmetic surgeries from qualifying for the deduction, was to restrict surgical procedures that were not medically necessary and did not treat a disfiguring condition (such as a congenital abnormality, personal injury, trauma, or disease). The IRS concluded that gender reassignment surgery was controversial, and so extension of the parameters of medical deductibility should not occur absent "unequivocal expression of Congressional intent." (For ILM 200603025, see Doc 2006-1195 or 2006 TNT 14-12.)

Hyping the Trial

At the start of trial, the parties brought several issues to the court's attention. The IRS invoked Tax Court Rule 145 to exclude prospective witnesses from the courtroom while other witnesses are testifying. The IRS also complained about the publicity the case has been receiving in the media and blamed the taxpayer's counsel for hyping the trial -- particularly in a note on the Gay & Lesbian Advocates & Defenders Web site that said O'Donnabhain's lawyers would be providing updated blogs over the course of trial. When asked, counsel stated they would not post blogs during trial. Judge Gale instructed petitioner's counsel to have witnesses avoid reading the organization's Web site or related blogs providing commentary or trial coverage.

O'Donnabhain's legal team objected to the relevance of evidence of the taxpayer's additional surgeries in 2002 and 2005 for facial feminization surgery and breast implants. Her counsel said that such evidence was irrelevant to the issue of whether the medical procedures in 2001 were necessary and noncosmetic under section 213. Judge Gale, while declining to offer a specific ruling in the matter at the time, said he was inclined to overrule the taxpayer's objection to the evidence.

Both sides presented opening statements. The petitioner stressed the diagnosis by a qualified medical professional of GID in O'Donnabhain and said GID was recognized by the medical community as a mental disorder. The taxpayer's counsel said O'Donnabhain's operation was the culmination of successive levels of treatment, and that O'Donnabhain met all the prequalifications under the accepted standards of care for surgery. The surgery was a way to "end discordance between [the taxpayer's] GID and her anatomy," counsel said. The operation was not directed at improving the petitioner's appearance but at treating a debilitating medical condition.

The IRS argued that the evidence showed the petitioner had undergone numerous surgeries over the past several years -- including rhinoplasty, Botox injections, and a face lift -- that were intended to make her look like a woman. Likewise, the operation to remove her male genitalia and insert breast implants was meant to alter her appearance. These procedures did not have the primary purpose of changing a naturally occurring body function and thus fell under Congress's intent to exclude them from medical deductibility under the cosmetic exception.

The IRS also questioned the notion that GID was accepted by the medical community, stating that the petitioner's reliance on a medical diagnostic manual for mental disorders was misplaced, as the purpose of the manual was to assign standardized healthcare codes for billing purposes and did not represent a treatment textbook. As such, the manual was a "guideline only" and not binding on the court for the legal definition of a medical term. Another significant point for the IRS was that sex reassignment surgery was an "elective" procedure equivalent to a personal expense.

Of Medical Necessity

A packed courtroom listened as O'Donnabhain took the stand. She recalled her hard upbringing in a small, rural town outside of Boston in a traditional Irish Catholic family. O'Donnabhain testified that she was confused from early in her childhood about her unhappiness with her male gender and the roles expected of her as an anatomic male -- particularly dating and sports. She said she remembers dressing in women's clothing and feeling ashamed that someone in her family might find out. She studied civil engineering, got married, and had three children, all the while feeling confused and unhappy, she said.

O'Donnabhain said that after her marriage ended in 1992, she started psychotherapy with a licensed clinical social worker who diagnosed her with GID. As part of her counseling sessions, O'Donnabhain discussed various levels of treatment options. She started undergoing cross-gender hormone therapy in 1997 and underwent several facial feminization techniques. She said she experienced a "sense of well-being" after those measures but still didn't feel sufficiently female. After 12 months of completing real-life tests in which she lived a full-fledged female lifestyle, she had a sex change operation -- which she called the "light at the end of the tunnel" -- to remove her male genitalia and have breast implants inserted.

On cross-examination of O'Donnabhain, the IRS questioned her timing of the sex change operation. The government referred to evidence that showed she contemplated surgery earlier but decided to wait until her youngest son went to college. The implication seemed to be that if the petitioner waited, the surgery was not medically necessary.

The taxpayer's second witness was her psychotherapist, who has a specialty in gender conditions. The therapist said she diagnosed the petitioner with severe GID because of the overwhelming distress she exhibited. The therapist's evaluation ruled out other problems O'Donnabhain had as the cause of her extreme emotional pain and discomfort. Over the course of 100 sessions the therapist had with the petitioner, she concluded sex reassignment surgery was necessary so that O'Donnabhain would feel congruent with her physical body.

In the IRS's cross-examination of the psychotherapist, the respondent's counsel questioned O'Donnabhain's impairment, noting that she had at the time a good, steady job and had a relationship with her children, who knew of her intentions to receive surgery. Judge Gale allowed into admission as evidence a letter the therapist wrote to the doctor who performed the taxpayer's sex change operation that O'Donnabhain qualified under the standards of care for surgery.

The last witness of the day was the psychologist who provided the second opinion on O'Donnabhain's eligibility for sex reassignment surgery. The psychologist testified that after meeting with the taxpayer for two hours, he had concluded that GID was the main source of O'Donnabhain's mental disorder and so seconded the clinical social worker's opinion that surgery was necessary. However, the IRS seemed to poke holes in the psychologist's credibility on cross-examination. The government, upon questioning, elicited a reluctant response from the witness that he was a transsexual who had gone by a female's name while he received his undergraduate degree, creating a possible inference of bias in his testimony. In addition, the respondent's counsel stressed the fact that the psychologist had only met with the taxpayer for less than two hours -- and didn't inquire into past mental illness -- before reaching his ultimate conclusion.

O'Donnabhain expects to call two more medical professionals as witnesses in the case this week. The IRS will put one expert witness on the stand this week to rebut the validity of GID as a recognized medical condition and will have another medical expert testify in August when the case is resumed.