The state of South Dakota has issued an apology letter and a $300,000 payment to a transgender advocacy group for the abrupt cancellation of a Department of Health contract in 2022.

Those are the terms of a settlement agreement inked Thursday in a federal discrimination lawsuit filed by The Transformation Project shortly after the cancellation.

Transformation Project calls termination of state contract ‘unwarranted’

The group had a contract with the state, paid for with federal funds, to provide community health worker services to the LGBTQ+ community from its Sioux Falls headquarters.

The cancellation came on Dec. 16, 2022, shortly after a conservative news outlet contacted Gov. Kristi Noem to ask why the state had signed
the $136,000 contract.

Department of Health Secretary Joan Adam resigned in the wake of the controversy, though neither she nor the state would comment on the reason for her departure.

The Transformation Project’s lawsuit cited Noem’s public comments on transgender people and her response to the conservative news outlet, made through spokesperson Ian Fury, as proof that the decision was discriminatory in nature.

“The contract was signed without Gov. Noem’s prior knowledge or approval,” Fury told the outlet.

The state offered a series of alleged failures on the part of The Transformation Project as reasons for the cancellation, but the lawsuit argued that those reasons were meant to put “a thin gloss” of legitimacy on a discriminatory action.

Apology: Group was treated ‘differently’

The community health worker hired through the contract,
Jack Fonder, was also named as a plaintiff in The Transformation Project’s lawsuit.

As part of the settlement, the current Department of Health secretary wrote an apology letter to Fonder and the project’s director, Susan Williams.

“On behalf of the State of South Dakota, I apologize that the Transformation Project’s contract was terminated and for treating the Transformation Project differently than other organizations awarded Community Health Worker contracts,” Secretary Melissa Magstadt wrote in the Jan. 17 letter.

Transgender employee at center of contract controversy pledges to fight on

She went on to “emphasize that all South Dakotans are entitled to equal treatment under the law — regardless of their race, color, national origin, religion, disability, age, or sex.”

The settlement agreement spells out the $300,000 payment – a figure more than double the amount of the contract, and enough to cover the attorney fees associated with the lawsuit.

The document also has the state agreeing “not to discriminate against the Transformation Project in violation of state or federal law with respect to any service, program, or activity that the State provides.”

The state “does not admit liability for the claims pleaded in the Litigation, but admits that the State treated the Transformation Project differently than other organizations awarded Community Health Worker contracts.”

‘We are vindicated’

The nonprofit lauded the settlement on Friday as proof that it had followed through on its obligations under the contract.

“We are vindicated as the government has acknowledged what we knew the very day we learned of our contract’s cancellation: that we did not break any procedures and we did not fail to meet the terms of the CHW contract in any way,” Williams said in a statement to South Dakota Searchlight. “To put it simply, the government canceled our contract because of the very population we serve – the transgender community.”

Brendan Johnson, the former U.S. attorney for South Dakota who represented the advocacy group, called the settlement a win for non-discrimination.

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“This settlement marks a significant milestone in our ongoing commitment to civil rights advocacy,” said Johnson, of Robins Kaplan LLP. “We commend the resiliency of the LGBTQ+ community and remain committed to vigorously upholding their rights.”

The Transformation Project has been an outspoken advocacy group for that community, and Fonder’s contracted role was intended to help members with health system navigation, health promotion and coaching, and education. The federal funds used to pay Fonder’s contract were earmarked for
certain targeted groups, including the LGBTQ+ community.

In a Friday statement, Fonder called the moment “an exciting time in history” for South Dakota’s trans community.

“I assumed the role of CHW with the intention of providing trans people in our community with the resources they require to succeed in this state, little realizing that doing so would result in my own outing as a trans man for standing up for what is right,” Fonder said. “We promise to keep up the battle for transgender rights and to make sure they have access to the resources they require.”

Eighty percent of LGBTQ+ youth in South Dakota report they’ve experienced discrimination for their sexual orientation or gender identity, according to The Transformation Project. Fifty-three percent of LGBTQ+ youth in South Dakota have seriously considered suicide in the past year and 19% report attempting suicide in the same timeframe – higher than for other youth in South Dakota. About 75% of LGBTQ+ youth also report experiencing anxiety and 58% report symptoms of depression.

“When our organization became a target of discrimination, we knew that we had to fight back, not just on behalf of our Community Health Worker, but on behalf of the entire population of transgender people across South Dakota,” wrote Williams, the Transformation Project director. “This settlement sends some clear and strong messages: that discrimination against transgender people will not be tolerated in South Dakota, and that when the government discriminates against transgender people, there are consequences. We hope that this is a message that reverberates across our state.”

The settlement will allow the group to keep Fonder on staff as a community health worker – a position he kept even after the dissolution of the contract. The group will continue to apply for future contracts with the state, Williams said.

Fury, Gov. Noem’s spokesperson, did not respond to a request for comment.

2024-01-18 Transformation Project Apology Letter

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