Texas Children's Hospital must create detransition clinic in $10M settlement

Texas Attorney General Ken Paxton announced a with Texas Children's Hospital on May 15, 2026, requiring the nation's largest pediatric hospital to pay $10 million and create what Paxton called a first-of-its-kind detransition clinic. The agreement, reached in coordination with the Trump Department of Justice, resolves a years-long investigation into whether the Houston hospital continued providing gender-affirming care to minors after Texas banned it.

Texas Children's Hospital operates 973 beds and employs nearly 13,000 people. It's affiliated with Baylor College of Medicine and sits in the Texas Medical Center, the world's largest medical complex.

The DOJ announced the settlement as under its national investigation into what it called violations of federal law connected to gender-transition procedures on minors. The investigation targets doctors, hospitals, and pharmaceutical companies that billed federal healthcare programs for treatments the administration considers fraudulent.

The settlement requires Texas Children's to establish a multidisciplinary clinic providing care to patients who previously received gender-transition procedures. The hospital must fund all services for the clinic's first five years at no cost to patients.

Paxton's office alleged that Texas Children's physicians used to continue billing for gender-affirming care after SB 14 took effect on September 1, 2023. SB 14 prohibits physicians from prescribing puberty blockers, administering cross-sex hormones, or performing surgeries related to gender transition for patients under 18. The law also bars 📖Medicaid reimbursement for these services.

Prosecutors contended that doctors changed patients' sex in billing records and submitted claims under unrelated diagnosis codes to avoid triggering 📖Medicaid claim denials. The hospital disputes this characterization.

Five physicians must be under the settlement. Texas Children's must also amend its bylaws to trigger automatic privilege revocation for any physician who violates the state's ban on gender-transition procedures for minors. Neither Paxton's office nor the hospital has released the physicians' names or a copy of the full settlement agreement.

The hospital must implement new compliance and ethics measures and can't provide gender-transition services going forward.

Texas Children's Hospital issued a statement saying it made the to protect its resources from ongoing litigation. The hospital maintained that all reviews and investigations support its position that it complied with applicable laws. Hospital leadership described the chapter as one filled with falsehoods and distractions, saying the settlement would let it redirect resources toward patient care and research.

The investigation traces back to 2023, when surgeon Eithan Haim provided records to conservative activist Christopher Rufo suggesting Texas Children's continued gender-affirming care after publicly announcing it had stopped. The Biden-era DOJ with four counts of criminal HIPAA violations for disclosing patient information.

The Trump DOJ against Haim in January 2025 with prejudice, meaning no future prosecution is possible. Judge David Hittner of the Southern District of Texas signed the dismissal order without explanation from prosecutors.

Lambda Legal senior counsel Karen Loewy called the settlement , saying the hospital capitulated to relentless pressure from Paxton and the Trump administration. Ash Hall, policy and advocacy strategist for the ACLU of Texas, said a detransition clinic serves one purpose for Paxton: pushing trans people out of public life.

The American Medical Association, American Academy of Pediatrics, American Academy of Child and Adolescent Psychiatry, and American Psychiatric Association all support evidence-based gender-affirming care as medically appropriate and necessary for qualifying minors.

Dr. Morissa Ladinsky, a clinical professor of pediatrics at Stanford, about firing the five physicians: the doctors who previously provided transition care would have been the most qualified to treat patients seeking to detransition, given their expertise. Research published in JAMA Pediatrics in 2024 found approximately 1% of transgender youth who received gender-affirming care chose to detransition.

Paxton announced the settlement his May 26 Republican Senate runoff against four-term incumbent John Cornyn. Paxton entered the race in November 2025, calling Cornyn anti-Trump and a Republican in name only. A University of Houston poll from May 5 showed Paxton leading Cornyn 48% to 45% among likely GOP runoff voters.

Paxton's enforcement record on gender-affirming care includes a separate February 2026 lawsuit against Children's Health System of Texas and Dr. Jason Jarin in Dallas for allegedly billing 📖Medicaid for banned treatments using false codes.

The DOJ signaled this settlement won't be the last. A federal memo directed the Civil Division's Fraud Section to pursue against any provider that submitted claims for gender-transition services to federal healthcare programs. The memo specifically cited coding fraud examples, including providers who attempt to evade state bans by submitting claims with false diagnosis codes.

At least 26 states have enacted some form of restriction on gender-affirming care for minors. Legal experts at Crowell & Moring warned that the combination of state bans and federal enforcement creates new liability exposure for hospitals and physicians nationwide.