Michigan Hospital Settles Faith Bias Lawsuit

A Michigan hospital system has agreed to overhaul its religious accommodation policies, provide employee training, and pay $410,000 to settle a lawsuit brought by a longtime physician assistant who alleged she was fired because of her Christian beliefs about gender identity.

The settlement between University of Michigan Health-West (UMHW) and former physician assistant Valerie Kloosterman resolves years of litigation over claims that the hospital violated federal employment law by refusing to accommodate her religious convictions. The agreement was announced by First Liberty Institute, which represented Kloosterman alongside Clement & Murphy LLP, LightStone Law, and Bossenbrook Williams PC.

As part of the settlement, UMHW will adopt a formal religious accommodation policy, notify and train employees on those protections, grant reasonable religious accommodations without retaliation, and pay $410,000 in damages and attorney fees.

The new policy states that employees cannot be required to perform or assist with gender transition treatments—including procedures, medications, or referrals—if doing so would violate their sincerely held religious beliefs. It also provides that employees will not be required to use pronouns that conflict with their sincerely held religious beliefs or conscience.

"Title VII prohibits employers from discriminating against and punishing employees for their faith," said Kayla Toney, Counsel at First Liberty. "Valerie is an exceptional physician assistant who cares for each of her patients. Employers cannot drive out people like Valerie just because of their sincere religious beliefs. We are grateful to have resolved this matter with University of Michigan Health-West."

Kloosterman welcomed the outcome, saying the settlement protects healthcare workers who seek to practice medicine without violating their religious convictions.

"All I wanted to do was provide the best care possible to my patients without being forced to violate my Christian beliefs. This new policy ensures that providers of faith and employees at UMHW will receive religious accommodations so that they can provide excellent care consistent with their medical judgment, because all patients are created in the image of God."

Kloosterman worked as a physician assistant for 17 years and, according to court filings, received consistently strong performance reviews while treating patients from a wide range of backgrounds. The dispute arose in 2021 after University of Michigan Health-West implemented mandatory diversity and inclusion training following its integration into the University of Michigan Health System.

According to her lawsuit, Kloosterman requested a religious accommodation because she objected to participating in gender transition procedures, making related referrals, or using pronouns that conflicted with her Christian beliefs. She alleged hospital officials rejected her request, criticized her religious views, and terminated her employment in August 2021.

Kloosterman filed suit in federal court in October 2022, asserting claims under the First Amendment, the Equal Protection Clause, and Title VII of the Civil Rights Act. In 2023, U.S. District Judge Jane Beckering allowed several of those claims to move forward. The case later reached the U.S. Court of Appeals for the Sixth Circuit, which ruled that the hospital had waived its attempt to force the dispute into arbitration, allowing the lawsuit to continue in federal court.

The settlement ends the litigation without a trial while establishing new workplace protections for employees seeking religious accommodations related to gender identity policies.