In Bruce's amended complaint filed this summer, attorneys with the ACLU argued that the South Dakota State Employee Health Plan "lacks any rational basis and is grounded in sex stereotypes, discomfort with gender nonconformity, and moral disapproval of people who are transgender."

Bruce was born female but had begun hormone treatment in 2011 and had a state-issued birth certificate listing his gender as male.

In the state's response to the amended complaint, Rapid City attorney Jerry Johnson had argued against viewing the surgery — mastectomy gynecomastia — as medically necessary to treat Bruce's gender dysphoria. The state also dismissed their decision as discriminatory.

"Title VII does cover gender nonconformity, but the courts disagree on what, in some instances, constitutes gender nonconformity," Johnson wrote in July.

In October, a federal jury in Wisconsin awarded two transgender state employees $750,000 after a federal judge found the state's ban on insuring sex-change procedures amounted to sexual discrimination. Both Bruce's attorneys and the state had filed for summary judgment this fall.

"Had Terri been born biologically male, he would've been entitled to the surgery he sought," Bowie of the ACLU told the Journal.