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