AZ Supreme Court allows Medicaid expansion case to move forward

‘Regardless of how the case ultimately comes out, today’s decision means lawmakers can’t vote to ignore the Constitution’
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PHOENIX – After a year and a half of legal wrangling by the Brewer administration, the Arizona Supreme Court ruled today that state legislators have standing to challenge a hospital provider tax passed by a simple majority vote and signed into law by Gov. Jan Brewer to fund the Medicaid eligibility expansion.

The case was brought by the Scharf-Norton Law Center for Constitutional Litigation at the Goldwater Institute on behalf of a bloc of legislators (27 representatives and nine senators) whose votes would have been sufficient to prevent passage of the law if the supermajority requirement applies.

Over 20 years ago, Arizona voters passed Proposition 108, a constitutional amendment requiring a supermajority vote to approve taxes or fee increases so as to curb taxes and government growth.

The lawsuit was filed after the legislature, without the required two-thirds supermajority vote, approved a new provider tax on hospitals, which was then signed into law by Brewer.

The Brewer administration argued the assessment is not subject to the supermajority requirement because it is an “administrative fee” that will be set by the director of Arizona’s Health Care Cost Containment System, rather than lawmakers.

christina sandefurChristina Sandefur (r), senior attorney with the Goldwater Institute, who argued the case on behalf of the 36 legislators, asserted the supermajority requirement should apply because the legislature must authorize all new taxes or fees before they may be adjusted by an agency administrator.

The decision this morning only addresses the issue of standing for these 36 lawmakers, whose votes were nullified by ignoring the supermajority rule, and now allows the case to move forward on the merits.

The legislators’ claims were initially dismissed by Maricopa County Superior Court Judge Katherine Cooper for lack of standing.

Cooper determined they lacked standing because they did not suffer an injury when the majority of the legislature decided the supermajority requirement was inapplicable.

That decision was reversed by the court of appeals, which held the applicability of the supermajority requirement depends on the Constitution’s commands, not on the legislature’s discretion.

The court of appeals also held, if the plaintiffs are correct on the merits, their votes on the bill (HB 2010) were nullified and therefore gives them standing to challenge its passage.

Following the supreme court’s ruling, Sandefur stated, “Regardless of how the case ultimately comes out, today’s decision means lawmakers can’t vote to ignore the Constitution …Thanks to today’s decision, the dozens of lawmakers who voted against dramatically transforming Arizona’s Medicaid program, putting the state on the hook for billions of dollars, and ceding the legislature’s taxing power to an unaccountable administrator will get to defend this important legacy.”

As the Goldwater Institute points out, “Twenty-eight states and the District of Columbia have expanded Medicaid as part of the Affordable Care Act and 22 states have decided not to make the expansion. Originally, the federal health care legislation required all states to expand Medicaid or lose all federal funding. The U.S. Supreme Court struck down that piece of the federal law as unconstitutional, saying states cannot be forced to accept new rules to keep funding that was given to them under previous rules.”

If the Goldwater Institute prevails in this case, Arizona will be the first state in the country to have its Medicaid expansion struck down by a legal challenge.

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