Arizona Supreme Court rejects GOP lawmakers' suit to overturn state's Medicaid expansion

The Arizona Supreme Court on Friday in an unanimous decision rejected a bid from a group of 36 current and former Republican lawmakers to overturn the state's Medicaid expansion.

The lawmakers argued that a hospital assessment used to pay the state's portion of the Medicaid expansion is a tax that required a two-thirds legislative majority to enact. The 2013 Legislature narrowly approved the assessment.

However, the state's high court rejected that claim, upholding a lower court's ruling.

The GOP lawmakers' challenge could have jeopardized health care for about 400,000 low-income Arizonans who gained insurance coverage under the Medicaid expansion.

"It is a huge victory for Arizona’s budget and stability," said former Gov. Brewer in a phone interview from Washington, D.C. "I feel good that Arizonans will continue to receive health care because of the decision. ... It met the test of doing the right thing, which almost always means doing the hard thing."

Decision's long-term implications

It's yet another defeat for the lawmakers and the Goldwater Institute, which have waged repeated court challenges of the Medicaid expansion since Brewer, a Republican, signed legislation in 2013 that enacted the expansion.

The lawsuit was rejected by a Maricopa County Superior Court judge in 2015, and the Arizona Court of Appeals upheld that decision in March.

The high court's decision Friday has implications beyond the state's Medicaid expansion because it addressed whether fees or assessments imposed as a matter of routine state government could be considered a tax.

A Goldwater Institute attorney representing the lawmakers argued before the seven-member Arizona Supreme Court on Oct. 26.

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The argument was the assessment was a tax that required the vote of a two-thirds majority of the Legislature under Proposition 108, which was passed by voters in 1992.

But attorneys representing the state argued that the voter-approved initiative included an exception that allowed fees and assessments to be imposed by state agencies.

Unanimous ruling

In a unanimous opinion written by Chief Justice Scott Bales, the state's high court ruled that the hospital assessment used to pay for the expansion is not a tax that requires a two-thirds legislative majority to impose.

The court ruled that the Medicaid assessment, imposed by Arizona Health Care Cost Containment System Director Tom Betlach, is not a tax.

"The assessment is imposed by the director in hospitals, a narrow class, and directly benefits hospitals by expanding AHCCCS coverage for uninsured patients, thereby increasing payments to hospitals," Bales wrote.

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The court also ruled the hospital assessment is an exception to the two-thirds legislative approval requirement because it is "not prescribed by formula, amount or limit."

Christina Sandefur, a Goldwater Institute attorney who argued for the lawmakers, blasted the high court's decision.

“This is a classic case of taxation without authorization,” Sandefur said in a statement. “This decision allows the legislature to call taxes assessments and escape the two-thirds requirement.”

The ruling included Arizona Court of Appeals Judge Christopher P. Staring, who substituted for Justice Clint Bolick.

Bolick, a former Goldwater Institute director who was that group's vice president for litigation from 2007 to 2016, recused himself from this case. He previously provided some counsel to the lawmakers.

The high court's decision is another victory for Brewer, who assembled a bipartisan coalition of lawmakers that passed legislation in 2013 authorizing an assessment on a select group of hospitals and health-care providers.

That assessment paid the local match for an Affordable Care Act provision that allowed the state to expand coverage to low-income Arizonans who earned up to 138 percent of the federal poverty level.

The current and former Republican lawmakers who challenged the state's Medicaid expansion are: Andy Biggs, Andrew Tobin, Nancy Barto, Judy Burges, Chester Crandell, Gail Griffin, Al Melvin, Kelli Ward, Steve Yarbrough, Kimberly Yee, John Allen, Brenda Barton, Sonny Borrelli, Paul Boyer, Karen Fann, Eddie Farnsworth, Thomas Forese, David Gowan, Rick Gray, John Kavanagh, Adam Kwasman, Debbie Lesko, David Livingston, Phil Lovas, J.D. Mesnard, Darin Mitchell, Steve Montenegro, Justin Olson, Warren Petersen, Justin Pierce, Carl Seel, Steve Smith, David Stevens, Bob Thorpe, Kelly Townsend and Michelle Ugenti.

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