PHOENIX — Outvoted by their colleagues, 36 Republican legislators are now asking a judge to invalidate the Medicaid expansion plan that they were unable to block politically.
The lawsuit filed Thursday in Maricopa County Superior Court against Gov. Jan Brewer contends the levy she pushed lawmakers to approve on hospitals to fund the expansion is a tax or, at the very least, a new state fee or assessment. That, challengers say, means it needed a two-thirds vote, something it did not get.
Christina Sandefur, the attorney for the Goldwater Institute, which is representing the legislators, said they have a right to sue because each of them voted against expansion. More to the point, they constitute more than a third of both the House and Senate — a sufficient margin which, if the constitutional requirement had been followed, would have blocked the levy.
“But because the governor signed the bill into law even though they did not have a two-thirds super-majority in either house, basically those legislators' votes were, in effect, nullified,” Sandefur said.
If the argument about a two-thirds vote falters, the legislators have a fallback position. They contend the measure unconstitutionally gives Tom Betlach, the chief of the state's Medicaid program, too much power to decide who has to pay the levy and how much. Betlach even exempted some hospitals from having to pay anything at all.
Under normal circumstances, it would be the hospitals who would sue, as they are the ones being assessed what Sandefur contends is an illegally enacted tax. But she said they a have financial interest in not overturning the levy. In fact, Betlach structured it so that every hospital chain in the state being assessed actually will benefit financially.
Figures from the Arizona Health Care Cost Containment System, the state's Medicaid program, estimate hospitals will shell out about $75 million for the first six months of 2014. But AHCCCS estimates they will get back $108 million more than that over the same period.
The key is that the legislation, coupled with federal dollars, will provide coverage for about 300,000 Arizonans who currently are uninsured. That includes both childless adults who the state stopped enrolling years ago in a budget-cutting move, and expanding eligibility beyond the current cap of the federal poverty level, about $19,530 a year for a family of three.
What that means for hospitals is fewer patients showing up without insurance and unable to pay their bills.
Gubernatorial press aide Andrew Wilder said the lawsuit amounts to little more than sour grapes.
“This is an ideological lawsuit filed by people who don't like the AHCCCS program,” he said. And Wilder noted that voters have approved prior expansions of the program. “We are happy to defend this in court.”
Proposition 108, approved by voters in 1992, requires a two-thirds vote of both the House and Senate for any measure that results in a “net increase in state revenues.” That specifically includes any new tax, higher tax rates and "imposition of any new state fee or assessment or the authorization of any new administratively set fee.''
But the measure does not apply to “fees and assessments that are authorized by statute, but are not prescribed by formula, amount or limit, and are set by a state officer or agency.” It is that exception the governor's office is relying on to justify the legality of approving the hospital levy with a simple majority.
Sandefur is arguing that the levy is a tax, no matter what Brewer calls it, as it is money being collected from one group of taxpayers to be redistributed for a public purpose.
Beyond that, she said the legislation gives Betlach total power, without legislative oversight, to “establish, administer and collect” the levy as well as set the method to determine the amount and who should be exempt. Sandefur argued lawmakers are powerless to give over that authority to any agency chief, making any funds collected or spent illegal.
Wilder brushed aside questions of whether having 36 of the 53 GOP legislators sue the Republican governor will cause friction in the upcoming legislative session. He said this is a two-way street: Brewer will have programs she wants lawmakers to approve, “and they have to work with us.”
Senate President Andy Biggs, R-Gilbert, one of the plaintiffs, said he hopes this fight does not undermine the entire session, saying the lawsuit is “not personal.”
But it could have deeper implications.
Biggs conceded that lawmakers have previously given state agencies the power to levy “assessments.” For example, the Department of Environmental Quality has been directed to cover some of its costs through fees paid by the businesses it regulates. And that was approved without a two-thirds vote.
That means the outcome of this case could throw an additional roadblock into future bids by lawmakers to allow agency-created fees — and possibly undermine those already being assessed.
Biggs said he has no problem with that.
“I think you're doing what said in (Proposition) 108 was supposed to be done,” he said. “Sometimes the Legislature has not been as vigilant as perhaps they should have otherwise been in adhering to the strictures of 108.”
He believes that the Legislature should have required that two-thirds vote for those DEQ fees.