Biggs et al. v. Betlach et al.

This lawsuit was filed by disgruntled legislators over then-Governor Brewer’s decision to expand Medicaid under the Affordable Care Act to include individuals with incomes from 100% to 133% of the federal poverty level in 2012.  The expansion was approved by a majority of legislators but the legislators who voted against it claim that the enactment was invalid because the bill did not receive a 2/3 vote as required under Arizona’s constitution for a new tax. 

The expansion is funded by an assessment paid by hospitals based on the number of discharges.  The constitution expressly exempts certain fees and assessment from the 2/3 vote requirement. The defendant in the case is Tom Betlach, the Director of the Arizona Health Care and Cost Containment System (AHCCCS).  

This lawsuit suit commenced when Governor Brewer was still in office and the Center participated as an amicus. The court initially dismissed the case on the grounds that the legislators did not have “standing” to bring it.  But by the time that the Arizona Supreme Court disagreed and reinstated the case, Governor Ducey had been elected.  Questions arose about how vigorously the state would defend the lawsuit because Governor Ducey had opposed Medicaid expansion during the gubernatorial campaign.  As a result, four individuals who were able to enroll in AHCCCS as a result of the expansion intervened in the case over the objection of Betlach.  The individuals are represented by the Arizona Center for Law in the Public Interest and the Morris Institute for Justice.  So far, the increased eligibility for AHCCCS has resulted in health care for over 300,000 individuals who were previously ineligible.

On remand from the Supreme Court, the parties agreed to a briefing schedule for simultaneous Motions for Summary Judgment. The issue at the core of the lawsuit is the plaintiffs’ claim that the hospital assessment is a “tax” subject to a 2/3 vote.  The Intervenors (and Betlach) argue that it’s not a “tax” but a “fee” like university tuition and is, therefore, exempt from the supermajority requirement.   In a decision issued on August 26, 2015, Judge Gerlach held that the assessment was constitutional because it was a fee, not a tax, and satisfied the exemption.  Judge Gerlach's decision is below.

The plaintiffs' appealed and the Court of Appeals heard oral argument on February 14, 2017.  Less than one month later, on March 16, 2017, the Court of Appeals issued its decision affirming the lower court.  The Court of Appeals' decision is below.    

 

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CV2013-011699-019-08262015.pdf439.73 KB
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Case Updates

Arizona Court of Appeals Upholds Medicaid Expansion

The Arizona Court of Appeals has affirmed the lower court and held that Arizona's Medicaid expansion was constitutional.  The court rejected the argument advanced by disgruntled legislators who had opposed the expansion that the hospital assessment authorized by the legislature but set and implemented by the AHCCS Director was a tax, and thus required a supermajority in order to pass.  Rather, the court agreed with the State and the Center that it was an assessment that fell within a constitutional exception. As a result, the legislation was constitutional and was properly enacted with a majority vote.