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Arizona Public Integrity Alliance, Inc. v. Maricopa County Special Health Care District

Court of Appeals of Arizona, First Division

October 8, 2015

ARIZONA PUBLIC INTEGRITY ALLIANCE, INC. and PACE ELLSWORTH, Plaintiffs/Appellants,
v.
MARICOPA COUNTY SPECIAL HEALTH CARE DISTRICT; BETSEY BAYLESS; MARY A. HARDEN; MARK DEWANE; SUSAN GERARD; ELBERT BICKNELL; TERENCE McMAHON; and MERCY MARICOPA INTEGRATED CARE, Defendants/Appellees.

Not for Publication – Rule 111(c), Rules of the Arizona Supreme Court

Appeal from the Superior Court in Maricopa County No. CV2013-009292 The Honorable Randall H. Warner, Judge The Honorable Douglas Rayes, Judge (Retired)

Tiffany & Bosco, PA, Phoenix By Christopher A. LaVoy, Richard E. Oney Counsel for Plaintiffs/Appellants

Dickinson Wright, PLLC, Phoenix By Gary L. Birnbaum, Andrew L. Pringle, Bradley A. Burns Counsel for Defendants/Appellees Maricopa County Special Health Care District Bayless, Harden, Dewane Gerard, Bicknell & McMahon

Coppersmith Brockelman, PLC, By Roopali H. Desai, Andrew S. Gordon, Melissa A. Soliz Counsel for Defendant/Appellee Mercy Maricopa Integrated Care

Judge Patricia A. Orozco delivered the decision of the Court, in which Presiding Judge Margaret H. Downie and Judge Maurice Portley joined.

MEMORANDUM DECISION

OROZCO, JUDGE.

¶1 Arizona Public Integrity Alliance, Incorporated (APIA) and Pace Ellsworth (collectively Appellants) appeal the trial court's grant of a motion to dismiss in favor of Maricopa County Special Health Care District (the District), Betsey Bayless, Mary A. Harden, Mark Dewane, Susan Gerard, Elbert Bicknell, Terence McMahon, and Mercy Maricopa Integrated Care (MMIC) (collectively Appellees). For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 APIA is an Arizona nonprofit corporation founded to "advance the principles of limited, constitutional government[, ] integrity and accountability in government and public officials[, ] government fiscal responsibility[, ] and lower taxes." Ellsworth serves as an APIA director.

¶3 The District is "a special healthcare district and a political subdivision of the State of Arizona." It operates several healthcare centers including the Maricopa Medical Center, which is the largest public hospital in Arizona. In both 2012 and 2013, Bayless, the District's President Emeritus, together with Appellees Harden, Dewane, Gerard, Bicknell, and McMahon served as board members.

¶4 The District holds a minority membership interest in MMIC, also a nonprofit Arizona corporation. In 2013, the Arizona Department of Health Services awarded MMIC a contract to become the Maricopa County Regional Behavioral Health Authority (RBHA) to provide integrated medical and behavioral healthcare services to Medicaid eligible adults with serious mental illnesses. The District provided an initial $5 million capital contribution to MMIC and subsequently executed a $5 million promissory note payable upon commencement of the RBHA contract (the transaction).

¶5 Appellants brought suit, arguing the District's membership interest in MMIC violated Article 9, Section 7, of the Arizona Constitution. Appellants also alleged the District's initial $5 million contribution was paid "from one or more accounts containing funds derived from the District's property tax levy or comingled with them" in violation of Article 9, Sections 3 and 9, of the Arizona Constitution and Arizona Revised Statutes (A.R.S.) section 48-5561. Moreover, Appellants claimed that the amount of property taxes levied for the District increased from $57.9 million in 2013 to $62.5 million in 2014 and by 56% since 2006.

¶6 Appellants asserted that APIA had standing to sue in a representative capacity on behalf of its directors. Alternatively, Appellants claimed that Ellsworth had standing as a taxpayer and that both Appellants had "common law standing" to bring suit. Appellants sought, inter alia, dec ...


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