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Biggs v. Betlach

Supreme Court of Arizona

November 17, 2017

Andy Biggs, et al., Plaintiffs/Appellants,
Thomas J. Betlach, Defendant/Appellee, Edmundo Macias; Gary Gorham; Daniel McCormick; and Tim Ferrell, Intervenor-Defendants/Appellees.

         Appeal from the Superior Court in Maricopa County The Honorable Douglas Gerlach, Judge No. CV2013-011699 AFFIRMED

         Opinion of the Court of Appeals, Division One 242 Ariz. 55 (App. 2017) VACATED.

          Christina Sandefur (argued), Aditya Dynar, Scharf-Norton Center for Constitutional Litigation at the Goldwater Institute, Phoenix, Attorneys for 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, Michelle Ugenti, Jeanette Dubreil, Katie Miller, and Tom Jenney.

          Douglas C. Northup, Timothy Berg (argued), Patrick Irvine, Carrie Pixler Ryerson, Fennemore Craig, P.C., Phoenix, Attorneys for Thomas J. Betlach Timothy M. Hogan, Joy Herr-Cardillo, Arizona Center for Law in the Public Interest, Phoenix, and Ellen Sue Katz, William E. Morris Institute for Justice, Phoenix, Attorneys for Edmundo Macias, Gary Gorham, Daniel McCormick, and Tim Ferrell.

          Roopali H. Desai, D. Andrew Gaona, Coppersmith Brockelman PLC, Phoenix and Ann-Marie Alameddin, Arizona Hospital and Healthcare Association, Phoenix, Attorneys for Amicus Curiae Arizona Hospital and Healthcare Association and Amicus Curiae American Cancer Society Cancer Action Network.

          James S. Burling, Pacific Legal Foundation, Sacramento, CA, Attorneys for Amici Curiae Pacific Legal Foundation and Howard Jarvis Taxpayers Association.

          Brett W. Johnson, Andrew Sniegowski, Snell and Wilmer LLP, Phoenix, Attorneys for Amicus Curiae Health System Alliance of Arizona.

          CHIEF JUSTICE BALES authored the opinion of the Court, in which VICE CHIEF JUSTICE PELANDER and JUSTICES BRUTINEL, TIMMER, GOULD, and LOPEZ and JUDGE STARING joined.[*]



         ¶1 In 2013, by a simple majority vote, the legislature enacted H.B. 2010 to expand coverage under Arizona's indigent health care program, Arizona Health Care Cost Containment System ("AHCCCS"), with federal monies funding most of the costs. To fund the remaining costs, the legislature provided in A.R.S. § 36-2901.08(A) that the director of AHCCCS "shall establish, administer and collect an assessment" from Arizona hospitals.

         ¶2 We hold that the hospital assessment is not subject to article 9, section 22 of the Arizona Constitution, which generally requires that acts providing for a net increase in state revenues be approved by a two-thirds vote in each house of the legislature. This requirement does not apply to statutorily authorized assessments that "are not prescribed by formula, amount or limit, and are set by a state officer or agency." Ariz. Const. art. 9, § 22(C)(2). Because the exception applies here, we reject the constitutional challenge to the assessment.


         ¶3 In 2010, Congress enacted the Patient Protection and Affordable Care Act ("ACA"), which provides federal funding to states that choose to expand eligibility under their state Medicaid program to all "individuals under the age of 65 with incomes below 133 percent of the federal poverty level." See Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519, 576 (2012). Under the AC A, the federal government pays most of the costs for the expansion, but federal funding is contingent on a state satisfying various conditions, including paying a share of the costs. See id. at 576, 586. Pursuant to the ACA, Arizona enacted H.B. 2010 to expand AHCCCS eligibility to all individuals with incomes not exceeding 133 percent of the federal poverty level. 2013 Ariz. Sess. Laws, ch. 10, §§ 5, 44 (1st Spec. Sess.). To pay for the expanded coverage, H.B. 2010 required the director of AHCCCS to levy an "assessment" on Arizona hospitals. A.R.S. § 36-2901.08(A).

         ¶4 After the governor signed H.B. 2010, then-state-senator Andy Biggs and thirty-five other legislators who had voted against the bill (the "Opponents") and three citizens filed this action against AHCCCS Director Thomas Betlach and others (collectively the "Director"). The lawsuit sought to enjoin implementation of the hospital assessment, alleging that it violates article 9, section 22 of the Arizona Constitution because § 36-2901.08 was not approved by a two-thirds vote. Although the superior court initially dismissed the case for lack of standing, we reversed and remanded for further proceedings. Biggs v. Cooper ex rel. Cty. of Maricopa, 236 Ariz. 415, 420 ¶ 21 (2014).

         ¶5 On remand, the parties filed cross-motions for summary judgment. The superior court ruled that § 36-2901.08 was properly enacted by a simple majority because the law does not impose a tax but instead falls within an exception listed in article 9, section 22. The court of appeals affirmed. Biggs v. Betlach, 242 Ariz. 55, 57 ¶ 2 (App. 2017).

         ¶6 We granted review because the application of article 9, section 22 to the hospital assessment presents legal issues of statewide importance. We have jurisdiction under article 6, section ...

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