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Arizona lawsuit targets Gov. Brewer's Medicaid plan

PHOENIX -- Opponents of a new law expanding Medicaid in Arizona took their fight to court Thursday, suing Gov. Jan Brewer to overturn key provisions of the law she pushed through the Legislature in June over the objections of conservative Republicans.

The lawsuit filed in Maricopa County Superior Court on behalf of 36 Republican legislators and a pair of citizens by lawyers for the Goldwater Institute contends a hospital assessment in the law is a tax that required a 2/3 vote of the Legislature under the state Constitution. It also alleges that allowing the director of the state's Medicaid program to set the assessment and exempt some providers gives him taxing authority that properly belongs to the Legislature.

The hospital assessment is expected to collect $256 million in the state's 2015 budget year to pay the state's share of expanding Medicaid to people earning between 100 percent and 138 percent of the federal poverty level. Hospitals strongly backed the assessment because they expect to see a much bigger reduction in uninsured patient costs.

Medicaid expansion barely passed both houses with support from all Democrats and a handful of Republicans during a special session Brewer called in June to get around recalcitrant GOP House and Senate leaders.

"By enacting a tax without the two-thirds majority required by our Constitution, the state has disenfranchised citizens whose representatives opposed the tax," Goldwater attorney Christina Sandefur said in a statement. "Legislators are beholden to their constituents, but bureaucrats have no such accountability."

Brewer has argued that the Legislature has a long record of getting around the 2/3 vote requirement in 1992's Proposition 108 by allowing agencies to set fees, and she says the hospital assessment is no different.

"All one must to do is read Prop 108 to see that it doesn't apply to the provider assessment in the Medicaid restoration law," spokesman Andrew Wilder said in an email. "There are countless examples where agencies have been given fee authority -- in fact, the legislature's granted it over 80 times in the last five years."

Senate President Andy Biggs, one of the lawmakers suing, said the issue has never been litigated and the earlier fees were smaller.

"I'd be interested to find any other delegation of duty that is so large and has such a broad impact as this delegation," Biggs said.

Brewer, a Republican, shocked many in January by embracing Medicaid expansion, a key part of President Barack Obama's health care overhaul law. She opposed the law and fought it to the Supreme Court, but then changed her mind after it was upheld and Obama was re-elected. The high court gave states the right to reject Medicaid expansion, but Brewer said doing so in Arizona would hurt poor Arizonans and hospitals and caregivers who now must give care without pay.

A date for a first hearing on the lawsuit hasn't been set. The suit seeks an order blocking the assessment and declaring it unconstitutional.

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