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TABOR Foundation v. Colorado Department of Health Care Policy and Financing.

2020 COA 156. No. 19CA0621.  Taxpayer Bill of Rights—Taxpayer Standing—Individual Standing—Associational Standing—Jurisdiction.

November 5, 2020

Plaintiffs are the TABOR Foundation, the Colorado Union of Taxpayers Foundation, and two of their members. Plaintiffs filed suit claiming that the Hospital Provider Fee (HPF) Program and the Healthcare Affordability and Sustainability Fee (HASF) Program, administered by the Colorado Healthcare Affordability and Sustainability Enterprise (CHASE), violate the Taxpayer’s Bill of Rights (TABOR), Colo. Const. art. X, § 20, and are also otherwise unconstitutional. The HPF Program was terminated in 2017 when the General Assembly enacted HASF. Under both programs, hospitals are required to make payments to the state or a state-created enterprise. The federal government provides matching funds to the state or enterprise, which then distributes the combined funds to the hospitals.

Plaintiffs argued that both programs violate TABOR because the money paid by the hospitals to the programs constitutes taxes that were not approved by the voters, CHASE is an unlawful enterprise under TABOR, the HASF program violated TABOR’s excess state revenues cap, and CHASE and the HASF program are unconstitutional because their enabling statutes violated the Colorado Constitution’s single-subject requirement. On cross-motions for summary judgment, the parties agreed that no trial was necessary and the court should decide the case on the facts presented. The court rejected defendants’ argument that plaintiffs lacked standing and it addressed and rejected all of plaintiffs’ substantive attacks on the statutes and programs.

On appeal, plaintiffs argued that the member plaintiffs had taxpayer standing. This type of standing requires a clear nexus between the status as a taxpayer and the challenged government action to satisfy the injury-in-fact requirement. Here, the unrebutted evidence showed that the programs are funded solely by the hospitals and matching federal dollars. Thus, there is no nexus between the member plaintiffs’ taxpayer dollars and the hospital programs. Because there is no nexus between the member plaintiffs’ taxpayer dollars and the constitutional violations they alleged, the member plaintiffs did not have taxpayer standing, and the district court erred by concluding otherwise.

Plaintiffs also argued that the member plaintiffs had individual standing based on economic injury because their bills for their hospital care increased beyond what they would have been required to pay but for the programs. However, individual standing is based on a direct and individualized injury to the plaintiff. Here, the programs affect healthcare consumers only indirectly because hospitals have several alternatives for recouping net loses under the programs, and there was no evidence that plaintiffs suffered an actual economic injury. Accordingly, the member plaintiffs lacked individual standing.

The foundation plaintiffs contended that they had associational standing. However, their two proffered members lacked standing and they failed to identify any other member who does have standing.

The dismissal of the action was affirmed, but it should have been based on lack of standing. Accordingly, the rejection of defendants’ standing challenge was reversed and those portions of the order that address the merits of plaintiffs’ claims were vacated.

Official Colorado Court of Appeals proceedings can be found at the Colorado Court of Appeals website.

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