Cochise County v. Dandoy

• Decision Date: 14 July 1977
• Docket Number: No. 13232,13232
• Citation: 567 P.2d 1182,116 Ariz. 53
• Parties: COCHISE COUNTY, Coconino County, Gila County, Graham County, Greenlee County, Maricopa County, Mohave County, Navajo County, Pinal County, Santa Cruz County, Yavapai County, and Yuma County, Bodies Politic and Corporate, Petitioners, v. Suzanne DANDOY, M.D., Director of the Department of Health Services and Department of Health Services, an Agency of the State of Arizona, John L. Huerta, Director of Department of Economic Security and Department of Economic Security, an Agency of the State of Arizona, Max Hawkins, Director of Department of Administration and Department of Administration, an Agency of the State of Arizona, and Bart Fleming, Treasurer of the State of Arizona, Respondents, Pima County, Arizona, a political subdivision, and Pima County Board of Supervisors, Apache County, a political subdivision, Respondents/Intervenors.
• Court: Arizona Supreme Court

Page 1182

567 P.2d 1182

116 Ariz. 53

COCHISE COUNTY, Coconino County, Gila County, Graham County, Greenlee County, Maricopa County, Mohave County, Navajo County, Pinal County, Santa Cruz County, Yavapai County, and Yuma County, Bodies Politic and Corporate, Petitioners, v. Suzanne DANDOY, M.D., Director of the Department of Health Services and Department of Health Services, an Agency of the State of Arizona, John L. Huerta, Director of Department of Economic Security and Department of Economic Security, an Agency of the State of Arizona, Max Hawkins, Director of Department of Administration and Department of Administration, an Agency of the State of Arizona, and Bart Fleming, Treasurer of the State of Arizona, Respondents, Pima County, Arizona, a political subdivision, and Pima County Board of Supervisors, Apache County, a political subdivision, Respondents/Intervenors.

No. 13232.

Supreme Court of Arizona, In Banc.

July 14, 1977.

Ryley, Carlock & Ralston by George Read Carlock and Joseph P. Ralston, Phoenix, for petitioners.

Bruce E. Babbitt, Atty. Gen. by Anthony B. Ching, Phoenix, for respondents Dandoy, Dept. of Health Services, John L. Huerta, Dept. of Economic Sec., Max Hawkins, and Dept. of Administration.

Divelbiss & Gage by G. David Gage, Phoenix, for respondent Bart Fleming, State Treasurer.

Stephen D. Neely, Pima County Atty. by Michael Lacey, Sp. Counsel, Bd. of Supervisors, Pima County, and Ronald M. Lehman, Deputy County Atty., Tucson, for respondent/intervenors.

Waterfall, Economidis, Caldwell & Hanshaw, P.C., Tuscon, Lynwood J. Evans, Tempe, John G. Balentine and William E. Morris, Tucson, Schmal & Wollschlager, Phoenix, for amici curiae.

HAYS, Justice.

Thirteen of the Arizona counties filed a petition for special action, asking this court to stay the action of the respondents in ordering the petitioners to budget and levy taxes for a July 1, 1977 implementation of the state's Medicaid program. Petitioners further asked that respondents be prohibited from expending state funds for the implementation or administration of the Medicaid program.

At the twelfth hour, Apache County asked to be dropped as a petitioner and permitted to appear with Pima County as an intervenor. Numerous legal aid and public legal services groups, along with religious, charitable, labor, and public social action organizations filed petitions to file briefs amicus curiae. The court granted the petitions to file briefs and the matter proceeded to oral argument. The court then accepted jurisdiction of the petition for special action.

The amicus curiae briefs in the main dealt with and emphasized policy rather than legal issues. One brief contained a well-annotated discussion of the history of Medicaid and its great contribution to the indigent poor. It is not the role of the court to determine the issues of this case on the merits or demerits of a highly controversial program. Our opinion neither approves nor condemns the Medicaid program concept.

As the last hold-out among the fifty states in accepting Medicaid, Arizona has found the path toward the program a halting process. In 1974 the "medical assistance program," known as Medicaid, was first enacted into law with effective dates for portions of the Act January 1 and October 1, 1975. Thereafter, in 1975, the Act was amended to postpone the effective dates for one year.

During the 1976 legislative session, the effective date for the program under A.R.S. Title 36 was again postponed; this time, to August 15, 1977. A.R.S. § 11-292.01, providing for the determination of the counties' share in the costs of the program, was also amended to become effective in 1977 upon the enactment of the general appropriation bill for the fiscal year 1977-1978.

In the 1977 legislative session a bill was passed repealing the Medicaid program, but the governor vetoed the legislation and the Senate failed to override the veto. The legislature, in the general appropriations bill, inserted footnotes prohibiting the use of appropriated funds by certain of the state departments, for any purpose related to the Medicaid program. The governor signed the general appropriation bill but by letter filed therewith indicated that these footnotes were invalid and unconstitutional.

Pursuant to the mandate of A.R.S. § 11-292, the respondent, Dandoy directed a letter to the board of supervisors of each of the fourteen counties ordering them to include in their annual budget and tax levy their share of the Medicaid program as determined by statutory formula. On or before the 15th day of each month, the county was ordered to pay 1/12th of its predetermined share into the medical assistance fund. From the foregoing, this special action resulted.

The petitioners, in their memorandum in support of the petition, raise the following issues:

1. Was an appropriation by the legislature of funds necessary to administer the Medicaid program a condition precedent to the implementation of the program?

2. Can the counties be required under the terms of the Medicaid Act to budget and levy for the Medicaid program?

Another issue was adverted to in petitioners' reply memorandum:

If the Medicaid law is at this stage self-executing without further legislative action being required, is there an excessive delegation of power to the respondent, Dandoy, which renders the Act unconstitutional?

The respondents filed a brief rebuttal memorandum. The court, however, considered the issue important enough to warrant additional consideration, and it ordered simultaneous filing of memoranda on the matter.

The petitioners, in support of their position on the first issue contending that the Medicaid program cannot be implemented without a legislative appropriation for administrative costs, cite Laws 1976, Ch. 132, § 4, which reads as follows:

"The hiring of staff necessary to provide medical assistance services as authorized by title 36, chapter 21, article 1, Arizona Revised Statutes, shall begin July 1, 1977 and shall be subject to legislative appropriation."

The legislature did not appropriate any funds for this purpose for the fiscal year 1977-1978. The appropriation of funds for the hiring of staff, urges the petitioners, is a condition precedent to the implementation of the program.

The respondents call petitioners' interpretation of section 4, supra, overly broad. They contend that if such interpretation is followed, the contemporaneous provisions for postponement were unnecessary and that this interpretation would effectively nullify the mandatory and unqualified language of A.R.S. §§ 11-292.01 and 36-2172(C). It is further urged that petitioners are advancing a "repeal by implication" argument. State Land Dept. v. Tucson Rock & Sand Co., 107 Ariz. 74, 481 P.2d 867 (1971), and State v. Rice, 110 Ariz. 210, 516 P.2d 1222 (1973), are cited in support of this last assertion.

Respondents indicate that they view section 4, supra, as merely a minor fiscal measure prohibiting the expenditure of state funds for staff until funds are appropriated.

Respondents cite Navajo Tribe v. Arizona Dept. of Admin., 111 Ariz. 279, 528 P.2d 623 (1974), for the proposition that the legislature's appropriations powers do not extend to funds originating from federal and county sources. Since it is proposed that staff hired to operate the Medicaid program will be paid out of federal and county funds (the medical assistance fund) the legislature's appropriation control alluded to in section 4, supra, cannot affect this action, argue the respondents. As another argument, respondents cite cases holding that the appropriations process cannot be used for "legislation" purposes. Carr v. Frohmiller, 47 Ariz. 430, 56 P.2d 644 (1936); Sellers v. Frohmiller, 42 Ariz. 239, 24 P.2d 666 (1933); Caldwell v. Board of Regents, 54 Ariz. 404, 96 P.2d 401 (1939).

Finally, respondents contend that section 4, supra, violates the constitutional principle of separation of powers. In support of this position are cited Ahearn v. Bailey, 104 Ariz. 250, 451 P.2d 30 (1969), and MacManus v. Love, 179 Colo. 218, 499 P.2d 609 (1972).

We now discuss the merits of the opposing positions. In the first place, does the fact that section 4, supra, was included with other legislation postponing the effective date of the Medicaid legislation negate its terms? We think not. By legislating in this fashion, the legislature left its options open; if Medicaid was to proceed on the date set, appropriations could be made to provide for staff in numbers deemed adequate. Otherwise, implementation would await the working out of the problems with which the program was beset.

The "repeal by implication" argument has little merit because this was not truly a repeal but merely another postponement of which there had been two previously. Nor can we look on this provision as a minor fiscal measure, especially in view of the fact that nowhere in the basic legislation in § 36-2171 et seq. and § 11-292 et seq. are there any limitations on or standards set for the hiring of staff to implement Medicaid. Parenthetically, we also note that the amount and extent of administrative costs for the program is left to the unbridled discretion of the respondent, Dandoy. The hiring of staff is limited by the requirement that it be subject to legislative appropriation. Section 4, supra.

In citing Navajo Tribe v. Arizona Dept. of Admin., supra, the respondents perhaps unconsciously extended the holding of that case. It does not stand for the proposition that the appropriations powers do not extend to funds originating from federal and county sources. From federal sources, yes. Nowhere in that opinion is there reference to funds raised by county taxation, and such a position is self-defeating because if county funds are not in the nature of state funds, the federal Medicaid grant will fail. See Exhibit E of Response to Special Action, a letter from the Department of Health, Education and Welfare ...