Tabor Found. v. Colo. Dep't of Health Care Policy & Financing

• Decision Date: 05 November 2020
• Docket Number: Court of Appeals No. 19CA0621
• Citation: 487 P.3d 1277
• Parties: TABOR FOUNDATION, Colorado Union of Taxpayers Foundation, Rebecca R. Sopkin, and James S. Rankin, Plaintiffs-Appellants and Cross-Appellees, v. COLORADO DEPARTMENT OF HEALTH CARE POLICY AND FINANCING ; Colorado Healthcare Affordability and Sustainability Enterprise; Kim Bimestefer, in her official capacity as Executive Director of the Colorado Department of Health Care Policy and Financing ; Colorado Department of the Treasury; Dave Young, in his official capacity as Colorado State Treasurer ; and State of Colorado, Defendants-Appellees and Cross-Appellants, and Colorado Hospital Association, Intervenor-Appellee.
• Court: Colorado Court of Appeals

487 P.3d 1277

TABOR FOUNDATION, Colorado Union of Taxpayers Foundation, Rebecca R. Sopkin, and James S. Rankin, Plaintiffs-Appellants and Cross-Appellees,

v.COLORADO DEPARTMENT OF HEALTH CARE POLICY AND FINANCING ; Colorado Healthcare Affordability and Sustainability Enterprise; Kim Bimestefer, in her official capacity as Executive Director of the Colorado Department of Health Care Policy and Financing ; Colorado Department of the Treasury; Dave Young, in his official capacity as Colorado State Treasurer ; and State of Colorado, Defendants-Appellees and Cross-Appellants,andColorado Hospital Association, Intervenor-Appellee.

Court of Appeals No. 19CA0621

Colorado Court of Appeals, Division V.

Announced November 5, 2020

William Banta, Englewood, Colorado; Lee A. Steven, R. James Valvo III, John J. Vecchione, Washington, D.C., for Plaintiffs-Appellants and Cross-Appellees

Philip J. Weiser, Attorney General, W. Eric Kuhn, Senior Assistant Attorney General, Jennifer L. Weaver, First Assistant Attorney General, Denver, Colorado, for Defendants-Appellees and Cross-Appellants

Polsinelli PC, Gerald A. Niederman, Sean R. Gallagher, and Bennett L. Cohen, Denver, Colorado, for Intervenor-Appellee

Opinion by JUDGE BERGER

¶ 1 Plaintiffs, the TABOR Foundation, the Colorado Union of Taxpayers Foundation, Rebecca R. Sopkin, and James S. Rankin, claim that two Colorado statutes violate the Taxpayer's Bill of Rights (TABOR), Colo. Const. art. X, § 20, and are also otherwise unconstitutional. The statutes require hospitals to make payments to the State of Colorado so that the state can obtain matching federal funding.

¶ 2 After rejecting the governmental defendants' standing challenge, the district court rejected all of the plaintiffs' attacks on the merits and dismissed the case. We conclude that none of the plaintiffs have standing to bring their claims. Therefore, while we affirm the district court's ultimate disposition — dismissal of the action — we reverse the district court's standing determination, and we vacate its order to the extent it adjudicated the claims on the merits.

I. Background

¶ 3 Colorado hospitals incur millions of dollars of losses every year when they provide medical care to persons who are uninsured and otherwise unable to pay for their care. See § 25.5-4-402.4(2)(b), C.R.S. 2019. To address this economic burden, Colorado's General Assembly established two programs to obtain federal funds.¹

¶ 4 The first was the Hospital Provider Fee (HPF) Program that was administered by defendant Colorado Department of Health Care Policy and Financing (the Department). § 25.5-4-402.3, C.R.S. 2016. The HPF Program was terminated in 2017 when the General Assembly enacted the Healthcare Affordability and Sustainability Fee (HASF) Program, administered by defendant Colorado Healthcare Affordability and Sustainability Enterprise (CHASE). § 25.5-4-402.4, C.R.S. 2019. 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 the enterprise, and then the state or the enterprise distributes the combined funds to the hospitals. § 25.5-4-402.4(2), C.R.S. 2019 (HASF Program declaration); § 25.5-4-402.3(1)(c)(I)-(V), C.R.S. 2016 (HPF Program declaration).

¶ 5 Plaintiffs, two foundations and two of their members, contend that both programs violated TABOR because the money paid by the hospitals to the programs constitutes taxes that were not approved by the voters. They also contend that 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. The district court allowed the Colorado Hospital Association to intervene, and the Association advocated in support of defendants.²

¶ 6 In their cross-motions for summary judgment and in their statements to the district court, the parties agreed that the court should decide the case on the facts presented and that no trial was required. The court rejected defendants' argument that plaintiffs lack standing, and the court addressed and rejected all of plaintiffs' substantive attacks on the statutes and programs.³

¶ 7 Relying in part on supreme court authority postdating the district court's order, we conclude that none of the plaintiffs have standing to bring these claims.

II. Standing

¶ 8 Because standing is a jurisdictional prerequisite to a case going forward, we must address it first. Hickenlooper v. Freedom from Religion Found., Inc. , 2014 CO 77, ¶ 7, 338 P.3d 1002. "A court does not have jurisdiction over a case unless a plaintiff has standing to bring it." Hotaling v. Hickenlooper , 275 P.3d 723, 725 (Colo. App. 2011). We review de novo whether a plaintiff has standing. Id.

¶ 9 To establish standing, a plaintiff must demonstrate "(1) that the plaintiff ‘suffered injury in fact,’ and (2) that the injury was to a ‘legally protected interest.’ " Barber v. Ritter , 196 P.3d 238, 245 (Colo. 2008) (quoting Wimberly v. Ettenberg , 194 Colo. 163, 168, 570 P.2d 535, 538 (1977) ).

¶ 10 Plaintiffs argue, as they did below, that the member plaintiffs have taxpayer standing and individual standing. They also argue that the foundation plaintiffs have associational standing. The district court agreed, finding that the member plaintiffs have "standing based on their challenge to the constitutionality of the subject provisions under TABOR" and that the foundation plaintiffs have associational standing based on their members' standing.

¶ 11 We now consider whether plaintiffs have any of the three types of standing — taxpayer standing, individual standing, or associational standing.

A. Taxpayer Standing

¶ 12 Unlike the federal courts, Colorado courts have historically granted broad standing to taxpayers. Compare Ariz. Christian Sch. Tuition Org. v. Winn , 563 U.S. 125, 134, 131 S.Ct. 1436, 179 L.Ed.2d 523 (2011) ("Absent special circumstances ... standing cannot be based on a plaintiff's mere status as a taxpayer."), with Nicholl v. E-470 Pub. Highway Auth. , 896 P.2d 859, 866 (Colo. 1995) ("[T]axpayers have standing to seek to enjoin an unlawful expenditure of public funds.").

¶ 13 In Barber v. Ritter , a case heavily relied on by plaintiffs, the Colorado Supreme Court held that taxpayers had standing "to seek to enjoin an unlawful expenditure of public funds." 196 P.3d at 246 (quoting Nicholl , 896 P.2d at 866 ). The court further held that "Colorado case law requires us to hold that when a plaintiff-taxpayer alleges that a government action violates a specific constitutional provision ... such an averment satisfies the two-step standing analysis." Id. at 247.

¶ 14 More recently, however, the supreme court has clarified that taxpayer standing requires a plaintiff to "demonstrate a clear nexus between his status as a taxpayer and the challenged government action" to satisfy the injury-in-fact requirement. Hickenlooper , ¶ 12 ; accord Hotaling , 275 P.3d at 727. In Hickenlooper , ¶ 15, the supreme court held that "incidental overhead costs" that were incurred by the Governor's Office to issue a day of prayer proclamation were "not sufficiently related to [the plaintiffs'] financial contributions as taxpayers to establish the requisite nexus for standing."

¶ 15 Still later, in an opinion announced after the district court issued its judgment in this case, the supreme court further explained that a plaintiff must "establish a clear nexus between her status as a taxpayer and the constitutional violation she alleges." Reeves-Toney v. Sch. Dist. No. 1 , 2019 CO 40, ¶ 28, 442 P.3d 81. "[T]he interest of the taxpayer who challenges the constitutionality of government action is her ‘economic interest in having h[er] tax dollars spent in a constitutional manner.’ " Id. at ¶ 23 (second alteration in original) (emphasis in original) (quoting Conrad v. City & Cty. of Denver , 656 P.2d 662, 668 (Colo. 1982) ).

¶ 16 The district court found that the member plaintiffs have taxpayer standing "based upon their challenge to the constitutionality of the subject provisions under TABOR, pursuant to the test articulated in Barber and Dodge ."⁴ The court further found that the nexus requirement was not "a qualification with which the court need be concerned" because "the amounts at issue here are many orders of magnitude greater than the incidental overhead expenses involved in Hickenlooper ."

¶ 17 The amount of funds at issue, however, does not, by itself, "establish a clear nexus between [plaintiffs'] status as ... taxpayer[s] and the constitutional violation [they] allege[ ]." Reeves-Toney , ¶ 28. The unrebutted evidence is that hospitals , not taxpayers, make the required payments to the programs. Then, after collecting the matching federal funds, the programs remit the money back to the hospitals. There is no evidence in the record that individual taxpayer dollars are used by the programs in any way. Simply put, the unrebutted evidence is that the programs are funded solely by the hospitals and matching federal dollars. Thus, under the teachings of Hickenlooper and Reeves-Toney , there is no nexus between the member plaintiffs' taxpayer dollars and the hospital programs.

¶ 18 Undeterred, plaintiffs argue that the healthcare financing programs "are funded with state general appropriations." This assertion is made without a citation to the record, as required by C.A.R. 28(e), and it finds no support in the record. In fact, there is significant, unrebutted evidence in the record — including annual financial reports and uncontroverted deposition testimony by Department officials — demonstrating the opposite: no taxpayer funds were used by the programs, including no comingling of taxpayer dollars with the hospital payments. Thus, this case is different from Barber , where money from a special fund was combined with taxpayer dollars from...