Ongoing litigation against the Colorado Department of Health Care Policy & Financing, among others, over a 2009 program that raised taxes via a “hospital provider fee,” has new energy after Cause of Action Institute announced earlier this month it would take on the representation of the plaintiffs in the case.
Cause of Action is a Washington D.C.-based 501(c)(3) organization that according to its website advocates for “economic freedom and individual opportunity advanced by honest, accountable, and limited government.”
Plaintiffs, who were originally represented by Mountain States Legal Foundation, had 60 days to find new counsel after Mountain States withdrew for reasons not related to the case or the plaintiffs.
Lee Steven and James Valvo are the lead attorneys. The Colorado-licensed attorney is Michael Francisco, who while working in the Colorado Attorney General’s office helped to write the defense of Colorado’s Taxpayer’s Bill of Rights (TABOR) in Kerr vs. Hickenlooper, which claimed TABOR was a violation of the U.S. Constitution’s guarantee of a republican form of government. That argument lost.
This case was initially filed in 2015. It asserts the state’s Hospital Provider Fee is actually a tax enacted in violation of the TABOR.
TABOR requires voter approval for any new tax, tax increase or tax policy change that causes a net tax revenue gain, the suit argues. TABOR also limits the amount of revenue the state can keep each year. Any revenue above that amount requires a refund to taxpayers,unless an election is held allowing the state to keep the excess.
TABOR exempts “fees” that are collected as part of enterprise funds, which are essentially government run businesses that do not have the authority to levy taxes, among other things.
The suit argues the state “violated Colorado’s Taxpayer’s Bill of Rights (“TABOR”) by using a hospital provider tax to artificially increase costs and then collect higher reimbursements from the federal government under Medicaid.”
“TABOR requires that the state get consent from the people before raising taxes. But for the past eight years the state of Colorado has been taxing hospitals by hundreds of millions of dollars to fleece the federal government without the required TABOR vote. The TABOR Foundation is rightly pushing back on the sweetheart deal that leaves taxpayers stuck with the bill,” Valvo said in a news release.
Plaintiffs amended the original suit last year after the legislature passed Senate Bill 17-267, that created an enterprise fund specifically to move the Hospital Provider Fee out of the general fund and increase the revenue cap. That move “violated the Colorado constitution’s single-subject requirement and failed to comply with the state excess revenue cap, which limits the amount of revenue the state can keep and spend,” the suit says.
Plaintiffs in the suit include the TABOR Foundation, the Colorado Union of Taxpayers, and two individuals, Rebecca R. Sopkin, a resident of Jefferson County and James S. Rankin, a resident of Weld County. Both individuals say they received outpatient and/or inpatient services provided by hospitals that pay the charges at issue in this case and would have received a taxpayer refund under TABOR in 2018-19, except for the enactment of Senate Bill 267.
“The people of Colorado are confronted with actions taken by the legislature and the governor to damage their constitution,” said Penn R. Pfiffner, Chairman of the TABOR Foundation in the release. “The Hospital Provider program was built on a lie, then made much worse. The people should get a final vote on tax increases and new government debt, but that was taken from them in a dishonest power grab by elected officials. The TABOR Foundation is grateful that Cause of Action Institute has stepped in to allow this lawsuit to go forward. Its participation supports all the citizens of Colorado to reverse the corrupt government actions and to allow the people once again to control their state government.”