Foundation v. Colorado Department of Health Care Policy and Financing

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
November 5, 2020
2020COA156
No. 19CA0621, TABOR Foundation v. Colorado Department of
Health Care Policy and Financing — Health and Welfare —
Hospital Provider Fee Program — Colorado Healthcare
Affordability and Sustainability Enterprise Act of 2017;
Taxation — TABOR; Jurisdiction of Courts — Standing
words
A division of the court of appeals considers whether two
foundations and two of their members have standing to contest the
constitutionality of two Colorado statutes under the Taxpayer’s Bill
of Rights (TABOR), Colo. Const. art. X, § 20, and on other grounds.
The division concludes that the two member plaintiffs do not have
taxpayer standing or individual standing. The division also
concludes that the foundations lack associational standing because
they have not identified any members who have standing.
COLORADO COURT OF APPEALS 2020COA156
Court of Appeals No. 19CA0621
City and County of Denver District Court No. 15CV32305
Honorable Ross B.H. Buchanan, Judge
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.
JUDGMENT AFFIRMED IN PART,
REVERSED IN PART, AND VACATED IN PART
Division V
Opinion by JUDGE BERGER
J. Jones and Pawar, JJ., concur
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
¶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),
1
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).
1 The federal funds are made available through the Medicaid
Program. Title XIX of the Federal Social Security Act established
the Medicaid Program, through which the federal government
provides funding to states that implement medical assistance plans.
42 U.S.C. §§ 1396a-1396b.
2
¶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
2The other defendants are the Colorado Department of the
Treasury; Dave Young, in his official capacity as Colorado State
Treasurer; Kim Bimestefer, in her official capacity as Executive
Director of the Colorado Department of Health Care Policy and
Financing; and the State of Colorado.
3
lack standing, and the court addressed and rejected all of plaintiffs’
substantive attacks on the statutes and programs.3
3 We note one procedural anomaly, though it does not affect our
disposition. Usually, as was the case here, a claim of lack of
standing or lack of subject matter jurisdiction is brought under
C.R.C.P. 12(b)(1). The state defendants moved to dismiss under
C.R.C.P. 12(b)(1) for lack of standing. Instead of deciding the
C.R.C.P. 12(b)(1) motion, the court decided the question on the
parties’ cross-motions for summary judgment. But the disposition
of a motion under C.R.C.P. 12(b)(1) is fundamentally different from
the disposition of a summary judgment motion under C.R.C.P. 56.
Under well-established standards governing summary judgment, all
doubts must be resolved in favor of the non-moving party and all
reasonable inferences (irrespective of whether the facts on which
the inferences are based are themselves undisputed) must be drawn
in favor of the non-moving party. Cotter Corp. v. Am. Empire
Surplus Lines Ins. Co., 90 P.3d 814, 819 (Colo. 2004). None of these
rules apply to a hearing to adjudicate questions of subject matter
jurisdiction. Trinity Broad. of Denver, Inc. v. City of Westminster,
848 P.2d 916, 925 (Colo. 1993). In the subject matter jurisdiction
context, the court sits as the trier of fact and makes the required
findings of fact and conclusions of law as to its jurisdiction. Id.The court does not view the evidence in the light most favorable to
the non-moving party. See id. As a result, there is a serious
question whether summary judgment, with its attendant standards,
is an appropriate vehicle to decide jurisdictional questions. See id.
at 924. As we read the parties’ submissions to the district court
and the district court’s order, the court essentially followed the
procedure outline in Trinity (albeit on undisputed facts) to decide
the standing question, notwithstanding the fact that the case was
decided on cross-motions for summary judgment.
4
¶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. “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
5
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 (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
6
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. “[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)
7
(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
4 Dodge v. Department of Social Services, 198 Colo. 379, 600 P.2d 70(1979), is a taxpayer standing case that predates Barber v. Ritter,
196 P.3d 238, 245 (Colo. 2008).
8
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 the state’s General Fund and
used “to defray general governmental expense.” 196 P.3d at 247.
¶ 19 The member plaintiffs’ final argument regarding taxpayer
standing is that standing is conferred by the citizen-suit provision
9
in TABOR, which provides, “[i]ndividual or class action enforcement
suits may be filed and shall have the highest civil priority of
resolution.” Colo. Const. art. X, § 20(1). This language
undoubtedly satisfies the legally-protected-interest element of
standing because “[c]laims for relief under the constitution . . .
satisfy the legally-protected-interest requirement.” Hickenlooper,
¶ 10. But, as in Hickenlooper, there remains the question of
whether the member plaintiffs have established the other element
— “injury as Colorado taxpayers” — which requires a nexus. Id. at
¶¶ 11-12. As demonstrated, the answer to that question is “no.”
¶ 20 It is inconsequential that neither Hickenlooper nor Reeves-
Toney addressed a TABOR challenge because their teachings are
not limited to non-TABOR cases. Those cases prescribe the law of
taxpayer standing in Colorado, and their reasoning is fully
applicable here. We see nothing in those cases indicating that
TABOR challenges receive different treatment, or that the type of
constitutional claim matters in any respect to the question of
taxpayer standing. To the contrary, the supreme court’s reasoning
is comprehensive and definitive: “[T]o establish standing as a
taxpayer, a plaintiff must establish an injury relevant to her status
10
as a taxpayer — that is, to the use of her tax dollars.” Reeves-Toney,
¶ 30 (emphasis in original). Thus, to the extent requested by
plaintiffs, it is not for us to invent any TABOR exception to the
supreme court’s clearly articulated law of standing.
¶ 21 Because there is no nexus between the member plaintiffs’
taxpayer dollars and the constitutional violations that they allege,
the member plaintiffs do not have taxpayer standing. The district
court erred by concluding otherwise.
B. Individual Standing
¶ 22 We next consider whether the member plaintiffs have
individual standing. The member plaintiffs argue that they have
individual standing because they suffered an economic injury.
Specifically, they allege that the HPF Program caused their bills for
their hospital care to increase beyond what they would have been
required to pay but for the programs. As we understand their
argument, there are two subparts. First, the member plaintiffs’ bills
increased because they received treatment from hospitals that
incurred a net loss under the HPF Program — that is, the hospitals
received less back in payments under the program than they paid.
11
Second, they hypothesize that the hospitals recovered this net loss
by increasing patients’ bills, including the member plaintiffs’ bills.5
¶ 23 Individual standing “flows from a direct and individualized
injury to the plaintiff.” Hickenlooper, ¶ 11 n.10. The injury must be
one of “concrete adverseness,” and “‘an injury that is overly
“indirect and incidental” to the defendant’s action’ will not convey
standing.” Id. at ¶ 9 (citations omitted).
¶ 24 In Wimberly v. Ettenberg, the Colorado Supreme Court
considered whether bail bondsmen had individual standing to sue
the Denver District Court for adopting a pretrial release program
that allowed criminal defendants to choose from a number of bail
alternatives. 194 Colo. at 165, 570 P.2d at 536-37. The court
reasoned, “[a]lthough the pre-trial release program may affect the
business of the bail bondsmen as a practical matter, it does so only
indirectly by permitting criminal defendants to choose amongst an
5 Plaintiffs do not allege that any member received medical services
from a hospital while the HASF Program was in effect or that the
HASF Program caused any members financial harm. Their alleged
economic injury only pertains to the HPF Program. Because we
conclude that none of the members have individual standing to
contest the constitutionality of either program, we need not
separately address this pleading deficiency regarding the HASF
Program.
12
increased number of bail alternatives.” Id. at 168, 570 P.2d at 539.
Thus, the court held that the “[i]ndirect and incidental pecuniary
injury” to the bail bondsmen’s business was “insufficient to confer
standing.” Id.
¶ 25 Here too, the programs affect healthcare consumers only
indirectly — if at all — because hospitals have a number of
alternatives for recouping any net loss under the programs. True,
when faced with a net loss, hospitals might attempt to recoup the
deficit by increasing patients’ bills. Or, as the Attorney General
suggests, hospital networks might subsidize individual hospitals
when the hospital network as a whole incurs a net gain under the
program. (The Attorney General cites record evidence
demonstrating that the hospitals visited by the member plaintiffs
were part of hospital networks that received more in payments
under the HPF Program than its members paid into the program.)
Or hospitals might deal with a net loss by cutting costs in other
ways. But on this record, all of this is speculation.
¶ 26 In the absence of any evidence supporting their theory of
economic injury, the member plaintiffs rely on the Colorado
Hospital Association’s brief in the district court as evidence that
13
hospitals are passing along the cost of the payments to patients.
But the Association said that the program costs are not passed on
to patients:
The hospital provider fees are not passed
through to patients as charges on bills or
otherwise. While some of the costs entailed in
operating the provider fee may be subsumed in
hospital bills generally (like any element of
overhead), there is no pass-through or linear
relationship between the hospital provider fee
and hospital charges.
In the end, as in Wimberly, the mere possibility that “some of the
costs . . . may be subsumed in hospital bills generally” does not
demonstrate the concrete adverseness between the member
plaintiffs and the state-run programs that is required to establish
an injury-in-fact.
¶ 27 For similar reasons, we also conclude that the economic injury
alleged by plaintiffs is too speculative. The member plaintiffs
presented no evidence that their hospital bills were higher than they
would have been absent the hospitals’ participation in the HPF
Program.
¶ 28 Plaintiffs nevertheless argue that the charges are necessarily
passed on to patients because (1) the HPF statute prohibited
14
identifying any part of the charge as a line item on a patient’s bill;
(2) the General Assembly did not expressly prohibit hospitals from
passing on the charges to patients; (3) a later bill was introduced,
but not passed, that would have removed the line-item prohibition,
allegedly to increase transparency; and (4) “basic economics teaches
that entities pass along charges, like taxes, to their customers.”
¶ 29 Absent any supporting evidence, however, these theories are
insufficient to show that the member plaintiffs suffered an actual
economic injury. Hypotheses about why language was or was not
included in a statute are simply too speculative, standing alone, to
establish the “concrete adverseness” that is required to demonstrate
individual standing. Hickenlooper, ¶ 9 (citation omitted).
¶ 30 “[A] plaintiff must establish” standing, id. at ¶ 8, and the
member plaintiffs have not done so.
C. Associational Standing
¶ 31 Last, the foundation plaintiffs contend that they have
associational standing.
[A]n organization has associational standing
when: (1) its members would otherwise have
standing to sue in their own right; (2) the
interests it seeks to protect are germane to the
organization’s purpose; and (3) neither the
15
claim asserted, nor the relief requested,
requires the participation of individual
members of the lawsuit.
Colo. Union of Taxpayers Found. v. City of Aspen, 2018 CO 36, ¶ 10.
¶ 32 The foundation plaintiffs’ claim of associational standing fails
at step one. As previously shown, their two proffered members do
not have standing, and the foundations have not identified any
other member who does.
III. Conclusion
¶ 33 The district court’s ultimate disposition — dismissal of the
action — was correct and we affirm it. But because none of the
plaintiffs have standing to bring this case, the district court should
have dismissed the case for lack of standing. Because the district
court did not have jurisdiction to decide the merits of the dispute,
we vacate those portions of its order addressing the merits. See
Hickenlooper, ¶ 8; see also In re M.M.V., 2020 COA 94, ¶ 44
(vacating the judgment when the court lacked jurisdiction).
¶ 34 The judgment of dismissal is affirmed. The district court’s
rejection of the defendants’ standing challenge is reversed, and
those portions of the district court’s judgment that address the
merits of the plaintiffs’ claims are vacated.
16
JUDGE J. JONES and JUDGE PAWAR concur.
17