Title: Hunter v. State

State: vermont

Issuer: Vermont Supreme Court

Document:

Hunter v. State (2003-013); 177 Vt. 339; 865 A.2d 381

2004 VT 108

[Filed 22-Oct=2004]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                                 2004 VT 108

                                No. 2003-013

  Susann Hunter, Robin Gagne and 	         Supreme Court
  Jane Doe
                                                 On Appeal from
       v.	                                 Washington Superior Court

  State of Vermont, M. Jane Kitchel and 	January Term, 2004
  Eileen Elliott

  Mary Miles Teachout, J.

  John J. McCullough III and Mark Loevy-Reyes of Vermont Legal Aid, Inc.,
    Montpelier, for Plaintiffs-Appellants.

  William H. Sorrell, Attorney General, Montpelier, and Susan R. Harritt,
    Assistant Attorney General, Waterbury, for Defendants-Appellees.

  PRESENT:  Amestoy, C.J. (FN1),  Dooley, Johnson, Skoglund and Reiber, JJ.

        
       ¶  1.  DOOLEY, J.  The principal question presented is whether,
  consistent with the separation-of-powers provision of the Vermont
  Constitution, the General Assembly validly delegated to the Secretary of
  Administration and the Joint Fiscal Committee the authority to prepare and
  implement a deficit-prevention plan to address a revenue shortfall while
  the Legislature was not in session.  A subsidiary question is whether the
  Department of Prevention, Assistance, Transition and Health Access (PATH)
  complied with emergency rulemaking procedures in implementing the
  reductions called for in the deficit-prevention plan.  Plaintiffs
  challenged the plan, and the superior court ruled that the plan did not
  violate the separation-of-powers doctrine, but that PATH had failed to
  provide proper notice and hearing before adopting the emergency rule.  We
  affirm the court's ruling that the delegation of authority was
  constitutionally permissible, and reverse the superior court determination
  that the emergency rule violated the Administrative Procedures Act, finding
  instead that PATH complied with the requisite rulemaking procedures.

       ¶  2.  The facts are briefly summarized as follows, although
  additional material facts are provided in the discussion.  The Fiscal Year
  2003 Appropriations Act (Act), enacted at the conclusion of the 2002
  legislative session, contained a final section directing the Secretary of
  Administration (Secretary)-in consultation with the legislative leadership
  and "relevant committee chairs"-to prepare and present to the legislative
  branch Joint Fiscal Committee (JFC) a "deficit prevention plan" in the
  event that: (1) the official state revenue estimates of the emergency board
  for the general fund, the transportation fund, or federal funds were
  reduced by two percent or more from the estimates adopted by the board on
  January 15, 2002; (FN2) (2) the General Assembly was not in session; and
  (3) the plan was "necessary to ensure a balanced budget in the general fund
  or transportation fund."  2001, No. 142 (Adj. Sess.), § 324(a), (d).  The
  JFC could accept, reject or amend the plan, and the Secretary was then
  empowered to implement the plan as approved.  Id. § 324(d).
                          
       ¶  3.  The Legislature adjourned in late June 2002.  After
  adjournment, the chairs of the House and Senate Appropriations Committees
  prepared and signed a "Statement of Intent to the Budget Act."  That
  statement provided that § 324 was intended to provide temporary rescission
  authority to address revenue shortfalls.  It further stated that it was the
  intent of the appropriation act conferees that PATH could invoke emergency
  rulemaking procedures to implement any program change "where it is
  necessitated by the imminent peril to public welfare posed by the revenue
  shortfall and the need through prompt exercise of rescission authority to
  avert or mitigate a state budget deficit."  Statement of Legislative
  Intent, Omnibus Appropriations Act, 2001, No. 142 (Adj. Sess.), available
  at Joint Fiscal Office.

       ¶  4.  In July, the emergency board predicted a revenue reduction in
  excess of four percent of the general fund from the January 2002 estimate,
  thereby triggering the Act's deficit-prevention provision.  The Secretary,
  in response, developed a deficit-prevention plan and presented it to the
  JFC, as the Act required, on August 12.  The plan recommended reductions in
  excess of $23 million, including cuts below the appropriation to PATH of
  nearly $4 million.  The proposed reductions to PATH's budget included the
  elimination of adult chiropractic coverage for Medicaid and Vermont Health
  Access Plan (VHAP) recipients, suspension of denture coverage for Medicaid
  recipients, and the elimination of VHAP coverage for elective inpatient
  hospital admissions. (FN3)  After several meetings, the JFC adopted the
  plan on August 23.  On September 5, PATH filed an emergency rule to
  implement the budget reductions articulated in the plan, to become
  effective on October 1.  PATH refiled the emergency rule on October 16, to
  reflect an amended implementation date of November 1.
                             
       ¶  5.  In late October, plaintiffs-three individuals affected by
  PATH's proposed reductions-filed a complaint against the State, Agency of
  Human Services Secretary Kitchel, and PATH Commissioner Elliott in superior
  court, seeking to enjoin implementation of the plan.  Plaintiffs claimed
  that the proposed reductions and implementing regulations were invalid
  because: (1) the deficit-prevention section of the Act impermissibly
  delegated an essential legislative function to the executive branch and
  legislative committee, in violation of the separation-of-powers provision
  of the Vermont Constitution; (2) PATH's implementation of the reductions
  violated certain requirements of the Administrative Procedure Act (APA), 3
  V.S.A. §§ 800-849; (3) the elimination of coverage for dentures and
  chiropractic services violated § 148(g), (i) of the Act; (4) the
  elimination of chiropractic coverage violated Vermont's health insurance
  law; and (5) the elimination of denture services violated federal Medicaid
  law.
   
       ¶  6.  The trial court heard arguments on plaintiffs' motion for a
  preliminary injunction, and issued a written decision on November 22.  The
  court rejected plaintiffs' separation-of-powers claim, concluding that the
  Constitution allowed such overlapping institutional arrangements as a means
  to accomplish the Legislature's limited objective of responding to a
  financial emergency during a period when the General Assembly was not in
  session.  The court also rejected plaintiffs' claims that the reductions
  violated § 148 of the Appropriations Act, or state health insurance and
  federal Medicaid law.  Finally, the court determined that PATH had failed
  to provide adequate notice and hearing in connection with the emergency
  rule, in violation of the APA.  The court granted the preliminary
  injunction as a remedy for the APA violation, but stayed its effect until
  December 31, 2002, to afford PATH an opportunity to comply with the notice
  and hearing requirements and, after it complied, to move to vacate the
  order granting the preliminary injunction.   On December 27, the court
  granted defendants' motion to vacate the preliminary injunction, and also
  granted plaintiffs' motion for permission to take an interlocutory appeal,
  which this Court accepted.  The court's order granting interlocutory appeal
  specified two issues for review: (1) whether the court erred in concluding
  that plaintiffs had failed to show a likelihood of success on their claim
  that § 324 of the Act violated the separation-of-powers doctrine; and (2)
  whether the court erred in staying issuance of a preliminary injunction
  after finding that PATH had failed to comply with the notice and hearing
  requirements of the APA.

                                     I.

       ¶  7.  We first address plaintiffs' claim that § 324 of the Act
  violates the Vermont Constitution's separation-of-powers provision by
  delegating the Legislature's appropriations power to the executive branch
  and the JFC.  Because the Act authorizes the Secretary to prepare and
  implement a deficit-prevention plan, subject to JFC approval or amendment,
  plaintiffs argue that it effectively empowers the executive and a small
  legislative body to make budgetary decisions properly exercised only by the
  Legislature as a whole.  See Bowsher v. Synar,