Opinion ID: 1678629
Heading Depth: 1
Heading Rank: 9

Heading: does the health care provider tax of hb 250 violate the supremacy clause of the united states constitution?

Text: Among the provisions in HB 250 is a tax on health care providers. [14] Specifically, HB 250 creates a two percent (2%) tax on the gross receipts of enumerated health care providers, including physicians; a two and a half percent (2.5%) tax on the gross receipts of hospitals; and a twenty-five cent (25¢) tax per prescription filled. Appellants claim that the provider tax is unconstitutional because it violates the principle of equal protection of the laws and is special legislation in violation of Ky. Const. § 59. Since we have previously dealt with these arguments, we merely reiterate our own reasoning. See supra, discussion of equal protection guarantees of Kentucky and United States Constitutions. See supra, discussion of § 59. See also, Commonwealth, Revenue Cabinet v. Smith, Ky., 875 S.W.2d 873, cert. denied sub nom Yeoman v. Kentucky, 513 U.S. 1000, 115 S.Ct. 509, 130 L.Ed.2d 417 (1994). Appellants also claim that the provider tax of HB 250 violates the Medicaid Voluntary Contribution and Provider-Specific Tax Amendments of 1991 (Medicaid Amendments), Pub.L. No. 102-234, codified at 42 U.S.C. § 1396b(w). Appellants fail to discuss exactly under what theory they believe that violation of a federal law invalidates a state law. But we assume they meant to mention the Supremacy Clause of the United States Constitution, which provides that federal law shall be the supreme Law of the Land and all state laws must operate in concert with federal law or be struck as invalid. U.S. Const. Art. VI(2). The specific violation alleged of the Medicaid Amendments by the provider tax of HB 250 is that the tax fails to meet the following requirements of being: (1) Broad-based; (2) Uniformly imposed; and (3) Must hold taxpayers harmless for the costs of the tax. 42 U.S.C. § 1396b(w)(3)(B); 42 U.S.C. § 1396b(w)(3)(C); 42 U.S.C. § 1396b(w)(3)(D); 42 U.S.C. § 1396b(w)(4). If a health care related tax fails to meet these three requirements, then the amount of assistance from the federal government under this program will be lowered. 42 U.S.C. § 1396b(w)(1)(A). As a preliminary issue, it should be noted that apparently when the United States Congress drafted the Medicaid Amendments, they considered the possibility that some states might not fully comply with its dictates. Accordingly, the law provides for the lowering of federal payments to those states. Thus, how appellants can argue that HB 250 should be stricken because it violates these amendments is beyond the comprehension of this Court. State laws that conflict with federal laws are indeed struck. However, state laws which do not conflict with federal laws are valid. In the instant case, there is no way that this Court could even begin to declare HB 250 invalid as violating the Medicaid Amendments, since it was obvious that Congress carved out a specific area for state laws to exist. When Congress regulates an entire area of law, it is said to have pre-empted the field and left no room for states to regulate. Accordingly, any state laws which attempt to regulate in that particular area are per se invalid because the field is full. However, when Congress has not pre-empted an area of law, either because it simply has not regulated the entire field, or as is the present case, when it specifically carves out space for state laws to operate, such laws are not unconstitutional.