Court Opinion

ID: 4585233
Source: CourtListenerOpinion
Date Created: 2020-11-10 19:02:21.41473+00
Date Added: 2024-06-11T13:42:44.340723
License: Public Domain

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