DATE FILED: February 4, 2021 3:54 PM

SUPREME COURT, STATE OF COLORADO FILING ID: 52DD3626FE5A9

2 East 14th Avenue, Denver, Colorado 80203 CASE NUMBER: 2020SC966

On Certiorari to the Colorado Court of Appeals,

2019 CA 621
TABOR FOUNDATION; COLORADO UNION OF
TAXPAYERS FOUNDATION; REBECCA R. SOPKIN; and
JAMES S. RANKIN,
Petitioners,

v.

COLORADO DEPARTMENT OF HEALTH CARE

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 THE STATE OF
COLORADO, Respondents, and

COLORADO HOSPITAL ASSOCIATION,

Intervenor-Respondents.
Lee A. Steven (DC Bar No. 468543) Case No. 2020 SC 966
R. James Valvo, III (Va. Bar No. 85448)
CAUSE OF ACTION INSTITUTE
1310 N. Courthouse Road, Suite 700
Arlington, VA 22201 / (571) 329-4420
lee.steven@causeofaction.org
james.valvo@causeofaction.org
Counsel for Petitioners

William M. Banta, Atty Reg No. 2718

10631 East Crestline Avenue, Englewood, CO 80111
(303) 741-6700 / billbanta@msn.com
Local Counsel

REPLY IN SUPPORT OF PETITION FOR WRIT OF CERTIORARI

 CERTIFICATE OF COMPLIANCE

I hereby certify that this Reply in Support of Petition for Writ of Certiorari

complies with the requirements of C.A.R. 25, 32 and 53, including the formatting

requirements set forth by those rules.

The undersigned certifies that this Reply in Support of Petition for writ

Certiorari complies with C.A.R. 53(f)(1) because it contains 2075 words and

therefore does not exceed the 3150 word limit.

/s/ Lee A. Steven

Lee A. Steven
DC Bar No. 468543

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 TABLE OF CONTENTS

CERTIFICATE OF COMPLIANCE .................................................................................... i

TABLE OF AUTHORITIES ............................................................................................ iii
REPLY IN SUPPORT OF PETITION FOR WRIT OF CERTIORARI ........................................1
I. IT WAS RESPONDENTS, NOT PETITIONERS, WHO WAIVED THEIR RIGHT TO CONTEST
THE TRIAL COURT’S DECISION THAT PETITIONERS HAD STANDING TO BRING
THEIR SECOND AND THIRD CLAIMS AND THIS COURT SHOULD GRANT THE
PETITION TO CORRECT THE COURT OF APPEALS COMPLETE FAILURE TO ADDRESS
STANDING WITH RESPECT TO THOSE CLAIMS. ........................................................1

II. RESPONDENTS FAIL TO APPRECIATE THE COURT OF APPEALS’ SERIOUS

MISAPPREHENSION OF HOW THE HOSPITAL PROVIDER/HEALTHCARE CHARGE IS
DEPENDENT UPON THE STATE MEDICAID PROGRAM AND DISREGARDED
PETITIONERS’ CITATION TO THE RECORD IN EXPLANATION. ..................................5
III. THE UNCERTAINTY IN WHETHER AND WHAT KIND OF A “NEXUS” IS REQUIRED TO
ESTABLISH TAXPAYER STANDING IN A CONSTITUTIONAL CHALLENGE TO STATE
SPENDING IS SUFFICIENT REASON FOR THIS COURT TO GRANT THE PETITION. .......8

CONCLUSION ...............................................................................................................9
CERTIFICATE OF SERVICE ..........................................................................................11

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 TABLE OF AUTHORITIES

Cases Page(s)

Barber v. Ritter,
196 P.3d 238 (Colo. 2008) ................................................................................8, 9

Federal Statutes
42 U.S.C. § 1396a ......................................................................................................7

42 U.S.C. § 1396b ......................................................................................................7

Colorado Statutes & Rules

Senate Bill 17-267 .....................................................................................................4

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 REPLY IN SUPPORT OF PETITION FOR WRIT OF CERTIORARI

I. It was Respondents, not Petitioners, who waived their right to contest the
Trial Court’s decision that Petitioners had standing to bring their second
and third claims and this Court should grant the Petition to correct the
Court of Appeals complete failure to address standing with respect to
those claims.
As the Petition for Writ of Certiorari explained, the Court of Appeals

dismissed Petitioners’ entire case by limiting its standing analysis to the first of

Petitioners’ three claims. Cert. Pet. at 9–11. The Court of Appeals, in other words,

failed to address the separate standing questions relating to Petitioners’ second and

third claims. A grant of the Petition is therefore proper to correct this departure from

the accepted and usual course of judicial proceedings.

Respondents argue in opposition that Petitioners waived their right to contest

this failure because “Petitioners never made this argument to the court of appeals”

and thereby “deprived the court of appeals of the opportunity to address the alternate

theories they raise here for the first time.” Opp’n at 12. That is incorrect and

misstates the actual course of proceedings below.

At summary judgment, the district court upheld Petitioners’ right to bring all

three of their claims and separately addressed each of those claims on the merits.

Petitioners did not appeal the trial court’s decision on standing because they

prevailed on standing; only Respondents appealed that issue. With respect to the

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question of standing on appeal, therefore, it was incumbent upon Respondents to

raise and argue those issues they believed justified dismissal of the entire case on

standing grounds. Yet, in their briefing before the Court of Appeals, Respondents

chose not to contest or even address standing with respect to the second and third

claims. Instead, they confined their entire argument to the proposition that standing

did not exist because only the hospitals, not the Petitioners, paid the Hospital

Provider/Healthcare Charge at issue. See State Defs.’ Opening-Answer Br., 10–12,

TABOR Foundation, et al. v. Colorado Department of Health Care Policy and

Financing, et al., No. 2019 CA 621 (Nov. 8, 2019). As the heading to their standing

argument makes clear, Respondents’ argument was that “Neither Foundations nor

their members are fee-paying hospitals, and as such they lack standing to pursue

their claims.” Id. at 6; see also id. at 12 (Petitioners lacked standing because they

“have not, and cannot, demonstrate a clear nexus between their status as taxpayers

and the Hospital Provider Fee or CHASE fee programs.”).

Given this framing of the issue on appeal, it is not surprising that the parties’

standing arguments focused on Petitioners’ first claim, which dealt with the question

of whether the Hospital Provider/Healthcare Charge was a tax or a fee under

Colorado law. But Petitioners also made it clear to the Court of Appeals that they

had standing on their second and third claims notwithstanding any decision to the

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contrary on their first claim because neither of those two claims concerned payment

of the Hospital Provider/Healthcare Charge. Petitioners explained it was

“undisputed that Plaintiffs raise constitutional challenges to the lawfulness of state

revenues and expenditures under TABOR, the single-subject requirement, and the

excess state revenues cap. See, e.g., CF, pp 445–50, ¶¶ 86–141 (alleging violations

of TABOR); CF, pp 451–53, ¶¶ 159–71 (alleging the state kept and spent monies,

violating TABOR); CF, pp 453–54, ¶¶ 172–85 (alleging violation of single-subject

requirement in a bill that included spending provisions).” Appellants’ Answer-

Reply Br., 4, TABOR Foundation, et al. v. Colorado Department of Health Care

Policy and Financing, et al., No. 2019 CA 621 (Dec. 13, 2019). They also explained

it was “undisputed the Individual Plaintiffs are Colorado taxpayers. CF, p 436, ¶ 6–

7; Summ. J. Hearing Tr. 43:7–9 (“The Court: . . . These folks are taxpayers, there’s

not an issue about that, right? Mr. Kuhn: These people are taxpayers.”).” Id.

Even more directly to the point, Petitioners argued to the Court of Appeals

that they “raise claims beyond challenging the lawfulness of the charges. They raise

constitutional claims under TABOR, the single-subject requirement, and the excess

state revenues cap that involve the unconstitutional expenditure of state funds.

Colorado law recognizes Plaintiffs’ taxpayer standing to maintain those claims

regardless of whether they directly pay the charges.” Id. at 6 (emphasis added).

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 Tellingly, Respondents never even tried to answer that argument. In their

final brief to the Court of Appeals, they simply returned to their theme that no

standing existed solely on the basis that Petitioners never paid the charge at issue,

an argument relevant only to Petitioners’ standing to bring their first claim.

As such, if there was any waiver on the question of standing in this case, it

was Respondents who waived their right to contest standing as to Petitioners’ second

and third claims. See Opp’n at 13 (arguing that “a party can waive an issue—even

an issue such as standing—by failing to address it in briefings or in arguments.”).

To summarize Petitioners’ position as set forth in the Petition for Writ of

Certiorari: in addition to their first claim that the Hospital Provider/Healthcare

Charge was a tax not a fee, Petitioners raised two additional constitutional claims.

They alleged for their second claim that SB 17-267 failed to meet the single-subject

requirement of the Colorado Constitution and that, for their third claim, if SB 17-

267 was deemed valid, it improperly transferred a revenue stream from the

Department to an enterprise without the proper reduction in the excess state revenues

cap required by the Colorado Constitution.1 See Cet. Pet. at 9-11. Because both of

1
This third claim on the merits is one of first impression, which, as explained in the
Petition, is another reason why this Court should grant the Petition. See Cert. Pet. at
11 (“Given the claim’s importance, not only in this case but with respect to future
bills the General Assembly may choose to enact, it was a departure from the accepted
and usual course of judicial proceedings that the Court of Appeals failed even to

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these claims involve allegations of unconstitutional state spending that directly

impact Petitioners’ status as taxpayers, “Colorado law recognizes Petitioners’

taxpayer standing to maintain those claims regardless of whether they directly paid

the charge at issue in their first claim.” Id. at 11. That the Court of Appeals failed

to address the separate standing questions as to claims two and three, therefore, was

error that departed from the accepted and usual course of judicial proceedings, which

this Court can and should remedy by granting the Petition.

II. Respondents fail to appreciate the Court of Appeals’ serious

misapprehension of how the Hospital Provider/Healthcare Charge is
dependent upon the state Medicaid program and disregarded
Petitioners’ citation to the record in explanation.
Respondents take issue with Petitioners’ position that the Court of Appeals

seriously misapprehend Petitioners’ argument and the evidence in the record

concerning whether the Hospital Provider/Healthcare Charge existed/exists as a part

of Colorado’s Medicaid program. See Opp’n at 11–12. Specifically, Respondents

declare: “What is conspicuously absent in the Petition is, again, any citation to the

record revealing that the court of appeals was wrong.” Id. at 11.

That is incorrect and misreads the Petition. As explained therein, the decision

of the Court of Appeals depended upon a determination that Petitioners did not pay

address Petitioners’ standing to bring this third claim.”). Notably, Respondents

failed to address or attempt to answer this point in their Opposition Brief.

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the Hospital Provider/Healthcare Charge and therefore their status as taxpayers did

not provide a sufficient nexus to establish standing to challenge the constitutionality

of that charge. See Cert. Pet. at 7 (citing Court of Appeals decision, App. A to the

Petition). Yet that decision was contrary to the evidence in the record, to which the

Petition pointed, and federal statutory law applicable to state Medicaid programs, to

which the Petition also pointed.

As the Petition explained, there never was a dispute about, and it never was

argued otherwise, that the only reason the Hospital Provider/Healthcare Charge

existed in the first instance was to increase the amount of federal funds allocated to

Colorado’s Medicaid program. That is, the charge served and supported the larger

state Medicaid program, it did exist to serve itself. And it could not serve itself,

because the only legal reason why the charge attracted a greater portion of federal

funds was because Colorado had created a state Medicaid program to which general

funds were allocated.

To explain this point, the Petition cited the record. It pointed to Petitioners’

Statement of Undisputed Material Facts from the summary judgment proceeding, a

statement that Respondents never objected to or denied. That statement explained

that “Medicaid is a federal-state program that provides federal matching funds to

states that have adopted the program.” Cert. Pet. at 8 (citing Pls.’ Mot. for Summ.

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J., 2, TABOR Found., et al. v. Colo. Dep’t of Health Care Policy &Fin., et al., No.

2015 CV 32305 (July 16, 2018)). That quote also included a citation to the relevant

federal law, 42 U.S.C. § 1396a. Id. And directly on point to the question of nexus,

the Petition further quoted the Statement of Undisputed Material Facts to explain

that “the federal government pays states participating in Medicaid matching funds

equal to a percentage of the total amount spent by a state on its Medicaid program.”

Id. (citing to 42 U.S.C. § 1396b).

The Court of Appeals never addressed the context in which the Hospital

Provider/Healthcare Charge operated, preferring a cramped, deracinated approach

that ignored the structure of the state Medicaid program of which the charge formed

a part. But the fact remains, and is supported by the record, that the charge at issue

operates to draw down an increased level of federal funding only because Colorado

created a state Medicaid program funded by money allocated from general state

funds. And it is that fact—the spending of Colorado taxpayer money to fund a

program that is a necessary condition for the operation of the charge—that

establishes any nexus needed to support Petitioners’ standing for their first claim.

The failure to appreciate such a basic fact was a serious misapprehension of

the case by the Court of Appeals, which undermines its entire decision. This Court

should grant the Petition to correct this gross error.

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III. The uncertainty in whether and what kind of a “nexus” is required to
establish taxpayer standing in a constitutional challenge to state spending
is sufficient reason for this Court to grant the Petition.

Finally, on the question of whether Colorado case law supports standing in

this case regardless of the nexus the Court of Appeals deemed not to exist, Petitioners

pointed to a selection of Colorado Supreme Court cases that support their position,

including Barber v. Ritter, a case that is closely analogous to the instant case on the

facts and that, if applied here, would uphold Petitioners’ standing. See Cert. Pet. at

5–7. Respondents counter by previewing the arguments they will assert should this

Court grant the Petition, citing and discussing case law that, they allege, “put Barber

in context” and support their position that no standing exists in this case. Opp’n at

4–8.

The Petition explained that Barber contradicts the Court of Appeals position

that a “clear nexus” is required to establish taxpayer standing under the facts

established in this case. Cet. Pet. at 7–8. Barber holds instead that both injury-in-

fact and injury to a legally protected interest are met when (1) a taxpayer

(2) challenges government spending (3) as violating a specific provision of the

Colorado Constitution, such as TABOR. See id. And Respondents appear to agree

with that articulation of Barber’s holding, conceding that “Petitioners correctly

8
quote Barber.” Opp’n at 8. Thus, instead of putting Barber in context, Respondents

actually are attempting to argue it away.

The fact that Respondents were required to spend five pages of their

Opposition Brief detailing the results of cases that are distinguishable on the facts

from the instant case in order to argue that Barber doesn’t actually mean what it

expressly says it means illustrates why this Court should grant the Petition. Barber

is still good law; it has not been overruled and it continues to be relied upon as

authority by Colorado courts. Although Barber directly supports Petitioners’

standing to bring their first claim, and there is no other case in the history of Colorado

jurisprudence that is more similar to the instant case, the Court of Appeals chose not

to apply it. The current state of the law accordingly is uncertain with respect to the

landmark Barber authority and the requirements for taxpayers to bring constitutional

challenges for claims of unlawful state spending. It is not only appropriate but

necessary for this Court to grant the Petition to resolve that uncertainty.

CONCLUSION

For all of the above reasons and those supplied in the Petition for Writ of

Certiorari, Petitioners respectfully request the Colorado Supreme Court to grant their

Petition.

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Date: February 4, 2021 Respectfully submitted,

/s/ Lee A. Steven

Lee A. Steven, DC Bar No. 468543
R. James Valvo, III, Va. Bar No. 85448
CAUSE OF ACTION INSTITUTE

Counsel for Petitioners

William M. Banta, Atty Reg No. 2718

10631 East Crestline Avenue
Englewood, CO 80111
(303) 741-6700
billbanta@msn.com

Local Counsel

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 Certificate of Service

I certify that on this 4th day of February 2021, the foregoing document was
served on the following counsel of record via the Integrated Colorado Courts E-
Filing System:

JENNIFER L. WEAVER, First Assistant Attorney General

W. ERIC KUHN, Senior Assistant Attorney General
Ralph L. Carr Colorado Judicial Center
1300 Broadway, 6th Floor
Denver, CO 80203
(720) 508-6145/6143
jennifer.weaver@coag.gov
eric.kuhn@coag.gov

SEAN R. GALLAGHER
GERALD A. NIEDERMAN
BENNETT L. COHEN
POLSINELLI PC
1401 Lawrence Street, Suite 2300
Denver, CO 80202
(303) 572-9300
sgallagher@polsinelli.com
gniederman@polsinelli.com
bcohen@polsinelli.com

/s/ Lee A. Steven

Lee A. Steven, DC. Bar No. 468543

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