FRANKFORT — Franklin Circuit Judge Philip Shepherd said Monday he planned to make a ruling as soon as possible on Gov. Steve Beshear's request to dismiss a lawsuit challenging the legality of the Kentucky Health Benefit Exchange.
Tea Party activist David Adams filed a lawsuit against the exchange earlier this year, claiming that Beshear did not receive "proper approval" from the Kentucky General Assembly to create the exchange. He is seeking an injunction against Beshear's executive order until the governor receives legislative approval.
Beshear issued an executive order in July, without the input of state lawmakers, to establish the online marketplace. The exchange will offer health insurance plans for Kentuckians beginning Jan. 1, as called for by the federal Patient Protection and Affordable Care Act, often referred to as Obamacare.
Beshear said last week that the exchange would help 332,000 Kentuckians in need of health care coverage. The exchange will be financed entirely with federal money until Jan. 1, 2015, after which Beshear has said it would be financed wholly by revenue it generates.
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After a hearing Monday in Franklin Circuit Court on the exchange lawsuit, Adams said he filed another lawsuit Monday challenging Beshear's recent decision to expand the state's Medicaid rolls under the federal health law. Adams was surrounded by about 25 Tea Party supporters as he announced the lawsuit.
The state's expansion of Medicaid is designed to provide health coverage to about 308,000 Kentuckians beginning in 2014. Beshear said the cost to state government over eight years, beginning in 2017, should be $473 million. The federal government will pay for 100 percent of expansion costs for the first three years, then will decrease funding gradually to 90 percent in 2020.
Adams' lawsuit against Medicaid expansion asks the court to stop Beshear from accepting the Medicaid expansion without legislative approval.
The suit also seeks to declare unconstitutional a 1966 state law that says it is state policy to take advantage of all federal funding that might be available for medical assistance.
According to the lawsuit, the state law "grants unchecked and absolute powers to the secretary of the Health and Family Services Cabinet in violation of Section 2 of the Constitution of the Commonwealth of Kentucky which reads: 'Absolute and arbitrary power over the lives, liberty and property of freemen exists nowhere in a republic, not even in the largest majority.'"
At Monday's hearing, Patrick Hughes of Crestview Hills, an attorney for the Beshear administration, asked the judge to dismiss the exchange lawsuit because the plaintiff lacked standing.
"It's purely a political question and not appropriate for this court," Hughes said.
Michael Dean of Irvine, an attorney for Adams, strongly disagreed, saying state taxpayers have standing in the case because state tax money would be used with federal money to operate the exchange.
Dean said a new bureaucracy with state employees would be created in the state Cabinet for Health and Family Services.
Shepherd then asked Hughes, "If they (taxpayers) don't have standing, who does?"
Hughes said that if the exchange involved spending only state tax dollars, there might be an issue about legal standing. He said that if Adams prevails, taxpayers could sue the government every time the governor reorganized a state agency and spent state dollars without legislative approval.
"That leads to an absurd result," he said.
Hughes emphasized that the executive order Beshear signed made no mention of the use of state money.
"It's a very interesting legal issue," the judge said before saying he would try to reach a decision promptly on the motion to dismiss the lawsuit.