FRANKFORT — Franklin Circuit Judge Phillip Shepherd denied a request by Gov. Steve Beshear to dismiss a Tea Party lawsuit challenging the legality of the Kentucky Health Benefit Exchange.
The ruling Thursday allows the lawsuit, filed earlier this year by Tea Party activist David Adams, to continue.
Shepherd ruled that "the plaintiffs, as citizens and taxpayers, have a right to challenge the executive actions of the governor." He did not rule on the merits of the lawsuit.
"This is a great day for all Kentuckians and a bad day for the political class," Adams said. "The Constitution is clear."
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Beshear press secretary Kerri Richardson said the administration disagrees with "this procedural decision."
Thursday's ruling "does not affect the state's ability to continue building the health benefit exchange, which will allow hundreds of thousands of uninsured Kentuckians to access affordable health care," Richardson said in an email.
Adams, joined in the suit by Dawn Cloyd of Lexington and Sarah Durand of Louisville, claims that Beshear did not receive "proper approval" from the Kentucky General Assembly to create the exchange. He wants work on it to stop.
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. The exchange is expected to help 332,000 Kentuckians find health care coverage.
Open enrollment on the exchange begins Oct. 1, with insurance plans taking effect as soon as Jan. 1.
Beshear has said the development and operation of the state's exchange will be financed with federal dollars until Jan. 1, 2015, after which it will be financed with revenues it generates.
So far, the federal government has given Kentucky $252 million to start its exchange.
Kentucky is one of 17 states that received federal approval to start its own exchange. The federal government will set up an exchange for states that do not establish their own.
Adams also has filed a lawsuit in Franklin Circuit Court challenging the legality of Beshear's recent decision to expand the state's Medicaid rolls. That move is expected to provide health coverage to about 308,000 Kentuckians.
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 Medicaid expansion costs for the first three years, then will decrease funding gradually to 90 percent in 2020.
Beginning in January, most Americans will be required to have health insurance or pay a penalty. Under the law, no one can be denied coverage due to a pre-existing health condition or lose coverage because a family member gets sick.