Oklahoma State Supreme Court rejects Medicaid petition challenge
Published: June 23rd, 2019
Making an apparent about-face from a similar ruling issued just a year ago, the Oklahoma Supreme Court found last week that an initiative petition could proceed, even though its gist contained material several justices conceded was misleading to voters.
The ruling was issued within hours of hearing oral arguments on the case.
During oral arguments on Tuesday, June 18, members of the Oklahoma Supreme Court were urged to reject an initiative petition that would place Medicaid expansion before Oklahoma voters because the petition’s gist is inaccurate.
“This would be a massive policy change for the state of Oklahoma, and the people have a right to know what they’re signing and the gist needs to be accurate,” said Travis Jett, an attorney with the GableGotwals law firm representing the Oklahoma Council of Public Affairs (OCPA) in the petition challenge.
Officials supporting expansion of Medicaid filed paperwork in April to begin an initiative petition process. If enough signatures are gathered and the measure is approved by voters, the petition would make Medicaid benefits a constitutional right for up to 628,000 able-bodied adults.
While the gist, a summary statement presented to potential petition signers, says Medicaid would be expanded to adults earning up to 133 percent of the federal poverty level (FPL), the text of the petition concedes expansion would include people earning up to 138 percent of the FPL because federal law allows for a “disregard” of up to 5 percent of income.
The impact of that discrepancy is substantial. Based on Census data, it is estimated the difference between 133 percent of FPL and 138 percent would translate into around 18,000 more people being added to state welfare rolls at a total additional taxpayer cost of $109 million annually, with $10.9 million of that total coming from Oklahoma state government.
Jett noted that when Medicaid expansion was put on the ballot via initiative petitions in Maine and Nebraska, those efforts were “explicit” in noting expansion covered people earning up to 138 percent of FPL.
“The fact that the gist does not match the petition should render this petition invalid because it’s inaccurate,” Jett said. “The petition can be resubmitted accurately, but it can’t go for signatures as it’s currently written.”
In 2018, the Oklahoma Supreme Court tossed an initiative petition that was challenged on similar grounds. That petition would have allowed voters to reject a host of just-passed tax increases. The court ruled the tax referendum’s gist was legally insufficient. While that petition said voters would have the chance to repeal tax increases on motor fuels, cigarettes, and oil and gas production, the court noted the gist failed to list a tax increase on little cigars that would also face repeal and failed to list an already-repealed hotel/motel tax.
“These flaws leave no doubt that signatories are not being put on notice of the changes being made,” the court’s 2018 decision read.
The court’s 2018 ruling was prominently cited as a factor in the state attorney general’s decision to side with OCPA in arguing that the Medicaid-petition gist was similarly flawed.
When asked if the problem with the gist would be solved if a signer also read the accompanying petition, Oklahoma Solicitor General Mithun Mansinghani replied, “Not according to this court’s decision last year in the referendum petition, which omitted the little-cigar tax but it was in the petition. And the little-cigar tax, remember, was a 0.2 percent effect to that petition. This is obviously much greater, the difference between 133 and 138. So if this court were to remain consistent, I think that doesn’t quite cure it.”
OCPA also argued that the gist is legally flawed because it does not explain that placing Medicaid expansion in the Oklahoma Constitution would effectively strip state lawmakers of spending authority over the Medicaid expansion program and that associated state spending would be effectively dictated by the federal government.
That’s in contrast to Oklahoma’s existing Medicaid program, which serves the aged, blind, disabled, and certain pregnant women. Jett noted state lawmakers can cut funding for that program, or even withdraw from it, options not allowed for the expansion program under the proposed constitutional amendment.
OCPA also argued the shift of state spending power to federal control effectively violates state constitutional provisions.
“Placing this right in the constitution transfers power from the state of Oklahoma to the federal government,” Jett said. “And the reason for that is the federal government gets to choose who is actually eligible for this program by setting the federal poverty level. Also, Congress dictates how much the state of Oklahoma actually pays by setting the federal matching level. So it is a distinction because the Legislature is cut out of the process here.”
While more than 30 states have expanded their Medicaid program under the Affordable Care Act, those expansions occurred through statutory changes and not through state constitutional amendments.
Melanie Rughani, an attorney with the Crowe and Dunlevy firm representing petition filers, argued the petition’s intent was clear enough to pass legal muster.
“This is not a question about whether the gist is accurate,” Rughani said. “I think it’s very clearly accurate. The question for the court is whether the gist is sufficient, because it doesn’t include one detail about the very complex income-calculation formula provided in the federal Medicaid laws.”
Yet, even as she defended the petition, Rughani effectively conceded points raised by critics in several instances.
When asked why petition supporters did not address Medicaid expansion through statutory change rather than constitutional amendment, Rughani responded, “That doesn’t give any protection from a Legislature that may be hostile to the initiative petition.”
“So you agree with Mr. Jett that then you’re trying to restrict the role of the Legislature?” said Chief Justice Noma Gurich.
In arguing that the 133-percent figure in the gist was more accurate than 138 percent, Rughani said the associated federal formula, which will partially dictate how much Oklahoma’s expansion program costs state taxpayers, has already been altered more than once.
“The additional 5 percent comes from a federal formula that’s provided across many sections of the federal code that adds an additional 5-percent income disregard,” Rughani said. “It’s kind of like the standard deduction in income taxes. That disregard is part of a very complex formula, none of which is really possible to explain here, much less the gist. But that formula can and has already changed. It’s changed twice since the advent of the Affordable Care Act.”
At one point in the hearing, one justice noted a gist should be written so someone reading at an eighth-grade level can understand it. But at another point Rughani argued justices should assume a far higher level of voter education and familiarity with what she conceded are “complex” federal regulations.
“If someone reasonably familiar with Medicaid reads a gist that has the number 138 in it, they might think that, as per every other Medicaid law, that actually it means 138 plus five, or 143 percent,” Rughani said.
It appeared even among justices there was disagreement over what constituted reasonable expectation of voter engagement. When one justice suggested Oklahoma’s initiative petition process contemplates that petition signers will read both the gist and the full petition, the comment drew open skepticism from a colleague.
“I don’t think it’s contemplated they read them at all,” Justice Yvonne Kauger said. “I mean, how many times does that happen?”
In a brief, two-page ruling, a six-judge majority ruled the gist “is clear” and “informs signers of what the proposed amendment is intended to do,” which is expand Medicaid. The court majority stressed that the gist includes the phrase “as permitted under the federal Medicaid laws.” During oral arguments, some justices suggested that phrase should notify petition signers that eligibility could be expanded to a larger group than what is indicated by the 133-percent figure in the gist.
The majority also rejected constitutional challenges to the petition.
A dissent, signed by three members of the court, said the gist’s use of the 133-percent figure “rather than the more accurate 138 percent is misleading to signatories and therefore the petition should be stricken on that basis alone.”
[Editor’s note: The Oklahoma Council of Public Affairs is the parent organization of the Center for Independent Journalism. This report first appeared at the OCPA website (https://ocpathink.org/post/court-rejects-medicaid-petition-challenge ).