Wednesday, July 12, 2023

UPDATE: AZ Drives Hard Bargain, Only Reimbursing ACLU For Fraction Of Costs Challenging Arizona To Cover Employees' Gender Reassignment Surgeries (READ Memorandum)

UPDATE, 9/15: "AZ Drives Hard Bargain, Only Reimbursing ACLU For Fraction Of Costs Challenging Arizona To Cover Employees' Gender Reassignment Surgeries"

Arizona legislative leaders had challenged a $500,000 payment the Attorney General had agreed to pay the ACLU for its successful constitutional challenge to Arizona's refusal to cover employees' gender reassignment surgery costs. And the judge asked to see the bills.

Turns out the state is only reimbursing 8% of the $6.6M in fees and costs, according to the memorandum filed last night with billing details.

Judge Marquez will now decide whether to approve the Consent Agreement (below) and Warren Petersen and Ben Toma's request to intervene. The would-be intervenors claim Hobbs' Executive Order removing the exclusion both mooted the settlement and inhibits lawmakers' abilities to legislate on the issue.

UPDATE, 9/1, 12pm: "UPDATE - SHOW ME THE RECEIPTS: Judge Orders ACLU To Show It Spent $500K Challenging Arizona To Cover Employees' Gender Reassignment Surgeries"

U.S. District Court Judge Rosemary Marquez today ordered plaintiffs to prove they incurred at least $500,000 in attorneys' fees in their long-running lawsuit to force Arizona to cover employees' gender reassignment surgery costs.

We set out the long and winding path of this litigation below, so we will not rehash the entire thing today. However, a long-in-the-works settlement spanning two Governors and two Attorneys General was reached in July, and it included the state paying the American Civil Liberties Union and other attorneys $500,000.

Judge Marquez's Order gives the plaintiffs one week to file their billing records to justify the $500,000. Such sua sponte - on her own, without a request - fees inspection has become more common recently, largely in the context of class action settlements. And, it is highly likely that Arizona's attorneys - outside counsel Fennemore Craig, hired by former AG Mark Brnovich - already asked whether the fees were at or above the half-million dollar mark.

Legislative leaders Ben Toma and Warren Petersen raised the issue in their motion to file a friend of the court (amicus) brief, but that permission has not been granted, and the judge did not mention it in today's Order.


ORIGINAL ARTICLE, 7/12: "BREAKING: AZ GOP Leg Leaders Tell Judge Hobbs' Executive Order Re: Coverage For State Employees' Gender Reassignment Surgeries Is VALID, But Say It Messed Up Settlement"

Late last month, Arizona Governor Katie Hobbs issued an Executive Order removing a state-imposed exclusion in health insurance for state employees, prohibiting the insurance companies from covering any gender reassignment surgery costs for the employees. (below)

That Executive Order notes that the exclusion is the subject of litigation which began in 2019 - the exclusion was implemented by the prior administration in 2017 - and that the U.S. Supreme Court ruled in 2020 that discrimination against transgender persons is unconstitutional.

Last week, the parties filed a proposed settlement to resolve the lawsuit, which included an agreement that the court should permanently prohibit Arizona from reimposing the exclusion and payment by the state of $500,000 to cover the ACLU's attorneys' fees. 

The parties had attempted settlement negotiations early in 2022 and had begun the latest round before Katie Hobbs and Kris Mayes took office in January 2023 as Governor and Attorney General, respectively. And, it should be noted, the state continues to be represented by outside counsel (Fennemore Craig) selected by former AG Mark Brnovich.

On Monday, state Senate President Warren Petersen and House Speaker Ben Toma asked permission to file an amicus ("friend of the court") brief to stop the settlement. (The motion and brief are below.)

Their principle argument is that Hobbs' Executive Order jumped the gun and immediately MOOTED the case and that U.S. District Court Judge Rosemary Marquez is not permitted to sign the consent judgment. To succeed on that argument, the Executive Order must be valid. 

This is significant because the Republican legislators (and Republican County Attorneys) are generally declaring Hobbs' Executive Orders to violate the law.

Only if their mootness argument fails do they argue that the Consent Judgment would hamper the Legislature's ability to make policies in the future and that the attorneys' fees award is unreasonable. (They have hired Drew Ensign as outside counsel. Ensign was a Deputy Solicitor General under Brnovich.)

In their news release, the leaders' argument focuses on a different point. Speaker Toma notes that the state passed a law last year prohibiting all gender reassignment surgeries for minors. (Theoretically, removing the exclusion would permit children of state employees to obtain coverage for surgeries, although the EO does note that they would still have to be "medically necessary" in order to be covered and - covered or not - it would still be against the new statute.)

If the settlement is not approved, the court would proceed with oral arguments on the parties' competing motions for summary judgment. It remains to be seen whether Petersen and Toma's latest (quasi-)intervention will prompt a hearing of its own, or whether the judge will approve the agreed-upon judgment.

"AZ Law" includes articles, commentaries and updates about opinions from the Arizona Supreme Court, U.S. Supreme Court, as well as trial and appellate courts, etc. AZ Law is founded by Phoenix attorney Paul Weich, and joins Arizona's Politics on the internet. 

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