A judge will hear arguments July 10 on whether the main funding source for Arizona's Medicaid expansion was legally enacted.
The order from Maricopa County Superior Court Judge Katherine Cooper released Friday comes nearly two months after the state Supreme Court dealt former Gov. Jan Brewer's Medicaid plan a severe blow by allowing a lawsuit challenging the plan to proceed.
Republicans who control the Legislature argue the assessment in the 2013 law expanding Medicaid to about 300,000 poor Arizonans required a two-thirds vote. A handful of Republicans joined all Democrats to pass the law with a bare majority.
A Monday filing from lawyers for the state and the lawmakers who sued is the first since new Gov. Doug Ducey took office. They asked that Ducey be formally dropped as the defendant replacing Brewer. That leaves the head of the state's Medicaid program, Tom Betlach, as the main defendant.
Ducey hasn't said if he planned to continue to defend the suit. Spokesman Daniel Scarpinato wasn't immediately available to say if Ducey had decided to keep fighting the case.
The December Supreme Court ruling allowing the case to proceed put one of Brewer's signature achievements in jeopardy. Her lawyers argued the lawmakers were sore losers who were unable to stop her law in the Legislature or by gathering enough signatures to put it on hold until voters could decide.
Without the assessment, Arizona won't have the matching funds to pay its share of the expansion that has extended coverage to more than 300,000 low-income Arizonans in the past 14 months. The state also is using excess federal cash from the assessment to plug holes in current and future budgets.
Brewer put together a coalition of Democrats and some Republicans who supported the expansion, and after a battle with conservatives pushed it through the Legislature in a June 2013 special session. She was one of only a handful of Republican governors who embraced Medicaid expansion.
The key question in the lawsuit brought by 36 Republican lawmakers and the Goldwater Institute is whether the hospital money — assessed on inpatient discharges — is a tax.
The lawmakers say it is a tax, meaning the Medicaid expansion violated the state Constitution because any tax increase in Arizona requires a two-thirds vote in the Legislature. Brewer's lawyers argued that the assessment wasn't a tax and that the Legislature itself voted not to require a supermajority.