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Parrish v. Rosenblum

Supreme Court of Oregon, En Banc

October 25, 2017

Julie PARRISH, Sal Esquivel, and Cedric Hayden, Petitioners,
v.
Ellen F. ROSENBLUM, Attorney General, State of Oregon, Respondent.

         On petition to review ballot title fled September 27, 2017;[*] considered and under advisement on October 13, 2017.

          Eric C. Winters, Wilsonville, fled the petition and reply for petitioners.

          Carson L. Whitehead, Assistant Attorney General, Salem, fled the answering memorandum for respondent. With him on the answering memorandum were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

          Steven C. Berman, Stoll Stoll Berne Lokting & Shlachter PC, Portland, fled the memorandum for amicus curiae Melissa Unger.

         Case Summary:

Petitioners challenged all parts of the ballot title prepared by a joint legislative committee for Referendum Petition (RP) 301 (2018). RP 301 incorporated certain sections of a more extensive bill enacted during the 2017 legislative session, House Bill (HB) 2391. The sections in RP 301 would impose temporary assessments on insurers, managed care organizations, the Public Employees' Benefit Board, and certain hospitals; and would permit insurers to increase premium rates. The assessments, as originally included in HB 2391, would provide funding for a new reinsurance program and the Oregon Health Plan. Held: The caption, the result statements, and the summary do not substantially comply with ORS 250.035(2).
The ballot title is referred to the Attorney General for modification. Pursuant to ORAP 1.20(5) and notwithstanding ORAP 9.25, ORAP 11.30(10), ORAP 16.25(1), and ORAP 16.60(1), the State Court Administrator shall issue the appellate judgment at 4:00 p.m. on October 26, 2017, unless a petition for reconsideration is both fled and physically received by the Office of the State Court Administrator by that time. Any timely petition for reconsideration will stay issuance of the appellate judgment until the court acts on such petition.

         [362 Or. 98] BALMER, C. J.

         Petitioners seek review of the ballot title prepared for Referendum Petition (RP) 301 (2018). They contend that the caption, the "yes" and "no" result statements, and the summary do not comply with requirements set out in ORS 250.035(2). We review the ballot title to determine whether it substantially complies with those requirements. See Senate Bill (SB) 229 (2017), § 58(4) (setting out that standard).[1] For the reasons explained below, we agree with some of petitioners' contentions, but disagree with others. We conclude that each part of the ballot title requires modification, and we refer it to the Attorney General for that purpose. See id, at § 58(6) (explaining modification referral process).

         I. BACKGROUND

         We begin by providing some background and a summary of RP 301. During the 2017 session, the legislature passed House Bill (HB) 2391.[2] Among other things, that bill created a new Health System Fund, which would pay the cost of administering a new Oregon Reinsurance Program, provide additional funding for medical assistance and health services to low-income individuals and families under ORS chapter 414, and make other payments. HB 2391, § 2; ORS ch 414.[3] The bill then imposed temporary, two-year assessments on insurance premiums or premium equivalents received by insurers (section 5(2)), managed care organizations (section 9(2)), and the Public Employees' Benefit Board (section 3(2)), that would be paid into the State Treasury and credited to the fund. See id, at §§ 3 -5, 7, 11 - 13 (imposing assessments, directing payments [362 Or. 99] and credits, and establishing timelines).[4] The bill further provided, in section 8(2), that insurers may increase their premium rates by 1.5 percent on policies subject to the temporary assessment on insurers. Also, in section 27(2)(2), the bill imposed a temporary assessment on the net revenue of certain hospitals, to be paid to the Oregon Health Authority. Id, at §§ 27 - 28 (imposing assessment, directing payment, and setting out related amendments); § 29 (removing assessment at later date); §§ 44, 51 (setting out operative and effective dates).[5] The Governor signed the bill on July 3, 2017, and it was scheduled to go into effect, with some delayed operative dates, on October 6, 2017.

         Two days after the Governor signed HB 2391, petitioners filed with the Secretary of State a referendum petition, which the Secretary numbered as RP 301 and which is set out as an Appendix to this opinion. RP 301 would refer to the people for a vote certain sections of HB 2391-sections 3(2) and (4); 5(2) and (4); 9(2) and (5); and 27(2)(2)- that impose the temporary assessments described above, as well as section 8(2), which permits insurers to increase their premium rates.[6] See generally Or Const, Art IV, § l(3)(a) -(b) (describing people's referendum power and process). The timelines for a potential referendum vote, and the related ballot title process, are governed by a different bill enacted during the 2017 session, SB 229. That bill provides that, if any part or all of HB 2391 is referred to the people, then a special election will be held on January 23, 2018. SB 229, § 55(1)(a)(A). Under applicable constitutional provisions, petitioners were required to gather and submit a sufficient number of signatures before October 6. See Or Const, [362 Or. 100] Art IV, § 1(3)(a) (referendum power may be exercised as to acts not effective earlier than 90 days after end of session); § l(4)(a) (setting out 30-day signature verification timeline for Secretary of State). The Secretary of State has confirmed that petitioners submitted a sufficient number of valid signatures and that RP 301 therefore will be on the ballot at a special election in January, as Measure 101 (2018).[7]

         After RP 301 was filed, a joint legislative committee prepared a ballot title and filed it with the Secretary of State. See SB 229, § 55(3) (establishing process). The ordinary word limits for ballot titles do not apply; however, the content requirements for each element of a ballot title for a state measure-set out in ORS 250.035(2) and discussed further below-do apply. Id, at §§ 55(3), 58(1). We review the ballot title for substantial compliance with those requirements. Id, at § 58(4). If we determine that modification is required, then we may refer the ballot title to the Attorney General for modification. Id, at § 58(6).

         The joint legislative committee prepared the following ballot title for RP 301:

"PROVIDES FUNDS CURRENTLY BUDGETED TO PAY FOR HEALTH CARE FOR LOW-INCOME INDIVIDUALS AND FAMILIES AND FOR STABILIZING HEALTH INSURANCE PREMIUMS, USING TEMPORARY ASSESSMENTS ON INSURANCE COMPANIES, SOME HOSPITALS AND OTHER PROVIDERS OF HEALTH INSURANCE OR HEALTH CARE COVERAGE.
"RESULT OF 'YES' VOTE: 'Yes' vote provides funds that are currently budgeted to pay for health care for low-income individuals and families and individuals with disabilities and to stabilize premiums charged by insurance companies for health insurance purchased by individuals and families. Approves temporary assessments on insurance companies, some hospitals, the Public Employees' Benefit Board and managed care organizations to provide the funds. Specifies that insurance companies may not increase rates on health insurance premiums by more [362 Or. 101] than 1.5 percent as a result of the assessment. Provides that the hospital assessment may not begin without the approval of a federal agency.
"RESULT OF 'NO' VOTE: 'No' vote underfunds budgeted costs for providing health care to low-income individuals and families and individuals with disabilities and for stabilizing premiums charged by insurance companies for health insurance purchased by individuals and families. Rejects temporary assessments on insurance companies, the Public Employees' Benefit Board and managed care organizations. Delays until the later of January 1, 2018, or the date of approval by a federal agency, the temporary assessment on some hospitals.
"SUMMARY: This measure asks voters to approve or reject five parts of House Bill 2391, enacted by the 2017 Oregon Legislature to address certain health care funding issues. House Bill 2391 provided funding to pay costs for providing health care to low-income adults, children, families and individuals with disabilities, and to stabilize premiums charged by insurance companies for health insurance purchased by individuals and families. House Bill 2391 provided the funding through a 1.5 percent assessment on premiums and premium equivalents (defined) of health insurance companies, the Public Employees' Benefit Board and managed care organizations for a two-year period, and an additional 0.7 percent assessment on the net revenue of some hospitals that begins on October 6, 2017, and ends on July 1, 2019. This measure asks voters to approve or reject the assessments on insurance companies, the Public Employees' Benefit Board and managed care organizations and only the portion of the hospital assessment that is in effect from October 6, 2017, through the later of January 1, 2018, or the date a federal agency approves other changes to the assessment made by House Bill 2391. The measure does not ask voters to approve or reject the portions of the hospital assessment that are in effect beginning on the later of January 1, 2018, or the date of federal agency approval."

         Petitioners object to all parts of the ballot title. In response, the Attorney General and amicus Unger contend that the ballot title substantially complies with statutory requirements. We address their contentions below.

         [362 Or. 102] II. ANALYSIS

         A. Caption

         We begin with the caption, which must "reasonably identif[y] the subject matter" of RP 301. ORS 250.035(2)(a). Petitioners contend that the caption fails to satisfy that standard in several ways. First, the caption does not reasonably identify the temporary assessments imposed in sections 3(2), 5(2), 9(2), and 27(2)(2) of HB 2391 (now contained in RP 301), nor the authority for insurers to increase premiums in section 8(2). Second, the caption is a long, run-on sentence that obscures those "direct subjects" of RP 301 by inappropriately magnifying and focusing on "secondary and speculative" effects-that is, programs that "may be funded" under HB 2391 (emphasis petitioners'). Third, to more accurately describe the temporary assessments, the caption should use the word "tax." Petitioners contend that the caption is "fundamentally flawed and should be discarded." The Attorney General and amicus Unger respond that the caption appropriately explains that the revenue from the temporary assessments will fund certain programs budgeted in HB 2391, and they also disagree with petitioners' remaining contentions.

         The "subject matter" of a proposed measure, ORS 250.035(2)(a), refers to its "actual major effect" or, "if the measure has more than one major effect, all such effects" within any applicable word limit. Whitsett v. Kroger, 348 Or. 243, 247, 230 P.3d 545 (2010). "To determine the subject matter of a proposed measure, we first examine its words and the changes, if any, that the proposed measure would enact in the context of existing law." Kainl" Waller v. Myers, 337 Or. 36, 41, 93 P.3d 62 (2004). As explained, the ballot title for RP 301 has no applicable word limit, but its caption nonetheless must state or describe the subject matter accurately, "in terms that will not confuse or mislead potential petition signers and voters." Greene v. Kulongoski, 322 Or. 169, 175, 903 P.2d 366 (1995). For the reasons explained below, we agree with petitioners that the ballot title caption for RP 301 does not substantially comply with ORS 250.035(2)(a), in two ways.

         [362 Or. 103] We begin with the text of RP 301. That measure is not a referendum on HB 2391 in its entirety, but instead includes only certain sections of the bill. The major, immediate effect based on the text alone-that is, the new law that RP 301 would enact-is the imposition of new, temporary assessments (sections 3(2), 5(2), 9(2), and 27(2)(2)), and the related grant of authority to insurers to increase insurance premiums (section 8(2)). The temporary assessments are generally described in the second part of the caption.

         When considered in the context of existing law, another major effect is apparent: Once approved, the new temporary assessments would work together with the other provisions of HB 2391, such that the incoming revenue would be directed to the Health System Fund or the Oregon Health Authority to pay for-as described in the caption-"health care for low-income individuals and families, " and "stabilizing health insurance premiums." Indeed, it appears that, without most of the temporary assessments, the Health System Fund would lose the revenue sources created in HB 2391.[8] We disagree with petitioners that those effects on the intended operation of HB 2391 are merely "speculative." To the contrary, those substantial effects are intertwined with the new assessments and are appropriately included in the caption. See generally Kain/Waller, 337 Or at 41-44 (measure that would impose broad property tax cap had effect of significantly altering existing tax structure; caption must describe that effect); cf. Caruthers v. Myers, 343 Or. 162, 166 P.3d 514 (2007) (approving caption that described only proposed new tax exemption but not predicted effect on existing tax revenues and funded programs; measure concerned limited tax exemption for only certain property owners, without any structural tax implications).

         Underlying petitioners' arguments, however, is the proposition that the caption obscures the immediate, major effect that flows directly from the text of RP 301: imposition of new temporary assessments. As written, the caption [362 Or. 104] first emphasizes with some detail the programs designed to benefit from "currently budgeted" revenue generated by the assessments and then states, in a secondary manner, that those programs would be funded by "using" the assessments. That framing has the potential of misleading voters, by suggesting that the assessments already exist. See McCormick v Kroger/Devlin, 347 Or. 293, 299, 220 P.3d 412 (2009) (caption that stated that a proposed tax increase would "maintain[]" budgeted funds for particular governmental services did not accurately convey that referendum would provide additional new revenue); Fred Meyer, Inc. v. Roberts, 308 Or. 169, 174, 777 P.2d 406 (1989) (caption did not reasonably identify measure's subject, because it may have led voters to think that they were simply being asked to confirm existing law).

         Also, as petitioners suggest, the caption as written may confuse or mislead voters, by including a lengthy-and difficult to read-description of programs funded in HB 2391 before describing the new temporary assessments that would fund them. We agree that the immediate, direct effect of RP 301 must be more prominently, and also accurately, explained. The caption therefore must be modified, so that it clearly conveys to voters that RP 301 would impose new temporary assessments that would fund certain programs. See generally Kendoll v. Rosenblum, 358 Or. 282, 289, 364 P.3d 678 (2015) (referring caption that was "unnecessarily difficult to understand" and, therefore, did not "sufficiently explain the subject matter").

         Petitioners also contend that the subject matter of RP 301 includes not only the temporary assessments, but also the authority granted to insurers in section 8(2) to increase their premium rates on policies subject to the assessments on insurers. The caption, however, does not mention that aspect of the subject matter at all; instead, it refers to only the assessments. As noted above, we agree with petitioners that the authority to increase premiums set out in section 8(2) is also a major effect of RP 301. Particularly given that no word limit applies to the caption, it must be modified to reasonably identify that additional subject matter set out in section 8(2). See Kendoll, 358 Or at 288-89 (2015) (caption [362 Or. 105] should highlight, for potential voters, "significant component of the subject matter" reflected in express text enacting change to current law); Towers v. Myers, 341 Or. 357, 361, 142 P.3d 1040 (2006) (caption that described only one of several changes that proposed measure would make to existing law was impermissibly underinclusive).

         Petitioners also argue that the caption's general description of the temporary assessments-"temporary assessments on insurance companies, some hospitals and other providers of health insurance or health care coverage"-does not reasonably identify the types and amounts of the assessments, and who must pay them. Petitioners are correct that sections 3(2), 5(2), 9(2), and 27(2)(2) of HB 2391, as set out in RP 301, more specifically identify certain entities as subject to new temporary assessments designated at particular rates.[9] A ballot title caption, however, need not convey that level of specificity, so long as the subject matter is accurately conveyed in an understandable way. We conclude that the more general description of the temporary assessments in the caption substantially complies with the "subject matter" requirement of ORS 250.035(2)(a). See Blosser / Romain v. Rosenblum (IP 45), 358 Or. 295, 300-01, 365 P.3d 525 (2015) (approving general wording in caption and rejecting argument for more specific wording, more appropriately used in other parts of ballot title); McCann / Harmon v. Rosenblum, 354 Or. 701, 707, 320 P.3d 548 (2014) O'[a]t times, it may be necessary to describe [measure's] effects generally").

         Finally, petitioners argue that the caption's use of the term "temporary assessments" does not sufficiently convey the subject matter of RP 301 because, in essence, the assessments are actually "taxes." As petitioners put it, an [362 Or. 106] "assessment" based on a percentage of net revenue (or on insurance premium earnings or equivalents) "is a tax in every normative sense of the word, " and the revenue-raising mechanism set out in the identified provisions possesses "the essential features" of levying a tax. Petitioners add that, before funds generated by the assessments can be "use[d]" to provide funding for various purposes described in the caption, they first must be collected, and the "means of collecting them in RP 301 are taxes." They also argue that ...


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