In a challenge by three hospitals to the New Hampshire Medicaid enhancement tax (MET), a state superior court held that the MET violated the equal protection clause of the New Hampshire Constitution. The hospitals argued that the MET was unconstitutional because it taxed hospitals but not non-hospitals, despite the fact that the two provided oftentimes identical medical or health services. The court noted that in contrast to other health care laws, the MET did not limit expenditure of funds collected from hospitals on uncompensated care payments to hospitals. Instead, the MET called for about 50% to lapse to the general fund. The Department of Revenue Administration had failed to articulate a sufficient basis for requiring hospitals, but not non-hospitals, to pay a tax on their net patient services revenue where only a portion of the money was reserved for hospital-related purposes. The court concluded that hospital and non-hospital health service providers were similarly situated taxpayers that impermissibly received discriminatory treatment under the MET. Further, there was no rational basis to support the imposition of the MET on hospitals but not non-hospitals. Finally, the court would not sever any portion of the MET, but found it unconstitutional on its face and in its entirety.
Catholic Medical Center v. N.H. Department of Revenue Administration, New Hampshire Superior Court, Nos. 216-2011-CV-00955, 216-2011-CV-00850, and 218-2011-CV-01394, April 8, 2014, ¶200-883