State loses ruling on adoptions

Date: 2000-07-13

The Arizona Daily Star
Author: Howard Fischer, CAPITOL MEDIA SERVICES

Out-of-state parents who adopt Arizona children do not have to reimburse the state for medical costs.

In a unanimous decision, the 9th U.S. Circuit Court of Appeals yesterday voided a 5-year-old state law designed to ensure that Arizona taxpayers do not pay for prenatal and delivery costs of children who end up being adopted by couples elsewhere.

The judges said the state is constitutionally barred from imposing a fee on out-of-state residents that it does not charge its own.

The ruling is a victory for the Birth Hope Adoption Agency.

Seymour Kurtz, owner of the Phoenix-based private agency, said virtually all of the birth mothers it works with in Arizona are poor. That makes them eligible for free care from the Arizona Health Care Cost Containment System.

Moreover, Kurtz said, all the children it handles for fees of up to $45,000 are placed for adoption out of state.

In 1995 lawmakers approved legislation requiring reimbursement of AHCCCS costs. Following that action, state officials sent a letter to Birth Hope demanding payment for the costs AHCCCS had incurred in providing care to mothers whose children were placed for adoption out of state.

U.S. District Judge Earl Carroll threw out a lawsuit filed by the adoption agency. Instead, he accepted arguments by AHCCCS attorney Logan Johnston, who said there was no bias because a separate law affects in-state couples.

Appellate Judge Edward Leavy acknowledged that a state can impose a tax on out-of-state residents without violating constitutional provisions that bar states from interfering in interstate commerce. He said, though, that the levy must be roughly similar to what is assessed to its own residents.

The other law relied on by the state requires "coordination of benefits" with private health insurers, the state's workers compensation plan and others "so that any costs for hospitalization and medical care paid by the (Arizona Health Care Cost Containment) System are recovered from any other available third party payors."

That, said Leavy, is not the same as requiring out-of-state parents themselves - and not just their insurers - to reimburse the state for its costs.

Johnston said the state does try to recover prenatal and birth costs from in-state couples that adopt babies from AHCCCS-eligible mothers. He said the way the state sees it, adoptive parents - and the agencies with which they deal - are just as obligated to pay costs as any insurance company.

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