ATTORNEYS FOR PETITIONERS: ATTORNEYS FOR RESPONDENT:
GERALD M. BISHOP STEVE CARTER
JOHN S. DULL ATTORNEY GENERAL OF INDIANA
ATTORNEYS AT LAW Indianapolis, IN
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
MICHAEL GRIFFIN and LAKE COUNTY, )
a political subdivision of the State of Indiana, )
v. ) Cause No. 49T10-0009-TA-98
DEPARTMENT OF LOCAL )
GOVERNMENT FINANCE, )
ORDER ON PARTIES CROSS-MOTIONS FOR SUMMARY JUDGMENT
September 9, 2003
In August of 2000, the Petitioner, Michael Griffin, filed an original tax appeal
in which he charged that Indianas Hospital Care for the Indigent Tax (HCI
tax) violated Article 10, § 1 of the Indiana Constitution, Article 1, §
23 of the Indiana Constitution, and the Fourteenth Amendment to the United States
Constitution. This Court subsequently issued an opinion on Griffins appeal, holding that
the HCI tax violated Article 10, § 1 of the Indiana Constitution because
it resulted in the non-uniform and unequal taxation of substantially similar property throughout
the state. Griffin v. Dept of Local Govt Fin., 765 N.E.2d 716
(Ind. Tax Ct. 2002) (Griffin I). As a result, the Court did
not address Griffins other constitutional challenges. See id. at 718 n. 2.
On March 5, 2003, the Indiana Supreme Court reversed this Courts holding in
Griffin I. Dept of Local Govt Fin. v. Griffin, 784 N.E.2d 448
(Ind. 2003) (Griffin II). Consequently, the case now returns to this Court
to resolve the remaining constitutional issues initially raised by Griffin:
I. Does the HCI tax violate Article 1, § 23 of the
II. Does the HCI tax violate the Equal Protection Clause of the
Fourteenth Amendment to the United States Constitution?
III. Does the HCI tax violate the Due Process Clause of the
Fourteenth Amendment to the United States Constitution? ANALYSIS AND OPINION
Standard of Review
Both Griffin and the Department of Local Government Finance (Department) have filed motions
for summary judgment on the remaining constitutional issues. Summary judgment is proper
only when no genuine issues of material fact exist and the moving party
is entitled to judgment as a matter of law. See Ind. Trial
Rule 56(C). See also W.H. Paige & Co. v. State Bd. of
Tax Commrs, 732 N.E.2d 269, 270 (Ind. Tax Ct. 2000). Cross motions
for summary judgment do not alter this standard. W.H. Paige, 732 N.E.2d
In Griffin II, our Supreme Court described the HCI program:
Before 1986, each of Indianas counties bore all responsibility for indigent health care.
The legislature enacted the HCI provisions in 1986 and then recodified them
in 1992 at Ind[iana ]Code §§ 12-16-2-1 to 12-16-16-3. The general purpose
was to provide cost-free emergency medical care to indigent patients who did not
qualify for Medicaid. The HCI program transferred the administration of indigent health
care to the State and imposed an HCI tax levy to finance it.
Under the present arrangement, the Department  review[s] each countys property tax levy
. . . and . . . enforce[s its] requirements[.] Each
county annually imposes the levy as a property tax for that county and
collects it like other state and county ad valorem property taxes. Unlike
the general property tax levy, the Indiana Code prescribes the amount of the
HCI levy for each county; it is the previous years levy increased by
the percentage of growth in assessed value of all property in the state.
Certain statutory limits on property tax rates may be exceeded [to] meet
the requirements of the county hospital care for the indigent fund.
[A]n HCI fund [is established] in each county. The balance of each
countys HCI fund is transferred to the state HCI fund. The State
administers the HCI program and reimburses providers of emergency medical care to the
indigent for their expenses from the state HCI fund. In 1993, the
legislature modified the HCI program to secure additional federal Medicaid funds by using
$35 million of the state HCI fund as matching money.
The initial HCI levy for each county had been set at the average
of its indigent hospital care expenditures over 1984-86, with certain adjustments. The
HCI tax rate thus varies from county to county because of the difference
in the counties historical expenditures on hospital services for the indigent during the
years immediately before the HCI program was enacted.
Griffin II, 784 N.E.2d at 451-52 (internal citation, quotation, and footnotes omitted).
Griffins Remaining Constitutional Claims
It was against this backdrop that Griffin asserted the HCI tax violated Article
10, § 1 of the Indiana Constitution. More specifically, he argued that
because the HCI tax rates varied from county to county, as opposed to
one tax rate applied uniformly and equally across the state,
the HCI tax
violated Indianas constitutional guarantee that all property within the state be assessed and
taxed at a uniform and equal rate. See Ind. Const. art. 10,
The Supreme Court, however, rejected Griffins argument; it determined that Article 10, §
1 of the Indiana Constitution requires that the same HCI tax rate shall
apply alike to all in any given taxing district, whatever that taxing district
may be (i.e., the state, a county, a township, or a municipality).
Griffin II, 784 N.E.2d at 452-53 (emphasis added). The Supreme Court also
explained that despite the fact that the HCI tax is a combined effort
of [the] state, local, and federal government to advance the welfare of [Indianas]
indigent[,] id. at 455, there was no constitutional evil in . .
. set[ting] the rate of local contribution so that it varies in
harmony with expenses for indigent health care in the local area. Id.
at 456. Consequently, the Supreme Court implicitly acknowledged the legislatures classification of
taxpayers on a county-by-county basis. See id. (stating that the General Assembly
[complied with the requirements of Article 10, § 1 when it] decided that,
for purposes of financing indigent health care, the counties were not similarly situated
and varied the tax burden accordingly). Furthermore, because all taxpayers within each
county are subject to the same HCI tax rate, the Supreme Court held
there was no Article 10, § 1 violation. See id. at 459.
The Court now turns to Griffins remaining constitutional claims. The Court notes,
however, that its standard of review for alleged violations of the Indiana Constitution
is well established: the statutes providing for the HCI tax are presumed
constitutional until Griffin, as the party challenging their constitutionality, clearly overcomes the presumption
by a contrary showing. See State Bd. of Tax Commrs v. Town
of St. John, 702 N.E.2d 1034, 1037 (Ind. 1998) (St. John V).
I. Article 1, § 23 of the Indiana Constitution:
The Privileges and Immunities Clause
Article 1, § 23 of the Indiana Constitution provides: The General Assembly
shall not grant to any citizen, or class of citizens, privileges or immunities,
which, upon the same terms, shall not equally belong to all citizens.
Ind. Const. art. 1, § 23. According to Griffin, the HCI tax
is unconstitutional under Section 23 because it arbitrarily establish[es] a class of taxpayers
(property owners in the County with the lowest . . . HCI tax)
and provid[es] them with a privilege not equally shared by members of the
same class (taxpayers in those counties who . . . pay a higher
HCI tax). (Petr Mem. In Support of [Its] Mot. for Partial Summ.
J. at 20.)
Claims asserted under Article 1, § 23 are subject to the two-part test
enunciated in Collins v. Day, 644 N.E.2d 72 (Ind. 1994). First, the
disparate treatment must be reasonably related to inherent characteristics which distinguish the unequally
treated classes. Id. at 78-79. Second, the preferential treatment must be
uniformly applicable and equally available to all persons similarly situated. Id. at
In applying this test, the Court must first determine whether HCI tax is
reasonably related to the inherent characteristics that define, or distinguish, the classes.
In this case, each class (i.e., county) is not defined by its HCI
tax rate. Rather, each class is defined by its historical expenditures on
indigent health care. As the Indiana Supreme Court discussed within the context
of Griffins Article 10, § 1 claim, the HCI funding formula reflects the
legislative determination that the local areas should contribute to the HCI fund in
proportion to the HCI benefits they in turn receive. See Griffin II,
784 N.E.2d at 456. Lake Countys HCI tax rate is the highest
in the state for no other reason than it has historically received much
more HCI service than  other counties. Id. at 458 n. 14.
Thus, the distinction between counties is neither arbitrary nor unreasonable, but rationally
related to the legislative goal of matching burden with benefit. Id. at
Turning to the second prong of the Collins test, this Court must ensure
that the preferential treatment provided by HCI tax is uniformly applicable to all
similarly situated persons. See Collins, 644 N.E.2d at 80. Griffin argues
that the HCI tax is unconstitutional as applied: although  similarly situated
to other taxpayers in, for example, Marion County, [Lake County taxpayers are] subjected
to a substantially different tax burden despite the fact that the funds
collected [by all counties] are used for the same purpose[.] Griffins argument
must again fail, for it ignores the fact that he, as a member
of the Lake County class, is in a class separate from the other
91 classes of taxpayers throughout the state.
Furthermore, within his respective class, Griffin is treated no differently than any other
taxpayer in Lake County they all pay the HCI tax at the
same rate. Likewise, a taxpayer in Allen County pays the HCI tax
at the same rate as all other taxpayers in Allen County; a taxpayer
in Marion County pays the HCI tax at the same rate as all
other taxpayers in Marion County; a taxpayer in Wells County pays the HCI
tax at the same rate as all other taxpayers in Wells County.
Within each respective county classification, each taxpayer is treated consistently. Consequently, it
cannot be said that the HCI tax, as applied, violates Article 1, §
23 of the Indiana Constitution.
II. The Equal Protection Clause:
Griffins Fourteenth Amendment Challenge
Griffin also claims that the HCI tax violates the Equal Protection Clause of
the United States Constitution, which provides [n]o state shall . . . deny
to any person within its jurisdiction the equal protection of the laws. U.S.
Const. amend. XIV, § 1 (emphasis added). The United States Supreme
Court has explained that is essentially a direction that all persons similarly situated
should be treated alike. City of Cleburne v. Cleburne Living Ctr., 473
U.S. 432, 439 (1985). Griffins claim for equality fares no better under
Fourteenth Amendment analysis than it did under Article 1, § 23.
Under federal equal protection analysis, absent a showing that the challenged classification involves
a suspect class or trammels on fundamental rights, the HCI tax is presumed
valid and will be upheld so long as the classification is rationally related
to a legitimate state interest. See id. at 440. Consequently, the
Equal Protection Clause does not forbid classifications. It simply keeps governmental decision
makers from treating differently persons, who in all relevant respects are alike.
Nordlinger v. Hahn, 505 U.S. 1, 10 (1992).
As the foregoing discussion shows, Griffin and his fellow Lake County taxpayers are
not similarly situated to other taxpayers outside Lake County. The separate classification
and treatment of taxpayers within each county for purposes of the HCI tax
is rationally related to the legitimate policy that each county pay the HCI
tax in proportion to its expenses for indigent medical care. Thus, in
the absence of evidence that Griffin has been treated differently from other taxpayers
within Lake County, this Court cannot find a violation of his federal equal
III. The Due Process Clause:
Griffins Second Fourteenth Amendment Challenge
In addition to providing equal protection under law, the Fourteenth Amendment also guarantees
that no state shall deprive any person of life, liberty, or property, without
due process of law. U.S. Const. amend. XIV, § 1.
Due process contains both procedural and substantive elements. Procedural due process requires
that taxpayers be provided with notice and a meaningful opportunity to be heard
before a tax liability is finally fixed. Town of St. John v.
State Bd. of Tax Commrs, 690 N.E.2d 370, 388 (Ind. Tax Ct. 1997)
(St. John III). Substantive due process requires that taxation not be arbitrary,
oppressive, or unjust. Id.
Griffin alleges that the HCI tax violates substantive due process. Thus, in
order to claim that the HCI tax interferes with his substantive due process
rights, Griffin must be able to demonstrate either that 1) it infringes fundamental
rights [or] liberties which are, objectively, deeply rooted in this Nations history and
tradition and implicit in the concept of ordered liberty, such that neither liberty
nor justice would exist if they were sacrificed, Washington v. Glucksberg, 521 U.S.
702, 720-21 (1997) (citations omitted); or 2) the HCI tax is arbitrary and
unreasonable, having no substantial relation to the public health, safety, morals, or general
welfare. Euclid v. Ambler Realty Co., 272 U.S. 365, 394 (1926).
Griffin seeks to have his claim resolved on the arbitrary and unreasonable showing.
Generally, Griffin claims the HCI tax is arbitrary because the HCI tax funding
formula is fundamentally flawed -- in reality, it does not match a countys
burden with its benefit because there is no apparent or reasonable correlation between
the percentage contribution of HCI tax paid by a [c]ounty, and the amount
of HCI tax benefits that same [c]ounty received in return. (Petr Supp.
Mem. In Support Of [Its] Mot. for Partial Summ. J. at 5.)
Specifically, he claims the HCI funding formula is arbitrary for eight reasons:
1) the HCI tax changes annually without any reference to actual HCI claims
or expenditures; 2) the HCI funding formula uses claims experience data from 1984-1986
as a basis for the assessment of HCI taxes ad infinitum; HCI taxes
will continue to increase ad infinitum irrespective of need; 4) the HCI tax
uses a formula which is dependent upon real estate as a component; 5)
HCI tax proceeds are currently being used for a purpose contrary to the
purpose of the funding formula; 6) the use of HCI funds for Medicaid
matching funds imposes a disproportionate share of taxes upon [the counties] to pay
the States obligation; 7) the fixed base being used in the HCI formula
(which was predicated upon emergency expenditures in a given county) has no rational
relationship to how the State should raise $35 million dollars for Medicaid matching
purposes; and 8) the annual growth quotient is based upon a state-wide average.
(Petr Mem. In Support of [Its] Mot. for Partial Summ. J. at
Arbitrary and unreasonable has been interpreted to mean invidious or irrational. Coniston
Corp. v. Village of Hoffman Estates, 844 F.2d 461, 467 (7th Cir. 1988).
This Court has stated that governmental action will be deemed irrational only
if no sound reason may be hypothesized for the action whatsoever. St.
John III, 690 N.E.2d at 391 (internal quotation and citation omitted). In
other words, the government need not prove a sound reason to the Courts
satisfaction in order to pass the rational basis test it merely needs
to hypothesize a sound reason. Id.
As the Supreme Court pointed out, despite Griffins complaints about paying a higher
HCI rate than others and about HCI funds being used to leverage Medicaid
dollars, the net effect of the current HCI funding formula has been to
generate more money to aid the poor without provoking  higher property tax[.]
Griffin II, 784 N.E.2d at 457. This reason, alone, is
sufficient on its face to pass the arbitrary and unreasonable test of Euclid.
Thus, in attempting to distribute the HCI burden amongst the counties
in proportion to their historical expenditures for indigent health care, all the while
generating up to another $45 million in federal matching funds to use for
providing care to Indianas poor, the Department acted in a rational manner.
Consequently, Griffins substantive due process claim fails.
For the aforementioned reasons, this Court finds that the material facts in this
case are undisputed and that, as a matter of law, the HCI tax
does not violate Article 1, § 23 of Indiana Constitution, nor does it
violate the Equal Protection Clause or the Due Process Clause of the Fourteenth
Amendment to the United States Constitution. Therefore, this Court DENIES Griffins motion
for partial summary judgment and GRANTS the Departments cross motion for summary judgment.
SO ORDERED this 9th day of September, 2003.
Thomas G. Fisher, Judge
Indiana Tax Court
Gerald M. Bishop
2115 W. Lincoln Highway
Merrillville, IN 46410
John S. Dull
8300 Mississippi St., Ste. F
Merrillville, IN 46410
Attorney General of Indiana
By: Frances M. Barrow
Deputy Attorney General
Indiana Government Centers South, Fifth Floor
402 West Washington Street
Indianapolis, IN 46204
At the crux of Griffins complaint is the fact that the
HCI tax rate in Lake County, Indiana is the highest in the state.
Accordingly, Griffin complains that as an owner of property in Lake County,
he pays HCI tax at a higher rate than property owners in other
Footnote: In subsequent briefing filed with the Court, Griffin states that
is not challenging the fact that the HCI funding formula is based upon
extrapolated HCI data from 1984-86, but rather whether . . . the method
of extrapolation of that data is constitutional; whether the results of that extrapolation
are constitutional; whether or not it is constitutional  to use historical HCI
data to subsequently fund non-HCI Medicaid; and whether or not the continued use
of that extrapolated data now results in the imposition of a tax which
is unconstitutional[.] (Petr Reply to [Respt] Supp. Mem. at 11-12.)