The action by the conservative public policy and research organization, based in Phoenix, comes a day after legislative efforts to refer the issue to voters failed in the state legislature.
The lawsuit against Gov. Jan Brewer and the state Medicaid director argues the governor and a coalition in the legislature violated Arizona's Constitution by imposing a tax on hospitals without obtaining a two-thirds majority in the legislature.
It also claims lawmakers ceded authority to the executive branch of government by allowing a state agency director to raise taxes on hospitals to fund Medicaid, in violation of the Constitution's separation of powers.
The new law expands Medicaid access to the poor, and although most of the cost will be covered by the federal affordable Care Act, Arizona's share will be paid through fees on hospitals,The (Phoenix) Arizona Republic said Thursday.
"This is taxation without representation," said Christina Sandefur of the Goldwater institute. "What they've basically tried to do is make an end-run around one constitutional provision, and by doing so, we think they've violated a second constitutional provision."
The case will likely hinge on an exemption in the state's Proposition 108, stating a two-thirds majority in the legislature is not required for "fees and assessments authorized by statute ... and are set by a state officer or agency," the newspaper noted.
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