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Scott withdraws lawsuit on LIP, says it was 'essential' to getting feds to continue subsidy

UPDATE: Gov. Rick Scott announced Thursday he was dropping the lawsuit filed in federal court in April, accusing the federal government of attempting to use the Low Income Pool funding to "coerce" the state into expanding Medicaid under the Affordable Care Act.

The cost to taxpayers for the legal challenge: $175,000, according a contract completed Thursday with the Washington, D.C., law firm Bancroft Associates, which represented Scott in Florida's challenge to the Affordable Care Act.  Download EXD053 - Bancroft_For Legal (3)

Scott all but conceded the lawsuit was moot on Tuesday when he signed the budget and accepted the terms of the LIP funding model developed by legislators and his agency staff.

But he waited until Thursay to announce he officially dropping the lawsuit -- an hour after the U.S. Supreme Court ruled in King v. Burwell to uphold subsidies for the uninsured in states like Florida that have established a federal insurance exchange. Scott had supported the King lawsuit and wants to see the Affordable Care Act repealed. 

In a statement, Scott said his lawsuit challenging LIP "was essential to making Obama continue LIP funding," but he cited no facts to back up that claim. 

The federal Centers for Medicare and Medicaid told the state last year that the funding for LIP was going to decline as it was phasing out subsidies to states that reimburse hospitals for charity care, but it never claimed it would eliminate all funding.

Scott claimed the reduction in LIP funding was an attempt to "coerce" Florida to accept $50 billion in federal funds to expand Medicaid and covering the uninsured but the agency denied those claims and said the move was part of its efforts to have money follow the patient. 

The same day the governor signed the budget, CMS sent the state's Agency for Health Care Administration a letter outlining its "agreement in principle" supporting the modified LIP funding model that was prepared only after the Florida Senate realized the Scott administration had not prepared for the potential loss in funding.

The final model allows the state to draw down federal matching funds and retain $1 billion of the federal funds it had previously received. It will also spend $400 million in state taxpayer funds to help offset the loss in federal funds. 

Scott called the agreement in principle "a tremendous win for low income families this week" because it meant the state could continue to received the federal LIP funding "even though our state did not expand Obamacare."

"It is unfortunate it took a lawsuit to make the right thing happen,'' he said in the statement. He also thanked Attorney General Pam Bondi for filing the lawsuit. 

Rep. Jose Javier Rodriguez, a Miami Democrat, called the governor's assertion that his lawsuit resulted in the federal government sending the state LIP money "totally absurd." He said it was ironic that Scott, who opposes Medicaid expansion because he claims it will expand the federal deficit, was now celebrating. 

"He's such a defender of federal tax subsidies that's he's jumping up and down because the administration continued another subsidy?,'' Rodriguez said.