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Governor asks US Supreme Court to evaluate fiscal board’s standards for rejecting local laws


Gov. Pedro Pierluisi

By The Star Staff


Gov. Pedro Pierluisi Urrutia has asked the U.S. Supreme Court to review the standard the Financial Oversight and Management Board uses to nullify new laws that are inconsistent with fiscal plans or the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA).


According to the petition filed on Nov. 18, PROMESA establishes two anti-democratic limitations on the power of Puerto Rico’s governor and Legislature to enact or enforce new statutes. First, PROMESA prohibits enacting or enforcing any law “that would impair or defeat the purposes of” PROMESA, “as determined by” the federally appointed oversight board.


Second, PROMESA allows the oversight board to seek to nullify legislation that is “significantly inconsistent with” the board’s certified fiscal plan, a blueprint for the commonwealth’s fiscal goals. As part of that process, PROMESA requires the governor to submit to the oversight board a “formal estimate … of the impact, if any, that the law will have on expenditures and revenues.” If the governor fails to submit such an estimate as well as a certification that the new law is not significantly inconsistent with the fiscal plan, PROMESA allows the oversight board to “seek judicial enforcement of its authority” to “ensure that the enactment or enforcement of the law will not adversely affect the territorial government’s compliance with the Fiscal Plan, including preventing the enforcement or application of the law.”


The government asked the top court to determine the standard of review that governs a district court’s evaluation of the oversight board’s determination that Puerto Rican legislation “would impair or defeat the purposes of” PROMESA and its review of that legislation for consistency with the fiscal plan. It also wants the top court to determine if the standard of review requires the board to reasonably and contemporaneously explain its decisions and to overturn an appeals court ruling that affirmed the oversight board’s holding to annul Acts 47, 82, 138 and 176.


Act 138 of 2019 amended Puerto Rico’s Insurance Code to prohibit health insurance companies from arbitrarily denying provider-enrollment applications from qualifying healthcare professionals and organizations in Puerto Rico. While the government determined the law will have no fiscal impact, the board rejected the Act 138 Certification for failure to provide the formal estimate of the fiscal impact.


Act 82 established the “Office of the Regulatory Commissioner of Administrators of Pharmacy Services and Benefits Managers” to regulate middlemen that negotiate medication costs between pharmaceutical companies and third-party payers. Before Act 82, those entities were unregulated in Puerto Rico, causing market inefficiencies, lack of transparency and inflated prescription drug prices, the government said.


On Dec. 18, 2019, the oversight board rejected the new law, contending that its “estimate is not ‘formal’ and not accurate because it provides only an ‘approximate impact’ of Act 82 on the Department of Health’s budget.”


In late 2019, the government enacted Act 176 to provide eligible public employees with the right to accumulate vacation and sick leave at the rates of 2.5 and 1.5 days per month, respectively. The new rates represent a modest increase of 0.5 days per month over the prior prevailing rates.


The oversight board rejected the new law’s certification because it “was not accompanied by the estimate required by PROMESA.”


The Supreme Court has not yet decided whether to review the case.

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