Attorney General Derek Schmidt said Wednesday a U.S. District Court judge in Texas ruled the federal government should reimburse Kansas $56 million collected on a now-rescinded health insurance provider fee tied to the Affordable Care Act.

The fee was gathered in Kansas and other states during a three-year period prior to Judge Reed O'Connor's ruling the fee was an illegal tax on state treasuries. Managed-care companies operating Medicaid programs in Kansas passed the burden of the fee onto state government until the Obamacare mandate was suspended in 2017.

"As we’ve argued from the beginning of this case, the two-step HIP fee scheme illegally taxes treasuries in states like Kansas to pay for federal expenditures, and the unlawfully collected amounts must be returned to the states," Schmidt said.

The $56.6 million contained in the judge's final judgment Tuesday for Kansas reflected payment of fees from 2014 to 2016. The judgment required return of $479 million to Kansas, Nebraska, Texas, Indiana, Wisconsin and Louisiana.

Schmidt said the federal government was appealing the baseline decision on repayment of the fee, but wouldn't challenge amounts designated for each state.
 
"The federal government continues to fight our claim to recover these illegally collected funds, so Kansas cannot yet count on this money being available," the Kansas attorney general said.