Robison Med. Research Grp., LLC v. N.M. Taxation & Revenue Dep't

535 P.3d 709

ROBISON MEDICAL RESEARCH GROUP, LLC, Protestant-Appellee,

v.NEW MEXICO TAXATION & REVENUE DEPARTMENT, Respondent-Appellant,

In the Matter of the Protest of Robison Medical Research Group, LLC to the Assessment Issued Under Letter ID No. L0625306288.

No. A-1-CA-39784

Court of Appeals of New Mexico.

Filing Date: June 20, 2023

Modrall, Sperling, Roehl, Harris & Sisk, P.A., Zachary L. McCormick, Ian W. Bearden, Albuquerque, NM, for Appellee

Raúl Torrez, Attorney General, David Mittle, Special Assistant Attorney General, Santa Fe, NM, for Appellant

WRAY, Judge.

{1} The Legislature has repeatedly amended NMSA 1978, Section 7-9-93(A) (2004, as amended through 2021). See also H.B. 547, 2023 Leg., 56th Sess., § 36 (N.M. 2023).¹ The Statute relates to a tax deduction for the provision of medical services. In the present case, the New Mexico Taxation and Revenue Department (the Department) disputes the hearing officer's determination that taxpayer Robison Medical Resource Group, LLC (Robison), a medical staffing company, is entitled to take the Deduction of gross receipts on behalf of its nurse employees under the previous historical statutes, either NMSA 1978, Section 7-9-93(A) (2007) or NMSA 1978, Section 7-9-93(A) (2016). Based on the circumstances of the present case, we affirm.

BACKGROUND

{2} Because the parties stipulated to the relevant facts as they were set forth in Robison's prehearing statement, we rely primarily on that recitation for the factual background in this case.² Between January 31, 2013 and April 30, 2019, Robison had commercial contracts with the Department of Veterans Affairs (the VA) and Indian Health Service (IHS). Under these contracts, Robison's nurse employees would provide health care services for the VA and IHS. In 2020, the Department assessed Robison for unpaid gross receipts taxes for the 2013 through 2019 period (the assessment period). Robison timely filed a written protest and claimed the Deduction for each of the tax years during the assessment period. The parties filed cross-motions for summary judgment.

{3} In the summary judgment decision, the hearing officer, based on the parties’ stipulations, found that (1) all of Robison's receipts during the assessment period derived from commercial contracts with the VA and IHS, which are managed health care providers;³ (2) Robison's nurse employees are health care practitioners who provided health care services; and (3) Robison is not a licensed health maintenance organization (HMO), hospital, hospice, nursing home, or a solely outpatient facility or intermediate care facility. These facts, the hearing officer concluded, satisfied the "basic statutory criteria" for the Deduction. The hearing officer also rejected the Department's argument that in Golden Services Home Health and Hospice v. New Mexico Taxation & Revenue Department (Golden Services ), A-1-CA-36987, 2020 WL 2045956, mem. op. (N.M. Ct. App. Apr. 20, 2020) (nonprecedential), the availability of the Deduction was limited to individual health care practitioners. Instead, the hearing officer determined that 3.2.241.13 NMAC, a regulation accompanying the Statute, permits some corporate entities to claim the Deduction. Because Robison was not an excluded entity under the regulation, the hearing officer determined that Robison was entitled to the Deduction. The Department appeals.

DISCUSSION

{4} A hearing officer's decision is set aside "only if we find [it] to be (1) arbitrary, capricious or an abuse of discretion; (2) not supported by substantial evidence in the record; or (3) otherwise not in accordance with the law." Team Specialty Prods., Inc. v. N.M. Tax'n & Revenue Dep't , 2005-NMCA-020, ¶ 8, 137 N.M. 50, 107 P.3d 4 (internal quotation marks and citation omitted); accord NMSA 1978, § 7-1-25(C) (2015). We review de novo questions of law and the application of the law to the facts. TPL, Inc. v. N.M. Tax'n & Revenue Dep't , 2003-NMSC-007, ¶ 10, 133 N.M. 447, 64 P.3d 474. The primary issue before us is whether the Statute permits Robison to take the Deduction of gross receipts on behalf of employees who are health care providers.

{5} As we have noted, the Statute has been repeatedly amended in recent years. Because one of these amendments took place during the assessment period, in 2016, see 2016 N.M. Laws, ch. 3, § 5 (enacting Section 7-9-93(A) (2016) ), a question arises as to whether the 2007 or the 2016 version of the Statute applies. The Department maintains that Section 7-9-93(A) (2016) applies to the present case but also contends that Robison is not entitled to the Deduction under any version of the Statute. Robison contends that because the two statutes do not significantly or materially differ, it is entitled to the Deduction regardless of whether we apply Section 7-9-93(A) (2007) or Section 7-9-93(A) (2016). We agree with Robison and explain.

I. The Statutory Amendments and Accompanying Regulations

{6} Section 7-9-93(A) (2007) stated as follows, in relevant part: "Receipts from payments by a managed health care provider or health care insurer for commercial contract services or medicare part C services provided by a health care practitioner that are not otherwise deductible pursuant to another provision of the Gross Receipts and Compensating Tax Act ... may be deducted from gross receipts." (Emphasis added.) The amendment in 2016 changed the arrangement of this provision: "Receipts of a health care practitioner for commercial contract services or medicare part C services paid by a managed health care provider or health care insurer may be deducted from gross receipts if the services are within the scope of practice of the health care practitioner providing the service." Section 7-9-93(A) (2016) (emphasis added). The 2021 amendment to the Statute included the receipts of an "association of health care practitioners" in the Deduction. See § 7-9-93(A).⁴

{7} Since 2006, 3.2.241.13 NMAC has accompanied each iteration of Section 7-9-93(A). The regulation, titled "Receipts of Corporate Practice," provides:

A corporation, unincorporated business association, or other legal entity may deduct under Section 7-9-93 ... its receipts from managed health care providers or health care insurers for commercial contract services or medicare part C services provided on its behalf by health care practitioners who own or are employed by the corporation , unincorporated business association or other legal entity that is not:

A. an organization described by Subsection A of [NMSA 1978,] Section 7-9-29 [(2019)]; or

B. an HMO, hospital, hospice, nursing home, an entity that is solely an outpatient facility or intermediate care facility licensed under the Public Health Act.

3.2.241.13 NMAC (emphasis added). Additionally, 3.2.241.17 NMAC specifically states that "[a]n organization" that is "licensed as a hospital, hospice, nursing home, an entity that is solely an outpatient facility or intermediate care facility under the Public Health Act is not a ‘health care practitioner’ as defined by Section 7-9-93," and the "[r]eceipts of such an organization are not deductible under Section 7-9-93." With this as context, we consider the application of the Statute and regulations.

II. The Statute and Current Regulations Contemplate That Entities May Take the Deduction on Behalf of Health Care Practitioner Employees

{8} The question before us is who, under the Statute, may claim the Deduction. The answer, according to the Department, is "individual health care practitioners," based on the Statute's language and the amendments. We first consider the Statute's language, because the primary goal in interpreting the state tax code is "to give effect to the intent of the Legislature," and we evaluate "legislative intent by first looking at the plain meaning of the language of the statute, reading the provisions together to produce a harmonious whole." See Sacred Garden, Inc. v. N.M. Tax'n & Revenue Dep't , 2021-NMCA-038, ¶ 5, 495 P.3d 576 (alterations, internal quotation marks, and citation omitted).

{9} The plain meanings of the language in all of the versions of the Statute do not identify who can take the Deduction, much less whether the employers of health care practitioners may take the Deduction. The primary difference between Section 7-9-93(A) (2007) and Section 7-9-93(A) (2016) is in the initial clause. Section 7-9-93(A) (2007) provides: "Receipts from payments by a managed health care provider or health care insurer for commercial contract services or medicare part C services provided by a health care practitioner ... may be deducted." The 2016 statute reorders the language as follows: "Receipts of a health care practitioner for commercial contract services or medicare part C services paid by a managed health care provider or health care insurer may be deducted." Section 7-9-93(A) (2016). The 2016 amendment highlighted that the receipts to be deducted must be the receipts of a health care practitioner. See Golden Services , A-1-CA-36987, mem. op. ¶ 24. But both the 2007 and 2016 versions of the Statute (as well as the later 2021 and 2023 versions) use the passive voice—the receipts may be deducted—and do not directly answer the question of "who is entitled to claim the [D]eduction." See Golden Services , A-1-CA-36987, mem. op. ¶ 14.

{10} New Mexico courts have repeatedly stated, as the Department notes, that "[t]he right to a deduction must be clearly and unambiguously expressed in the statute." TPL, Inc. , 2003-NMSC-007, ¶ 9, 133 N.M. 447, 64 P.3d 474. A plain reading of all versions of the Statute, however, results in no one being "clearly and unambiguously" entitled to the Deduction. See id. Because we reject the proposition that the Legislature created a tax deduction that could not be claimed by anyone, see Santa Fe Cnty. Bd. of Cnty. Comm'rs v. Town of Edgewood , 2004-NMCA-111, ¶¶ 5, 7, 136 N.M. 301, 97 P.3d 633 (declining to interpret a statute to be meaningless and without effect), we must look...