Crowe v. Bio–Med. Application of La., LLC

• Decision Date: 03 June 2016
• Docket Number: Nos. 2014 CA 0917,2014 CA 0918.,s. 2014 CA 0917
• Parties: Robert J. "Bobby" CROWE, Sheriff of Washington Parish v. BIO–MEDICAL APPLICATION OF LOUISIANA, LLC. Robert J. "Bobby" Crowe, Sheriff of Washington Parish v. AmerisourceBergen Drug Corporation.
• Court: Court of Appeal of Louisiana — District of US

208 So.3d 473

Robert J. "Bobby" CROWE, Sheriff of Washington Parish
v.
BIO–MEDICAL APPLICATION OF LOUISIANA, LLC.

Robert J. "Bobby" Crowe, Sheriff of Washington Parish
v.
AmerisourceBergen Drug Corporation.

Nos. 2014 CA 0917
2014 CA 0918.

Court of Appeal of Louisiana, First Circuit.

June 3, 2016.

208 So.3d 476

Robert R. Rainer, Drew M. Talbot, Baton Rouge, LA, and Margaret H. Kern, Covington, LA, and Russell J. Stutes, Lake Charles, LA, for Plaintiff/Appellee, Sheriff of Washington Parish.

Jesse R. Adams, III, Andre B. Burvant, Matthew A. Mantle, New Orleans, LA, for Defendant/Appellant, Bio–Medical Application of Louisiana and Counsel for Defendant, AmerisourceBergen Drug Corporation.

Before WHIPPLE, C.J., WELCH and DRAKE, JJ.

WHIPPLE, C.J.

In this suit for declaratory judgment regarding whether the purchases of certain prescription drugs are subject to local sales taxes, defendant, BioMedical Applications of Louisiana, LLC ("Bio–Medical"), appeals the district court's judgment, which: granted in part the motion for summary judgment filed by the Sheriff of Washington Parish, declaring that BioMedical was not entitled to a sales tax exclusion or a sales tax exemption for the purchases at issue and was not entitled to a refund pursuant to LSA–R.S. 47:315.3 as to sales taxes paid on those purchases during the tax period at issue; denied the motion for partial summary judgment filed by BioMedical; and dismissed Bio–Medical's reconventional demand for declaratory judgment relief.¹

While this appeal was pending, this court ex proprio motu issued a show cause order, ordering the parties to show cause by briefs as to whether the district court had subject matter jurisdiction over this matter.

Finding that the district court below had subject matter jurisdiction, we recall the show cause order. And, for the reasons below, we affirm.

FACTS AND PROCEDURAL HISTORY

Bio–Medical is a limited liability company doing business in Washington Parish under the name Fresenius Medical Care Franklinton, where it operates a dialysis facility. Through correspondence dated December 18, 2009, Bio–Medical submitted a Claim for Refund for Washington Parish sales taxes in the amount of $33,201.48, which it contended it had erroneously paid for the period of January 1, 2006 through

208 So.3d 477

October 31, 2009 ("the tax period"). Bio–Medical contended that it regularly purchases and administers certain prescription drugs, including Epogen, Calcijex, Zemplar, and Venofer, to patients suffering from End–Stage Renal Disease ("ESRD") and that the purchases of those drugs are exempt or excluded from local taxation to the extent that the drugs are administered to Medicare patients treated at its Franklinton dialysis facility. Bio–Medical asserted that LSA–R.S. 47:301(10)(u) provides a broad exclusion from local taxes for sales of tangible personal property made "under the provisions of Medicare" and, further, that LSA–R.S. 47:337.9(F) provides an exemption from local sales tax for prescription drugs purchased "through or pursuant to a Medicare Part B and D plan." Accordingly, Bio–Medical contended that it was entitled to a refund for the sales taxes it paid on these prescription drugs administered to its Medicare patients.²

In response to the refund claim, the Sheriff filed the instant Petition for Declaratory Judgment, seeking a declaration that Bio–Medical was not entitled to a refund for the tax period under the provisions of LSA–R.S. 47:315.3 (which provides for a refund of taxes on sales "paid by or under the provisions of Medicare"), LSA–R.S. 47:301(10)(u) (which, as stated above, excludes from local taxation sales of tangible personal property made "under the provisions of Medicare"), or LSA–R.S. 47:337.9(F) (which, as stated above, exempts from local sales tax prescription drugs purchased "through or pursuant to a Medicare Part B and D plan"). The Sheriff also sought a declaration that Bio–Medical was not entitled to a refund of taxes paid voluntarily and not under protest under the provisions of LSA–R.S. 47:337.77.³

After filing and then withdrawing various exceptions, Bio–Medical answered and reconvened against the Sheriff, seeking a judgment declaring its rights and liabilities with respect to the tax exclusions set forth in LSA–R.S. 47:301(10)(u), and LSA–R.S. 47:301(10)(a)(ii) (which excludes from taxation sales made for the purpose of resale), the refund provision contained in LSA–R.S. 47:315.3, and the tax exemption set forth in LSA–R.S. 47:337.9(F).⁴

208 So.3d 478

Thereafter, the Sheriff filed a motion for summary judgment, seeking a declaratory judgment as prayed for in his petitions (as to both Bio–Medical and ABC) and, further, seeking dismissal of Bio–Medical's (and ABC's) reconventional demand. Bio–Medical (and ABC) also filed a motion for partial summary judgment, seeking a declaration that Bio–Medical's purchases of certain prescription drugs from ABC that it administered to ESRD Medicare patients during the tax period of March 1, 2007 through December 31, 2009, were excluded from Washington Parish sales and use taxes under LSA–R.S. 47:301(10)(u) and exempt from local sales tax under LSA–R.S. 47:337.9(F).

A hearing on the cross motions was conducted on May 2, 2013, and thereafter, the district court rendered judgment, dated September 9, 2013, as follows:

IT IS ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of Plaintiff GRANTING the motion for summary judgment filed by the Sheriff and DENYING the motion for partial summary judgment filed by Bio–Medical, and DECLARING that Bio–Medical is not entitled to an exclusion under La.R.S. 47:301(10)(u), nor an exemption under La.R.S. 47:337.9(F), nor a refund under La.R.S. 47:315.3 as to sales taxes that were charged by AmerisourceBergen Drug Corporation ("ABC") to and collected from Bio–Medical and remitted to the Sheriff on sales of prescription drugs by ABC to Bio–Medical at the kidney dialysis facility operated by Bio–Medical in Washington Parish during the period January 1, 2006 t[h]rough October 31, 2009.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Sheriff's prayer for a declaration that Bio–Medical is not entitled to a refund under La.R.S. 47:337.77 is DENIED.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the reconventional demand filed by Bio–Medical for refund pursuant to La.R.S. 47:315.3 is hereby DISMISSED, with prejudice.^{[5 ]}

From this judgment, Bio–Medical appeals, contending that the district court erred in:

(1) Granting the Sheriff's Motion for Summary Judgment;

(2) Denying Bio–Medical's Motion for Partial Summary Judgment;⁶

(3) Declaring that the prescription drug purchases are not excluded from sales tax under LSA–R.S. 47:301(10)(u) ;

208 So.3d 479

(4) Declaring that the prescription drug purchases are not exempt from sales tax under LSA–R.S. 47:337.9(F) ;

(5) Disregarding the expert testimony of Dr. Hugh Long; and

(6) Failing to admit into evidence the CMS Regulations, CMS Interpretive Guidance, CMS Clinical Performance Measures, and other CMS documents submitted by Bio–Medical.

SHOW CAUSE ORDER

By show cause order dated April 4, 2016, this court directed the parties to address by briefs whether subject matter jurisdiction was appropriate in the district court below. We will address the show cause order first.

Subject matter jurisdiction is the legal power and authority of a tribunal to adjudicate a particular matter involving the legal relations of the parties and to grant the relief to which the parties are entitled. LSA–C.C.P. arts. 1 and 2. A judgment rendered by a court without subject matter jurisdiction is void. LSA–C.C.P. art. 3.

Jurisdiction over the subject matter cannot be conferred by consent of the parties. LSA–C.C.P. art. 3. It is the duty of the court to examine subject matter jurisdiction sua sponte, even when the issue is not raised by the litigants.⁷ Whittenberg v. Whittenberg, 97–1424 (La.App. 1st Cir.4/8/98), 710 So.2d 1157, 1158.

The Louisiana Constitution provides that district courts have original jurisdiction of all civil matters except as otherwise authorized by the Constitution or except as provided by law for administrative agency determinations in workers' compensation matters. LSA–Const. art. V, § 16 (A)(1). A district court is considered to have general jurisdiction unless specifically denied it. City of Denham Springs v. Perkins, 2008–1937 (La.App. 1st Cir.3/27/09), 10 So.3d 311, 318, writ denied, 2009–0871 (La.5/13/09), 8 So.3d 568. A district court cannot be held to lack subject matter jurisdiction in the absence of constitutional authority expressly granting exclusive jurisdiction to an administrative agency or other tribunal. Michel v. State, Division of Administrative Law, 2013–1419 (La.App. 1st Cir.11/3/14), 167 So.3d 654, 658, writ denied, 2014–2539 (La.2/27/15), 159 So.3d 1069.

The Louisiana Constitution vests the power of taxation in the legislature and mandates that it provide a complete and adequate remedy for the recovery of an illegal tax paid by a taxpayer. LSA–Const. art. VII, §§ 1 and 3 (A). To fulfill this obligation...