Compsource Mut. Ins. Co. v. Oklahoma Tax Commission

• Decision Date: 26 June 2018
• Docket Number: 116341,Case Number: 116337
• Parties: COMPSOURCE MUTUAL INSURANCE COMPANY, Protestant/Appellant, v. STATE of Oklahoma EX REL. OKLAHOMA TAX COMMISSION, Appellee. Oklahoma Association of Electric Self Insurers Fund, Protestant/Appellant, v. State of Oklahoma Tax Commission, Respondent/appellee.
• Court: Oklahoma Supreme Court

435 P.3d 90

COMPSOURCE MUTUAL INSURANCE COMPANY, Protestant/Appellant,

v.STATE of Oklahoma EX REL. OKLAHOMA TAX COMMISSION, Appellee.

Oklahoma Association of Electric Self Insurers Fund, Protestant/Appellant,

v.State of Oklahoma Tax Commission, Respondent/appellee.

Case Number: 116337

116341

Supreme Court of Oklahoma.

Decided: June 26, 2018

Rehearing Denied: January 28, 2019

Robert G. McCampbell, Travis V. Jett, Gable Gotwals, P.C., Oklahoma City, Oklahoma, for Protestant/Appellant, CompSource Mutual Insurance Company, No. 116,337.

Darren B. Derryberry, Derryberry & Naifeh, LLP, Oklahoma City, Oklahoma, for Protestant/Appellant, Oklahoma Association of Electric Self Insurers Fund, No. 116,341.

Lee Pugh, General Counsel; Elizabeth Field, Deputy General Counsel; and Mary Ann Roberts, Deputy General Counsel, of the Oklahoma Tax Commission, Oklahoma City, Oklahoma, for Respondent/Appellee, No. 116,337 and No. 116,341.

EDMONDSON, J.

¶1 Protestants requested statutory rebates from assessments paid to the Tax Commission. Tax Commission denied the requests arguing the statutory authority for the rebate, 68 O.S.2011 § 6101, had been repealed by implication when 85A O.S.Supp. 2014 § 31 was amended in 2015. We conclude the 2015 amendment to 85A O.S. § 31 did not repeal 68 O.S.2011 § 6101 by implication. We also conclude no substantive due process violation is shown on the appellate records. We deny protestants' requests for payment of interest on their rebates.

¶2 The CompSource Mutual Insurance Company filed with the Oklahoma Tax Commission a request for a Multiple Injury Trust Fund rebate. The request was filed on May 25, 2016, and sought a rebate in the amount of $10,777,247.00 based upon the Multiple Injury Trust Fund assessment CompSource paid in 2015.

¶3 In March 2016, the Oklahoma Association of Electric Self Insurers Fund filed with the Oklahoma Tax Commission a request for a Multiple Injury Trust Fund rebate based upon the Multiple Injury Trust Fund assessment it paid in 2015. This rebate request was for the amount of $136,754.82.

¶4 An administrative law judge for the Oklahoma Tax Commission granted an unopposed motion to consolidate the protests of CompSource and the Oklahoma Association of Electric Self Insurers Fund, and they were adjudicated together, but adjudicated separately when reviewed by the Commissioners who issued separate orders for each protest. The administrative law judge concluded the rebates should be paid to the protestants. The Tax Commission, with two Commissioners voting, denied both protests and directed the administrative law judge to issue findings, conclusions and recommendations consistent with the denial.

¶5 Protestants brought appeals from both orders of the Tax Commission.¹ They filed motions for the Court to retain the appeals and those motions were granted by a prior order of the Court. We have treated the appeals as companion appeals and we adjudicate both of them with a single opinion.

¶6 The Oklahoma Association of Electric Self Insurers and CompSource Mutual Insurance Company filed separate motions for an oral argument before the Court. A motion for oral argument must set forth "the exceptional reason that oral argument is necessary."² The Tax Commission opposed the motions. The motions state the Court's decision will have an impact on several workers' compensation insurance carriers. Workers' compensation statutes are part of a public-law regulatory scheme,³ and the rebates sought by Protestants, if authorized, would be paid from the general income taxes collected by the Tax Commission pursuant to 68 O.S. § 2355.⁴ This controversy has attributes of both a private and public nature. Oral argument would not materially assist the Court and the motions for oral argument are denied.

Statutes Raised by the Parties

¶7 The legal issue presented by these cases is whether certain parties are entitled to a rebate of funds previously paid to the Tax Commission. The controversy involves statutory construction and the intent of the Legislature concerning the rebate. Protestants state they are entitled to a refund pursuant to 68 O.S. §§ 6101 - 6102, and the Tax Commission argues these statutes have been repealed citing an Executive Order issued by the Governor. A short history of the relevant statutes provides a context for the present controversy.

¶8 The Multiple Injury Trust Fund, previously known as the Special Indemnity Fund, was established to compensate an injured worker for his or her statutorily recognized work-related injury after having had a previous worker's compensation injury. Workers' compensation insurance carriers, CompSource, employers self-insured for workers' compensation, and other entities fulfilling the same role have been statutorily required to pay annual assessments to the Multiple Injury Trust Fund.

¶9 In 2001, 85 O.S. § 173 required annual assessments made upon each mutual or interinsurance association, stock company, CompSource Oklahoma, an insurance carrier writing workers' compensation insurance, and from employers carrying their own risk including group self-insurance associations.⁵ These assessments were paid to the Oklahoma Tax Commission.⁶ The Tax Commission paid to the State Treasurer monies collected pursuant to these assessments "to the credit of the Multiple Injury Trust Fund" minus specified amounts paid to the Department of Labor, Office of the Attorney General, and the Oklahoma Department of Career and Technology Education.⁷ In 2001, these assessments had been part of a tax incentive program and involved an income tax credit provided by 68 O.S. § 2357.44.⁸

¶10 In 2002, the Legislature passed House Bill No. 2752 which (1) amended § 173 and specified one-third of the assessment could be charged to policy holders and two-thirds could not be so charged, (2) repealed the income tax credit for the assessment,⁹ and (3) created a statutory rebate, 68 O.S. §§ 6101 - 6102,¹⁰ based upon two-thirds of the assessment previously paid pursuant to § 173. In summary, the tax credit was replaced with a rebate based upon the assessment and the two-thirds ratio provided in 85 O.S. § 173. From 2002 to 2011, and in accordance with 85 O.S. § 173, now expressly repealed, only one-third (1/3) of the assessments could be charged by the carriers against their policyholders, and the remaining two-thirds (2/3) of assessments could not be included in any rate, premium, charge, fee, assessment or other amount collected from a policy-holder.¹¹

¶11 In 2011, 85 O.S.Supp. 2005 § 173 was repealed by Laws 2011, c. 318, § 87.¹² The "Workers' Compensation Code" was created by this change in order to replace the previous "Workers' Compensation Act."¹³ The new Workers' Compensation Code created 85 O.S.2011 § 403 and for our purposes its application was identical to repealed § 173.¹⁴ Section 403 continued the assessment against the same entities, and continued to state one-third (1/3) of the assessments could be charged against the policyholders, and the remaining two-thirds (2/3) of assessments could not be included in any rate, premium, charge, fee, assessment or other amount collected from a policy-holder .

¶12 Section 403 had a minor amendment in 2012,¹⁵ and then one year later the Legislature amended § 403 as part of the new "CompSource Mutual Insurance Company Act," and appeared to remove CompSource Oklahoma from the designated insurers required to pay the assessment formerly referenced in § 403(A)(1), (3), (5), & (D),¹⁶ and simultaneously the 2013 version of § 403(A)(1) stated: "The Board of Directors of CompSource Mutual Insurance Company shall have the power to disapprove the rate established by the MITF Director until the Multiple Injury Trust Fund repays in full the amount due on any loan from CompSource Mutual Insurance Company or its predecessor CompSource Oklahoma." During this same legislative session, § 403 was expressly repealed effective February 1, 2014, the date the new Administrative Workers' Compensation Act was effective.¹⁷

¶13 The new Administrative Workers' Compensation Act created 85A O.S.Supp.2013 § 31, enacted language similar to the previous 85 O.S. § 403, and again expressly included "CompSource Oklahoma"¹⁸ in the designated list of insurers required to pay the annual assessments.¹⁹ The new Act continued to state the assessment against the same entities, and continued to state one-third (1/3) of the assessments could be charged against the policyholders, and the remaining two-thirds (2/3) of assessments could not be included in any rate, premium, charge, fee, assessment or other amount collected from a policyholder .²⁰

¶14 In 2015, the Legislature amended 85A O.S.Supp.2014 § 31. The amendment removed the language in § 31 (A)(3) which had created the one-third and two-thirds split in the assessment, removed the prohibition of collecting two-thirds of the assessment from policyholders, and also removed the allocations to the Office of the Attorney General and the Department of Labor granted by the previous version of § 31(I).²¹

¶15 Title 68 O.S. § 6101 states a party required to pay an assessment pursuant to 85 O.S. § 173 is entitled to receive a rebate equal to two-thirds (2/3) of the amount of the assessment actually paid , subject to application to and approval by the Oklahoma Tax Commission.²² In 68 O.S. § 6102, the Legislature created a special fund within the State Treasury for the Workers' Compensation Assessment Rebate Fund."²³ Section 6102 states the Tax Commission is authorized and directed to withhold a portion of the taxes levied and collected pursuant to 68 O.S. § 2355 (income tax) for deposit into the Rebate Fund. The 68 O.S. § 6101 rebate to insurers was also referenced in 36 O.S. Supp.2002 § 1501(12) for the purpose of calculating the assets of an insurer.²⁴ This language in § 1501 was subsequently codified in the current version of § 1501 located in the 2011 statutes.²⁵ Sections 6101 and 6102 have not been expressly repealed by the Legislature.

¶16 Governor...