COORDINATING COUNCIL v. Palmer

• Decision Date: 30 April 2001
• Docket Number: No. 28666.,28666.
• Citation: 546 S.E.2d 454,209 W.Va. 274
• Court: West Virginia Supreme Court
• Parties: The COORDINATING COUNCIL FOR INDEPENDENT LIVING, INC., A West Virginia Corporation; Pro Careers, Inc., a West Virginia Corporation; Alternate Care, Inc., a West Virginia Corporation; American Homecare Services, Inc., a West Virginia Corporation; Braley and Thompson, Inc., a West Virginia Corporation; Catholic Community Services, Inc., a West Virginia Corporation; Health Consultants Plus, Inc., a West Virginia Corporation; Mountain State Home Health Care, Inc., a West Virginia Corporation; Wyoming County Opportunity Workshop, Inc., a West Virginia Corporation; and Companion Care Corporation, a West Virginia Corporation, Plaintiffs Below, Appellees, v. The Honorable Joseph M. PALMER, State Tax Commissioner, Defendant Below, Appellant.

546 S.E.2d 454

209 W.Va. 274

The COORDINATING COUNCIL FOR INDEPENDENT LIVING, INC., A West Virginia Corporation; Pro Careers, Inc., a West Virginia Corporation; Alternate Care, Inc., a West Virginia Corporation; American Homecare Services, Inc., a West Virginia Corporation; Braley and Thompson, Inc., a West Virginia Corporation; Catholic Community Services, Inc., a West Virginia Corporation; Health Consultants Plus, Inc., a West Virginia Corporation; Mountain State Home Health Care, Inc., a West Virginia Corporation; Wyoming County Opportunity Workshop, Inc., a West Virginia Corporation; and Companion Care Corporation, a West Virginia Corporation, Plaintiffs Below, Appellees, v. The Honorable Joseph M. PALMER, State Tax Commissioner, Defendant Below, Appellant.

No. 28666.

Supreme Court of Appeals of West Virginia.

Submitted March 7, 2001.

Decided April 30, 2001.

Darrell V. McGraw, Attorney General, Silas B. Taylor, Senior Deputy Attorney General, Charleston, for Appellant.

Herschel H. Rose, III, Rose & Atkinson, Lee B. Forb, Charleston, for Appellees.

Karen H. Miller, Richard W. Walters, Miller, Snyder, Weiler & Walters, Charleston, for Amici Curiae, Barbour County Senior Center; Berkley Senior Services; Boone County Community Organization; Braxton County Senior Citizen Center; Brooke County Committee on Aging; Cabell Huntington Multipurpose Senior Center; Calhoun County Committee on Aging; Clay County Development Corporation; Doddridge County Senior Citizen Center; Fayette County Committee on Aging; Council of Senior Citizens of Gilmer County; Grant County Commission on Aging; Greenbrier County Committee on Aging; Hampshire County Committee on Aging; Committee for Hancock County Senior Citizens; Hardy County Committee on Aging; Harrison County Senior Citizens; Jackson County Commission on Aging; Jefferson County Council on Aging; Kanawha Valley Senior Services; Lewis County Senior Citizens Center; Lincoln County Opportunity Company; Pride in Logan County; Marion County Senior Citizens; Marshall County Committee on Aging; Mason County Action Group; McDowell County Commission on Aging; Mercer County Commission on Aging; Aging and Family Services of Mineral County; Mingo County Senior Citizens Program; The Senior Monogalians; Monroe County Council on Aging; Senior Life Services of Morgan County; Nicholas County Community Action; Upper Ohio Valley; Pendleton County Committee on Aging; Pleasants County Committee on Aging; Pocahontas County Senior Program; Preston County Senior Citizens; Putnam Aging Program; Raleigh County Commission on Aging; The Committee on Aging for Randolph County; Ritchie County Integrated Family Services; Roane County Commission on Aging; Summers County Council on Aging; Taylor County Senior Citizens; Tucker County Senior Citizens; County of Senior Tyler Countians; Upshur County Senior Citizens Opportunity Center; Wayne County Community Services Organization; Webster County Commission of Senior Citizens; Wetzel County Committee on Aging; Wirt County Committee on Aging; Wood County Senior Citizens Association; and Wyoming County Council on Aging.

DAVIS, Justice:

The appellant herein, and defendant below, the Honorable Joseph M. Palmer, Tax Commissioner for the State of West Virginia [hereinafter referred to as "the Commissioner" or "Commissioner Palmer"], appeals from an order entered February 18, 2000, by the Circuit Court of Kanawha County. In that order, the circuit court enjoined the Commissioner from enforcing the privilege tax applicable to providers of health care services, W. Va.Code § 11-13A-3 (1997) (Repl.Vol.1999), against the appellees herein, and plaintiffs below, The Coordinating Council for Independent Living, Inc., et al.¹ [hereinafter collectively referred to as "the appellees" or "Coordinating Council"], finding that the statutory language was too ambiguous to determine whether the homemaker and case management services provided by the appellees were within the scope of the health care services contemplated by the statute. On appeal to this Court, the Commissioner assigns error to the circuit court's ruling and requests that it be reversed.

Upon a review of the parties' arguments, the record submitted for appellate consideration, and the pertinent authorities, we are inclined to agree with the circuit court's ruling. We conclude that, absent further clarification from the Legislature, neither the statutory language employed in W. Va.Code § 11-13A-3 (1997) (Repl.Vol.1999) nor that set forth in W. Va.Code § 11-13A-2(d)(2) (1995) (Repl.Vol.1999) renders the health care services provider tax applicable to those homemaker and/or case management services supplied by the appellees pursuant to the Aged/Disabled Home and Community-Based Services Waiver Program. Furthermore, we concur with the circuit court's determination that the Commissioner's attempt to enforce this tax, after failing to do so for nearly five years from the date of its inception, by issuing a letter informing affected taxpayers of their resultant tax liability amounted to an impermissible rule in contravention of the mandates of the Administrative Procedures Act, W. Va.Code § 29A-1-1, et seq., and W. Va.Code § 29A-3-1, et seq. Accordingly, we affirm the February 18, 2000, decision of the Circuit Court of Kanawha County.

I. FACTUAL AND PROCEDURAL HISTORY

In the State of West Virginia, persons who are elderly or disabled are often provided home health services as an alternative to residential care provided by a nursing home or other health care facility. To facilitate the provision of these services, West Virginia Medicaid administers the Aged/Disabled Home and Community-Based Services Waiver Program [hereinafter the "A/D Waiver Program"],² which pays for the provision of such home-based services for those individuals who satisfy the requisite eligibility criteria. The Program is funded by both West Virginia and federal funds: for every $1.00 provided by the State, the federal government contributes $3.00, i.e., the federal government reimburses the State for 75% of the cost to provide A/D Waiver Program services. See generally 42 U.S.C. § 1396, et seq. In order to generate the State's contributory amount, the Legislature, in 1993, adopted a privilege tax applicable to health care services.³ W. Va.Code § 11-13A-3(a) (1997) (Repl.Vol. 1999). The pertinent language directs:

(a) Imposition of tax.—Upon every person exercising the privilege of engaging or continuing within this state ... in the business of furnishing certain health care services, there is hereby levied and shall be collected from every person exercising such privilege an annual privilege tax.

(b) Rate and measure of tax.—The tax imposed in subsection (a) of this section shall be five percent of the gross value of... the health care service provided, as shown by the gross income derived from the ... furnishing thereof by ... the provider of the health care service, except as otherwise provided in this article....

W. Va.Code § 11-13A-3.

The instant controversy concerns the definition of "health care services" referenced in § 11-13A-3(a) and whether the services provided by the appellees are subject to this privilege tax. Pursuant to W. Va.Code § 11-13A-3(c), "the term `certain health care services' means, and is limited to, behavioral health services and community care services." "Community care services" is further defined as "home and community care services furnished by a provider pursuant to an individual plan of care, which also includes senior citizens groups that provide such services, but does not include services of home health agencies." W. Va.Code § 11-13A-2(d)(2) (1995) (Repl.Vol.1999). The record before us indicates that, from the imposition of this tax in 1993 until 1998, entities such as the appellees⁴ were not required to pay this tax and, in fact, refunds were issued to those organizations that had nevertheless rendered payment.⁵ In 1998, however, the State Tax Commissioner determined that the appellees were within the rubric of those health care services providers contemplated by W. Va. Code § 11-13A-3, and issued a letter to affected taxpayers levying the tax thereon.⁶ Shortly thereafter, on August 24, 1998, the plaintiffs below and appellees herein consolidated their objections and filed the instant proceeding in the Circuit Court of Kanawha County challenging the tax's applicability.

Following the taking of discovery, and a hearing on this matter, the circuit court rendered its decision by order entered February 18, 2000. In deciding this case, the court first found, in part, that

Plaintiffs [appellees] are Medicaid Title XIX Aged and Disabled Waiver providers of either homemaker services or case management services.

All Title XIX Waiver Services must be delivered pursuant to an individual [sic] plan of care in order to be reimbursable. Consequently, all services delivered by all Plaintiffs [appellees] are delivered pursuant to an individualized plan of care designed for the particular client being served.

Medicaid dollars are expended to reimburse, inter alia, providers of case management and homemaker services pursuant to the Aged/Disabled Home and Community-Based Services Waiver Program.

The services rendered by Plaintiffs [appellees], to the extent that they are rendered to Medicaid-eligible individuals, are reimbursed by the State Medicaid Program, and were so reimbursed when S.B. 2 [W. Va.Code § 11-13A-3] was passed.

Homemaker services include light housekeeping, hygiene related activities, and food preparation by aides and other forms of non-medical or non-health related personal care....⁷

Case management services, as provided by the Plaintiffs [appellees], include the development of a plan of care for Medicaid eligible clients by registered nurses and case managers.

(Paragraph numbers omitted; footnote added). The circuit court then

DECLARE[D] that the West Virginia Medicaid Provider Tax, W. Va.Code §...