Prudential Health Care Plan, Inc. v. Commissioner of Ins., 13289
| Citation | 626 S.W.2d 822 |
| Decision Date | 23 December 1981 |
| Docket Number | No. 13289,13289 |
| Parties | PRUDENTIAL HEALTH CARE PLAN, INC., Appellant, v. COMMISSIONER OF INSURANCE, et al., Appellees. |
| Court | Court of Appeals of Texas |
John F. Morehead, Mary A. Keeney, Daugherty, Kuperman, Golden, Carlisle & Morehead, Austin, for appellant.
Mark White, Atty. Gen., Yolanda Martin, Asst. Atty. Gen., Austin, for appellees.
Prudential Health Care Plan, Inc., appellant, sued to recover $90,627.89 paid under protest to the Comptroller of Public Accounts 1 pursuant to the requirements of article 20A.33 of the Texas Insurance Code. The district court tried the case without a jury and entered a take-nothing judgment against appellant, who perfected its appeal to this Court.
Appellant is a corporation organized and existing under the laws of the State of Texas, doing business as a health maintenance organization (HMO) under the provisions of Chapter 20A of the Insurance Code, the Texas Health Maintenance Organization Act. 2 The Act forbids the operation of an HMO in the State without a certificate of authority issued by the Commissioner of Insurance. 3 The Act allows "any person" to obtain authority to operate as an HMO and defines "person" to include natural persons and such artificial persons as partnerships, associations, "organizations, trusts and corporations." 4
Article 20A.33, as it existed before June 13, 1979, 5 imposed upon HMOs the requirement that they pay certain "taxes." 6 That article provided as follows:
Sec. 33. Taxation
(a) To defray the expense of carrying out the provisions of this Act, there shall be annually assessed and collected by the State of Texas, through the State Board of Insurance, from each corporation operating under this Act, in addition to all other taxes now imposed, or which may hereafter be imposed by law, a tax of one percent of all revenues received by such corporation in return for issuance of health maintenance certificates or contracts in this state, according to the reports made to the State Board of Insurance as required by law. Said taxes, when collected, shall be placed in a separate fund with the State Treasurer which shall be kept separate and apart from other funds and money in his hands, and shall be known as the Health Maintenance Organization Fund, said fund to be expended during the current and succeeding years, or so much thereof as may be necessary, in carrying out such provisions. Such expenditures shall not exceed in the aggregate the sum assessed and collected from such corporations; and should there be an unexpended balance at the end of (b) Each corporation complying with requirements of this Act shall on or before the first day of March of each year file its annual statement showing the gross amount of revenues collected during the year ending December 31 preceding, and each such corporation if organized under the laws of this State shall pay an annual tax for the gross amounts of revenues collected for the issuance of health maintenance certificates or contracts in accordance with Article 7064a, Revised Civil Statutes of Texas, 1925, as amended; if such corporation is not organized under Texas laws, said corporation shall pay an annual tax for the gross amounts of revenues collected for the issuance of health maintenance certificates or contracts in accordance with Article 4769, Revised Civil Statutes of Texas, 1925, as amended.
any year, the State Board of Insurance shall reduce the assessment for the succeeding year so that the amount produced and paid into the State Treasury together with said unexpended balance in the treasury will be sufficient to pay all expenses of carrying out the provisions of this Act, which funds shall be paid out and filed by a majority of the State Board of Insurance when the comptroller shall issue warrants therefor. Any amount remaining in said fund at the end of a year shall be carried over and expended in accordance with the provisions of this article during the subsequent year or years. Provided, that no expenditures shall be made from said fund except under the authority of the legislature as set forth in the general appropriations bill.
Upon receipt of the sworn statement above provided, the State Board of Insurance shall certify to the State Treasurer the amount of taxes due by such corporation which shall be paid to the State Treasurer on or before March 15 following, and the State Treasurer shall issue his receipt therefor as evidence of the payment of such tax. Such taxes shall be for and on account of business transacted within this state during the calendar year ending December 31 in which such payments were collected for that portion of the year during which the corporation transacted business in this state.
(c) Each such corporation shall be subject to the provisions of Articles 7074 through 7078 of the Revised Civil Statutes of Texas, 1925, as amended. (emphasis added).
The literal words of article 20A.33 manifest an obvious discrimination between those HMOs which have a corporate form of organization and those which do not, with respect to the charges imposed in the article. It is upon this different treatment that the parties join issue.
Appellant attacks the constitutionality of article 20A.33, claiming each subdivision of that article contravenes the following constitutional provisions: article VIII, section 1 of the Constitution of Texas, 1876, requiring that all taxation, specifically including occupation taxes, be "equal and uniform; " article I, section 3 of the Constitution of Texas, 1876, which guarantees all persons equal protection of the law, and the similar guarantee of the 14th amendment of the Constitution of the United States; and article I, section 19 of the Constitution of Texas, 1876, which guarantees all persons due process of law, and the similar guarantee of the 14th amendment of the Constitution of the United States. Appellant claims that no substantial, reasonable basis exists for the discrimination expressed in article 20A.33.
Appellees reply that the charges imposed by article 20A.33 do not contravene the "equal and uniform" requirement of article VIII, section 1 of the Constitution of Texas, 1876, because they are not taxes at all, being only "fees" imposed for regulatory purposes under the police power, and not the taxing power, of the sovereign, notwithstanding their denomination as "taxes." Appellees assign this meaning to the charges on the basis of their view of the primary purpose of the statute and the charges authorized by it. In the alternative, appellees say, the discrimination has a reasonable basis, and is therefore valid: (1) as being an attempt to bring corporate HMOs within a tax liability imposed upon all other corporate insurance companies The discussion which follows is in the context of the established principles pointed out by appellees. The constitutionality of the statute is presumed and it will not be held unconstitutional unless it is absolutely necessary to do so. Texas State Board of Barber Examiners v. Beaumont Barber College, 454 S.W.2d 729 (Tex.1970). Every reasonable intendment and presumption is indulged in favor of a statute's constitutionality and it is our duty to give the statute an interpretation that will render it constitutional, if it is possible to do so. Hamrick v. Simpler, 127 Tex. 428, 95 S.W.2d 357 (1936). Our primary task is to ascertain and enforce the legislative intent, where constitutional, even though our interpretation may depart from the strict letter of the law as used by the legislature. Edwards v. Morton, 92 Tex. 152, 46 S.W. 792 (1898); Board of Insurance Commissioners v. Sproles Motor Freight Lines, Inc., 94 S.W.2d 769 (Tex.Civ.App.-Fort Worth 1936, writ ref'd). Moreover, our discussion is within the confines of the findings of fact and conclusions filed by the trial court. 7
which liability corporate HMOs would otherwise escape; and (2) as being a charge on the privilege of doing business as an HMO in corporate form, justifiable on the basis of the commercial advantages derived from that privilege. We will discuss each point raised by the parties.
We should point out in the beginning that article 20A.33 levies two distinctly-different charges under the single heading "Taxation." Subdivision (a) of the statute levies a charge "assessed and collected by the State of Texas, through the State Board of Insurance," the revenue derived therefrom being kept in a separate fund to be used exclusively for the purpose of defraying the cost of administering the Act. After the first-year levy of one-percent, the rate at which the charge is made may vary as determined by the Commissioner of Insurance to be necessary to produce an amount of revenue equal to the cost of administering the Act. Subdivision (b), on the other hand, incorporates the levy of a tax actually Appellant contends that article 20A.33(a) imposes a tax and not a mere license fee. Appellant points to the fact that the statute itself denominates the charge a "tax; " that license and other fees are charged HMOs in another section of the Texas Health Maintenance Organization Act, article 20A.32; and that the segregation of the revenue derived from article 20A.33 into a particular fund, for payment of regulatory expenses only, does not compel the inference that a mere regulatory fee was intended by the legislature, citing Conlen Grain & Mercantile, Inc. v. Texas Grain Sorghum Producers Board, 519 S.W.2d 620 (Tex.1975), where it was held that a charge assessed the producers of an agricultural commodity was an "occupation tax" within the meaning of the State Constitution, though the funds derived from the charge were to be used solely "to finance programs of research, education, and promotion, designed to encourage the production, marketing, and use of such commodity." Tex.Rev.Civ.Stat.Ann. art. 55c, § 3 (Vernon 1969).
made by two other statutes. These two
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