Texas Dept. Ins. v. Am. Home Assurance

• Decision Date: 29 July 1999
• Citation: 998 S.W.2d 344
• Parties: (Tex.App.-Austin 1999) Texas Department of Insurance; Jose Montemayor, Commissioner of Insurance; John Cornyn, Texas Attorney General; Carole Keeton Rylander, Texas Comptroller of Public Accounts; and Texas Public Finance Authority, Appellants <A HREF="#fr1-1" name="fn1-1">1 v. American Home Assurance Company and The Insurance Company of the State of Pennsylvania, Appellees NO. 03-98-00566-CV
• Court: Texas Court of Appeals

Page 344

998 S.W.2d 344 (Tex.App.-Austin 1999)

Texas Department of Insurance; Jose Montemayor, Commissioner of Insurance; John Cornyn, Texas Attorney General; Carole Keeton Rylander, Texas Comptroller of Public Accounts and Texas Public Finance Authority, Appellants¹ v. American Home Assurance Company and The Insurance Company of the State of Pennsylvania, Appellees

NO. 03-98-00566-CV

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

July 29, 1999

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT NO. 97-06217 HONORABLE PAUL R. DAVIS, JR., JUDGE PRESIDING.

Before Chief Justice Aboussie, Justices Kidd and Patterson

Jan P. Patterson, Justice

American Home Assurance Company and the Insurance Company of the State of Pennsylvania (collectively "appellees") sued appellants (collectively "the State") for a partial refund of taxes and interest paid to the State under protest. The parties filed cross-motions for summary judgment. The district court denied the State's motion and granted summary judgment in favor of appellees. We will affirm the judgment of the district court.

THE CONTROVERSY

This is a case involving workers' compensation insurance taxes assessed annually under the Texas Workers' Compensation Act² (the "Act") and the Texas Insurance Code (the "Code"). Under the Act, "workers' compensation insurance coverage" means: (1) an approved insurance policy to secure the payment of compensation; (2) self-insurance to secure the payment of compensation; or (3) coverage provided by a governmental entity to secure the payment of compensation. See Tex. Lab. Code Ann. 401.011(44) (West 1996). Appellees are foreign property and casualty insurance companies authorized by the Texas Department of Insurance (the "Department") to write workers' compensation insurance in Texas. Id. 401.011(28). In addition to traditional workers' compensation insurance, appellees offer optional deductible insurance plans that allow policyholders to self-insure for the deductible amount. See Tex. Ins. Code Ann. art. 5.55C(a) (West Supp. 1999).

Each workers' compensation insurance carrier, other than a governmental entity, is required to pay a general maintenance tax to support the administration of the Act and the prosecution of workers' compensation fraud. See Tex. Lab. Code Ann. 403.002(a) (West 1996 & Supp. 1999). The general maintenance tax for insurance companies "may not exceed an amount equal to two percent of the correctly reported gross workers' compensation insurance premiums." Id. 403.002(b).³

Workers' compensation insurance companies must also pay a tax to fund the operations of the Department. This operations maintenance tax is assessed on "the correctly reported gross workers' compensation insurance premiums of all authorized insurers writing workers' compensation insurance in this state." See Tex. Ins. Code Ann. art. 5.68(a) (West Supp. 1999). Prior to 1993, the general maintenance tax and the operations maintenance tax were calculated and collected based on actual premiums written. In 1993, the Texas Legislature added the following section to article 5.68:

For purposes of this article and Section 2.22, Texas Workers' Compensation Act [formerly Tex. Rev. Civ. Stat. art. 8308-2.22, currently Tex. Lab. Code Ann. 403.002], gross workers' compensation insurance premiums include the modified annual premium of a policyholder that purchases a deductible pursuant to Article 5.55C of this code, and the rate of assessment shall be applied to the modified annual premium prior to application of any deductible premium credit.

Act of June 17, 1993, 73d Leg., R.S., ch. 685, 3.16, 1993 Tex. Gen. Laws 2559, 2589 (codified at Tex. Ins. Code Ann. art. 5.68(b) (West Supp. 1999)). Thus, by its express terms, the 1993 amendment expanded the tax base for both the general maintenance tax and the operations maintenance tax to include both actual premiums written and premiums that would have been written had certain policyholders not chosen to partially self-insure.

A third type of maintenance tax, referred to by the parties as the "surcharge," is used to retire $300 million dollars in bonds issued by the Texas Public Finance Authority to raise money for the Texas Workers' Compensation Insurance Fund (the "Fund"), a corporate body organized for the purpose of providing workers' compensation coverage to Texas employers. See Act of August 25, 1991, 72d Leg., 2d C.S., ch. 12, 18.07-.19, 1991 Tex. Gen. Laws 342, 342-61 (codified at Tex. Ins. Code Ann. arts. 5.76-3-.76-5, since amended); American Home Assurance v. Texas Dep't of Ins., 907 S.W.2d 90, 92 (Tex. App.-Austin 1995, writ denied). The surcharge is equal to a percentage of gross workers' compensation insurance premiums⁴ and is assessed against: "(1) each insurance company writing workers' compensation insurance in this state; (2) each certified self-insurer . . .; and (3) the fund." Tex. Ins. Code Ann. art. 5.76-5, 10(a) (West Supp. 1999). The surcharge must be set in an amount sufficient to pay all debt service on the bonds. Id. art. 5.76-5, 10(b). The surcharge "is set by the commissioner in the same time and shall be collected by the comptroller on behalf of the fund in the same manner as provided under Article 5.68 of this code . . . ." Id.

For calendar years 1994 through 1996, the State applied the definition of "gross workers' compensation insurance premiums" from article 5.68(b) of the Code to article 5.76-5, section 10 and assessed appellees a surcharge based upon both actual premiums written and modified premiums arising from the purchase of deductibles. Appellees protested,⁵ contending that the 1993 amendment to article 5.68 changed the tax base for the general maintenance tax and the operations maintenance tax, but not for the surcharge. Appellees sued the State in district court for a partial refund. Appellees also sought a declaratory judgment that the surcharge should be based solely upon actual written workers' compensation insurance premiums.

In its amended final judgment, the district court awarded appellees actual damages equal to the difference between the surcharge taxes appellees remitted to the State under protest for calendar years 1994 through 1996 and what appellees would have owed if the State had assessed the surcharge on workers' compensation insurance premiums actually written for those years. In addition, the court ordered that: (1) "the maintenance tax for the Texas Workers' Compensation Insurance Fund must be based on actual written workers' compensation insurance premiums for each year beginning with 1994 and continuing until such time that the Texas Legislature enacts an appropriate amendment"; (2) "the definition of gross workers' compensation insurance premiums in Tex. Ins. Code, art. 5.68(b), does not apply to Tex. Ins. Code art. 5.76-5, 10"; and (3) the State is "prohibited from setting and collecting" from appellees surcharges "based on other than the amount of annual workers' compensation insurance actually written by them."

DISCUSSION AND HOLDINGS

Because the suitability of summary judgment is a question of law, we review the trial court's decision de novo. See Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994); Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). Where both parties file a motion for summary judgment, and one is granted and one is denied, we determine all questions presented and render such judgment as the trial court should have rendered. See Commissioners Court v. Agan, 940 S.W.2d 77, 81 (Tex. 1997).

In its only issue presented, the State argues that the district court erred by refusing to apply the definition of "gross workers' compensation insurance premiums" in article 5.68(b) to the surcharge tax of article 5.76-5, section 10. The State acknowledges that article 5.68(b) does not specifically refer to the surcharge but contends that nothing in the article expressly limits the application of the amended definition of "gross workers' compensation insurance premiums" to article 5.68 and Labor Code section 403.002. The State also argues that because the legislature is presumed to enact law with reference to other statutes on the same subject, see Allen Sales & Servicenter, Inc. v. Ryan, 525 S.W.2d 863, 866 (Tex. 1975), the surcharge statute must be interpreted with reference to amended article 5.68. The State contends that the legislature's intent to incorporate the provisions of article 5.68 into the surcharge statute is evidenced by part (b) of article 5.76-5, section 10, which states: "The maintenance tax surcharge is set by the commissioner in the same time and shall be collected by the comptroller on behalf of the fund in the same manner as provided under Article 5.68 . . . ." Tex. Ins. Code Ann. art. 5.76-5, 10(b) (West Supp. 1999).

Appellees respond that the 1993 amendment to article 5.68 specifically and unambiguously changed the tax base for the general maintenance tax and the operations maintenance tax alone. Appellees argue that the clear language of the amendment forecloses the argument that the amended definition of "gross workers' compensation insurance premiums" applies to the surcharge. Furthermore, appellees contend that it must be presumed that the legislature knew all three workers' compensation insurance taxes had been assessed on actual written premiums and deliberately amended article 5.68 to include only two of those three taxes.

Our primary objective when we construe a statute is to determine and give effect to the intent of the legislature. See Tex. Gov't Code Ann. 312.005 (West 1998); see also Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 484 (Tex. 1998); Texas Property & Casualty Ins. Guar. Assoc. v. Southwest Aggregates, Inc., 982 S.W.2d 600, 608 (Tex. App.-Austin 1998, no pet.). The legislature's intent should be determined by examining the language used in the statute. See In re Bay Area Citizens Against Lawsuit Abuse, ...