GROUP HEALTH COOPERATIVE, a Washington nonprofit corporation; and GROUP HEALTH OPTIONS, INC., a Washington corporation, Appellants,
STATE OF WASHINGTON, DEPARTMENT OF REVENUE, Respondent.
Health Cooperative (GHC) and Group Health Options Inc. (GHO)
appeal the summary dismissal of their complaint for a refund
of business and occupation (B&O) taxes paid on certain
premiums they received from or on behalf of their members for
providing Medicare Advantage (MA) plans. The premiums at
issue are described in 42 U.S.C. § 1395w-24(g) and
consist of "payments to Medicareਚ≱ organizations
under [42 U.S.C] section 1395w-23 [and] premiums paid to such
organizations under [part C of Title 42, chapter 7,
subchapter XVIII of the United States Code]"
(collectively MA premiums). We hold that although MA premiums
are subject to B&O tax under state law, federal law
preempts the imposition of B&O taxes on MA premiums.
Therefore, we reverse and remand to the trial court to
determine the refund amount.
its wholly owned subsidiary, GHO (collectively Group Health),
provide health care coverage to members in Washington and
Idaho. Group Health's health care plans include MA health
benefit plans, which Group Health has contracted with the
Centers for Medicare & Medicaid Services (CMS) to
provide. CMS is a division of the Department of Health and
Human Services, a federal agency. In exchange for providing
MA plans to eligible members, Group Health receives MA
premiums from CMS and from Group Health members.
2012, GHO requested a determination from the Washington State
Department of Revenue (Department) as to whether Washington
State B&O tax applies to MA premiums. The Department
responded that B&O tax does apply, and Group Health paid
B&O tax based on MA premiums recorded as income from 2010
through February 2016.
2016, Group Health filed this lawsuit for a refund of those
B&O tax payments. It then moved for summary judgment,
arguing that (1) MA premiums are exempt from B&O tax
under RCW 82.04.322 and (2) federal law preempts the
Department's imposition of B&O tax on MA premiums.
The trial court disagreed with both arguments and denied
Group Health's motion. Because no genuine issues of
material fact remained in dispute, the court entered summary
judgment in favor of the Department. Group Health appeals.
of B&O Taxes to MA Premiums
Health argues that the trial court erred by concluding that
MA premiums are not exempt from B&O taxes under RCW
82.04.322. We disagree.
meaning of a statute is a question of law that this court
reviews de novo. Durant v. State Farm Mut. Auto Ins.
Co., 191 Wn.2d 1, 8, 419 P.3d 400 (2018). Our
"fundamental objective in determining what a statute
means is to ascertain and carry out the legislature's
intent." Durant, 191 Wn.2d at 8. "If the
statute's meaning is plain on its face, then courts must
give effect to its plain meaning as an expression of what the
legislature intended." Durant, 191 Wn.2d at 8.
To discern a statute's plain meaning, we consider the
text of the provision in question, taking into account the
statutory scheme as a whole. Dep't of Ecology v.
Campbell & Gwinn, L.L.C., 146 Wn.2d 1, 11, 43 P.3d 4
(2002). "We may use a dictionary to discern the plain
meaning of an undefined statutory term." Nissen v.
Pierce County, 183 Wn.2d 863. 881 357 P.3d 45 (2015).
If, after conducting this inquiry, the statute is
"susceptible to more than one reasonable meaning, the
statute is ambiguous and it is appropriate to resort to aids
to construction, including legislative history."
Campbell & Gwinn, 146 Wn.2d at 12. Because
courts presume that taxes are valid, a taxpayer that claims
immunity from a tax bears the burden of establishing an
exemption. Avnet. Inc. v. Dep't of Revenue, 187
Wn.2d 44, 49-50, 384 P.3d 571 (2016).
Group Health argues that MA premiums are exempt from B&O
taxes under RCW 82.04.322, which provides: "[B&O
tax] does not apply to any health maintenance organization,
health care service contractor, or certified health plan in
respect to premiums or prepayments that are taxable under RCW
48.14.0201." The Department does not dispute that GHC
and GHO are, respectively, a health maintenance organization
and a health care service contractor under this statute. The
only dispute is whether MA premiums are "taxable"
under RCW 48.14.0201 and therefore exempt from B&O tax.
B&O tax statutes do not define "taxable." Thus,
we may look to the dictionary to discern its plain meaning.
Nissen, 183 Wn.2d at 881. The dictionary defines
"taxable" as "[s]ubject to taxation."
Black's Law Dictionary 1688 (10th ed. 2014). For the
following reasons, we conclude that MA premiums are not
"subject to taxation" under RCW 48.14.0201 and
therefore are not exempt from B&O tax under RCW
MA premiums are expressly exempt from taxation under RCW
48.14.0201, which is the state premium tax statute. At all
times relevant hereto, that statute has required each
"taxpayer" to pay a tax equal to two percent of all
health care premiums and prepayments received by the
taxpayer. RCW 48.14.0201 (2); see also former RCW 48.14.0201