HORIZON BLUE CROSS v. State, 39 A.3d 228

Horizon Blue Cross Blue Shield of New Jersey (Horizon) is the state's sole health service corporation (HSC) and has long benefited from tax treatment under the Premium Tax Cap (PTC).
PTC historically taxed insurers but exempted HSCs under a 1/8th rule; Horizon was exempt from the corporate business tax (CBT) and taxed under the Insurance Premium Tax (IPT) regime.
In 2005, Assembly Bill A4401 amended the PTC to eliminate the 1/8th rule for all HSCs, altering Horizon’s tax treatment by taxing all premiums rather than applying the 12.5% cap.
A4401 excluded Horizon from the 1/8th Rule while other insurers remained subject to it, creating an “inequity” in the tax scheme and a potential revenue source for the deficit.
Horizon challenged A4401 as unconstitutional, arguing special legislation, equal protection and due process violations, and bill of attainder concerns; the Tax Court denied Horizon’s refund claim and upheld A4401, and Horizon appealed.
The appellate court affirmed, holding that A4401 rationally related to raising revenue and correcting the inequity in the tax system, and that Horizon failed to prove retaliation or other constitutional defects.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether A4401 constitutes special legislation	Horizon contends A4401 targets it alone, thus constituting special legislation.	The legislation applies to the HSC class, not Horizon alone, with rational basis for the classification.	Not special legislation; rational basis valid.
Whether A4401 violates equal protection or due process	Horizon argues improper targeting and lack of rational basis for excluding HSCs.	Legislation rationally related to revenue and correcting inequities; includes HSCs as a class.	No due process or equal protection violation.
Whether A4401 is a bill of attainder	A4401 is punitive toward Horizon for not converting to for-profit status.	Taxation measures are nonpunitive and serve revenue purposes; no punitive intent shown.	Not a bill of attainder.
Whether A4401 results in manifest injustice due to retroactive application	Retroactive increase in Horizon’s tax liability is unjust.	Retroactive effect within legitimate budgetary policy; reliance not deserving of protection.	No manifest injustice.
Whether discovery and summary judgment were properly handled	Requests for broader discovery were improper; privilege issues unresolved.	Requests irrelevant; privilege matters appropriately handled; record supports summary judgment.	Discovery denied as to relevance; summary judgment affirmed.

Raybestos-Manhattan, Inc. v. Glaser, 144 N.J. Super. 152 (Ch. Div.1976) (special legislation analysis distinguished; evidence of targeting scrutinized)
Am. Fire & Cas. Co. v. N.J. Div. of Taxation, 189 N.J. 65 (2006) (taxation with legitimate public purposes; equal protection considerations)
State v. Churchdale Leasing, Inc., 115 N.J. 83 (1989) (legitimate public purpose and classification rationality in tax policy)
Greenberg v. Kimmelman, 99 N.J. 552 (1985) (balancing test for equal protection in tax legislation; public needs and intrusions)
Wash. Nat'l Ins. Co. v. Bd. of Rev., 1 N.J. 545 (1949) (due process standard for tax classifications; rational basis review)