*1 LIFE FIDELITY SECURITY COMPANY,

INSURANCE

Appellant, OF REVENUE

DIRECTOR Insurance,

Respondents.

No. SC 82427. Missouri,

Supreme Court of

En Banc.

Dec.

528

decision the AHC is affirmed part. and reversed in upheld The AHC’s decision is when law, supported by authorized by when competent upon evidence and substantial record, the decision is whole and when clearly ex contrary the reasonable pectations Assembly. General Revenue, Whitehead v. 962 1998); 884, banc 885 sec. law, questions 621.193.1 With this a de novo Court conducts review. Lines, Delta Air Inc. Director Reve nue, 353, 908 S.W.2d 355 I.

Fidelity company life is a insurance principal in Kan place its of business City, sas Missouri. The state Missouri taxes, annum, percent 2 per at rate of companies insurance policyholders. receive from Sec. their 1 n tax, premium From certain this Insur deductions and credits are allowed. ers for fees that may, example, deduct the they pay toward examination yearly their department of insurance. Sec. Fidelity’s percent pre H8.400. $96,677.66. mium tax was incurred Cozad, Donley, John C. James Steven C. $168,822.55 in resulting deductible fees City, Krueger, Appellant. Kansas for year, from its insurance examination (Jay) Gen., Nixon, Atty. Jeremiah W. an its tax reducing premium amount net Stahlhuth, Gen., Sp. Mark W. Atty. Asst. appeal zero. The first is whether Sol., M. Alana Barragan-Seott, Associate carry forward the unused City, Respondents. Jefferson for deduction into 1996. 148.400 relevant Section states

HOLSTEIN, Judge. part, companies “All associa insurance Appellant, Fidelity Security Life Insur- tions to this state organized or admitted Company (Fidelity), ance seeks review of may payable deduct from taxes Hearing Administrative Commission state, to all other .credits this addition (AHC) decision affirming the director of registration law ... fees and ” revenue’s pre- assessment its insurance Fidelity argues paid.... examination fees mium tax for 1996. also named surplus that the 1995 should be the director party of insurance aas re- applied against tax in 1996 be owing spondent. Review decision of specifically cause section 148.400 does not involving AHC the construction of examination revenue limit the deduction to jurisdiction law falls within the during year. The critical statuto Const, V, Court. Mo. ry payable.” art. sec. 3. Statutory term is “taxes 1. All references to statutes are to RSMo 1994 unless otherwise indicated. [transportation invest- any unused plain or ordi- forward terms considered their ”); .... up years to ten Ryder tax credit nary ment] and usual sense. Student Serv., Supp.1999 (“Taxpay- sec. Transp. Inc. v. Director of 1995); may carry unused credits ers forward 896 S.W.2d *3 ....”); sec. up periods tax “Payable” is defined as “due” or to five (tax for research ex- paid.” to be Third 620.1039.3 credit “requiring Webster’s 620.195.12(2)(small (1981). business Dictionary penses); New International 1659 sec. credit); to tax sec. “required] program taxes that are be incubator Arguably, (credit 135.110.11(2), for Supp.1999 and RSMo paid” 1995 do not include taxes due facility). expanded business owing years, suggests. later new or is less phrase’s precise meaning But the most Reading light in a payable” “taxes perfectly than clear. Where there is an authority, be- taxing the and favorable to creating exemptions ambiguity, statutes to provide the knows how legislature cause strictly taxation construed are carry-over if is intent did for a such its but against taxpayer. Hyde the Park Hous. here, not so finds that Fideli- do Court v. S.W.2d P’ship Director 850 of the ty carry not to forward is entitled 1993). 82, 84 banc the am- Reading unused deduction. phrase light to biguous in a favorable the taxing authority, concludes that the Court II. the deductions found in section 148.400 Fideli reasoning applies Similar to only may year, be taken in the current and appeal, concerning its ty’s second may unused amounts not be carried for- unused deduc attempt carry to forward its ward. paid Mis tion for fees to the assessment Guaranty souri Life Health Insurance and supported by result is This (MOLHIGA) of in the amount Association premise tax credits that deductions and to $23,956.2 This section time and legislative grace are matters of are allowing guaranty associa 376,745.1, only available the extent authorized ... against tion assessments as “offset statute. Herschend Director Reve of ar liability,” Fidelity again tax nue, 458, 1995); 896 461 S.W.2d express no gues that this section contains Group, Brown Inc. v. Administrative and its limitation on that Comm’n, 874, Hearing 877 compa purpose, to reimburse insurance Assembly The General assessments, amount of the nies deduction, carry-over authorizes Fideli should not frustrated. As with be exemption by including language or credit rejects these ty’s point, first the Court See, 135.503.3, e.g., that sec. effect. arguments. legislative purpose (“All capi Supp.1999 [certified such RSMo apparent. not When suggests is against premi investment] tal credits state Assembly carry-over intends a the General liability be forward may um tax carried deduction, credit, it in exemption of or utilized.”); indefinitely until the credits effect, and no such language cludes Supp.1999 (“Any sec. RSMo 376.745.1. language present is section Assistance tax credit [Neighborhood Act] Furthermore, it is clear that the deduc- period used in the for which the credit twen- “to the extent of approved be over the tion is may was carried ty the amount of MOLHI- years percent [the ten until the full succeeding next allowed.”); years five for each of the calendar GA] credit has been (“A year in which such assess- following the Supp.1999 taxpayer carry lapse cover- non-profit legal entity life and health insurance and 2. MOLHIGA a insolvency be a member in order to trans- impairment insurers must age due financial pur- act insurance business Missouri. company. Sec. 376.720. the insurance against protect people pose of MOLHIGA paid.” is, ment ...” Sec. That requires. By as section 148.390.2 876.745.1. Fidelity may definition, twenty per- is a form coverage paid cent of the fees from 1990 to 1994. health Employers insurance. are directly Fidelity may deduct the same policies under stop-loss reimbursed fees percentage from 1991 to 1995. employee expenses healthcare above the Construing the as Fidelity section sug- expected Stop-loss poli- amount of claims. gests, allowing the carry-over however, unused employees, cies also benefit satis- 1995 deduction into would undermine fying the of section requirement second this provision essentially permit 148.390.2 the benefit of be for deduction MOLHIGA assessment coverage prevents employees. Stop-loss *4 five-year period outside the by the employees from the burden of bearing statute. large plunge healthcare claims that could an employer, especially employer, a small

III. Employers into financial devastation. who Fidelity’s point challenges third the self-fund healthcare use this insurance cov- ruling paid by AHC’s that amounts Fideli erage protect not to themselves but stop-loss ty under plans insurance are not protect jobs also to the and healthcare under deductible section 148.390. Fideli benefits due their the event employees merit, ty’s claim has and the AHC decision of catastrophic a loss. is reversed to this claim. context, appeals of another the court Section 148.390 insurers to allows stop-loss found that insurance not “the payments entire amount of benefit “group subject regula to health insurance” actually “gross made” from the amount of by department tion the of insurance under n premiums policies received on or contracts sectio at Angoff, 376.421. 937 S.W.2d health providing insurance benefits for the the This was due in to fact that benefit of some or all employees of the of stop-loss policies the “no provide direct section, one or employers....” more any employee. benefits” Id. Unlike in to words, in other allows insurers to deduct 376.421, regulatory the scheme of section the they pay policies benefits on providing however, nothing in of the text section health insurance to employees benefits expressly implicitly 148.390.2 limits the gross premiums they the receive on premiums result in deductions to. that di policies. return, the same its 1996 On rect employees. to Also relied benefits Fidelity included a deduction the 376.421.1(1) upon defining was section $1,488,113.41 amount of that consisted of group policy insuring health insurance as a stop-loss policies. benefits under employees “for employer of the issued question is payments whether benefit benefit persons employ of other the than stop-loss policies qualify made under as 148.329.2, er.” unlike section Section employees health to un- insurance benefits not does limit the health insurance der section 148.390. premium subject exemption to the tax to “other pay persons that benefits to Stop-loss is coverage defined as than 148.329.2 employer.” the Section re “indemnity coverage employer to an issued quires employees that some or all benefit maintaining, a plan health self-funded coverage directly from the but not does the employer large reimburse medical rule employer out benefit does section as expense the by employees losses incurred 376.421. protected by plan.” the Associated Indus. v. Angoff Missouri 278 While it true that in a tax ambiguities is of the (Mo.App.1996). Key analysis favorably is statute construed stop-loss policies provide authority, equally whether these to the taxing it is true “health that primary statutory insurance benefits” are “for the rule con- of the employees requires the benefit some or all of struction the Court determine v. Di- permitted. Shoe Co. the meaning the of a statute based Wolff Revenue, 29, 31 762 S.W.2d v. rector used the statute. Hadlock words 1988). 835, 337 banc 860 S.W.2d nothing in the Because payment that a to a Any doubt lingering that the requires text of section 148.390.2 as TPA is be treated employee di- healthcare benefits to the be provides resolved employ- rect or that no inure to benefit TPA, insurer uses the services if an read policy, will not er under Court any to the administrator payment “the provisions words or into the statute by or on behalf for insurance charges appear do not there. State Missouri shall deemed party be insured Elec., Inc., 936 S.W.2d SKC A the insurer....” been received have 1997). In the context of sec- limited paid to an insurer consideration charge payment tion premium. contract is a for an insurance insurance is deductible. is cer- dispositive, statute While not charges kind tainly indicative of the IV. fall within the am- legislature intended to Fidelity’s final concerns *5 “premiums .” the term bit of by charged third-party fees administrators arguing that TPA In course of (TPAs) manage who certain issued tax, subject to premiums charges are Fidelity; these by specifically, whether the director’s method Fidelity claims that tax. premiums subject fees constitute charges TPA calculating non-affiliated administrative The fees AHC held point preserved This was not was flawed. charged by premiums TPAs are direct on and not be ad- in a relied need Fi purposes Fidelity’s tax assessment. say there is no dressed. sufficient delity argues charged such fees plain error. TPAs are not in the nature of they paid because are not consideration CONCLUSION

indemnify a The finding risk. AHC’s correct. The of the AHC is reversed decision respect to the issue. “premiums” The term is not de is affirmed. remainder of decision context, fined in section 148.320. But in plain ordinary meaning and LIMBAUGH, COVINGTON, WHITE premium paid word is the consideration JJ., WOLFF, and concur. an insured to an insurer for a contract of Law Dictionary insurance. Black’s PRICE, C.J., part in and concurs (6th ed.1990); Webster’s Third New Inter separate opinion filed. part dissents in (1981). rec Dictionary national BENTON, J., opinion Fidelity ord in concurs requires shows some PRICE, pay charges directly to certain sureds to C.J. affiliates, TPAs, including some Justice, PRICE, Concurring in Chief the consideration for issu Part. and Dissenting Part

ing a The record contract of insurance. opinion majority I concur with the ex- supports also the conclusion that these ability of insurance provided cept as it limits the fees administrative services their “examination companies to deduct by TPAs are lieu of the normal adminis payable” paid” “premium taxes expenses by the fees from trative borne insurer. No Thus, such year examination. simply part TPA of the charge expressly in Section limitation is stated by Fidelity for its con premium demanded part, pertinent no insurance. Because there is tracts of of that section reads: language construction resort to canons of ambiguity, companies All insurance ... payable taxes exami-

nation ...” all

With due majority’s to the at-

tempt parse statute and consider statutory

other language, I believe this

language is simply most clearly read

to allow the any premium deduction from payable,

taxes even in years. future Missouri, Respondent,

STATE of Clayton SMITH, Appellant.

John

No. SC 82000. Missouri,

Supreme Court of

En Banc.

Dec. 2000.

Rehearing Denied Dec.