4. The privilege tax imposed under West Virginia
Code § 11-13A-3 (1997) (Repl. Vol. 2003) upon certain health care providers
is not limited in application to behavioral health care services that are provided
by licensed medical providers.
Albright, Chief Justice:
Appellant REM Community Options, Inc. (Options) appeals from the August 24, 2004, order of the Circuit Court of Kanawha County, which reversed a decision by the West Virginia Office of Tax Appeals that had significantly reduced the amount of privilege taxes owed by Options and reinstated the full tax assessment. In challenging the decision reached by the circuit court, Options argues that statutory amendments pertaining to the subject privilege taxes were wrongly applied in a retroactive fashion. Upon our full and careful review of this matter, we find no error and, accordingly, affirm the decision of the lower court.
(1) Behavioral health services means health
care related services provided by a behavioral health center as defined in
section one [§ 27-2A-1], article two-a, chapter twenty-seven of this code
or section one [§ 27-9-1], article nine of said chapter.
(2) Community care services means home and community care services furnished by a provider pursuant to an individual plan of care, which also includes senior citizens groups that provide such services, but does not include services of home health agencies.
W.Va. Code § 11-13A-2(d) (1995) (emphasis supplied).
At the core of its challenge to the tax assessment
at issue is the argument that the bulk of the taxed services Options provides
are not health care related, as required by the definition of behavioral
health services that was in effect during the period covering the assessment
at issue. (See footnote 6) See W.Va.
Code § 11-13A-2(d)(1) (1995). (See
footnote 7) Other than the medical and psychological services that
it periodically provides, Options maintains that the other services it provides
cannot come within the definition of behavioral health services. Id. Options
contends that the remainder of its services _ those that are not provided by
licensed medical providers _ are outside the realm of traditional health care
services. Likening the bulk of its services to babysitting in nature,
Options argues that such services, while necessary to enable its clients to live
outside an institutional setting, are not within the reach of the privilege tax
While this case was on appeal to the circuit court, the Legislature amended the definition of behavioral health services to mean:
services provided for the care and treatment of persons with mental illness, mental retardation, developmental disabilities or alcohol or drug abuse problems in an inpatient, residential or outpatient setting, including, but not limited to, habilitative or rehabilitative interventions or services and cooking, cleaning, laundry and personal hygiene services provided for such care: Provided, That gross receipts derived from providing behavioral health services that are included in the provider's measure of tax under article twenty-seven [§§ 11-27-1 et seq.] of this chapter shall not be include[d] in that provider's measure of tax under this article. The amendment to this definition in the year two thousand four is intended to clarify the intent of the Legislature as to the activities that qualify as behavioral health services, and this clarification shall be applied retrospectively to the effective date of the amendment to this section in which the definition of behavioral health services was originally provided as enacted during the first extraordinary session of the Legislature in the year one thousand nine hundred ninety-three.
W.Va. Code § 11-13A-2(d) (2004) (emphasis supplied).
Based on the express retroactive reach of the amended statutory definition of behavioral services back to the enactment of the privilege tax in 1993, the circuit court determined that not only do REM's [Option's] nursing services and physical and psychological examinations fall within behavioral health services, but by definition and current clarification REM's 'at issue services' fall within behavioral health services. In the circuit court's opinion, the 2004 amendment resolved any lingering issue as to whether those services that Options provides that are not traditional health care services fall within the ambit of the behavioral services intended to be taxed by the Legislature.
Options argues strenuously against relying
on a retroactive application of the 2004 amendment for resolving the issue of
whether the privilege tax can be assessed against the non-traditional health
care services it provided during the assessed tax period. Options maintains that
by making the statutory amendment effective as of when the statute was first
enacted in 1993, the Legislature has clearly exceeded what is deemed acceptable
in terms of retroactive application. Rather than being asked to sanction an eleven-year
clarification by the Legislature, we note initially that the retroactive reach
at issue is only six years. Due to the statute of limitation that governs tax
matters, the effective reach of the statutory amendment in the case sub judice is
1998 _ the first year of the assessment at issue.
In considering the issue of retroactivity, we must acknowledge the impact that this Court's decision in Coordinating Council for Independent Living v. Palmer, 209 S.E.2d 274, 546 S.E.2d 454 (2001), had on the statutory amendment at issue. In Coordinating Council, we were asked to determine whether homemaker or case management services were included within the definition provided for community care services with regard to imposing the privilege tax on certain health care services. W.Va. Code §§ 11-13A-2(d); -13A-3. Finding a noticeable lack of clarity as to the precise nature of 'community care services' and applying the principle of statutory construction which recognizes that the inclusion of one is the exclusion of the others, we held that the privilege tax levied upon certain health care services did not apply to homemaker or case management services. 209 W.Va. at 282-83, 546 S.E.2d at 462-63. Given this ruling, we expressly prohibited further taxation of such services until further clarification by the Legislature. Id. at 283, 546 S.E.2d at 463. Following our holding in Coordinating Council, the Legislature removed the term community care services from those health care services subject to the privilege tax at issue. See W.Va. Code § 11-13A-3 (2002). Importantly, the services at issue provided by Options were taxed based on their inclusion within the definitional ambit of behavioral health services, rather than community care services. (See footnote 8)
Before discussing the issue of retroactivity, however, we wish to examine whether the privilege tax, as the Tax Commissioner asserts, was properly assessed prior to the statutory amendment in 2004. As with all matters of statutory construction, our objective is to afford the statute a construction that is consistent with the Legislature's intent. Coordinating Council, 209 W.Va. at 281, 546 S.E.2d at 461. As we recognized in syllabus point one of Smith v. State Workmen's Compensation Commissioner, 159 W.Va. 108, 219 S.E.2d 361 (1975): The primary object in construing a statute is to ascertain and give effect to the intent of the Legislature. Consequently, our analysis of the legislative intent underlying the privilege tax at issue requires a careful examination of the statutory language
authorizing the imposition of the tax, as well as the basis for the enactment under consideration.
As previously set forth, the authorizing statute provides for the imposition of the privilege tax on businesses furnishing certain health care services. W.Va. Code § 11- 13A-3(a). During the period pertinent to the assessment, the authorizing statute in effect defined certain health care services to mean behavioral health services and community care services. W.Va. Code § 11-13A-3(c) (1997). (See footnote 9) In authorizing this privilege tax, the Legislature was clear that only those health care services that fell within the fields of behavioral health and community care were subject to this tax. As specified above, the Legislature further defined persons providing health care items or services in West Virginia Code § 11-13A-2(d) (1995) to include behavioral health services. The pertinent definition of behavioral health services is health care related services provided by a behavioral health center as defined in section one [§ 27-2A-1], article two-a, chapter twenty- seven of this code or section one [§ 27-9-1], article nine of said chapter. W.Va. Code § 11- 13A-2(d) (1995).
Under the original legislative enactment,
the Legislature only defined behavioral health services in terms
of the entities providing qualifying mental health services. The Legislature
expressly tied the statutory definition of behavioral health services to
those centers that are licensed by the state to provide services to the mentally
retarded under either West Virginia Code §§ 27-2A-1 (1977) (Repl. Vol.
2004) or 27-9-1 (1977) (Repl. Vol. 2004). West Virginia Code § 27-2A-1addresses
the operation of comprehensive community mental health-mental retardation centers
and West Virginia Code § 27-9-1 requires that a license be obtained by any hospital,
center or institution . . . to provide inpatient, outpatient or other service
designed to contribute to the care and treatment of the mentally ill or mentally
retarded. . . . The parties do not dispute that Options operates as a behavioral
health center pursuant to licensure under authority of West Virginia Code § 27-9-1.
Notwithstanding its status as a behavioral health center, Options suggests that because the Legislature failed to define the term health care related services in defining the behavioral health services subject to the privilege tax, the statute is too ambiguous to be applied. Conversely, the Tax Commissioner adopts the same approach this Court took when faced with an undefined statutory term in Coordinating Council. See 209 W.Va. at 281-82, 546 S.E.2d at 461-62. Rather than denying any meaning to the enactment at issue, rules of statutory construction require that undefined terms be construed based on the commonly accepted usage of such terms. See Syl. Pt. 1, Miners in General Group v. Hix, 123 W.Va. 637, 17 S.E.2d 810 (1941) (holding that [i]n the absence of any definition of the intended meaning of words or terms used in a legislative enactment, they will, in the interpretation of the act, be given their common, ordinary and accepted meaning in the connection in which they are used) (overruled on other grounds by Lee-Norse Co. v. Rutledge, 170 W.Va. 162, 291 S.E.2d 477 (1982)).
Before reaching its decision below, the administrative law judge opined that [t]here is nothing in the statute to indicate that the health care related services are intended to be limited to benefitting the physical health of the clients. Following this observation, the administrative law judge proceeded to conclude that the statutory terms health care related connoted only the provision of medical services by licensed medical personnel. This conclusion, however, is not supported by the ordinary and accepted meaning of the terminology at issue. The phrase health care is defined as 1. the field concerned with the maintenance or restoration of the health of the body or mind; 2. any of the procedures or methods employed in this field. Random House Webster's Unabridged Dictionary 882 (2nd ed., 1998). In turn, the term health is defined as the general condition of the body or mind with reference to soundness and vigor. Id.
A narrow interpretation of health care that limits the meaning of this statutory term to only traditional medical services supplied by licensed medical personnel does not withstand scrutiny. By definition, the concept of health care expansively encompasses both physical and mental health, as well as the various procedures or methods employed for the purpose of restoring or maintaining both physical and mental health. See id. To conclude, as the administrative law judge did, that only traditional medical services provided by licensed medical personnel were subject to the privilege tax at issue belies both the nature of behavioral health and the basis for the enactment of the privilege tax on such services.
By regulations adopted pursuant to the act which addresses mental illness, West Virginia Code §§ 27-1-1 to 27-17-4, and the licensing statute pertaining to mental health treatment centers, West Virginia Code § 27-9-1, the term behavioral health services was initially defined during the period of time relevant to this matter as:
Those services intended to help individuals gain or retain the capacity to function adaptively in their environment, to care for themselves and their families, and to be accepted by society. This includes individuals with emotional or mental disorders, alcohol or drug abuse problems, and mental retardation or other developmental disabilities.
W.Va. R. Division of Health 64 § 11-4.4 (1990). (See
footnote 10) We fully recognize that rather than being adopted
pursuant to the specific enforcement powers of the Tax Department, this regulation
was promulgated pursuant to the Department of Health's authority to govern
the licensure and operation of centers providing mental health services. Consequently,
we look to this regulatory definition solely for purposes of gaining an understanding
of the nature of the services that Options is licensed to provide.
When the term health care related is properly viewed in its accepted usage as encompassing both physical and mental health, then the various services that Options provides that enable the recipients of those services to maintain a level of mental health which permits them to reside within the community rather than in an institutional setting are clearly health care related services. To conclude otherwise is to deny the necessity and significance of the behavioral health services provided by centers such as Options to the continued viability of non-institutionalized residential life for the recipients of such services. While many of the services that Options provides may initially seem unrelated to the health and well-being of its recipients, there is little question that without these vital services, the affected individuals could not continue to maintain the level of mental health that permits them to reside outside an institutional setting. (See footnote 11)
An examination of the basis for the privilege tax being imposed on behavioral health centers supports the position that the broad range of services provided by such centers were intended to be subject to the tax, rather than the limited scope of only those services provided by licensed medical personnel as maintained by Options. The Legislature expressly dedicated the funds collected from the imposition of the privilege tax on health care items or services to the special revenue fund created in the state treasurer's office and known as the medicaid state share fund. W.Va. Code § 11-13A-20a(a) (1994) (Repl. Vol. 2003). These funds, like those collected pursuant to the health care provider taxes enacted during the same extraordinary legislative session in 2004, are generated for the distinct purpose of generating federal matching funds to draw down Medicaid funds. (See footnote 12) See W.Va. Code §§ 11-27-1 to -37 (1993) (Repl. Vol. 2005) (West Virginia Health Care Provider Tax Act of 1993).
The services at issue that Options provides are pursuant to Title XIX of the Social Security Act, also known as the Mental Retardation Developmental Disability Waiver Program. See 42 U.S.C. § 1396 (2000). As the Legislature has recognized:
While participation by a state
in the medicaid program created by Title XIX of the Social Security Act is voluntary,
the reality is that states, and particularly this state, have no choice but to
participate. The alternative is to deprive indigent citizens and particularly
the children of indigent families of basic medical services.
W.Va. Code § 11-27-1(d). Once a state decides to participate in the medicaid program, it is required to comply with the full panoply of federal requirements set forth in Title XIX. An individual's eligibility for the services provided by Options under Title XIX is determined based upon whether that person is eligible to be institutionalized in an intermediate care facility for the mentally retarded. (See footnote 13)
Under federal law, individuals who are eligible for the Mental Retardation Developmental Disability Waiver Program must receive active treatment. Active treatment is defined as:
(a) Standard: Active Treatment. (1) Each client must receive a continuous active treatment program, which includes aggressive, consistent implementation of a program of specialized and generic training, treatment, health services and related services described in this subpart, that is directed toward -
The acquisition of behaviors necessary for the client to function with as much
self determination and independence as possible; and
(ii) The prevention or deceleration of regression or loss of current optimal functional status.
42 C.F.R. § 483.440 (2004). In its amicus brief, the DHHR argues that absent this active treatment component attached to the federal monies, individuals would regress and lose any abilities they have to function in an independent manner.
While Options argues against looking to federal law for guidance in determining the meaning of the statutory language at issue, federal law is instructive on two levels. First, it provides an explanation for the origin of the tax at issue. Second, it proves useful in understanding that the variety of services that are offered by Options pursuant to the requirements of Title XIX have as their object the acquisition and maintenance of behaviors necessary for the client to function with as much . . . independence as possible.
42 C.F.R. § 483.440. It stands to reason that the multiplicity of services provided by Options in its capacity as a behavioral health center are aimed at maintaining the mental health of the recipients of such services for the purpose of allowing such individuals to live outside the restricting confines of an institutional setting.
After careful examination of both the statutory language and the legislative purpose underlying its enactment, we are compelled to conclude that the term health care related, as it pertains to the provision of behavioral health services within the meaning of West Virginia Code § 11-13A-2(d) (1995) for purposes of levying the privilege tax upon certain health care providers, broadly encompasses both physical and mental health and all the various services related to maintaining or restoring an individual's physical and/or mental health. Moreover, our review of the legislation at issue further requires the conclusion that the privilege tax imposed under West Virginia Code § 11-13A-3 (1997) upon certain health care providers is not limited in application to behavioral health care services that are provided by licensed medical providers. (See footnote 14) Accordingly, we conclude that because health care related encompasses mental as well as physical health, the broad range of services that are required pursuant to Title XIX by a behavioral health center, such as Options, are properly within the category of services intended to be taxed by the Legislature for the express purpose of generating funding for draw-down purposes of medicaid funding.
Based on our determination that the statutory
provision under consideration, as originally enacted in 1993, permitted the assessment
of the privilege tax on the services provided by Options, we find it unnecessary
to further address whether principles governing
retroactive statutory application prevent application of the clarifying language included in the 2004 amendment to West Virginia Code § 11-13A-2(d). (See footnote 15) Our decision in this case is reached entirely without reference to the 2004 amendment to West Virginia Code § 11-13A- 2(d).
Having determined, for reasons differing from the circuit court, (See footnote 16) that the privilege tax assessment at issue was sustainable, the decision of the Circuit Court of Kanawha County is hereby affirmed.