Could Lea Regional Hospital claim New Mexico's practitioner deductions for its hospital gross receipts?

Plain-English summary

Lea Regional Hospital's two gross receipts tax refund protests were denied on summary judgment. Lea Regional was a 201-bed acute-care hospital in Hobbs providing services including cardiac care, pediatrics, mental health care, and outpatient surgery. The Department had denied refunds of:

• $938,140 for the period ending December 31, 2014; and
• $563,338 for the period ending December 31, 2015.

The central issue was whether the hospital could use Section 7-9-93 or the similarly structured Section 7-9-77.1. The hospital protests were coordinated, and the parties adopted the legal arguments made in the lead Alta Vista Regional Hospital case.

Hearing Officer Chris Romero held that Lea Regional could not use either deduction:

• Section 7-9-93 was limited to health care practitioners. The Court of Appeals' nonprecedential Golden Services decision concluded that the deduction did not extend to health care facilities such as hospitals. The hearing officer found that construction highly persuasive, and Four Corners Healthcare had rejected the argument that Golden Services was wrongly decided.
• Section 7-9-77.1 was construed the same way. The statute's wording and 2016 amendment paralleled Section 7-9-93, listing eligible practitioners and selected facilities without naming hospitals.
• A different provision expressly covered hospitals. Section 7-9-73.1 used the word “hospital” and granted licensed hospitals a separate percentage deduction. That showed the Legislature knew how to include hospitals when it intended to do so.

The ruling displaced an earlier procedural result: a December 7, 2017 order denying the Department's motion for partial judgment was set aside in light of Golden Services. Because Lea Regional ultimately lost, it was not entitled to administrative costs or fees.

Result: protests DENIED; Department granted summary judgment.

What this means for you

Practitioner deductions and hospital deductions are not interchangeable

The decision treats the taxpayer named in the statute as decisive. A hospital cannot claim a deduction for receipts of a health care practitioner merely because practitioners furnished the underlying care.

Express statutory lists matter

Section 7-9-77.1 named numerous practitioners and certain facilities, while Section 7-9-73.1 expressly named hospitals. The omission of hospitals from the practitioner provisions was treated as intentional.

Later appellate guidance can change an administrative case's direction

Lea Regional had obtained an earlier order denying partial judgment to the Department. After the Court of Appeals addressed the same statutory issue in Golden Services, the hearing officer set that order aside and ruled for the Department.

Check the law for the tax period involved

This decision addressed refund periods ending in 2014 and 2015 and discussed 2007 and 2016 statutory language. Later amendments or different facts may produce a different analysis.

Common questions

Q: Can a hospital use Section 7-9-93 for receipts associated with services by its doctors?
A: Not under D&O 23-04. The hearing officer treated the deduction as one for health care practitioners, not hospital facilities.

Q: Is Section 7-9-77.1 broader because it concerns federal or Medicare payments?
A: It did not help Lea Regional. The hearing officer found its structure and practitioner language materially parallel to Section 7-9-93 and held that hospitals were omitted.

Q: What refund amounts did the Department deny?
A: The decision identifies denials of $938,140 for the period ending in 2014 and $563,338 for the period ending in 2015.

Q: Why was the 2017 order set aside?
A: It predated Golden Services. Once the Court of Appeals supplied persuasive guidance on the same statutory issue, the hearing officer replaced the earlier order with summary judgment for the Department.

Q: Did Lea Regional receive administrative costs or fees?
A: No. It was not the prevailing party under Section 7-1-29.1.

Q: Can another hospital rely on this decision?
A: No. This Decision and Order resolved Lea Regional's own protests under the record and law before the hearing officer.

Citations and references

Statutes and regulations:

• NMSA 1978, § 7-9-93 (2007 and 2016) — deduction for specified receipts of health care practitioners
• NMSA 1978, § 7-9-77.1 (2007 and 2016) — deduction for specified federal payments for medical and health services
• NMSA 1978, § 7-9-73.1 (2007 and 2019) — percentage deduction expressly available to licensed hospitals
• NMSA 1978, § 7-1-26 — refund claims and the claimant's burden to establish entitlement and amount
• NMSA 1978, § 7-1-29.1 — administrative costs and fees for a prevailing party
• NMSA 1978, §§ 7-1B-6 and 7-1B-8; Regulation 22.600.3.8 NMAC — hearing procedure and timing
• NMSA 1978, § 7-1-25 — right to appeal the decision
• Regulations 3.2.241.13 and 3.2.241.17 NMAC — Department interpretations discussed in connection with Section 7-9-93

Cases:

• Golden Services Home Health & Hospice v. Taxation & Revenue Dep't, No. A-1-CA-36987, 2020 WL 2045956 (N.M. Ct. App. Apr. 20, 2020) (nonprecedential) — health care facilities were not eligible for the Section 7-9-93 deduction
• Four Corners Healthcare v. New Mexico Taxation & Revenue Department, No. A-1-CA-38869 (N.M. Ct. App. Dec. 14, 2022) (memorandum opinion) — rejected the contention that Golden Services was wrongly decided
• TPL, Inc. v. New Mexico Taxation & Revenue Department, 2003-NMSC-007 — a refund claimant must establish entitlement and facts supporting the amount
• Public Service Co. of New Mexico v. Diamond D Construction Co., 2001-NMCA-082 — statutes concerning similar subject matter guide interpretation
• Helmerich & Payne International Drilling Co. v. New Mexico Taxation & Revenue Department, 2019-NMCA-054 — administrative-cost issue cited in the decision

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Lea Regional Hospital
• Decision PDF: D&O 23-04

Original ruling text

1 STATE OF NEW MEXICO
2 ADMINISTRATIVE HEARINGS OFFICE
3 TAX ADMINISTRATION ACT

4 IN THE MATTER OF THE PROTEST OF
5 LEA REGIONAL HOSPITAL
6 TO DENIAL OF REFUND ISSUED UNDER LETTER
7 ID NOs. L0926992688 and L0472566064

8 v. Case No. N/A, D&O No. 23-4

9 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

10 DECISION AND ORDER
11 GRANTING SUMMARY JUDGMENT FOR DEPARTMENT

12 This matter came before the Administrative Hearings Office, Hearing Officer Chris

13 Romero, Esq., upon the following: (1) Department’s Motion For Summary Judgment and Brief

14 in Support (filed July 15, 2022) (“Department’s Motion”); (2) Lea Regional Hospital’s Response

15 to Taxation and Revenue Department’s Motion for Summary Judgment (filed July 29, 2022)

16 (“Taxpayer’s Response” 1); (3) Alta Vista Regional Hospital’s2 Motion for Partial Summary

17 Judgment (filed August 29, 2022) (“Taxpayer’s Motion”); and (4) Department’s Objection and

18 Response to Motion for Summary Judgment to Non-Lead Hospitals (filed September 6, 2022)

19 (“Department’s Response).

20 A hearing on the foregoing motions was held on November 28, 2022. Lea Regional

21 Hospital, LLC (“Taxpayer”) appeared by and through Mr. Wade Jackson, Esq. The Taxation and

22 Revenue Department (“Department”) appeared by and through Mr. David Mittle, Esq.

1
Taxpayer’s Response explicitly incorporated by reference the arguments contained in Carlsbad Medical Center’s
Response to Taxation and Revenue Department’s Motion for Summary Judgment filed on July 29, 2022. The
incorporated response is subject of D&O 23-2 issued on January 13, 2023.
2
Pursuant to the Amended Order Modifying Briefing Schedule for Dispositive Motions, Response and Replies, the
Hearing Officer refers to the motion that was filed in the matter of Alta Vista Regional Hospital for Taxpayer’s legal
arguments for summary judgment in its favor which the parties agreed would be the lead case for all cases
categorized as “hospital” cases. The Decision and Order (D&O 23-1) in the protest Alta Vista Regional Hospital
was issued on January 13. 2023.

In the Matter of the Protest of Lea Regional Hospital
Page 1 of 23
1 On the record of this hearing, the parties adopted the arguments that had been

2 made on the record in the matter of the protest of Alta Vista Regional Hospital, subject of

3 Decision and Order 23-1 entered on January 13, 2023. The Department had an

4 opportunity to make a separate record at which time it objected to any facts from the lead

5 case being considered to establish the amount of Taxpayer’s tax liability in this protest.

6 The facts and legal issues presented concentrate on whether Taxpayer, a hospital, is eligible

7 to deduct any portion of its gross receipts pursuant to NMSA 1978, Sections 7-9-77.13 or 7-

8 9-93. Since the application of Section 7-9-93 presents a question of law that was resolved in

9 favor of the Department in Golden Services Home Health and Hospice and Unnamed

10 Nursing and Rehabilitation Center v. Taxation and Revenue Dep’t, No. A-1-CA-36987,

11 2020 WL 2045956, mem. op. (NMCA, April 20, 2020) (non-precedential), cert. denied,

12 No. S-1-SC-38341 (NMSC, November 17, 2020), the Hearing Officer finds that

13 Taxpayer is not legally entitled to the deduction. The Hearing Officer also finds that

14 Taxpayer is not eligible to claim a deduction under Section 7-9-77.1.

15 For these reasons, which will be addressed in further detail, the Department’s

16 Motion should be granted, and Taxpayer’s Motion and protest should be denied.

17 Additionally, a prior order of the tribunal entered December 16, 2017, prior to Golden

18 Services, which denied summary judgment to the Department, should be set aside in

19 favor of this order. IT IS DECIDED AND ORDERED AS FOLLOWS:

20 FINDINGS OF FACT

21 Material Facts

3
Although the undisputed statements of material fact suggest that there is no dispute regarding the application of
NMSA 1978, Section 7-9-77.1, the Hearing Officer will also address that statute since Taxpayer previously asserted
on January 16, 2018 that the deduction was in dispute.[Administrative File (Taxpayer’s Prehearing Statement)]

In the Matter of the Protest of Lea Regional Hospital
Page 2 of 23
1 1. Lea Regional Hospital is a hospital. Petitioner is part of Community Health

2 Systems, Inc. which is one of the largest providers of general hospital healthcare services in the

3 United States. Petitioner is located in Hobbs, N.M. and is a 201-bed acute care facility providing

4 complete care from cardiac care and pediatrics to mental health and outpatient surgery.

5 [Department’s Motion; Administrative File (Protest)]

6 2. Under Letter Id. No. L0926992688:

7 a. The applicable period is January 1, 2013 through December 31, 2014.
8 b. The Application for Refund was filed August 19, 2016.
9 c. Refund is sought under NMSA Section 7-9-93 (2007) plus administrative
10 fees.

11 [Department’s Motion; Administrative File (Protest)]

12 3. Under Letter Id. No. L0472566064:

13 a. The applicable period is January 1, 2013 through December 31, 2014.
14 b. The Application for Refund was filed August 19, 2016.
15 c. Refund is sought under Section 7-9-93 (2007) plus administrative fees.

16 [Department’s Motion; Administrative File (Protest)]

17 4. On February 3, 2017, the Department issued a denial of Taxpayer’s requested

18 refund under Letter ID No. L0926992688. [Administrative File (accompanying Hearing Request

19 filed April 18, 2017)]

20 5. The denial under Letter ID No. L0926992688 explained that the refund of

21 $938,140.00 for the period ending December 31, 2014 “has been reviewed and denied.” It went

22 on to explain that “[a] Request for Additional Information notice was mailed to you on

23 December 13, 2016” and that the requested information was not received by the deadline of

24 January 15, 2017. [Administrative File (accompanying Hearing Request filed April 18, 2017)]

25 6. On February 14, 2017, the Department issued a denial of Taxpayer’s requested

26 refund under Letter ID No. L0472566064. [Administrative File (accompanying Hearing Request

In the Matter of the Protest of Lea Regional Hospital
Page 3 of 23
1 filed April 18, 2017)]

2 7. The denial under Letter ID No. L0472566064 explained that the refund of

3 $563,338.00 for the period ending December 31, 2015 “has been reviewed and denied.” It went

4 on to explain that “[a] Request for Additional Information notice was mailed to you on

5 December 7, 2017” and that the requested information was not received by the deadline of

6 January 19, 2017. [Administrative File (accompanying Hearing Request filed April 18, 2017)]

7 8. On February 21, 2017, Taxpayer’s Formal Protest of the Department denial under

8 Letter ID No. L0926992688 was stamped received in the Department’s Protest Office.

9 [Administrative File (accompanying Hearing Request filed April 18, 2017)]

10 9. On March 1, 2017, Taxpayer’s Formal Protest of the Department denial under

11 Letter ID No. L0472566064 was stamped received in the Department’s Protest Office.

12 [Administrative File (accompanying Hearing Request filed April 18, 2017)]

13 Procedural History
14 (Pre Golden Services)

15 The Hearing Officer intentionally omits events which are immaterial to the issues under

16 consideration or which are unnecessary for establishing a historical setting for the ensuing

17 discussion. A comprehensive history of the protest may be acquired by referring to the

18 administrative file.

19 10. On March 8, 2017, the Department separately acknowledged both of Taxpayer’s

20 protests under Letter ID No. L0593385776 and Letter ID No. L2118244656. [Administrative

21 File (accompanying Hearing Request filed April 18, 2017)]

22 11. On April 18, 2017, the Department filed a combined Hearing Request in the

23 matter of Taxpayer’s protests. [Administrative File]

24 12. On April 21, 2017, the Administrative Hearings Office entered a Notice of

In the Matter of the Protest of Lea Regional Hospital
Page 4 of 23
1 Telephonic Scheduling Conference which set an initial hearing to occur on May 15, 2017.

2 [Administrative File]

3 13. An initial telephonic scheduling hearing occurred on May 15, 2017. Neither party

4 objected that that hearing satisfied the 90-day hearing deadline of NMSA 1978, Section 7-1B-8

5 (A). [Administrative File]

6 14. On May 16, 2017, the Administrative Hearings Office entered a Scheduling Order

7 and Notice of Administrative Hearing. [Administrative File]

8 15. On May 23, 2017, the Department filed Taxation and Revenue Department’s

9 Motion for Partial Judgment. [Administrative File]

10 16. On July 7, 2017, Taxpayer timely filed Lea Regional Hospital LLC’s Response to

11 Taxation and Revenue Department’s Motion for Partial Judgment on the Protest. [Administrative

12 File]

13 17. On October 13, 2017, the Department timely filed Department’s Reply Brief.

14 [Administrative File]

15 18. On October 12, 2017, Taxpayer timely filed Lea Regional Hospital LLC’s Sur-

16 Reply to Taxation and Revenue Department’s Reply to Hospital’s Response to Department’s

17 Motion for Partial Judgment on the Protest. [Administrative File]

18 19. On October 27, 2017, Taxpayer filed Lea Regional Hospital LLC’s Supplemental

19 Brief on the Constitutional Prohibitions Against Retroactive Operation of the Senate Bill 6.

20 [Administrative File]

21 20. On October 27, 2017, the Department filed Department’s Brief Addressing

22 Article IV, Section 24 of the New Mexico Constitution. [Administrative File]

23 21. On December 15, 2017, the Administrative Hearings Office entered an Order

In the Matter of the Protest of Lea Regional Hospital
Page 5 of 23
1 Denying Department’s Motion for Partial Judgement. [Administrative File]

2 22. On December 15, 2017, Taxpayer filed Taxpayer’s Motion for Summary

3 Judgment, and on December 19, 2017, Taxpayer filed a notice of Correction to Taxpayer’s

4 Motion for Summary Judgment. [Administrative File]

5 23. On December 29, 2017, the Department filed Department’s Response to Motion

6 for Summary Judgment. [Administrative File]

7 24. On January 11, 2018, Taxpayer filed Taxpayer’s Reply in Support of Motion for

8 Summary Judgment. [Administrative File]

9 25. On January 16, 2018, Taxpayer filed Taxpayer’s Prehearing Statement in which it

10 asserted that the only deductions in contention were those provided by NMSA 1978, Section 7-9-

11 93 and 7-9-77.1. [Administrative File]

12 26. On January 18, 2018, the Department filed Taxation and Revenue Department’s

13 Notice of Filing Appeal and Motion to Stay explaining that “[b]ecause the determinative issue of

14 whether the Taxpayer is entitled to a deduction under Section 7-9-93 is before the Court of

15 Appeals, this protest should be stayed.” Taxpayer did not oppose the request to stay the

16 proceeding. [Administrative File]

17 27. The Hearing Officer takes administrative notice that the appeal subject of the

18 Department’s request was Golden Services and a second, unnamed4 nursing home facility.

19 28. On January 23, 2018, the Department filed Department’s Motion to Reconsider

20 the Hearing Officer’s Order Denying Department’s Motion for Partial Summary Judgement

21 entered December 15, 2017. [Administrative File]

4
The taxpayer in the appeal accompanying Golden Services was unnamed since the order from which the appeal
arose was interlocutory in nature, not a final Decision and Order, and therefore not subject to disclosure under
NMSA 1978, Section 7-8-1.3 D.

In the Matter of the Protest of Lea Regional Hospital
Page 6 of 23
1 29. On January 24, 2018, Taxpayer filed Taxpayer’s Response to Department’s

2 Motion to Reconsider. [Administrative File]

3 30. On January 24, 2018, the Administrative Hearings Office entered an Order

4 Vacating Hearing on Merits and Staying Protest Pending Appeal. The order provided that the

5 protest would be stayed pending further court order in the appeal underlying the Department’s

6 motion. The order further provided that the parties shall make reasonable effort to keep the

7 Administrative Hearings Office reasonably informed of the status of the appeal.5 [Administrative

8 File]

9 Post Golden Services

10 31. On April 20, 2020, the New Mexico Court of Appeals entered its decision in the

11 appeal for which the protest was stayed. See Golden Services Home Health & Hospice v.

12 Taxation & Revenue Dep't, A-1-CA-36987, 2020 WL 2045956 (Apr. 20, 2020) (non-

13 precedential)

14 32. On April 15, 2021, in the absence of any overt activity in this matter since

15 issuance of the mandate, the Administrative Hearings Office Proposed Summary Disposition

16 consistent with the holding expounded by Golden Services. [Administrative File]

17 33. On April 30, 2021, Taxpayer filed Taxpayer’s Response and Objection to the

18 Hearing Officer’s Proposed Summary Disposition. [Administrative File]

19 34. On June 2, 2021, the Administrative Hearings Office entered an Order to Conduct

20 Informal Conference and Notice of Telephonic Scheduling Hearing. [Administrative File]

21 35. On July 14, 2021, the Administrative Hearings Office entered a Briefing Schedule

5
This protest is one of approximately 60 protests that were stayed pending the outcome of Golden Services. As of
the date this order is entered, the vast majority remain pending. However, the Administrative Hearings Office has
directed a course of action with the relevant party representatives to move these cases toward an expeditious
resolution.

In the Matter of the Protest of Lea Regional Hospital
Page 7 of 23
1 for Dispositive Motions, Responses, and Replies. The order permitted the parties to stipulate to

2 extensions of deadlines without need for an order of the Administrative Hearings Office so long

3 as their agreement was mutual and memorialized in writing. [Administrative File]

4 36. On June 9, 2022, approximately eleven months after the Administrative Hearings

5 Office entered its briefing schedule on July 14, 2021, and nearly 26 months after entry of Golden

6 Services, the Administrative Hearings Office entered Order Modifying Briefing Schedule for

7 Dispositive Motions, Responses and Replies. The order set firm deadlines for filing the

8 dispositive motions contemplated by the parties in July of 20216. [Administrative File]

9 37. On June 14, 2022, the Department filed Department’s Motion to Vacate Order

10 Modifying Briefing Schedule for Dispositive Motions, Responses, and Replies as well as a

11 separate Unopposed Motion to Exceed Page Limit. [Administrative File]

12 38. On June 27, 2022, the Administrative Hearings Office informally notified the

13 parties by email that it would consider reasonable alternatives to the order entered on June 9,

14 2022 and encouraged the parties to confer and respond by motion on or before July 1, 2022.

15 [Administrative File]

16 39. On July 6, 2022, the parties filed a Joint Motion to Extend Briefing Schedule.

17 [Administrative File]

18 40. On July 15, 2022, the Administrative Hearings Office entered an Amended Order

19 Modifying Briefing Schedule for Dispositive Motions, Responses, and Replies (Hospitals).

20 [Administrative File]

6
Again, cognizant of the number of cases held in abeyance pending the Golden Services appeal, and with desire to
efficiently manage and resolve those cases on the docket, the Administrative Hearings Office developed a strategy to
get all related cases moving in stages towards an efficient resolution. The AHO acknowledges that this docket
management plan created a great deal of work for the individual representatives in these cases and wishes to thank
them for their difficult but necessary work in moving these cases closer to final resolution.

In the Matter of the Protest of Lea Regional Hospital
Page 8 of 23
1 41. On July 15, 2022, the Department filed Department’s Motion for Summary

2 Judgment and Brief in Support. [Administrative File]

3 42. On July 25, the Department filed Department’s Objection to Amended Order

4 Modifying Briefing Schedule for Dispositive Motions, Responses, and Replies. [Administrative

5 File]

6 43. On July 29, 2022, Taxpayer filed Lea Regional Hospital’s Response to Taxation

7 and Revenue Department’s Motion for Summary Judgment. [Administrative File]

8 44. On August 3, 2022, the Administrative Hearings Office entered Order on

9 Department’s Objection to Amended Order Modifying Briefing Schedule for Dispositive

10 Motions, Responses, and Replies. [Administrative File]

11 45. On August 29, 2022, Taxpayer filed Alta Vista Regional Hospital’s Motion for

12 Partial Summary Judgment. [Administrative File]

13 46. On September 6, 2022, the Department filed Department’s Response to Alta

14 Vista’s Motion for Summary Judgment. [Administrative File]

15 DISCUSSION

16 The facts and legal issues presented concentrate on whether Taxpayer, a hospital, is eligible

17 to deduct any portion of its gross receipts pursuant to NMSA 1978, Sections 7-9-77.1 or 7-9-93.

18 Although the parties continue to dispute the sufficiency of documents provided to substantiate the

19 refund claimed, a ruling in favor of the Department on the legal entitlement to deductions under

20 Section 7-9-77.1 and Section 7-9-93 renders that specific factual dispute moot.

21 In controversies involving a question of law, or application of law where there are no

22 disputed facts, summary judgment is appropriate. See Koenig v. Perez, 1986-NMSC-066, ¶10-

23 11, 104 N.M. 664. If the movant for summary judgment makes a prima facie showing that it is

In the Matter of the Protest of Lea Regional Hospital
Page 9 of 23
1 entitled to a judgment as a matter of law, the burden shifts to the opposing party to show

2 evidentiary facts that would require a trial on the merits. See Roth v. Thompson, 1992-NMSC-

3 011, ¶17, 113 N.M. 331.

4 The issues presented in this case are appropriate for summary judgment. The question is

5 whether Taxpayer is legally entitled to claim deductions under NMSA 1978, Sections 7-9-77.1

6 and 7-9-93.

7 Burden of Proof

8 “[T]axation is the rule and the claimant must show that his demand is within the letter as

9 well as the spirit of the law.” See TPL, Inc. v. New Mexico Taxation & Revenue Dept., 2003-

10 NMSC-007, ¶ 9, 133 N.M. 447, 451, 64 P.3d 474, 478 (quoting Rauscher, Pierce, Refsnes, Inc.

11 v. Taxation & Revenue Dep't, 2002–NMSC–013, ¶ 11, 132 N.M. 226, 46 P.3d 687.

12 The Gross Receipts and Compensating Tax Act, for the privilege of engaging in business,

13 imposes excise taxes of specified percentages on gross receipts on any person engaging in

14 business in New Mexico. “To prevent evasion of the gross receipts tax and to aid in its

15 administration, it is presumed that all receipts of a person engaging in business are subject to the

16 gross receipts tax. See NMSA 1978, Section 7-9-4 (2010, Amended 2022). For the purpose of

17 enforcing the tax, there is a presumption that all receipts of a person engaging in business in New

18 Mexico are subject to gross receipts tax. See Section 7-9-5(A) (2019).

19 Taxpayers may, however, reduce their gross receipts tax obligations by availing

20 themselves of deductions and exemptions authorized by the Legislature. “[D]eductions are a

21 matter of legislative grace and a way of achieving [the Legislature’s] policy objectives.” See

22 Sutin, Thayer & Browne v. Revenue Div. of Taxation & Revenue Dept., 1985-NMCA-047, ¶ 17,

23 104 N.M. 633, 636, 725 P.2d 833, 836. The right to a deduction must be clear and unambiguous

In the Matter of the Protest of Lea Regional Hospital
Page 10 of 23
1 with a strict construction against the taxpayer. Sec. Escrow Corp. v. State Taxation and Revenue

2 Dep’t., 1988-NMCA-068, ¶ 8, 107 N.M. 540. See also Wing Pawn Shop v. Taxation and

3 Revenue Dep’t., 1991-NMCA-024, ¶ 16, 111 N.M. 735. See also Chavez v. Commissioner of

4 Revenue, 1970-NMCA-116, ¶ 7, 82 N.M. 97. See also Pittsburgh and Midway Coal Mining Co.

5 v. Revenue Division, 1983-NMCA-019, 99 N.M. 545.

6 Consequently, “[a] taxpayer has the burden of showing that it comes within the terms of a

7 statute permitting a tax deduction. See Sutin, Thayer & Browne, 1985-NMCA-047, ¶ 17. A

8 “deduction must be denied in the absence of a showing of clear legislative intent to permit the

9 deduction.” See Sutin, Thayer & Browne, 1985-NMCA-047, ¶ 18.

10 Even if a taxpayer can establish a legal entitlement to a deduction, a taxpayer seeking a

11 refund must support the amount of the refund claimed with credible documentation. See NMSA

12 1978, Section 7-1-26 (A) (5) and (C) (2019). Accordingly, it is not enough that a taxpayer

13 establishes a legal right to a refund, but it must also come forward with evidence to establish the

14 facts supporting the amount of the refund. See TPL, Inc., 2003-NMSC-007, ¶ 9.

15 In this case, while Taxpayer claims it is eligible for a deduction under either Section 7-9-

16 77.1 or Section 7-9-93, the Department argues, that because a hospital’s deductions are limited to

17 Section 7-9-73.1, neither Section 7-9-77.1 nor Section 7-9-93 are applicable. Under the facts

18 presented in this protest, the Department is correct.

19 As a preliminary and overarching observation pertinent to the Department’s assertion, it

20 relies on the rule of statutory construction that “[a] conferral of specific authority trumps any

21 previous conferral of general authority.” See Matter of Estate of McElveny, 2017-NMSC-024, ¶

22 21, 399 P.3d 919. The legislature has specifically addressed hospitals and those particular

23 deductions from gross receipts for which they qualify. See Section 7-9-73.1. Except for costs

In the Matter of the Protest of Lea Regional Hospital
Page 11 of 23
1 incurred in the construction of hospitals, the Department asserts that the Legislature has not

2 explicitly provided hospitals any other deduction from gross receipts other than Section 7-9-73.1.

3 The Department’s argument, in conjunction with the holding of Golden Services persuasively

4 establishes that the Legislature did not intend to confer eligibility for a hospital to claim a gross

5 receipts deduction under Section 7-9-77.1 or Section 7-9-93.

6 The discussion will begin with the application of Section 7-9-93 which the Hearing

7 Officer perceives to be the crux of the dispute at hand.

8 Application of Section 7-9-93 to Hospitals

9 As counsel are aware, application of Section 7-9-93 to entities, such as hospitals, has

10 been considered several times by this tribunal. Although this tribunal has previously ruled7 that

11 hospitals could qualify for the deduction provided by Section 7-9-93, the Court of Appeals in

12 Golden Services, an unpublished decision, concluded that Section 7-9-93 does not permit entities

13 such as hospitals to claim a deduction from gross receipts. Instead, the deduction is limited to

14 receipts received for the services of individual health care practitioners.

15 Section 7-9-93 (A) (2007) provides:

16 Receipts from payments by a managed health care provider or
17 health care insurer for commercial contract services or medicare
18 part C services provided by a health care practitioner … may be
19 deducted from gross receipts[.]

20 Golden Services found the statute to be ambiguous which prompted it to evaluate “other

21 indicia of legislative intent such as the statute’s purpose and legislative history.” See Golden

22 Services, ¶ 15. In doing so, the Court of Appeals found that gross receipts must flow to the

23 individual practitioner and not, for example, the hospital that employs it.

7
See e.g. In the Matter of the Protest of HealthSouth Rehabilitation, D&O No. 16-16, 2016 WL 2958471 (May 11,
2016) (non-precedential)

In the Matter of the Protest of Lea Regional Hospital
Page 12 of 23
1 In Golden Services, the Court of Appeals framed the issue as “whether the statutory

2 deduction set forth in Section 7-9-93(A) is available to health care facilities like Taxpayers … or

3 instead, is only available to health care practitioners, as the Department contends.” See Golden

4 Services, ¶ 12.

5 The Court ultimately agreed that the Department’s position reflected the intention of the

6 Legislature when it enacted Section 7-9-93. It explained:

7 Given the [Fiscal Impact Reports] and the bill titles, the
8 Department’s presumptively correct regulations, Taxpayers’
9 burden to establish its entitlement to the deduction, and most
10 importantly, the possible interpretation of the statute’s language
11 itself that the deduction is limited only to health care practitioners,
12 we conclude that, Taxpayers, as health care facilities, and not
13 individual practitioners, are not entitled to claim the deduction.

14 See Golden Services, ¶ 24 (Emphases Added)

15 The Court also explained that a 2016 amendment to Section 7-9-93:

16 -finalizes once and for all that the Legislature does not intend to
17 bestow a tax deduction to simply “any taxpayer” and thus non-
18 practitioner transactions do not fall within the purview of Section
19 7-9-93 (2016).

20 See Golden Services, ¶ 26.

21 In the special concurrence, Judge Ives further observed:

22 [T]he titles of the bills that amended the statute at issue, resulting
23 in the 2007 version, indicate that the Legislature intended to limit
24 the deduction to health care practitioners.

25 See Golden Services, ¶¶ 37, 38 (Ives, J. specially concurring).

26 As part of its evaluation, Golden Services also observed that the two regulations directly

27 addressing the applicability of the deduction under Section 7-9-93 were presumptively proper

28 interpretations of the statute. See Golden Services, ¶ 21; See also Regulations 3.2.241.13 and

29 3.2.241.17 NMAC (2006).

In the Matter of the Protest of Lea Regional Hospital
Page 13 of 23
1 The purpose of the Department’s regulations is “to interpret, exemplify, implement and

2 enforce the provisions of the Gross Receipts and Compensating Tax Act.” See Regulation 3.2.1.6

3 NMAC (2001). The Department has authority to enact regulations that interpret and exemplify

4 the statutes to which they relate. See NMSA 1978, Section 9-11-6.2 (B) (1) (2015). The

5 Department’s regulations also carry a presumption that they are a “proper implementation of the

6 provisions of the laws.” NMSA 1978, Section 9-11-6.2 (G). See also Chevron U.S.A. Inc. v.

7 State ex rel. Taxation and Revenue Dep’t, 2006-NMCA-050, ¶ 16, 139 N.M. 498 (holding that

8 agency regulations that interpret a statute are presumed to be proper). Regulations are also to be

9 interpreted in accordance with legislative intent and in a manner that does not lead to an absurd,

10 unreasonable, or unjust result. See Hess Corp. v. N.M. Taxation & Revenue Dep’t, 2011-NMCA-

11 043, 149 N.M. 527; See also Johnson v. NM Oil Conservation Com’n, 1999-NMSC-021, 127 NM

12 120 (holding that canons of construction that apply to statutes also apply to rules and regulations).

13 One regulation prohibits “[a]n organization, whether or not owned exclusively by health

14 care practitioners, licensed as a hospital, hospice, nursing home, … an outpatient facility or

15 intermediate care facility” from taking the deduction. See Regulation 3.2.241.17 NMAC (2006).

16 The regulation indicates that such a facility “is not a ‘health care practitioner’ as defined by

17 Section 7-9-93”. Id. The other regulation actually allows for “[a] corporation, unincorporated

18 business association, or other legal entity” to take the deduction for payments on services

19 performed “on its behalf by health care practitioners who own or are employed by the

20 corporation, unincorporated business association or other legal entity.” See Regulation

21 3.2.241.13 NMAC (2006). However, the regulation creates an exception to that allowance when

22 that entity is a 501 (C) (3) organization or “an HMO, hospital, hospice, nursing home, an …

In the Matter of the Protest of Lea Regional Hospital
Page 14 of 23
1 outpatient facility or intermediate care facility”. Id. These excepted entities may not take the

2 deduction. See id.

3 The parties stipulated that Taxpayer is a hospital. Hospitals are not health care

4 practitioners and for that reason, are not eligible to claim the deduction under Section 7-9-93 and

5 the regulations implementing it. See 3.2.241.13 and 3.2.241.17 NMAC. See also Golden

6 Services, No. A-1-CA-36987.

7 Nonetheless, Taxpayer asserts that Golden Services should not be afforded persuasive

8 value because it is an unpublished decision and because it was “wrongly decided.” Taxpayer

9 encourages the tribunal to decide the protest consistent with its prior decisions contrary to the

10 holding of Golden Services. In effect, Taxpayer asks the tribunal to disregard the ruling of the

11 Court of Appeals simply because it was an unpublished opinion and because Taxpayer prefers its

12 previous decisions premised on a statutory construction of the deduction now rejected by the

13 Court of Appeals in Golden Services. This argument is inconsistent with the limited quasi-

14 judicial statutory role of the Administrative Hearings Office and the broader principle of an

15 ordered, adjudicative process, where a lower administrative tribunal must show deference and

16 respect to the legal rulings of a court of superior jurisdiction. See Bd. of Cnty. Commissioners,

17 Harding Cnty. v. New Mexico Taxation & Revenue Dep't, 2021-NMSC-007 fn2, 480 P.3d 870,

18 878 (albeit within the context of a convoluted and confusing procedural posture, the Supreme

19 Court made clear the broader principle that AHO does not have authority to overrule a prior

20 judicial construction of a statute).

21 This position also contradicts prior representations of the parties that this protest would

22 be informed by the decision in Golden Services, which Taxpayer now argues should be

23 disregarded because it is an unpublished decision which has no precedential value.

In the Matter of the Protest of Lea Regional Hospital
Page 15 of 23
1 Taxpayer is correct that an unpublished decision is not controlling precedent. See Rule 12-

2 405 NMRA (2012). See also Hess Corp. v. N.M. Taxation & Revenue Dep’t, 2011-NMCA-043,

3 ¶ 35, 149 N.M. 527 (indicating that unpublished opinions and orders are written solely for the

4 benefit of the parties and have no controlling precedential value). See also Inc. County of Los

5 Alamos v. Montoya, 1989-NMCA-004, ¶ 6, 108 N.M. 361 (noting that unpublished caselaw is

6 not binding precedent). See State v. Granillo-Macias, 2008-NMCA-021, ¶ 11, 143 N.M. 455

7 (noting that unpublished orders, decisions, and opinions are not controlling and are written solely

8 for the benefit of the parties). See State v. Gonzales, 1990-NMCA-040, ¶ 47-48, 110 N.M. 218

9 (noting that unpublished orders, decisions, and opinions are not meant to be controlling authority

10 and that they rarely describe the context of the issue at length, which may be of controlling

11 importance to the decision).

12 However, unpublished decisions may nevertheless be cited for their persuasive

13 significance. See Rule 12-405 NMRA (stating that unpublished decisions are not precedent but

14 may still be persuasive). See also State v. Stevenson, 2020-NMCA-005, ¶ 25 (considering an

15 unpublished decision for its persuasive value), cert. denied, No. S-1-SC-38015 (December 26,

16 2019).

17 Golden Services dealt primarily with the legal applicability of Section 7-9-93, the same

18 deduction at issue here (and in roughly 60 other protests that were stayed pending its issuance,

19 the majority of which remain pending). Thus, Golden Services is highly persuasive as to the legal

20 applicability of the deduction and should be applied to the facts of this case.

21 Second, the Court of Appeals has recently rejected the contention that Golden Services

22 was “wrongly decided.” The Court of Appeals in Four Corners Healthcare v. N. Mex. Taxation

23 and Revenue Dept., A-1-CA-38869, ¶ 8. (Memorandum Opinion entered Dec. 14, 2022) (non-

In the Matter of the Protest of Lea Regional Hospital
Page 16 of 23
1 precedential), explained:

2 Taxpayer argues that Golden Services is not binding and was
3 ‘wrongly decided,’ and it urges this Court to review the motion for
4 rehearing filed in Golden Services and to rely on In the Matter of
5 the Protest of HealthSouth Rehabilitation, No. 16-16, 2016 WL
6 2958471 (N.M. Tax’n & Revenue Dep’t May 11, 2016) (dec. &
7 order), which is the written decision of an administrative hearing
8 officer. These assertions provide no reason in this case to divert
9 from the conclusion of this Court in Golden Services.

10 The Hearing Officer is not inclined to divert from the Court’s reasoning and conclusion

11 in Golden Services. The Hearing Officer respects the guidance provided by Golden Services and

12 will faithfully adhere to its reasoning and conclusion.

13 The Department presented several other arguments to support and solidify its position8

14 regarding the application and limitations of Section 7-9-93, but the Hearing Officer need not

15 address those since Golden Services resolves the question of statutory construction over which

16 the parties quarrel without need for further discussion.

17 In conclusion, the deduction provided by Section 7-9-93 is limited to individual health

18 care practitioners. Hospitals are not eligible. See Golden Services, ¶ 24.

19 Application of Section 7-9-77.1 to Hospitals

20 The next deduction presented for consideration is Section 7-9-77.1 which the Department

21 also contends is not available to hospitals. The Hearing Officer agrees, especially in light of the

22 structural similarities between Section 7-9-93 and Section 7-9-77.1. Those similarities

23 demonstrate the Legislature’s parallel policy objectives and intention that Section 7-9-93 and

24 Section 7-9-77.1 be construed similarly.

25 Section 7-9-77.1 (2007) provided:

8
Because Golden Services is unpublished, counsel presented several arguments anew. They were carefully
considered but need not be addressed in detail given the highly persuasive value of Golden Services and the Court’s
subsequent rejection in Four Corners that Golden Services was “wrongly decided.”

In the Matter of the Protest of Lea Regional Hospital
Page 17 of 23
1 A. Receipts from payments by the United States government
2 or any agency thereof for provision of medical and other health
3 services by medical doctors, osteopathic physicians, doctors of
4 oriental medicine, athletic trainers, chiropractic physicians,
5 counselor and therapist practitioners, dentists, massage therapists,
6 naprapaths, nurses, nutritionists, dietitians, occupational therapists,
7 optometrists, pharmacists, physical therapists, psychologists,
8 radiologic technologists, respiratory care practitioners,
9 audiologists, speech-language pathologists, social workers and
10 podiatrists or of medical, other health and palliative services by
11 hospices or nursing homes to medicare beneficiaries pursuant to
12 the provisions of Title 18 of the federal Social Security Act may be
13 deducted from gross receipts.

14 Section 7-9-77.1 (A) was amended in 2016 to provide that:

15 A. Receipts of a health care practitioner from payments by the
16 United States government or any agency thereof for provision of
17 medical and other health services by a health care practitioner or of
18 medical or other health and palliative services by hospices or
19 nursing homes to medicare beneficiaries pursuant to the provisions
20 of Title 18 of the federal Social Security Act may be deducted
21 from gross receipts.

22 The 2016 version defined “health care practitioner” in Section 7-9-77.1 I (3) to include

23 specified fields of relevant practice similar to that observed in Section 7-9-93, including licensed

24 athletic trainers (3) (a), audiologists (3) (b), dentists (3) (f), and other individual areas of practice,

25 just to name a few. Similar to observations of Section 7-9-93, “hospital” is not included in the

26 list of eligible taxpayers.

27 The Legislature also explicitly made the deduction available to clinical laboratories

28 (subsection “C”), home health agencies (subsection “D”), and dialysis facilities (subsection “F”).

29 The language used by the Legislature demonstrates that it has not extended the same grace to

30 “hospitals,” recognizing that when the Legislature intends to confer a tax benefit on a hospital,

31 that it has historically used the term, “hospital.” Compare Section 7-9-73.1 A (2019) (“Sixty

32 percent of the receipts of hospitals licensed by the department of health may be deducted from

33 gross receipts…”) (Emphasis Added); Section 7-9-73.1 (2007) (“Fifty percent of the receipts of

In the Matter of the Protest of Lea Regional Hospital
Page 18 of 23
1 hospitals licensed by the department of health may be deducted from gross receipts…”)

2 (Emphasis Added)

3 The fact that the Legislature omitted “hospitals” from the list of eligible taxpayers,

4 similar to observations made in Section 7-9-93 as construed by Golden Services, establishes the

5 intention of the Legislature to preclude hospitals from claiming the deduction provided by

6 Section 7-9-77.1.

7 The Legislature’s approach to drafting Section 7-9-77.1 was similar to its approach to

8 Section 7-9-93 and they should be construed in like manner. Since the 2007 versions of both

9 statutes began with “[r]eceipts from payments” and the 2016 versions were both amended to

10 “[r]eceipts of a health care practitioner”, it stands to reason that the same statutory interpretation

11 should apply to both statutes. See NMSA 1978, Section 7-9-77.1 (2007) and (2016) and Section

12 7-9-93 (2007) and (2016). See also Golden Services, No. A-1-CA-36987.

13 Consequently, the absence of an explicit reference to “hospitals” in the statute

14 demonstrates the Legislature’s intention to exclude hospitals from eligibility and therefore, from

15 the grace conferred on those individuals and entities specifically referenced in Section 7-9-77.1.

16 This conclusion is reinforced by the Department’s in-depth discussion of the statute’s

17 legislative history and policies the Legislature sought to promote, going way back to its inception

18 in 1998 through the act’s most recent iteration. The Department’s extraction and discussion of

19 legislative history is persuasive and in harmony with the plain language of the statute.

20 These observations persuaded the Hearing Officer that if the Legislature intended

21 hospitals to claim any deduction under Section 7-9-77.1, it would have explicitly provided that

22 right in the statute, as similarly observed in Golden Services. See also Pub. Serv. Co. of New

23 Mexico v. Diamond D Const. Co., Inc., 2001-NMCA-082, ¶ 50, 131 N.M. 100, 115, 33 P.3d 651,

In the Matter of the Protest of Lea Regional Hospital
Page 19 of 23
1 666 (“[S]tatutes concerning similar subject matter, relevant common law principles, and public

2 policy [] guide us in our interpretation.”)

3 For these reasons, hospitals are not entitled to deduct gross receipts under Section 7-9-

4 77.1.

5 Administrative Costs and Fees

6 The Hearing Officer will not address Taxpayer’s request for administrative costs and fees

7 under NMSA 1978, Section 7-1-29.1 (A) (2015) because Taxpayer is not the prevailing party.

8 For that reason, Taxpayer’s request is denied.

9 CONCLUSION

10 For the stated reasons, Department’s Motion should be, and hereby is GRANTED.

11 Taxpayer’s Motion should be, and hereby is DENIED. The previous Order Denying

12 Department’s Motion for Partial Judgment, entered prior to Golden Services on December 7,

13 2017, should be and hereby is set aside in favor of this order. Taxpayer’s protest should be, and

14 hereby is, DENIED.

15 CONCLUSIONS OF LAW

16 A. Taxpayer filed timely, written protests to the denial of its claimed refunds and

17 jurisdiction lies over the parties and the subject matter of this protest.

18 B. The Administrative Hearings Office conducted a timely hearing within 90 days of

19 receipt of the Hearing Request under NMSA 1978, Section 7-1B-8.

20 C. The parties did not object that conducting the scheduling hearing satisfied the 90-

21 day hearing requirements of Section 7-1B-8 (A) while still allowing meaningful time for

22 completion of the other statutory requirements under Section 7-1B-6 (D). See also Regulation

23 22.600.3.8 (E) NMAC.

In the Matter of the Protest of Lea Regional Hospital
Page 20 of 23
1 D. Hospitals are not entitled to claim a deduction under NMSA 1978, Section 7-9-93.

2 See Golden Services; NMSA 1978, Section 7-9-93.

3 E. Hospitals are not entitled to claim a deduction under NMSA 1978, Section 7-9-

4 77.1. See NMSA 1978, Section 7-9-77.1.

5 F. Taxpayer is not a prevailing party and not entitled to an award of administrative

6 costs or fees. See NMSA 1978, Sedtion 7-1-29.1; See Helmerich, 2019-NMCA-054, ¶ 11

7 For the reasons stated, Taxpayer’s protest is DENIED.

8 DATED: January 18, 2023

9
10 Chris Romero
11 Hearing Officer
12 Administrative Hearings Office
13 P.O. Box 6400
14 Santa Fe, NM 87502

In the Matter of the Protest of Lea Regional Hospital
Page 21 of 23
1 NOTICE OF RIGHT TO APPEAL

2 Pursuant to NMSA 1978, Section 7-1-25 (2015), the parties have the right to appeal this

3 decision by filing a notice of appeal with the New Mexico Court of Appeals within 30 days of the

4 date shown above. If an appeal is not timely filed with the Court of Appeals within 30 days, this

5 Decision and Order will become final. Rule of Appellate Procedure 12-601 NMRA articulates

6 the requirements of perfecting an appeal of an administrative decision with the Court of Appeals.

7 Either party filing an appeal shall file a courtesy copy of the appeal with the Administrative

8 Hearings Office contemporaneous with the Court of Appeals filing so that the Administrative

9 Hearings Office may begin preparing the record proper. The parties will each be provided with a

10 copy of the record proper at the time of the filing of the record proper with the Court of Appeals,

11 which occurs within 14 days of the Administrative Hearings Office receipt of the docketing

12 statement from the appealing party. See Rule 12-209 NMRA.

13

In the Matter of the Protest of Lea Regional Hospital
Page 22 of 23
1 CERTIFICATE OF SERVICE
2 I hereby certify that I served the foregoing on the parties listed below this 18 day of January,

3 2023 in the following manner:

4
5 INTENTIOANLLY BLANK

In the Matter of the Protest of Lea Regional Hospital
Page 23 of 23