Were medical case-management and rehabilitation-consulting services supplied to insurance companies taxable in Texas?

Plain-English summary

A rehabilitation-consulting provider used social workers and registered nurses to obtain medical updates, meet with injured people and medical professionals, assess medical and vocational status, coordinate appointments, and report recommendations to insurance carriers.

The Comptroller classified those services as taxable insurance services. They met Rule 3.355's definitions of insurance investigation and insurance claims adjustment or claims processing, so the provider had to collect sales tax from its insurance-company clients.

The letter enclosed a sales-tax permit application and the rules governing resale certificates and seller and purchaser responsibilities.

What this means for you

Calling a service medical case management or rehabilitation consulting did not keep it outside the insurance-services tax. The actual work—investigating an injured person's status and helping process or adjust the insurance claim—controlled.

Common questions

Were the provider's employees physicians? The letter identified them as social workers and registered nurses.

What made the work taxable? The assessments, information gathering, coordination, reports, and recommendations qualified as insurance investigation and claims adjustment or processing.

Did the provider have to collect sales tax? Yes, on services supplied to insurance companies.

Citations and references

• 34 Tex. Admin. Code Rule 3.355(a)(3) — insurance investigation
• 34 Tex. Admin. Code Rule 3.355(a)(6) — insurance claims adjustment or processing
• 34 Tex. Admin. Code Rule 3.355(b) — taxability of insurance services
• 34 Tex. Admin. Code Rule 3.285 — resale certificates
• 34 Tex. Admin. Code Rule 3.286 — seller and purchaser responsibilities

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9107L1122A08

Original ruling text

July 23, 1991

Dear ***:

Thank you for your letter concerning the medical case management
(rehabilitation consulting) services that you provide for
insurance companies.

You indicated that your employees (social workers and registered
nurses) obtain medical updates by telephoning therapists, physicians,
claims adjusters, attorneys, employers and hospitals. In
addition, your employees meet with the injured party and/or
medical professionals to assess the injured party's medical and
vocational status; meet with employers to "obtain vocational
clarification"; coordinate medical appointments for the injured
party; and provide progress reports and recommendations to the
insurance carrier.

The services that you provide are taxable under Rule 3.355-Insurance
Services. Your services meet the definition of "insurance
investigation" given in section (a) (3) of the rule and "insurance
claims adjustment or claims processing" in section (a)(6). You
should collect sales tax on these services that you provide for
insurance companies. See section (b) of the rule.

An application for a sales and use tax permit is enclosed along
with Rule 3.286 on seller's and purchaser's responsibilities and
Rule 3.285 on resale certificates.

This opinion is based on the facts that you presented. If there
are additional or different facts, this opinion may change.

Please feel free to contact me if you have any additional
questions. You may write me, call toll-free 1-800-252-5555, ext.
34685, from anywhere in the United States or phone 512/463-4685.

Sincerely,

Julie Pesl
Tax Administration Division