Can a New Mexico hospital deduct receipts under the health-care-practitioner provisions in Sections 7-9-93 or 7-9-77.1?

Plain-English summary

Roswell Clinic Corporation lost on summary judgment. It filed a September 2016 refund application seeking deductions under Sections 7-9-93 and 7-9-77.1 for the 2012–2015 period. The Department's protest acknowledgment described the disputed refund as $672,780. The Department did not grant or deny the application within 120 days, and Roswell Clinic timely protested that inaction.

The coordinated litigation treated Roswell Clinic as a hospital case. Roswell Clinic described itself as a multi-specialty physicians group in Roswell offering primary care, gastroenterology, cardiology, general and vascular surgery, and urology, but the dispositive legal issue was whether a hospital could use the two claimed health-care deductions.

Hearing Officer Chris Romero held that it could not:

• Section 7-9-93 did not cover hospitals. The New Mexico Court of Appeals' nonprecedential Golden Services decision construed the deduction as limited to receipts of individual health care practitioners, not the facilities employing them. A later Court of Appeals memorandum in Four Corners Healthcare rejected the argument that Golden Services was wrongly decided. The hearing officer treated that reasoning as highly persuasive.
• Section 7-9-77.1 also did not cover hospitals. Its 2007 and 2016 versions listed particular health care practitioners and expressly extended benefits to facilities such as hospices, nursing homes, clinical laboratories, home health agencies, and dialysis facilities — but not hospitals.
• The separate hospital statute confirmed the omission mattered. Section 7-9-73.1 expressly grants a percentage deduction to licensed hospitals. The Legislature knew how to name hospitals when it intended to give them a tax benefit.

Because Roswell Clinic had no legal entitlement to either claimed deduction, the parties' factual dispute over the amount of the refund no longer affected the outcome. The Department's motion was granted, Roswell Clinic's motion and protest were denied, and it received no administrative costs or fees because it was not the prevailing party.

Result: protest DENIED; Department granted summary judgment.

What this means for you

A hospital cannot assume a practitioner deduction belongs to the facility

A deduction written for receipts of a health care practitioner does not automatically pass to a hospital or other employer that bills for the practitioner's work. The identity of the taxpayer named in the statute matters.

Lists of eligible providers and facilities are consequential

Section 7-9-77.1 specifically names numerous practitioners and several types of facilities. The decision treated the omission of hospitals from that detailed list as intentional, particularly because another statute expressly names hospitals.

A refund claimant must first establish a legal right to the deduction

There was a dispute about the amount of Roswell Clinic's refund, but the hearing officer did not need to resolve it after deciding that hospitals were legally ineligible for both deductions. Documentation proving an amount cannot cure failure to qualify under the statute itself.

This decision concerns the statutes and periods before it

The decision analyzed the 2007 and 2016 versions of Sections 7-9-93 and 7-9-77.1 and the 2012–2015 refund period. Check the law applicable to your own reporting period rather than treating this as current-law confirmation.

Common questions

Q: Can a hospital use Section 7-9-93 for Medicare Part C receipts generated by its doctors?
A: Not under this decision. The hearing officer followed Golden Services and held that the deduction was limited to individual health care practitioners, not hospitals or similar facilities.

Q: What about Section 7-9-77.1 for payments from the United States government?
A: The result was the same. The statute named many practitioners and certain facilities, but not hospitals, so Roswell Clinic could not claim that deduction either.

Q: Why did Section 7-9-73.1 matter?
A: It expressly referred to licensed hospitals and provided them a separate percentage deduction. That wording showed the Legislature knew how to include hospitals when it wanted to do so.

Q: Did the hearing officer decide how much refund Roswell Clinic could document?
A: No. Once the hearing officer found no legal entitlement to either deduction, the factual dispute about the refund amount was moot.

Q: Did Roswell Clinic recover its costs and attorney fees?
A: No. Its request under Section 7-1-29.1 was denied because it was not the prevailing party.

Q: Can another hospital rely on this decision as its own ruling?
A: No. This Decision and Order resolved Roswell Clinic's protest on the record and law before the Administrative Hearings Office. Another taxpayer should analyze its own facts, tax periods, and the law then in effect.

Citations and references

Statutes and regulations:

• NMSA 1978, § 7-9-93 (2007 and 2016) — deduction for specified Medicare Part C 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 both legal entitlement and the 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 (2006) — 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 both legal entitlement and facts supporting the amount
• Public Service Co. of New Mexico v. Diamond D Construction Co., 2001-NMCA-082 — statutes on similar subject matter and public policy 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: Roswell Clinic Corporation
• Decision PDF: D&O 23-05

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 ROSWELL CLINIC CORPORATION
6 TO TAXATION & REVENUE DEPARTMENT’S
7 FAILURE TO GRANT OR DENY A REFUND

8 v. Case No. N/A, D&O 23 – 05

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) Roswell Clinic Corporation’s

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

16 2022) (“Taxpayer’s Response” 1); (3) Alta Vista Regional Hospital’s2 Motion for Partial

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

18 Objection and Response to Motion for Summary Judgement to Non-Lead Hospitals (filed

19 September 6, 2022) (“Department’s Response).

20 A hearing on the foregoing motions was held on November 28, 2022. Roswell Clinic

21 Corporation (“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 since that was the case the parties selected as their lead case for
protests 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 Roswell Clinic Corporation
Page 1 of 21
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 7-9-77.1 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 provided by Section 7-9-93 or the

14 similarly-structured deduction at Section 7-9-77.1.

15 Having considered all arguments, the Department’s Motion should be granted,

16 and Taxpayer’s Motion and protest should be denied. IT IS DECIDED AND ORDERED

17 AS FOLLOWS:

18 FINDINGS OF FACT

19 Material Facts

20 1. Roswell Clinic Corporation is a hospital. “Petitioner is a multi-specialty

21 physicians group with practices located in Roswell, New Mexico. These practices specialize in a

22 wide variety of health services including primary care, gastroenterology, cardiology, general and

23 vascular surgery and urology.” [Department’s Motion; Administrative File (Protest)]

In the Matter of the Protest of Roswell Clinic Corporation
Page 2 of 21
1 a. The applicable period is January 1, 2012 through December 31, 2015.
2 b. The Application for Refund was filed September 28, 2016.
3 c. Refund is sought under NMSA Section 7-9-93 (2007) and Section 7-9-
4 77.1, plus administrative fees.

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

6 2. Taxpayer filed its Application for Refund on September 28, 2016. The

7 Department did not grant or deny Taxpayer’s application within 120 days from the date of filing.

8 [Administrative File (Taxpayer’s Protest)]

9 Procedural History
10 (Pre Golden Services)

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

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

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

14 administrative file.

15 3. On April 24, 2017, Taxpayer’s Formal Protest of the Department’s failure to grant

16 or deny its Application for Refund was stamped received in the Department’s Protest Office.

17 [Administrative File (accompanying Hearing Request filed June 26, 2017)]

18 4. On May 12, 2017, the Department acknowledged Taxpayer’s protest under Letter

19 ID No. L0371430704 noting that the protest stemmed from the “Department’s failure to grant or

20 deny refund claim in the amount of $672,780.00” for “periods December 1, 2012 through

21 December 31, 2015[.]”[Administrative File (accompanying Hearing Request filed June 26,

22 2017)]

23 5. On June 26, 2017, the Department filed a Hearing Request in the matter of

24 Taxpayer’s protest of the Department’s failure to grant or deny its Application for Refund.

25 [Administrative File]

26 6. On June 27, 2017, the Administrative Hearings Office entered a Notice of

In the Matter of the Protest of Roswell Clinic Corporation
Page 3 of 21
1 Telephonic Scheduling Hearing which set an initial hearing in the protest for July 14, 2017.

2 [Administrative File]

3 7. An initial scheduling hearing occurred on July 14, 2017 at which time the parties

4 agreed that the hearing satisfied the 90-day hearing requirement under NMSA 1978, Section 7-

5 1B-8 (A). The parties also requested that the matter be held “in abeyance pending resolution of

6 the scope and applicability of the §7-9-93 deduction[.]” [Administrative File]

7 8. The Hearing Officer takes administrative notice that the appeal referenced on the

8 Order Holding the Matter in Abeyance was Golden Services and a second, unnamed3 nursing

9 home facility.

10 Post Golden Services

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

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

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

14 precedential)

15 10. After nearly one year from entry of Golden Services, on April 15, 2021, the

16 Administrative Hearings Office entered a Proposed Summary Disposition which proposed to

17 dispose of the protests with an order consistent with the holding expounded by Golden Services.

18 [Administrative File]

19 11. On April 30, 2021, Taxpayer filed Taxpayer’s Response and Objection to the

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

21 12. On June 2, 2021, the Administrative Hearings Office entered an Order to Conduct

3
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 Roswell Clinic Corporation
Page 4 of 21
1 Informal Conference and Notice of Telephonic Scheduling Hearing. [Administrative File]

2 13. On July 14, 2021, the Administrative Hearings Office entered a Briefing Schedule

3 for Dispositive Motions, Responses, and Replies. The order permitted the parties to stipulate to

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

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

6 14. On June 9, 2022, approximately eleven months after the Administrative Hearings

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

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

9 Dispositive Motions, Responses and Replies. The order 4 set firm deadlines for filing the

10 dispositive motions contemplated by the parties in July of 2021. [Administrative File]

11 15. On June 14, 2022, the Department filed Department’s Motion to Vacate Order

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

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

14 16. On June 27, 2022, the Administrative Hearings Office informally notified the

15 parties by email that it would consider reasonable alternatives to the order entered on June 14,

16 2022 and encouraged the parties to confer and respond by motion on or before July 1, 2022.

17 [Administrative File]

18 17. On July 6, 2022, the parties filed a Joint Motion to Extend Briefing Schedule in

19 Alta Vista Regional Hospital (the lead case) which proposed that this protest be categorized as a

20 “hospital” case and proceed to summary judgment with other hospital cases in which Alta Vista

4
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 Roswell Clinic Corporation
Page 5 of 21
1 would be the lead case for purposes of legal briefing. [Administrative File]

2 18. Also on July 6, 2022, the parties filed a Joint Motion to Extend Briefing Schedule

3 in which Roswell Clinic Corporation was also classified as “other.” However, subsequent

4 treatment of taxpayer was consistent with the intention that Taxpayer be classified as a “hospital”

5 and that Taxpayer’s concurrent identification as “other” was erroneous. [Administrative File;

6 Department’s Motion; Record of Hearing (11/28/2022)]

7 19. On July 15, 2022, the Administrative Hearings Office entered an Amended Order

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

9 [Administrative File]

10 20. On July 15, 2022, the Department filed Department’s Motion for Summary

11 Judgment and Brief in Support. [Administrative File]

12 21. On July 25, the Department filed Department’s Objection to Amended Order

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

14 File]

15 22. On July 29, 2022, Taxpayer filed Roswell Clinic Corporation’s Response to

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

17 23. On August 4, 2022, the Administrative Hearings Office entered Order on

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

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

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

21 Partial Summary Judgment which provided Taxpayer’s legal argument in this protest. Alta Vista

22 Regional Hospital was the lead case in the “hospital” category. [Administrative File]

23 25. On September 6, 2022, the Department filed Department’s Objection and

In the Matter of the Protest of Roswell Clinic Corporation
Page 6 of 21
1 Response to Motion for Summary Judgment to Non-Lead Hospitals. [Administrative File]

2 DISCUSSION

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

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

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

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

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

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

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

10 11, 104 N.M. 664. If the movant for summary judgment makes a prima facie showing that it is

11 entitled to a judgment as a matter of law, the burden shifts to the opposing party to show

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

13 011, ¶17, 113 N.M. 331.

14 The parties agreed that there were no disputes as to the material fact that the Taxpayer is

15 a hospital. The parties also agreed that an outcome in favor of the Department would be

16 dispositive to the issues of the hearing and result in a final appealable Decision and Order. An

17 outcome in favor of the Taxpayer would result in the protest being placed on the docket for a

18 hearing on the merits5.

19 The issues presented in this case are appropriate for summary judgment. The primary

20 question is whether Taxpayer is legally entitled to claim deductions under NMSA 1978, Sections

21 7-9-77.1 and 7-9-93.

5
If the Taxpayer is legally entitled to take the deductions, the Taxpayer must still provide evidence to establish the
facts supporting the amount of the refund. See TPL, Inc., 2003-NMSC-007, ¶ 9. See also NMSA 1978, § 7-1-26
(2019).

In the Matter of the Protest of Roswell Clinic Corporation
Page 7 of 21
1 Burden of Proof

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

17 104 N.M. 633, 636, 725 P.2d 833, 836. The right to a deduction must be clear and unambiguous

18 with a strict construction against the taxpayer. Sec. Escrow Corp. v. State Taxation and Revenue

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

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

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

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

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

In the Matter of the Protest of Roswell Clinic Corporation
Page 8 of 21
1 statute permitting a tax deduction. See Sutin, Thayer & Browne, 1985-NMCA-047, ¶ 17. A

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

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

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

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

6 1978, Section 7-1-26 (A) (5) and (C) (2019). Accordingly, it is not enough that a taxpayer

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

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

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

10 77.1 or Section 7-9-93, the Department argues, that because a hospital’s deductions are limited to

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

12 presented in this protest, the Department is correct.

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

14 relies on the rule of statutory construction instructing that “[a] conferral of specific authority

15 trumps any previous conferral of general authority.” See Matter of Estate of McElveny, 2017-

16 NMSC-024, ¶ 21, 399 P.3d 919. The legislature has specifically addressed hospitals and those

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

18 costs incurred in the construction of hospitals, the Department asserts that the Legislature has not

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

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

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

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

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

In the Matter of the Protest of Roswell Clinic Corporation
Page 9 of 21
1 Officer perceives to be the crux of the dispute at hand.

2 Application of Section 7-9-93 to Hospitals

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

4 been considered several times by this tribunal. Although this tribunal has previously ruled6 that

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

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

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

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

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

10 Receipts from payments by a managed health care provider or
11 health care insurer for commercial contract services or medicare
12 part C services provided by a health care practitioner … may be
13 deducted from gross receipts[.]

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

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

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

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

18 In Golden Services, the Court of Appeals framed the issue as “whether the statutory

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

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

21 Services, ¶ 12.

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

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

24 Given the [Fiscal Impact Reports] and the bill titles, the

6
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 Roswell Clinic Corporation
Page 10 of 21
1 Department’s presumptively correct regulations, Taxpayers’
2 burden to establish its entitlement to the deduction, and most
3 importantly, the possible interpretation of the statute’s language
4 itself that the deduction is limited only to health care practitioners,
5 we conclude that, Taxpayers, as health care facilities, and not
6 individual practitioners, are not entitled to claim the deduction.

7 See Golden Services, ¶ 24 (Emphases Added)

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

9 -finalizes once and for all that the Legislature does not intend to
10 bestow a tax deduction to simply “any taxpayer” and thus non-
11 practitioner transactions do not fall within the purview of Section
12 7-9-93 (2016).

13 See Golden Services, ¶ 26.

14 In the special concurrence, Judge Ives further observed:

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

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

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

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

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

22 3.2.241.17 NMAC (2006).

23 The purpose of the Department’s regulations is “to interpret, exemplify, implement and

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

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

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

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

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

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

In the Matter of the Protest of Roswell Clinic Corporation
Page 11 of 21
1 agency regulations that interpret a statute are presumed to be proper). Regulations are also to be

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

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

4 043, 149 N.M. 527 See also Johnson v. NM Oil Conservation Com’n, 1999-NMSC-021, 127 NM

5 120 (holding that canons of construction that apply to statutes also apply to rules and regulations).

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

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

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

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

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

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

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

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

14 3.2.241.13 NMAC (2006). However, the regulation creates an exception to that allowance when

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

16 outpatient facility or intermediate care facility”. Id. These excepted entities may not take the

17 deduction. See id.

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

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

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

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

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

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

In the Matter of the Protest of Roswell Clinic Corporation
Page 12 of 21
1 encourages the tribunal to decide the protest consistent with its prior decisions contrary to the

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

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

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

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

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

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

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

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

10 878 (albeit within the context of a convoluted and confusing procedural posture, the Supreme

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

12 judicial construction of a statute).

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

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

15 disregarded because it is an unpublished decision which has no precedential value. The Hearing

16 Officer is not persuaded.

17 Taxpayer is correct that an unpublished decision is not controlling precedent. See Rule 12-

18 405 NMRA (2012). See also Hess Corp. v. N.M. Taxation & Revenue Dep’t, 2011-NMCA-043,

19 ¶ 35, 149 N.M. 527 (indicating that unpublished opinions and orders are written solely for the

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

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

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

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

In the Matter of the Protest of Roswell Clinic Corporation
Page 13 of 21
1 for the benefit of the parties). See State v. Gonzales, 1990-NMCA-040, ¶ 47-48, 110 N.M. 218

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

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

4 importance to the decision).

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

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

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

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

9 2019).

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

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

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

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

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

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

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

17 precedential), explained:

18 Taxpayer argues that Golden Services is not binding and was
19 ‘wrongly decided,’ and it urges this Court to review the motion for
20 rehearing filed in Golden Services and to rely on In the Matter of
21 the Protest of HealthSouth Rehabilitation, No. 16-16, 2016 WL
22 2958471 (N.M. Tax’n & Revenue Dep’t May 11, 2016) (dec. &
23 order), which is the written decision of an administrative hearing
24 officer. These assertions provide no reason in this case to divert
25 from the conclusion of this Court in Golden Services.

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

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

In the Matter of the Protest of Roswell Clinic Corporation
Page 14 of 21
1 will faithfully adhere to its reasoning and conclusion.

2 The Department presented several other arguments to support and solidify its position7

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

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

5 the parties quarrel without need for further discussion.

6 In conclusion, the deduction provided by Section 7-9-93 (2007) is limited to individual

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

8 Application of Section 7-9-77.1 to Hospitals

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

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

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

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

13 Section 7-9-77.1 be construed similarly.

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

15 A. Receipts from payments by the United States government
16 or any agency thereof for provision of medical and other health
17 services by medical doctors, osteopathic physicians, doctors of
18 oriental medicine, athletic trainers, chiropractic physicians,
19 counselor and therapist practitioners, dentists, massage therapists,
20 naprapaths, nurses, nutritionists, dietitians, occupational therapists,
21 optometrists, pharmacists, physical therapists, psychologists,
22 radiologic technologists, respiratory care practitioners,
23 audiologists, speech-language pathologists, social workers and
24 podiatrists or of medical, other health and palliative services by
25 hospices or nursing homes to medicare beneficiaries pursuant to
26 the provisions of Title 18 of the federal Social Security Act may be
27 deducted from gross receipts.

7
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 Roswell Clinic Corporation
Page 15 of 21
1 Section 7-9-77.1 (A) was amended in 2016 to provide that:

2 A. Receipts of a health care practitioner from payments by the
3 United States government or any agency thereof for provision of
4 medical and other health services by a health care practitioner or of
5 medical or other health and palliative services by hospices or
6 nursing homes to medicare beneficiaries pursuant to the provisions
7 of Title 18 of the federal Social Security Act may be deducted
8 from gross receipts.

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

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

11 trainers (3) (a), audiologists (3) (b), dentists (3) (f), and other individual areas of practice, just to

12 name a few. Similar to Section 7-9-93, “hospital” is not included in the list of eligible taxpayers.

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

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

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

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

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

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

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

20 hospitals licensed by the department of health may be deducted from gross receipts…”)

21 (Emphasis Added)

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

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

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

25 Section 7-9-77.1.

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

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

In the Matter of the Protest of Roswell Clinic Corporation
Page 16 of 21
1 statutes began with “[r]eceipts from payments” and the 2016 versions were both amended to

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

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

4 7-9-93 (2007) and (2016). See also Golden Services, No. A-1-CA-36987.

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

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

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

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

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

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

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

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

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

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

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

16 666 (“[S]tatutes concerning similar subject matter, relevant common law principles, and public

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

18 For these reasons, hospitals are not entitled to a deduction under Section 7-9-77.1.

19 Administrative Costs and Fees

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

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

22 For that reason, Taxpayer’s request for costs and fees is denied.

23

In the Matter of the Protest of Roswell Clinic Corporation
Page 17 of 21
1 CONCLUSION

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

3 Taxpayer’s Motion should be, and hereby is DENIED. Taxpayer’s protest should be, and hereby

4 is, DENIED.

5 CONCLUSIONS OF LAW

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

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

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

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

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

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

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

13 22.600.3.8 (E) NMAC.

14 D. Hospitals are not entitled to claim a deduction under NMSA 1978, Section 7-9-93.

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

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

17 77.1. See NMSA 1978, Section 7-9-77.1.

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

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

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

21 DATED: January 20, 2023

22
23 Chris Romero, Hearing Officer
24 Administrative Hearings Office

In the Matter of the Protest of Roswell Clinic Corporation
Page 18 of 21
1 P.O. Box 6400
2 Santa Fe, NM 87502

In the Matter of the Protest of Roswell Clinic Corporation
Page 19 of 21
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 Roswell Clinic Corporation
Page 20 of 21
1 CERTIFICATE OF SERVICE
2 I hereby certify that I served the foregoing on the parties listed below this 20th day of

3 January, 2023 in the following manner:

4
5
6 INTENTIONALLY BLANK

In the Matter of the Protest of Roswell Clinic Corporation
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