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Lafayette General Medical Center, Inc. v. Robinson

Court of Appeals of Louisiana, Third Circuit

August 14, 2019

LAFAYETTE GENERAL MEDICAL CENTER, INC.
v.
KIMBERLY ROBINSON, SECRETARY, LOUISIANA DEPARTMENT OF REVENUE

          APPEAL FROM THE LOUISIANA BOARD OF TAX APPEALS DOCKET NO. 10437D HONORABLE TONY GRAPHIA; CADE R. COLE, FRANCES "JAY" LOBRANO, BOARD MEMBERS, PRESIDING

          Jesse R. Adams, III Andre B. Burvant Matthew A. Mantle Jones Walker, LLP COUNSEL FOR APPELLANT: Lafayette General Medical Center, Inc.

          Russell J. Stutes, Jr. Stutes & Lavergne, LLC COUNSEL FOR APPELLEE: Louisiana Department of Revenue

          Court composed of Sylvia R. Cooks, Shannon J. Gremillion, and D. Kent Savoie, Judges.

          SYLVIA R. COOKS JUDGE.

         Appellant, Lafayette General Medical Center, Inc. (hereafter LGMC), appeals the judgment of the Louisiana Board of Tax Appeals granting summary judgment in favor of Kimberly Lewis Robinson, in her official capacity as Secretary of the Department of Revenue, State of Louisiana (hereafter Department). For the following reasons, we reverse the grant of summary judgment in favor of the Department and grant summary judgment in favor of LGMC.

         FACTS AND PROCEDURAL HISTORY

         As LGMC notes, the issue in this appeal concerns whether, during the November 2016 sales tax period, the Louisiana Constitution's prohibition against state general sales and use taxes on "prescription drugs" set forth in La.Const. Art. VII § 2.2(B)(3) prohibits the imposition of those taxes on purchases by LGMC of medical devices, such as pacemakers, stents, artificial limbs, etc., used in the treatment of patients.

         The Louisiana Legislature in the 1st Extraordinary Session of 2016 passed Acts 25 and 26, both of which went into effect April 1, 2016, and were to expire on June 30, 2018. The Acts suspended nearly all exclusions and exemptions from two pennies of Louisiana sales and use tax and added an additional penny, which was imposed with a similarly reduced set of exemptions and exclusions. The exemption of medical devices does not specifically appear anywhere in the list of preserved exemptions. There was an exemption for "prescription drugs" expressly listed in Acts 25 and 26. The list in both Acts 25 and 26 contains the following statement in the list of preserved exemptions:

Prescription drugs, as provided in Article VII, § 2.2 of the Constitution of Louisiana.

         Article VII, § 2.2 of the Louisiana Constitution provides in pertinent part:

(B) Effective July 1, 2003 the sales and use tax imposed by the state of Louisiana or by a political subdivision whose boundaries are coterminous with those of the state shall not apply to sales or purchases of the following items:
(3) Prescription drugs.

         LGMC maintained the phrase "prescription drugs" found in Section 2.2 extended to "medical devices." LGMC argued it was the goal and intent of the constitutional prohibition to permanently cement into the Louisiana Constitution the statutory exemption for "drugs prescribed by a physician or dentist" in La.R.S. 47:305(D)(1)(j), which had previously included pharmaceuticals and medical devices, and not allow it to be suspended or otherwise affected based simply on revenue needs. LGMC's argument was largely based on La.R.S. 47:301(20), which provides in pertinent part:

301. Definitions
As used in this Chapter the following words, terms, and phrases have the meanings ascribed to them in this section, unless the context clearly ...

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