NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us

SJC-12346

            DENTAL SERVICE OF MASSACHUSETTS, INC.   vs.
                     COMMISSIONER OF REVENUE.



        Suffolk.     December 5, 2017. - April 13, 2018.

   Present:   Gants, C.J., Gaziano, Lowy, Budd, & Cypher, JJ.


Taxation, Abatement, Insurance company, Excise. Practice,
     Civil, Abatement. Insurance, Health and accident, Group,
     Coverage. Statute, Construction. Words, "Covered
     persons."



    Appeal from a decision of the Appellate Tax Board.

     The Supreme Judicial Court granted an application for
direct appellate review.


     David C. Kravitz, Assistant State Solicitor, for
Commissioner of Revenue.
     Daniel P. Ryan (David J. Nagle also present) for the
taxpayer.
     James Roosevelt, Jr., & Rachel M. Wertheimer, for
Massachusetts Association of Health Plans, amicus curiae,
submitted a brief.
                                                                    2


     BUDD, J.   The taxpayer, Dental Service of Massachusetts,

Inc.,1 is an insurer that provides dental coverage through

preferred provider arrangements (PPAs).2   Pursuant to G. L.

c. 176I, § 11, insurers operating PPAs are obligated to pay

annually an excise tax equal to a specified percentage "of the

gross premiums received during the preceding calendar year for

coverage of covered persons residing in this [C]ommonwealth"

(emphasis added).   The term "[c]overed person" is defined in the

statute as "any policy holder or other person on whose behalf

the organization is obligated to pay for or provide health care

services."   G. L. c. 176I, § 1.




     1 The taxpayer, Dental Service of Massachusetts, Inc., is an
independent member of the Delta Dental Plans Association, an
organization of thirty-nine independent dental companies that
offers dental coverage throughout the United States.

     2 A preferred provider arrangement is a "form of health care
delivery in which payers contract with a select group of [health
care service providers] to provide care for enrollees through
their health insurance or health benefits plans under conditions
that give the payer some control over costs" (footnote omitted).
E.S. Rolph, J.P. Rich, P.B. Ginsburg, S.D. Hosek, K.M. Keenan, &
G.B. Gertler, State Laws and Regulations Governing Preferred
Provider Organizations 1 (Aug. 1986). The term "[p]referred
provider arrangement" is defined in G. L. c. 176I, the statute
at issue in this case, but the definition does not provide
guidance as to the substance of the term. See G. L. c. 176I,
§ 1 ("'Preferred provider arrangement,' a contract between or on
behalf of an organization and a preferred provider which
complies with all of the requirements of this chapter"). The
statute defines "[p]referred provider" as a health care provider
or group of providers "who have contracted to provide specified
covered services." Id.
                                                                   3


     The taxpayer and the Commissioner of Revenue (commissioner)

disagree regarding whether "covered persons" may sometimes refer

to the employer-organizations that contract with insurers, or

instead refers only to the individuals receiving health care

services (in this case, dental care).3   That is, when an employer

purchases group insurance on behalf of its employees, does the

insurer owe tax on premiums paid by or on behalf of only those

individuals who live in Massachusetts, as the taxpayer contends,

or does the insurer owe tax on all premiums received from the

Massachusetts-based employer regardless of where its individual

employees reside, as the commissioner contends.   We agree with

the Appellate Tax Board (board), and conclude that "covered

persons" as used in G. L. c. 176I, § 11, refers solely to

natural persons who, as employees, receive insurance coverage

for health care services under a group insurance plan, rather

than employer entities.4




     3 The record indicates that the taxpayer contracts with
Massachusetts-based employers, unions, and other Massachusetts
groups to provide dental insurance for, respectively, individual
employees, union members, and other group members (and their
respective family members). In this opinion, solely for ease of
reference, we mention only contracting employers and their
employees, but all that is stated applies equally to contracting
unions or other groups and their members.

     4 We acknowledge the amicus brief submitted by the
Massachusetts Association of Health Plans.
                                                                     4


    Background.     The statute governing PPAs, G. L. c. 176I, was

enacted in 1988.    St. 1988, c. 23, § 65.   Chapter 176I includes

an assessment provision that requires "[e]very organization

. . . operating a [PPA] . . . annually [to] pay an assessment

equal to [2.28] per cent of the gross premiums received during

the preceding calendar year for coverage of covered persons

residing in this [C]ommonwealth."   G. L. c. 176I, § 11 (a).

    The taxpayer offers, through Massachusetts employers, dental

insurance coverage to individual employees and members of their

families using PPAs.   Although all of the employers with which

the taxpayer contracted were headquartered in Massachusetts

during the period in question, some employees did not reside in

the Commonwealth.   The taxpayer paid the excise tax prescribed

by G. L. c. 176I, § 11, on the total gross premiums received

from Massachusetts employers in connection with its PPAs for the

tax years 2006, 2007, and 2008.   Subsequently, based on its

reading of § 11, between 2010 and 2012, the taxpayer filed

applications with the commissioner requesting an abatement and

refund for taxes it has paid for 2006 through 2008 on premiums

received from those employers for coverage of employees who

lived outside of the Commonwealth during those tax years.

    The commissioner denied the applications, finding that the

taxes were properly assessed; the taxpayer appealed.    The board

ruled in favor of the taxpayer and granted abatements for the
                                                                       5


three tax years in question, concluding that the term "covered

persons" as used in G. L. c. 176I, § 11, refers to the employees

receiving health care coverage rather than the employer-

organization with which the taxpayer contracted.      The

commissioner appealed from the board's decision, and we allowed

his application for direct appellate review.

       Discussion.    "Decisions of the board are reviewed for

errors of law."      Bridgewater State Univ. Found. v. Assessors of

Bridgewater, 463 Mass. 154, 156 (2012).      "[Q]uestions of

statutory construction are questions of law, to be reviewed de

novo."    Id.

       "[O]ur analysis begins with the statutory language, 'the

principal source of insight into [l]egislative purpose.'"

Associated Subcontractors of Mass., Inc. v. University of Mass.

Bldg. Auth., 442 Mass. 159, 164 (2004), quoting Commonwealth v.

Lightfoot, 391 Mass. 718, 720 (1984).      Further, in interpreting

§ 11, "[w]e adhere to the familiar principle that tax statutes

are to be strictly construed; we will not read into a statute an

authority to tax that it does not plainly confer."      Commissioner

of Revenue v. Oliver, 436 Mass. 467, 470-471 (2002) (Oliver).

"Any ambiguity is resolved in the taxpayer's favor."        Id. at

471.

       In considering the meaning of the term "covered persons" as

used in the assessment provision, we look first to the
                                                                    6


definition provided in the statute.    See Bulger v. Contributory

Retirement Appeal Bd., 447 Mass. 651, 660 (2006), quoting Perez

v. Bay State Ambulance & Hosp. Rental Serv., Inc., 413 Mass.

670, 675 (1992) ("[A] definition [that] declares what a term

means . . . excludes any meaning that is not stated").    As

mentioned supra, G. L. c. 176I, § 1, defines "[c]overed person"

as "any policy holder or other person on whose behalf the

organization is obligated to pay for or provide health care

services."   As the commissioner points out, in the insurance

industry, where an employer purchases a group health (or dental)5

insurance plan on behalf of its employees, the employer is

considered to be the policy holder.    See Foster v. Group Health

Inc., 444 Mass. 668, 668 n.2 (2005).    The commissioner argues

that because the definition in § 1 includes the term "policy

holder" it should be read broadly to include both employer-

organizations when they are policy holders as well as natural

persons, depending on the context in which the term is being

used.    However, the commissioner's interpretation disregards

both the syntax and the context of the statute's definition of

"covered person."    See Commonwealth v. Brooks, 366 Mass. 423,


     5 The statute defines "[h]ealth care services" as including
"hospital, medical, surgical, dental, vision, and pharmaceutical
services or products." G. L. c. 178I, § 1. Although this case
involves dental insurance, we will refer generally to health
care services throughout the rest of the opinion.
                                                                     7


428 (1974) ("words in a statute must be considered in light of

the other words surrounding them").6

     The fact that "policy holder" is coupled with "or other

person" implies that both categories are intended to be persons

"on whose behalf the organization [i.e., the insurer] is

obligated to pay for or provide health care services."     The use

of the word "other" to modify "person" would not otherwise be

necessary or, for that matter, make sense.   Phillips v. Equity

Residential Mgt., L.L.C., 478 Mass. 251, 258 (2017), quoting

Adamowicz v. Ipswich, 395 Mass. 757, 760 (1985) ("so long as it

yields a 'logical and sensible result,' we do not interpret a

statute so as to render any portion of it meaningless").    Thus,

the words "policy holder" can be interpreted only as an

individual, natural person, because a corporate or other

organizational employer cannot be provided with health care

services.7


     6 As for the argument of the Commissioner of Revenue
(commissioner) that, in the group insurance context, it is the
employer "on whose behalf the [insurer] is obligated to pay for
. . . health care services," G. L. c. 176I, § 1, it is
recipients of the "services rendered or products sold by a
health care provider" that the insurer typically "pays for;"
there is nothing to suggest that they are made on the employer's
behalf.

     7 To bolster their arguments about the meaning of words
"covered person," the parties refer to the differences between
G. L. c. 176I and the Preferred Provider Arrangements Model Act
(1987), drafted by the National Association of Insurance
Commissioners (Model Act). The commissioner uses the fact that,
                                                                    8


    The commissioner asks us to interpret "covered persons

residing in this [C]ommonwealth" in § 11 as applying to either

employers or individuals, depending on who the "policy holder"

is, pointing out that, in other statutes, employer-organizations

as well as natural persons can be said to "reside" in a

particular location.   See, e.g., G. L. c. 4, § 13 (a) (newspaper

subscribers); G. L. c. 59, § 18, Sixth & Seventh (partnerships);

G. L. c. 110C, § 7 (stockholders); G. L. c. 110E, § 1 (e)

(same); G. L. c. 110F, § 2 (e) (same).   However, where the

Legislature uses the word "reside" in reference to both natural

persons and artificial entities, typically it includes

additional terms describing how to apply the statute to the

latter category.   See, e.g., G. L. c. 149, § 6F½ (a) (action for

injunction or restraining order brought in county in which "such

person, firm, corporation, or other entity resides or has its

principal place of business"); G. L. c. 203A, § 1 (requiring

common trust fund to be administered in accordance with written

instrument filed "in the county in which such individual,




in contrast to G. L. c. 176I, the definition of "covered person"
in the Model Act refers only to an individual and not to a
"policy holder" receiving health care services. See Model Act,
supra at § 3B. Assuming that the Legislature relied on the
Model Act, the argument that the Legislature added "policy
holder" to the definition of "covered person" in order to expand
the scope of taxable entities under § 11 is undermined by the
use of the word "other" before "person" as discussed supra. See
G. L. c. 176I, § 1.
                                                                    9


corporation or association resides or has his or its principal

place of business").    See also Mass. R. Civ. P. 4 (d), as

amended, 370 Mass. 918 (1976) (describing service of process

requirements with rules for individuals different from those for

artificial entities).   Cf. 28 U.S.C. § 1391 (setting forth

standards for Federal courts to establish residency for natural

person different from those for artificial entities).     Here, the

Legislature's choice of the word "residing" connotes the

behavior of natural persons, not entities like employer-

organizations.   See RJR Nabisco Holdings, Corps. v. Dunn, 657

N.E.2d 1220, 1223 (Ind. 1995) (noting that statute's use of word

"reside" indicates natural person, not organization).

    The use of the term "covered person" in other parts of the

statute is consistent with this view.    See Casseus v. Eastern

Bus Co., Inc., 478 Mass. 786, 795 (2018), quoting Leary v.

Contributory Retirement Appeal Bd., 421 Mass. 344, 347 (1995)

("When the meaning of any particular section or clause of a

statute is questioned, it is proper, no doubt, to look into the

other parts of the statute:   otherwise the different sections of

the same statute might be so construed as to be repugnant, and

the intention of the [L]egislature might be defeated").

Throughout G. L. c. 176I, the term "covered person" appears in

connection with an individual or natural person's health or the

provision of health care services.   For example, the definition
                                                                    10


of "[e]mergency care" refers to medical services provided to,

and the health of, covered persons.8    General Laws c. 176I, § 2,

requires organizations operating PPAs to submit a variety of

information to the commissioner for approval, including "a

description of the health services and any other benefits to

which the covered person is entitled."    General Laws c. 176I,

§ 3 (b), refers to covered persons receiving emergency care and

dialing 911.9   Obviously employer-organizations do not receive

health care services or dial 911.    Therefore, the use of

"covered person" in the above-referenced sections is consistent

with meaning a natural person, and inconsistent with meaning an


     8   General Laws c. 176I, § 1, defines "[e]mergency care" as

     "services provided in or by a hospital emergency facility
     to a covered person after the development of a medical
     condition, . . . manifesting itself by symptoms of
     sufficient severity that the absence of prompt medical
     attention could reasonably be expected . . . to result in
     placing the covered person's or another person's health in
     serious jeopardy, serious impairment to body function, or
     serious dysfunction of any body organ or part . . . ."

     9   Section 3 (b) provides, in relevant part:

          "If a covered person receives emergency care and
     cannot reasonably reach a preferred provider, payment for
     care related to the emergency shall be made . . . as if the
     covered person had been treated by a preferred provider;
     whenever a covered person is confronted with a need for
     emergency care, . . . no covered person shall in any way be
     discouraged from using the . . . medical service system,
     [or] the 911 telephone number, . . . or be denied coverage
     for medical and transportation expenses incurred as a
     result of such use of emergency care."
                                                                   11


employer-organization.   Manning v. Boston Redev. Auth., 400

Mass. 444, 453 (1987) ("A statute . . . should not be construed

in a way that produces absurd or unreasonable results when a

sensible construction is readily available").   The term is not

used anywhere in the statute in a manner suggesting that it must

apply to entities other than natural persons.

     It is true that use of the term throughout the chapter to

refer to natural persons is not necessarily inconsistent with

the commissioner's interpretation, that is, defining "covered

persons" as either a policy holder entity that is not a natural

person, or as a natural person, depending on the context used.

Additionally, there are perhaps some strong policy reasons that

favor the commissioner's interpretation.10   However, consistent

with the principles of statutory construction on which we rely

in interpreting tax statutes, and which were respected by the

board in this case, we construe the use of "covered persons" in

§ 11 "strictly against the taxing authority" if the statute is




     10For example, it may be easier to administer the statute
if insurers pay the assessment on the entire gross premiums
received from contracts for group insurance with Massachusetts
employers and other groups, rather than identifying the portion
of those premiums attributable to individuals covered by the
group insurance plan that actually reside in the Commonwealth.
Additionally, the commissioner's interpretation is consistent
with the policy of assessing insurers for the value of the
franchise -- the benefit or value of being able to offer
insurance in the Commonwealth.
                                                                    12


ambiguous.   See Oliver, 436 Mass. at 472; Commissioner of

Revenue v. Dupee, 423 Mass. 617, 622 (1996).

     Furthermore, our interpretation is supported by the

administration of G. L. c. 176I by the Division of Insurance

(division).11,12   The division likewise treats "covered persons"

as meaning natural individual persons in administering reporting

requirements for health benefit plans, which include PPAs.

General Laws c. 176I, § 7, requires insurers operating PPAs to

"file annually with the [C]ommissioner [of Insurance] . . . a

report covering its prior fiscal year."    "The report shall

include . . . the number of covered persons under health benefit

plans . . . , which include preferred provider arrangements."


     11The Division of Insurance (division) is an agency tasked
with the regulation of insurance products. See generally, e.g.,
G. L. cc. 26, 175. The division is responsible for the
administration and enforcement of G. L. c. 176I, with the
exception of § 11, which is administered by the Department of
Revenue. See G. L. c. 176I, §§ 8, 11.

     12Even though § 11 is administered by the commissioner,
because "covered person" is defined for use throughout the
chapter in § 1, any deference due for an interpretation of that
term would be to the division's interpretation because that
agency administers the rest of the chapter. See Goldberg v.
Board of Health of Granby, 444 Mass. 627, 633 (2005), quoting
Briggs v. Commonwealth, 429 Mass. 241, 253 (1999) (noting that,
in interpreting regulations, our analysis requires substantial
deference to expertise and statutory interpretation of agency
charged with "primary responsibility" for administering
statute). Furthermore, the "specialized knowledge, technical
competence, and experience" of the Commissioner of Insurance is
more relevant than the Appellate Tax Board's in interpreting the
disputed insurance term here. Springfield v. Department of
Telecomm. & Cable, 457 Mass. 562, 568 (2010).
                                                                   13


Id.   See 211 Code Mass. Regs. § 51.06 (2016) (requiring PPA

operator annual reports to include "summary of the number of

[c]overed [p]ersons").   The division ensures compliance with the

reporting requirement by requiring insurers to file "raw data on

actual membership."   See Division of Insurance, 2015 Preferred

Providers Information, http://www.mass.gov/ocabr/insurance

/providers-and-producers/insurance-companies/group-products-and-

plans/insured-preferred-provider-membership/2015-preferred-

providers-information.html [https://perma.cc/M38K-58HL].     For

the purposes of these reports "membership includes all

subscribers and covered dependents of a subscriber . . . for

whom the carrier has accepted the risk of financing necessary

health services," not the number of employers who are group

insurance policy holders.   Id.

      For all of these reasons, we conclude that the term

"covered persons" in § 11 refers to the natural person receiving

health care coverage under a PPA policy, including his or her

spouse and additional dependents, not the employer-organization

with whom the insurer contracts.

                                    Decision of the Appellate Tax
                                      Board affirmed.
