ATTORNEY FOR PETITIONER:                     ATTORNEYS FOR RESPONDENT:
PAUL M. JONES, JR.                           CURTIS T. HILL, JR.
PAUL JONES LAW, LLC                          ATTORNEY GENERAL OF INDIANA
Greenwood, IN                                MEREDITH B. MCCUTCHEON
                                             WINSTON LIN
                                             REBECCA L. MCCLAIN
                                             DEPUTY ATTORNEYS GENERAL
                                             Indianapolis, IN

                                                                                FILED
                               IN THE                                      Mar 10 2020, 4:01 pm



                         INDIANA TAX COURT
                                                                                CLERK
                                                                            Indiana Supreme Court
                                                                               Court of Appeals
                                                                                 and Tax Court




UNIVERSAL HEALTH REALTY,                     )
                                             )
      Petitioner,                            )
                                             )
          v.                                 ) Cause No. 19T-TA-00012
                                             )
WILLIAM J. FLUTY, JR., in his official       )
capacity as VANDERBURGH COUNTY               )
ASSESSOR,                                    )
                                             )
      Respondent.                            )


                    ON APPEAL FROM A FINAL DETERMINATION OF
                        THE INDIANA BOARD OF TAX REVIEW

                                  FOR PUBLICATION
                                    March 10, 2020

WENTWORTH, J.

      In March of 2019, the Indiana Board of Tax Review issued a final determination

that found that Universal Health Realty’s real property tax liability was required to be

computed using the 3% property tax cap for the 2011 through 2015 tax years. The

Court affirms the Indiana Board’s final determination.
                        FACTS AND PROCEDURAL HISTORY

      During the years at issue, Universal Health owned property in Evansville, Indiana

that was used as an inpatient rehabilitative hospital (Hospital). (See, e.g., Cert. Admin.

R. at 123-35, 358-60.)     The 85-bed Hospital was operated by Encompass Health

pursuant to a license issued by the Indiana State Department of Health under Indiana

Code § 16-21. (See, e.g., Cert. Admin. R. at 128-35, 358-60.)

      The Hospital provided rehabilitative services to patients who, after being

discharged from acute care hospitals, were still not ready to return home. (See Cert.

Admin. R. at 358-60.) While the average length of stay by a patient at the Hospital was

only 2 weeks, some patients stayed as long as two or three months depending on the

extent of their injuries or illnesses. (Cert. Admin. R. at 358.) Upon discharge from the

Hospital, 80% of the patients returned home. (Cert. Admin. R. at 361.) The remaining

20% of patients were admitted to either a nursing home, another acute care hospital, or

hospice upon discharge. (Cert. Admin. R. at 361.)

      For each of the tax years at issue, Universal Health’s property tax liability on the

Hospital was computed using the 3% property tax cap applicable to nonresidential

property. (See, e.g., Cert. Admin. R. at 2-5, 18-21, 36-39, 54-57, 72-75.) Universal

Health subsequently appealed those computations, first to the Vanderburgh County

Property Tax Assessment Board of Appeals and then to the Indiana Board. (See, e.g.,

Cert. Admin. R. at 2-5, 18-21, 36-39, 54-57, 72-75.)         Throughout those appeals,

Universal Health argued that Indiana Code § 6-1.1-20.6-7.5 required its property tax

liability to be computed using a 2% property tax cap because its property was either 1) a

hospital, 2) a long term care property, or 3) a residential property. (See, e.g., Cert.



                                            2
Admin. R. at 2-5, 18-21, 36-39, 54-57, 72-75, 355-56.)          On March 11, 2019, after

conducting a hearing on the matter, the Indiana Board issued a final determination

rejecting each of Universal Health’s three arguments. (See Cert. Admin. R. at 344-51.)

       Universal Health initiated an original tax appeal on April 24, 2019. The Court

heard the parties’ oral arguments on October 24, 2019. 1            Additional facts will be

supplied when necessary.

                                 STANDARD OF REVIEW

       The party seeking to overturn an Indiana Board final determination bears the

burden of demonstrating its invalidity. Osolo Twp. Assessor v. Elkhart Maple Lane

Assocs., 789 N.E.2d 109, 111 (Ind. Tax Ct. 2003). Accordingly, Universal Health must

demonstrate to the Court that the Indiana Board’s final determination in this matter is

arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

contrary to constitutional right, power, privilege, or immunity; in excess of or short of

statutory jurisdiction, authority, or limitations; without observance of the procedure

required by law; or unsupported by substantial or reliable evidence. See IND. CODE §

33-26-6-6(e)(1)-(5) (2020).

                                            LAW

       Indiana Code § 6-1.1-20.6 governs the computation and allocation of Indiana’s

property tax caps. See generally IND. CODE §§ 6-1.1-20.6-0.3 to -13 (2020) (the “Tax

Cap Statutes”). Specifically, a property’s annual tax liability is capped (i.e., it cannot

exceed) a certain percentage of its gross assessed value under Indiana Code § 6-1.1-

1
   The Court conducted its oral argument at the Indiana University Maurer School of Law
in Bloomington, Indiana. The Court thanks Maurer for its hospitality and the parties and their
counsel for traveling to Bloomington and their able advocacy. The Court also wishes to thank
Mr. Steve Paul, adjunct professor at Maurer, for coordinating and scheduling the argument.


                                              3
20.6-7.5. See IND. CODE § 6-1.1-20.6-7.5 (2011). The cap is accomplished by applying

a credit in

          the amount by which the person’s property tax liability attributable to
          the person’s:

              (1) homestead exceeds one percent (1%);
              (2) residential property exceeds two percent (2%);
              (3) long term care property exceeds two percent (2%);
              (4) agricultural land exceeds two percent (2%);
              (5) nonresidential real property exceeds three percent
                  (3%); or
              (6) personal property exceeds three percent (3%);

          of the gross assessed value of the property that is the basis for
          determination of property taxes for that calendar year.

I.C. § 6-1.1-20.6-7.5(a). For purposes of this computation, the Legislature has defined

the terms “residential property” and “long term care property.” Indiana Code § 6-1.1-

20.6-4 defines “residential property” as “[r]eal property that consists of: (A) a building

that includes two or more dwelling units; (B) any common areas shared by the dwelling

units; and (C) the land, not exceeding the area of the building footprint, on which the

building is located.” IND. CODE § 6-1.1-20.6-4 (2011) (amended 2013). Indiana Code §

6-1.1-20.6-2.3 defines “long term care property” as property that

              (1) is used for the long term care of an impaired individual;
                  and
              (2) is one (1) of the following:
                      (A) A health facility licensed under IC 16-28.
                      (B) A housing with services establishment (as
                         defined in IC 12-10-15-3) that is allowed to use
                         the term “assisted living” to describe [its]
                         housing with services establishment’s services
                         and operations to the public.
                      (C) An independent living home that, under
                         contractual agreement, serves not more than
                         eight (8) individuals who:
                                    (i) have a mental illness or
                                         developmental disability;

                                             4
                                   (ii) require regular but limited
                                        supervision; and
                                  (iii) reside independently of their
                                        families.

IND. CODE § 6-1.1-20.6-2.3 (2011).

                                         ANALYSIS

       On appeal, Universal Health contends that the Indiana Board’s final

determination must be reversed because it is contrary to law and constitutes an abuse

of discretion. (Pet’r Br. at 4, 6, 8-9.) More specifically, Universal Health argues that its

property tax liability should have been computed using the 2%, not the 3%, tax cap

because its property constitutes 1) a hospital, 2) a long term care property, or 3)

residential property. (Pet’r Br. at 4-11.)

                                       1)    Hospital

       Universal Health first argues that because its property is a hospital, it was entitled

to have its property tax liability computed during the years at issue using the 2% cap.

Universal Health acknowledges that Indiana Code § 6-1.1-20.6-7.5 does not explicitly

refer to hospitals, but claims two memoranda issued by the Department of Local

Government Finance (“DLGF”) to local assessing officials in 2008 assigns the 2% cap

to hospitals. (See Pet’r Br. at 4-6; Oral Arg. Tr. at 4-6.) The memoranda provided a

general list of property class types along with corresponding cost codes and property

tax cap assignments. (See Cert. Admin. R. at 136, 139, 143-45.) Universal Health

points out that the memoranda assign commercial nursing homes and hospitals a code

of “412” and indicate that they are subject to the 2% property tax cap. (See Cert.

Admin. R. at 136, 139, 143-45.) Thus, Universal Health concludes the memoranda

required its property tax liability be computed using the 2% cap because its property

                                             5
was a hospital. (See Pet’r Br. at 5-6.) Universal Health’s reliance on the memoranda,

however, is misplaced.

       First, the memoranda explicitly indicate that they are offering non-binding

guidance to local assessing officials. (See, e.g., Cert. Admin. R. at 136 (stating that

“[t]his [M]emorandum will answer [some] questions and suggest classification cap

assignments” (emphasis added)).)       In fact, they provide the specific disclaimer that

“depending on the circumstances some propert[ies ] may have more than one possible

[property tax] cap. The ultimate decision on the most appropriate property class code

and [property tax cap] rests with the local assessing official.” (See Cert. Admin. R. at

136 (emphasis added).)

       Second, and more importantly, the DLGF is authorized to adopt rules,

regulations, and advisory memoranda, like those at issue here, that enable it to

accomplish the purposes of Indiana’s property assessment statutes, but it is not

authorized to make any rules, regulations, or issue memoranda that are inconsistent

with the statutes it administers or that add to or detract from the law as enacted. See,

e.g., IND. CODE § 6-1.1-1-15 (2020) (indicating that the DLGF prescribes the standards

that are to be used in assessing real property); Austin v. Indiana Family & Soc. Servs.

Admin., 947 N.E.2d 979, 982 (Ind. Ct. App. 2011) (explaining that an administrative

agency’s interpretation of a statute is entitled to great weight unless it is inconsistent

with the law itself); Lowe’s Home Ctrs., LLC v. Indiana Dep’t of State Revenue, 23

N.E.3d 52, 59 (Ind. Tax Ct. 2014) (stating that an administrative agency “‘may not make

rules and regulations inconsistent with the statute[s] which it is administering, it may not

by its rules and regulations add to or detract from the law as enacted, nor may it by rule



                                             6
extend its powers beyond those conferred upon it by law’” (citations omitted)), review

denied. Indiana Code § 6-1.1-20.6-7.5(a) explicitly provides that the 2% cap applies to

just three types of property:         residential property, long term care property, and

agricultural land. I.C. § 6-1.1-20.6-7.5(a). Thus, Universal Health’s property tax liability

cannot be computed using the 2% cap based on the memoranda because the

Legislature did not list hospital property as a type of property eligible for the 2% property

tax cap under the statute. Accordingly, the Court will not reverse the Indiana Board’s

determination on basis of the memoranda. 2

                               2)     Long Term Care Property

       Next, Universal Health argues that it was entitled to have its property tax liability

computed using the 2% cap because it is a “long term care property.” (See Pet’r Br. at

6-8.) “Long term care property” is property that “is used for the long term care of an

impaired individual[] and . . . [a] health facility licensed under IC 16-28.” 3 I.C. § 6-1.1-

20.6-2.3 (emphasis added).

       In its final determination, the Indiana Board denied Universal Health’s request for

long term care status solely because the Hospital was not licensed under Indiana Code

§ 16-28, but was licensed instead under Indiana Code § 16-21. (See Cert. Admin. R. at

347-48 ¶¶ 13-14 (explaining that while the Hospital may be subject to certain provisions

of Indiana Code § 16-28, it was not licensed under Indiana Code § 16-28).) (See also

2
  Given its resolution of this issue, Universal Health’s argument that the Assessor erroneously
assigned its property a code of “447,” applicable to 1 or 2-story commercial offices, and not the
“412” code applicable to commercial nursing homes and hospitals, (see Pet’r Br. at 4; Oral Arg.
Tr. at 7-11), is moot.
3
   Under Indiana Code § 6-1.1-20.6-2.3, a facility can also qualify as a long term care property if
it is either a “housing with services establishment” or an “independent living home.” See supra
pp. 4-5. Universal Health does not seek long term care property status under either of those
definitions. (See Oral Arg. Tr. at 12.)
                                                7
Cert. Admin. R. at 128-35, 366; Pet’r Br. at 8 (where Universal Health admits the

Hospital was not licensed under Indiana Code § 16-28).)           Universal Health argues

nonetheless that its property is used for the long term care of impaired individuals and is

a health facility, stating that

          Indiana Code § 16-18-2-167 provides, in pertinent part, that the term
          “health facility” means a building, a structure, an institution, or other
          place for the reception, accommodation, board, care, or treatment
          extending beyond a continuous twenty-four (24) hour period in a
          week of more than four (4) individuals who need or desire such
          services because of physical or mental illness, infirmity, or
          impairment. . . . [A]t all times during the [y]ears in [i]ssue, the
          Property was used to provide “accommodation, board, care, or
          treatment extending beyond a continuous twenty-four (24) hour
          period in a week of more than four (4) individuals who need or desire
          such services because of physical or mental illness, infirmity, or
          impairment.” Residents of the Property are admitted to the [H]ospital
          due to physical and/or mental impairments. The residents at the
          Property stay overnight and often stay several nights (average of
          nearly two (2) weeks) as part of their rehabilitation. As a result, the
          entire Property is used for “long term care” purposes, as defined in
          the Indiana Code.

(Pet’r Br. at 7-8 (citations omitted).)     Universal Health concludes, therefore, that its

property would have qualified as a long term care property but for the Indiana Board’s

arbitrary distinction “as to whether a hospital must be ‘subject to IC 16-28’ or ‘licensed

under IC-28[.]’” (Pet’r Br. at 8 (citation omitted).)

       When construing a statute, the primary goal is to determine and apply the intent

of the Legislature in enacting that statute. See Hamilton Square Inv., LLC v. Hamilton

Cty. Assessor, 60 N.E.3d 313, 317 (Ind. Tax Ct. 2016), review denied.                 The best

evidence of this intent is found in the plain language of the statute itself, as chosen by

the Legislature. See id.          Consequently, meaning must be given to each and every

word used in a statute because it will not be presumed that the Legislature intended to



                                               8
enact a statutory provision that is superfluous, meaningless, or a nullity. See id. In a

similar vein, when the language of a statute is clear and unambiguous, the meaning of

statute may not be expanded or contracted by reading into it language or words that

simply are not there or, alternatively, omitting from the statute language or words that

are there. See DeKalb Cty. E. Cmty. Sch. Dist. v. Dep’t of Local Gov’t Fin., 930 N.E.2d

1257, 1260 (Ind. Tax Ct. 2010).

          The Indiana Board did not create or apply an arbitrary distinction when it

determined that Universal Health’s property did not qualify as a long term care property

because it was not a health facility licensed under Indiana Code § 16-28. Instead, the

Indiana Board applied the plain language of Indiana Code § 6-1.1-20.6-2.3 exactly as it

was written, giving meaning to the words intentionally chosen by the Legislature. As a

result, the Court will not reverse the Indiana Board’s final determination on this basis

either.

                                  3)     Residential Property

          Finally, Universal Health claims it was entitled to have its property tax liability

computed during the years at issue using the 2% tax cap because its property was a

“residential property.” (See Pet’r Br. at 9-10.) To be considered a “residential property,”

Universal Health’s property must contain “two (2) or more dwelling units[.]”      See I.C. §

6-1.1-20.6-4.

          Universal Health argues that because “[its p]roperty is used as an 85-bed

hospital . . . it includes more than two (2) ‘dwelling units.’” (Pet’r Br. at 9 (emphasis and

citation omitted).) As support for this argument, Universal Health relies on Indiana Code

§ 32-31-5-3(a), a general provision in Indiana’s Landlord Tenant statutory scheme, that



                                               9
defines a “dwelling unit” as “a structure or part of a structure that is used as a home,

residence, or sleeping unit[.]” (See Pet’r Br. at 9 (quoting IND. CODE § 32-31-5-3(a)

(2011) (emphasis added)).)        In other words, Universal Health maintains that under

Indiana Code § 32-31-5-3, each of its 85 beds constitutes a sleeping unit and, in turn, a

dwelling unit. (See Pet’r Br. at 10.) The Court, however, does not find this argument

persuasive.

       As previously explained, the Court gives effect to the Legislature’s intent when

construing a statute, finding the best evidence of that intent in the plain language of the

statute itself.   See Hamilton Square Inv., 60 N.E.3d at 317.        Statutory words and

phrases are understood in their plain, ordinary, and usual sense. Johnson Cty. Farm

Bureau Co-op. Ass’n, Inc. v. Indiana Dep’t of State Revenue, 568 N.E.2d 578, 581 (Ind.

Tax Ct. 1991), aff’d, 585 N.E.2d 1336 (Ind. 1992). Moreover, the words of a statute are

read within the context of the whole statutory act of which they are a part as well as in

harmony with other statutes applicable to the same subject matter.             Id. at 584.

Accordingly, Universal Health’s reliance on the definition of “dwelling unit” found in

Indiana’s Landlord Tenant statutory scheme is too remote to be reliable when the

meaning of the term “dwelling unit” can be ascertained from Indiana’s property tax

statutory scheme (i.e., Title 6, Article 1.1) itself.

       Indiana Code § 6-1.1-12-37 defines “dwelling” as “[r]esidential real property

improvements that an individual uses as [her] residence, including a house or garage.”

IND. CODE § 6-1.1-12-37(a)(1) (2011). Under this definition, a residence is much more

than just a bed. See, e.g., Kellam v. Fountain Cty. Assessor, 999 N.E.2d 120, 122 (Ind.

Tax Ct. 2013) (explaining that one’s principal place of residence is “‘an individual’s true,



                                                10
fixed, permanent home to which the individual has the intention of returning after an

absence’” (quoting 50 IND. ADMIN. CODE 24–2–5 (2009))), review denied; Brookover v.

Kase, 83 N.E. 524, 524 (Ind. Ct. App. 1908) (stating that “[r]esidence, as used in our tax

laws, means a permanent abode, as distinguished from a temporary sojourn” (citation

omitted)).   See also WEBSTER’S THIRD NEW INT’L DICTIONARY 1931 (2002) (defining

“residence” as a “dwelling place, abode, or habitation to which one intends to return as

distinguished from a place of temporary sojourn or transient visit”).

       The evidence in this case reveals that patients who stayed at Universal Health’s

property during the years at issue did so temporarily. (See Cert. Admin. R. at 358, 361

(indicating that patients stayed at the property for a short period of time before either

returning home, being admitted to an assisted/skilled living facility, or being admitted to

hospice).)   As a result, Universal Health’s 85 beds did not constitute 85 individual

dwelling units.   Because Universal Health’s property was not comprised of multiple

dwelling units, it did not qualify as a “residential property” for purposes of the 2%

property tax cap under Indiana Code § 6-1.1-20.6-7.5(a). Therefore, the Court will not

reverse the Indiana Board’s final determination on this basis either.

                                      CONCLUSION

       Universal Health has not demonstrated that the Indiana Board’s final

determination is contrary to law or constitutes an abuse of discretion. Accordingly, the

Indiana Board’s final determination in this matter is AFFIRMED.




                                            11
