Appeals from the Orders of the Board of Finance and Revenue in the case of Providence Washington Insurance Company, Docket No. R-2838 and in the case of Affiliated F.M. Insurance Company, Docket No. C-5961.
Ronald D. Butler, with him William A. Fetterhoff, Ronald D. Butler and Associates, P.C., for petitioners.
Robert Patrick Coyne, Deputy Attorney General, with him LeRoy S. Zimmerman, Attorney General, for respondent.
Judges Rogers, Blatt and Craig, sitting as a panel of three. Opinion by Judge Rogers.
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We have consolidated the tax appeals of Affiliated F.M. Insurance Company and Providence Washington Insurance Company from decisions of the Board of Finance and Revenue sustaining the settlements by the Department of Revenue of the gross premium tax of each for the years ending respectively December 31, 1977, and December 31, 1976.
The facts in both cases have been stipulated of record. We adopt these as our findings of fact. The stipulations are identical except with respect to the numerical details concerning the refunds and settlement of each petitioner. In the course of our discussion we shall refer to such of the stipulated facts as we deem essential to disposition of the appeal.
Each of the petitioners is incorporated in Rhode Island and each does business in Pennsylvania. Both are subject to the tax of two percent on gross premiums on sales of insurance within Pennsylvania, including workmen's compensation insurance, which Pennsylvania imposes on all insurance companies doing
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business in Pennsylvania pursuant to the Tax Reform Code of 1971, Act of March 4, 1971, P.L. 6, as amended, 72 P.S. §§ 7901-7906. The State of Rhode Island also imposes a two percent tax on gross premiums from sales of insurance.
In addition to paying a two percent gross premiums tax on all workmen's compensation insurance sold in Rhode Island, that State, pursuant to Section 28-38-5 of the General Laws of Rhode Island, requires all insurance companies writing or renewing workmen's compensation insurance in Rhode Island to contribute one and one-half percent of the gross premiums received from workmen's compensation insurance written or renewed by it within Rhode Island or subject to the jurisdiction of Rhode Island during the previous calendar year into the special treasury department fund known as the Dr. John E. Donley Rehabilitation Fund. This fund is used for the care and maintenance of the Dr. John E. Donley Rehabilitation Center located in Providence, Rhode Island. The center's only source of funding is the contribution of the one and one-half percent of the workmen's compensation insurance premiums. Treatment at the center is free to injured Rhode Island workers whose employers have complied with the provisions of the Workmen's Compensation Act of Rhode Island and is available on the same terms to workers whose employers are policy holders with Pennsylvania insurance carriers. Further, there are no charges for the services rendered at the center, either to the carrier or to the worker patient, regardless of the services rendered or the length of time during which such services may be needed.
The center provides physical therapy, psychotherapy and occupational therapy to injured workers and provides such workers modern curative treatment, rehabilitation and therapy under the supervision of
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medical personnel in consultation with the workers' own physicians. The center does not treat injured workers suffering from brain damage, eye, ear, nose or mouth injuries. It treats primarily orthopedic type injuries. The center treats approximately two percent of the injured workers of the entire State of Rhode Island. The majority of injured workers in Rhode Island, as in Pennsylvania, are treated in private health care facilities. Most injured wokers are provided medical rehabilitation services through the workmen's compensation insurance carrier of their employer. All workmen's compensation insurance carriers which provide such coverage in Rhode Island have the opportunity to use the center for rehabilitation and treatment of workmen's compensation injuries.
Under no circumstances are injured Pennsylvania workers entitled to free treatment at the Donley Center, although they may be insured by a Pennsylvania insurance carrier writing or renewing workmen's compensation insurance in Rhode Island and which pays the additional one and one-half percent charge to Rhode Island.
The Commonwealth of Pennsylvania established the Hiram G. Andrews Center in Johnstown, Pennsylvania, which provides similar rehabilitative services to the Donley Center. The Andrews Center charges fees to the patient, the patient's employer, or to the employer's insurance carrier to pay for the services rendered. The Andrews Center was constructed by general funds of the Commonwealth of Pennsylvania. Since 1959 it has been a self-supporting government institution. There is no special assessment made against insurance carriers who sell workmen's compensation insurance to fund this facility.
The Donley Center, as a result of treatment, therapy and rehabilitation rendered there, tends to reduce lost time from ...