Peacehealth St. Joseph Med. Ctr. v. Dep't of Revenue (Majority)Annotate this Case
Petitioners PeaceHealth St. Joseph Medical Center and PeaceHealth St. John Medical Center (PeaceHealth) argued that, under RCW 82.04.4311’s plain language, qualifying Washington hospitals were entitled to a business and occupation (B&O) tax refund and deduction on compensation they receive from any state’s Children’s Health Insurance Programs (CHIP) or Medicaid programs, not just Washington’s. Alternatively, PeaceHealth contended that by excluding compensation that qualifying Washington hospitals receive from other states’ CHIP and Medicaid programs, the Washington Department of Revenue (Department) unlawfully penalized those hospitals that served out-of-state patients, thus violating the dormant Commerce Clause of the United States Constitution. In holding that RCW 82.04.4311’s deduction excluded compensation that qualifying hospitals receive from other states’ CHIP and Medicaid programs, the Court of Appeals used the "series-qualifier" rule of statutory construction in lieu of the last antecedent rule. To this, the Washington Supreme Court held the Court of Appeals properly applied the series-qualifier rule to delimit the scope of RCW 82.04.4311’s deduction, thus affirming the Court of Appeals’ reasoning on this issue. Additionally, because the Supreme Court found that RCW 82.04.4311 supported a traditional government function without any differential treatment favoring local private entities over similar out-of-state interests, the Supreme Court held that RCW 82.04.4311 was constitutional under the government function exemption to the dormant Commerce Clause.