{ "id": 349628, "name": "NORTH SHORE MRI CENTRE, Plaintiff-Appellant, v. THE DEPARTMENT OF REVENUE et al., Defendants-Appellees; SKOKIE VALLEY COMPUTED TOMOGRAPHY CENTER, Plaintiff-Appellant, v. THE DEPARTMENT OF REVENUE et al., Defendants-Appellees", "name_abbreviation": "North Shore MRI Centre v. Department of Revenue", "decision_date": "1999-12-16", "docket_number": "Nos. 1\u201498\u20142736, 1\u201498\u20142737 cons.", "first_page": "895", "last_page": "902", "citations": [ { "type": "official", "cite": "309 Ill. App. 3d 895" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "636 N.E.2d 551", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1994, "opinion_index": 0 }, { "cite": "159 Ill. 2d 249", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 781336 ], "year": 1994, "pin_cites": [ { "page": "260" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/159/0249-01" ] }, { "cite": "556 N.E.2d 236", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1990, "opinion_index": 0 }, { "cite": "136 Ill. 2d 385", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3255216 ], "year": 1990, "pin_cites": [ { "page": "391" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/136/0385-01" ] }, { "cite": "129 N.E.2d 765", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1955, "opinion_index": 0 }, { "cite": "7 Ill. 2d 95", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2713879 ], "weight": 2, "year": 1955, "pin_cites": [ { "page": "106" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/7/0095-01" ] }, { "cite": "544 N.E.2d 344", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "129 Ill. 2d 389", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5567477 ], "year": 1989, "pin_cites": [ { "page": "414" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/129/0389-01" ] }, { "cite": "545 N.E.2d 695", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "131 Ill. 2d 196", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5570158 ], "year": 1989, "pin_cites": [ { "page": "216" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/131/0196-01" ] }, { "cite": "691 N.E.2d 961", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1995, "opinion_index": 0 }, { "cite": "168 Ill. 2d 247", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 307266 ], "year": 1995, "pin_cites": [ { "page": "254" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/168/0247-01" ] }, { "cite": "564 N.E.2d 890", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1990, "opinion_index": 0 }, { "cite": "206 Ill. App. 3d 447", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2559632 ], "year": 1990, "pin_cites": [ { "page": "457" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/206/0447-01" ] }, { "cite": "383 N.E.2d 197", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1978, "opinion_index": 0 }, { "cite": "73 Ill. 2d 243", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5441129 ], "weight": 2, "year": 1978, "pin_cites": [ { "page": "247-48" }, { "page": "247" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/73/0243-01" ] }, { "cite": "553 N.E.2d 14", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1990, "opinion_index": 0 }, { "cite": "195 Ill. App. 3d 532", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2492197 ], "weight": 2, "year": 1990, "pin_cites": [ { "page": "535-36" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/195/0532-01" ] }, { "cite": "625 N.E.2d 424", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1993, "pin_cites": [ { "parenthetical": "Medcat" } ], "opinion_index": 0 }, { "cite": "253 Ill. App. 3d 801", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5421605 ], "weight": 3, "year": 1993, "pin_cites": [ { "page": "803-04", "parenthetical": "Medcat" }, { "page": "804" }, { "page": "804" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/253/0801-01" ] } ], "analysis": { "cardinality": 734, "char_count": 15312, "ocr_confidence": 0.745, "pagerank": { "raw": 6.907597123529909e-08, "percentile": 0.4197192577636766 }, "sha256": "9393e996c14014757f3af6c1cf84ae99adc92f6ef23f5dce5c1336d1e1872441", "simhash": "1:31253cc97986b890", "word_count": 2418 }, "last_updated": "2023-07-14T20:36:09.526568+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "NORTH SHORE MRI CENTRE, Plaintiff-Appellant, v. THE DEPARTMENT OF REVENUE et al., Defendants-Appellees.\u2014SKOKIE VALLEY COMPUTED TOMOGRAPHY CENTER, Plaintiff-Appellant, v. THE DEPARTMENT OF REVENUE et al., Defendants-Appellees." ], "opinions": [ { "text": "JUSTICE HOURIHANE\ndelivered the opinion of the court:\nIn these consolidated administrative appeals, we consider whether a magnetic resonance imaging system (MRI) and a computed tomography machine (CT scanner) qualify for the tax exemption afforded to \u201cmedical appliances\u201d under section 3 of the Illinois Use Tax Act (Act) (Ill. Rev. Stat. 1985, ch. 120, par. 439.1 et seq.) Because we find that they do not qualify for exemption, we affirm the judgments of the circuit court which affirmed two decisions of the Department of Revenue (Department).\nBACKGROUND\nThe underlying facts are not in dispute. Plaintiffs Skokie Valley Computed Tomography (Skokie Valley) and North Shore MRI Centre (North Shore) purchased a CT scanner and MRI, respectively. Plaintiffs each paid a use tax, for which they later sought a credit from the Department. Each claimed that the subject equipment fell within the statutory tax exemption afforded to \u201cmedical appliances.\u201d See Ill. Rev. Stat. 1985, ch. 120, par. 439.3. The Department denied their claims for credit, and plaintiffs filed timely protests.\nAt separate administrative hearings, Dr. Leonard Berlin, plaintiffs\u2019 general partner, testified that a CT scanner and MRI are diagnostic tools. A representative of the company that manufactured the equipment testified consistently.\nIn both cases, the Department adopted the recommended decision of the administrative law judge (ALJ), denying plaintiffs\u2019 claims for credit. The plaintiffs appealed to the circuit court, which found in favor of the Department. Plaintiffs timely appealed to this court.\nANALYSIS\nAt the time plaintiffs purchased the MRI and CT scanner, the Act provided a reduced rate of tax for certain goods, including \u201cmedical appliances.\u201d The Act read in relevant part:\n\u201c[Wjith respect to food for human consumption which is to be consumed off the premises where it is sold (other than alcoholic beverages, soft drinks and food which has been prepared for immediate consumption) and prescription and nonprescription medicines, drugs, medical appliances and insulin, urine testing materials, syringes, and needles used by diabetics, for human use, such tax shall be imposed at the rate of 0%.\u201d Ill. Rev. Stat. 1985, ch. 120, par. 439.3.\nThe zero-percent tax rate created, in effect, a tax \u201cexemption.\u201d Medcat Leasing Co. v. Whitley, 253 Ill. App. 3d 801, 803-04, 625 N.E.2d 424 (1993) (Medcat).\nSignificantly, the Act did not (nor does it now) define the term \u201cmedical appliance.\u201d However, pursuant to the rules and regulations duly adopted by the Department and in force at the time of plaintiffs\u2019 purchases, \u201cmedical appliance\u201d was explained as follows:\n\u201c2) A medical appliance is an item which is intended by the maker to correct any functioning part of the body or which is used as a substitute for any functioning part of the body, such as artificial limbs, crutches, wheelchairs, stretchers, hearing aids, corrective eyeglasses, dental prostheses, and sterile cotton, bandages and band-aids. The term \u2018medical appliance\u2019 also includes testing equipment used by an individual to test his or her own medical condition.\n3) Medical appliances used by health care professionals and not transferred to their patients in providing medical services do not qualify for the reduced rate of tax.\u201d 86 Ill. Adm. Code \u00a7 130.310(c) (1985).\nThe Department\u2019s exclusion of medical appliances used by health care professionals was subsequently rejected by this court in Travenol Laboratories, Inc. v. Johnson, 195 Ill. App. 3d 532, 553 N.E.2d 14 (1990). There, the first district considered whether the sale by plaintiff of a component of a kidney hemodialysis machine to a health care professional was exempt as a \u201cmedical appliance\u201d under the Retailers\u2019 Occupation Tax Act (ROTA) (Ill. Rev. Stat. 1985, ch. 120, par. 441). The Department conceded that the component was a medical appliance. Thus, the only issue before the court was the validity of the Department\u2019s 1985 regulation disqualifying medical appliances used by health care professionals from the reduced rate of tax.\nThe trial court invalidated the regulation and this court affirmed. We found that the legislature plainly provided that all \u201cmedical appliances *** for human use\u201d qualify for the exemption. That the sale is made to a health care professional does not change the nature of the product as a medical appliance or its use for humans. Travenol, 195 Ill. App. 3d at 535-36.\nA few years later, the fourth district, in the Medcat case, held that a CT scanner was not a medical appliance subject to the tax exemption. There, the trial court found the Department\u2019s 1985 regulation defining \u201cmedical appliance\u201d invalid to the extent it distinguished between appliances correcting any functioning part of the body and those assisting in the treatment and diagnosis of medical conditions, as this was a distinction not made by the legislature. It also found that the Department recognized the legislature\u2019s intent to include testing equipment used by an individual to test one\u2019s own medical condition, but that the Department\u2019s \u201cpatient-use\u201d limitation had been stricken in Travenol. Thus, the trial court allowed the exemption for the CT scanner.\nOn appeal, the fourth district reversed. It found the term \u201cmedical appliance\u201d ambiguous and the Department\u2019s interpretation thereof reasonable. It explained that the term \u201cmedical appliance,\u201d as it appears in the Act, \u201cis among a group of other items focusing on consumer use\u201d and that the definition promulgated by the Department parallels the nature of those items. Medcat, 253 Ill. App. 3d at 804. The court further noted that \u201c[t]he decision to free all equipment used in medical testing is a legislative responsibility.\u201d Medcat, 253 Ill. App. 3d at 804. Thus, under Medcat, unless the testing equipment is \u201cused by an individual to test his or her own medical condition,\u201d as set forth in the Department\u2019s 1985 regulation, it does not qualify for exemption.\nEffective January 13, 1992, the Department amended its regulations by expressly providing that \u201c[diagnostic equipment\u201d and \u201c[ojther medical tools, devices and equipment such as x-ray machines, laboratory equipment, and surgical instruments *** which do not directly substitute for a malfunctioning part of the human body do not qualify as exempt medical appliances.\u201d 86 Ill. Adm. Code \u00a7 130.310(c)(2) (1992).\nBoth the ALJ and the trial court found that the MRI and CT scanner did not fall within the narrow range of testing equipment set forth in the Act, i.e., \u201curine testing materials, syringes, and needles used by diabetics.\u201d Ill. Rev. Stat. 1985, ch. 120, par. 439.3. The circuit court also explicitly found that the Department\u2019s 1986 regulation impermissibly extended the language of the Act to include testing equipment other than that used by diabetics.\nOn appeal, plaintiffs argue that the Department\u2019s early private letter rulings and regulations evidence a policy by the Department to include testing and diagnostic equipment within the medical-appliance exemption, and that the Department\u2019s later attempt to deny the exemption to health care providers was struck down in Travenol. Thus, plaintiffs contend that until 1992, when the Department amended its regulations to exclude diagnostic equipment from the medical-appliance exemption, MRIs and CT scanners would qualify for exemption.\nWe agree with plaintiffs that under certain of the Department\u2019s private letter rulings and regulations, as modified by Travenol, diagnostic and testing equipment would qualify for the tax exemption. See Ill. Dep\u2019t of Rev. Pvt. Ltr. Ruling No. 81 \u2014 1171 (October 28, 1981) (exempting electrocardiogram equipment and blood testing equipment as direct diagnostic tools); 111. Dep\u2019t of Rev. Pvt. Ltr. Ruling 85 \u2014 0514 (May 9, 1985) (exempting diagnostic equipment and blood glucose monitors sold to individuals for treating their personal medical conditions). However, we must consider whether the Department\u2019s rules and regulations, so construed, conflict with the Act. The Department\u2019s rules may not limit or extend the scope of the statute or otherwise alter its effect. Du-Mont Ventilating Co. v. Department of Revenue, 73 Ill. 2d 243, 247-48, 383 N.E.2d 197 (1978); Highland Park Women\u2019s Club v. Department of Revenue, 206 Ill. App. 3d 447, 457, 564 N.E.2d 890 (1990).\nIn determining the appropriate scope of the medical-appliance exemption, we note that the Department\u2019s private letter rulings are not precedential. Union Electric Co., 136 Ill. 2d at 400-01. Further, while a rule or regulation interpreting a statutory exemption is entitled to some deference, it is not binding on this court. Du-Mont Ventilating Co., 73 Ill. 2d at 247. Thus, in construing the provisions of the statutory exemption we apply what is essentially a de novo standard of review. Branson v. Department of Revenue, 168 Ill. 2d 247, 254, 691 N.E.2d 961 (1995).\nPreliminarily, we observe that plaintiffs do not challenge the definition of \u201cmedical appliance\u201d long promulgated by the Department. This definition provides that a \u201cmedical appliance is an item intended by the maker to correct any functioning part of the body or which is used as a substitute for any functioning part of the body.\u201d 86 Ill. Adm. Code \u00a7 130.310(c)(2) (1985). As the trial court correctly found, testing equipment and diagnostic equipment plainly do not fall within this definition. Thus, the narrow issue before this court is whether the reference in the Act to \u201cinsulin, urine testing materials, syringes, and needles used by diabetics\u201d (Ill. Rev. Stat. 1985, ch. 120, par. 439.3) may properly be read as including other testing materials and equipment such as an MRI or CT scanner.\nThe Department argues that, under the canon of expressio unius est exclusio alterius, the Act\u2019s express enumeration of urine testing materials used by diabetics means that all other testing materials and equipment are presumed to have been excluded by the legislature. Plaintiffs argue that this reference was only intended as an example, rather than an exhaustive list, of the items exempt. The Department\u2019s position is the better one.\nHad the legislature intended the reference to urine testing materials for diabetics to be merely an example of the type of testing materials exempt under the Act, it could have easily included language so indicating. For instance, the legislature could have said, \u201cinsulin, urine testing materials, syringes, and needles used by diabetics and other testing materials and equipment used to diagnose and/or monitor a medical condition.\u201d However, the legislature did not do so. Rather, it singled out for exemption the testing materials and other items used by diabetics. The enumeration of these items implies the exclusion of other testing materials. This interpretation of the statute is consistent with the rule that tax laws are to be construed strictly in favor of the taxing body and against exemptions. Van\u2019s Material Co. v. Department of Revenue, 131 Ill. 2d 196, 216, 545 N.E.2d 695 (1989); Geary v. Dominick's Finer Foods, Inc., 129 Ill. 2d 389, 414, 544 N.E.2d 344 (1989). Thus, the Department\u2019s regulations and its own interpretations thereof impermissibly enlarged the scope of the statutory exemption.\nEven if we were to construe the reference to urine testing materials as an example of the type of testing materials that are exempt, a CT scanner or MRI would still not qualify for exemption. There is a qualitative difference between the materials used by a diabetic to monitor and treat his or her own medical condition and a CT scanner and MRI, which are used by a physician to diagnose a medical condition.\nPlaintiffs also argue that because the statute contains an express exemption for insulin, under the \u201cexclusio\u201d rule, all other drugs must be excluded. According to plaintiffs, this produces an absurd result because \u201cprescription and nonprescription medicines [and] drugs\u201d are expressly exempt under the Act.\nWhile insulin is available commercially and may be considered a drug (see Physicians\u2019 Desk Reference 1462-79 (52d ed. 1998)), it is also a naturally occurring \u201cprotein pancreatic hormone\u201d (Webster\u2019s Third New International Dictionary 1173 (1993)). Therefore, we agree with the Department that the legislature\u2019s specific reference to insulin removed any ambiguity as to whether or not it is exempt as a \u201cdrug.\u201d Further, had insulin been excluded from the list of exempt items used by a diabetic, a question could well have arisen as to whether the provision exempting drugs, or the provision exempting materials used by diabetics, should control any exemption for insulin used by diabetics. In the first instance, insulin would be exempt; in the second instance, it would not.\nPlaintiffs also argue that the Medcat case was wrongly decided. However, we need not consider this issue as the decision we reach today, while consistent with the outcome in Medcat, is not dependent on the rationale employed in that case.\nFinally, citing Pressed Steel Car Co. v. Lyons, 7 Ill. 2d 95, 129 N.E.2d 765 (1955), plaintiffs maintain that it is error to void retroactively a Department regulation and interpretation on which taxpayers have relied. In Pressed Steel, our supreme court held that it was unreasonable and inequitable to apply a revised regulation retroactively after the taxpayers had entered into contractual relationships upon the basis of the existing regulation. Pressed Steel, 7 Ill. 2d at 106. However, plaintiffs cite to nothing in the record suggesting that they contracted for the purchase of the CT scanner and MRI in reliance on the Department\u2019s regulations at that time.\nFor the foregoing reasons, we affirm the judgments of the circuit court.\nAffirmed.\nHOFFMAN, EJ., and SOUTH, J., concur.\nThe Illinois use tax is a tax \u201cimposed upon the privilege of using in this State tangible personal property.\u201d Ill. Rev. Stat. 1985, ch. 120, par. 439.3.\nThe medical-appliance exemption in ROTA (Ill. Rev. Stat. 1985, ch. 120, par. 441) is identical to that found in the Act. ROTA complements the Act. Union Electric Co. v. Department of Revenue, 136 Ill. 2d 385, 391, 556 N.E.2d 236 (1990).\nWe observe that although the Department\u2019s regulation makes reference to \u201ctesting equipment,\u201d a phrase also used by the parties, the ALJ, and the circuit court, the Act refers only to \u201curine testing materials.\u201d (Emphasis added.) Ill. Rev. Stat. 1985, ch. 120, par. 439.3.\nExpressio unius est exclusio alterius is a rule of statutory construction which recognizes that \u201cthe enumeration of one thing in a statute implies the exclusion of all others.\u201d Baker v. Miller, 159 Ill. 2d 249, 260, 636 N.E.2d 551 (1994); see also Black\u2019s Law Dictionary 602 (7th ed. 1999).", "type": "majority", "author": "JUSTICE HOURIHANE" } ], "attorneys": [ "Thomas H. Donohoe and Melissa A. Connell, both of McDermott, Will & Emery, of Chicago, for appellants.", "James E. Ryan, Attorney General, of Chicago (Joel D. Bertocchi, Solicitor General, and Edmund C. Baird, Assistant Attorney General, of counsel), for appellees." ], "corrections": "", "head_matter": "NORTH SHORE MRI CENTRE, Plaintiff-Appellant, v. THE DEPARTMENT OF REVENUE et al., Defendants-Appellees.\u2014SKOKIE VALLEY COMPUTED TOMOGRAPHY CENTER, Plaintiff-Appellant, v. THE DEPARTMENT OF REVENUE et al., Defendants-Appellees.\nFirst District (4th Division)\nNos. 1\u201498\u20142736, 1\u201498\u20142737 cons.\nOpinion filed December 16, 1999.\nThomas H. Donohoe and Melissa A. Connell, both of McDermott, Will & Emery, of Chicago, for appellants.\nJames E. Ryan, Attorney General, of Chicago (Joel D. Bertocchi, Solicitor General, and Edmund C. Baird, Assistant Attorney General, of counsel), for appellees." }, "file_name": "0895-01", "first_page_order": 915, "last_page_order": 922 }