{ "id": 2183323, "name": "NATIONWIDE GENERAL INSURANCE COMPANY et al., Plaintiffs-Appellants, v. NATHANIEL S. SHAPO, Director of the Department of Insurance, et al., Defendants-Appellees", "name_abbreviation": "Nationwide General Insurance v. Shapo", "decision_date": "2002-04-10", "docket_number": "No. 4\u201401\u20140524", "first_page": "1028", "last_page": "1033", "citations": [ { "type": "official", "cite": "328 Ill. App. 3d 1028" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "513 U.S. 106", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1332582 ], "weight": 3, "year": 1994, "pin_cites": [ { "page": "111" }, { "page": "459" }, { "page": "550" } ], "opinion_index": 0, "case_paths": [ "/us/513/0106-01" ] }, { "cite": "751 N.E.2d 610", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2001, "pin_cites": [ { "page": "614" } ], "opinion_index": 0 }, { "cite": "322 Ill. App. 3d 996", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 126423 ], "year": 2001, "pin_cites": [ { "page": "1001" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/322/0996-01" ] }, { "cite": "737 N.E.2d 678", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2000, "pin_cites": [ { "page": "680" } ], "opinion_index": 0 }, { "cite": "316 Ill. App. 3d 664", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1096604 ], "year": 2000, "pin_cites": [ { "page": "667" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/316/0664-01" ] }, { "cite": "753 N.E.2d 554", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2001, "pin_cites": [ { "page": "557" } ], "opinion_index": 0 }, { "cite": "323 Ill. App. 3d 620", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 171737 ], "year": 2001, "pin_cites": [ { "page": "623" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/323/0620-01" ] }, { "cite": "688 N.E.2d 68", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1997, "pin_cites": [ { "page": "73" } ], "opinion_index": 0 }, { "cite": "179 Ill. 2d 94", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 801346 ], "year": 1997, "pin_cites": [ { "page": "104-05" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/179/0094-01" ] } ], "analysis": { "cardinality": 578, "char_count": 10078, "ocr_confidence": 0.778, "pagerank": { "raw": 4.856319230494445e-08, "percentile": 0.3049137227691653 }, "sha256": "00669fa72d50376863450a1da6e9da8ba918afe3d9fd7befbd7975876f955a71", "simhash": "1:3a2bd5dd4ef3ba10", "word_count": 1575 }, "last_updated": "2023-07-14T17:11:21.532369+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "NATIONWIDE GENERAL INSURANCE COMPANY et al., Plaintiffs-Appellants, v. NATHANIEL S. SHAPO, Director of the Department of Insurance, et al., Defendants-Appellees." ], "opinions": [ { "text": "JUSTICE KNECHT\ndelivered the opinion of the court:\nPlaintiffs, foreign insurance companies, appeal the May 2001 order of the Sangamon County circuit court dismissing their consolidated complaints for administrative review, which plaintiffs filed after defendants, the Illinois Department of Insurance (Department), Nathaniel S. Shapo, Director of the Department (Director), and Robert Enoex, chief counsel of the Department, notified them the Director has no statutory authority to authorize refunds of privilege taxes plaintiffs paid. We affirm.\nI. BACKGROUND\nPlaintiffs are all insurance or surety companies incorporated under the laws of states other than Illinois. As foreign companies, they were subject to an annual tax of 2% of net taxable premium income, which was imposed by section 409 of the Illinois Insurance Code (Insurance Code) (215 ILCS 5/409 (West 1996)) for the privilege of doing business in Illinois (privilege tax). Foreign companies may also be required to pay additional tax if the laws of their state impose greater taxes on Illinois companies doing business in their state (retaliatory tax). 215 ILCS 5/444, 444.1 (West 1996).\nIn Milwaukee Safeguard Insurance Co. v. Selcke, 179 Ill. 2d 94, 104-05, 688 N.E.2d 68, 73 (1997), the Supreme Court of Illinois held section 409 of the Insurance Code (215 ILCS 5/409 (West 1996)) violated the uniformity clause of the Illinois Constitution (Ill. Const. 1970, art. IX, \u00a7 2). Relying on the holding in Milwaukee Safeguard and on section 412(1) of the Insurance Code (215 ILCS 5/412(1) (West 1996)), plaintiffs tendered amended annual privilege tax returns to the Department, requesting refunds of privilege taxes paid from 1991 to 1997. Plaintiffs paid these taxes without protest. Section 412(1) provides:\n\u201cWhenever it appears to the satisfaction of the Director that because of some mistake of fact, error in calculation, or erroneous interpretation of a statute of this or any other state, any authorized company has paid to him pursuant to any provision of law, taxes, fees[,] or other charges in excess of the amount legally chargeable against it, during the 6[-]year period immediately preceding the discovery of such overpayment, he shall have power to refund to such company the amount of the excess or excesses by applying the amount or amounts thereof toward the payment of taxes, fees[,] or other charges already due, or which may thereafter become due from that company until such excess or excesses have been fully refunded, or, at his discretion, to make a cash refund.\u201d 215 ILCS 5/412(1) (West 1996).\nFollowing plaintiffs\u2019 requests, Enoex informed each plaintiff the Director is not authorized to provide refunds under section 412 on the basis taxes were paid under an invalid law. In Sangamon County circuit court, plaintiffs made timely complaints for administrative review following each of the Department\u2019s decisions. In October 2000, defendants filed a motion to dismiss. The circuit court allowed defendants\u2019 motion to consolidate the cases, but each case retained a separate record on review. In February 2001, the circuit court allowed defendants\u2019 motion to dismiss. In March 2001, plaintiffs filed a motion to reconsider, which the circuit court denied in May 2001. This appeal followed.\nII. ANALYSIS\nA. Whether Section 412(1) Applies\nPlaintiffs first contend they are entitled to refunds of overpaid privilege taxes under the plain meaning of section 412(1) of the Insurance Code because they erroneously interpreted section 409 of the Insurance Code to be valid and in force. The Director argues section 412(1) has never provided a refund based on the unconstitutionality of a statute. The Director has maintained this interpretation since 1988 and has recently incorporated it into a regulation. See 50 Ill. Adm. Code \u00a7 2525.50(b)(4) (West CD-ROM May 1999) (effective December 21, 1998).\nGenerally, statutory construction is a matter of law and is considered de novo on review. People v. Slover, 323 Ill. App. 3d 620, 623, 753 N.E.2d 554, 557 (2001). We are not bound by an administrative agency\u2019s interpretation of a statute; however, we defer to the reasonable interpretation placed on a statute by the agency charged with its administration and enforcement. Morse v. Department of Professional Regulation, 316 Ill. App. 3d 664, 667, 737 N.E.2d 678, 680 (2000). The consistency and duration of the agency\u2019s interpretation are factors bearing on the deference to be given to the agency\u2019s interpretation. Schober v. Young, 322 Ill. App. 3d 996, 1001, 751 N.E.2d 610, 614 (2001).\nWe agree with the Director\u2019s consistent, long-standing, and reasonable construction of section 412(1), which statute is unambiguous: an erroneous interpretation of a statute does not include a finding of unconstitutionality of the statute in question.\nNo erroneous interpretation of a statute occurs when a taxpayer pays, and the Director collects, a tax pursuant to a statute later declared void because of a separate constitutional limitation. The fact the taxpayer complies with, and the Director enforces, an invalid statute as written does not mean either the taxpayer or the Director misconstrued the meaning of any word in the statute, i.e., erroneously interpreted it. See 2A N. Singer, Sutherland on Statutes and Statutory Construction \u00a7 45.04, at 24 (6th ed. 2000) (\u201cinterpretation\u201d determines the meaning of words).\nPlaintiffs also urge us to construe section 412(1) to reach an equitable result and avoid allowing the State to retain illegally collected taxes. However, equity does not demand a refund because plaintiffs had a remedy but failed to pursue it: they co.uld have chai-lenged the unconstitutional privilege tax by paying it under protest. See 30 ILCS 230/2a (West 1996).\nTherefore, incorrectly determining the constitutionality of section 409 is not an \u201cerroneous interpretation\u201d of that statute for the purpose of section 412(1). Under the plain meaning of section 412(1), plaintiffs are not entitled to a refund of unconstitutional taxes paid without protest.\nWe also reject plaintiffs\u2019 assertion the Director\u2019s possible misinterpretations of section 409 and section 444 in other litigation entitles them to section 412(1) refunds here. Nothing in the record showed plaintiffs paid unconstitutional privilege taxes because they misconstrued any statutory word or phrase. Section 412(1) requires a causal link between the erroneous interpretation and the tax payment. See 215 ILCS 5/412(1) (West 1996) (\u201cbecause of some *** erroneous interpretation of a statute ***, any authorized company has paid *** taxes *** in excess of the amount legally chargeable against it\u201d (emphasis added)).\nWe determine the Director did not err in refusing to apply section 412(1) to plaintiffs\u2019 privilege-tax refund claims.\nB. Whether an Unconstitutional Bait and Switch Occurred\nPlaintiffs next assert the Department violated their due process rights with an unconstitutional \u201cbait and switch,\u201d which involves withdrawing \u201cwhat plainly appear[s] to be a \u2018clear and certain\u2019 post-deprivation remedy, in the form of [a] tax refund statute\u201d in favor of an alternative procedure, effectively leaving no remedy. See Reich v. Collins, 513 U.S. 106, 111, 130 L. Ed. 2d 454, 459, 115 S. Ct. 547, 550 (1994). The Director argues Illinois did not \u201cbait\u201d plaintiffs into paying without protest because section 412(1) was never a clear and certain remedy for a postpayment refund of unconstitutional taxes. We agree with the Director.\nPlaintiffs primarily rely on a March 7, 1988, letter from the Director, denying an unrelated request for a privilege-tax refund based on the unconstitutionality of section 409 and section 444. In the letter, the Director disagreed with the alleged constitutionality but additionally stated it:\n\u201cwould not form the basis by which our Department of Insurance could order a refund of taxes or fees. Section 412 of the Illinois Insurance Code is interpreted by the Department of Insurance as not providing a statutory basis for a refund of premium taxes where the unconstitutionality of a statute is the basis for the requested refund, and where no constitutional challenge to such statute has been upheld in any Illinois court of competent jurisdiction at the time of payment of the premium taxes.\u201d\nThe letter concluded, \u201cSince [s]ection 412 governs requests for refunds such as yours, your request for a refund is denied.\u201d Contrary to plaintiffs\u2019 claim, the Director\u2019s letter did not concede section 412(1) provides a refund of unconstitutional taxes. Plaintiffs\u2019 negative inference is not supported by the letter\u2019s final line because it only generally states section 412 governs refund requests.\nJudge Shiftman\u2019s March 1, 1993, memorandum opinion finding section 409 to be unconstitutional (Melhan v. Illinois, No. 88 \u2014 L\u2014134 (Cir. Ct. Sangamon Co.)) does not support plaintiffs\u2019 argument, either. That circuit court decision, which was vacated after the parties settled and does not mention section 412, stated its finding of unconstitutionality \u201cdoes not resolve the refund question.\u201d\nThese examples fail to support plaintiffs\u2019 contention section 412(1) was a \u201cclear and certain\u201d remedy for refunding unconstitutional taxes. We find no violation of plaintiffs\u2019 due process rights by any unconstitutional \u201cbait and switch.\u201d\nIII. CONCLUSION\nFor the reasons stated, we affirm the circuit court\u2019s judgment.\nAffirmed.\nCOOK and STEIGMANN, JJ., concur.", "type": "majority", "author": "JUSTICE KNECHT" } ], "attorneys": [ "Richard Bromley, R. Lee Christie, Mary Kay M. Martire (argued), Tracy D. Williams, and Jason A. Bremer, all of Foley & Lardner, of Chicago, for appellant Colonial Life & Accident Insurance et al.", "Jeffrey E DeJong, Iain D. Johnston (argued), and Andrea R. Harmon, all of Altheimer & Gray, of Chicago, and Robert E. Wagner, Assistant Attorney General, of Springfield, for appellees." ], "corrections": "", "head_matter": "NATIONWIDE GENERAL INSURANCE COMPANY et al., Plaintiffs-Appellants, v. NATHANIEL S. SHAPO, Director of the Department of Insurance, et al., Defendants-Appellees.\nFourth District\nNo. 4\u201401\u20140524\nArgued January 24, 2002.\nOpinion filed April 10, 2002.\nRichard Bromley, R. Lee Christie, Mary Kay M. Martire (argued), Tracy D. Williams, and Jason A. Bremer, all of Foley & Lardner, of Chicago, for appellant Colonial Life & Accident Insurance et al.\nJeffrey E DeJong, Iain D. Johnston (argued), and Andrea R. Harmon, all of Altheimer & Gray, of Chicago, and Robert E. Wagner, Assistant Attorney General, of Springfield, for appellees." }, "file_name": "1028-01", "first_page_order": 1046, "last_page_order": 1051 }