Myers

INTRODUCTION

Article XIII, section 28 of the California Constitution imposes a tax of 2.35 percent on the amount of gross premiums received each year by “each insurer doing business in this state” (Cal. Const., art. XIII, § 28, subd. (b), italics added; see id., subds. (c) & (d)). The tax differs from the corporate franchise tax imposed on all other businesses, which is calculated on the basis of the business’s “net income.” (Rev. & Tax. Code, § 23151, subd. (f), italics added.)

The issue in this appeal is whether California Physicians’ Service, doing business as Blue Shield of California (Blue Shield), and Blue Cross of California, doing business as Anthem Blue Cross (Blue Cross; collectively, Real Parties in Interest) are “insurers” under the California Constitution’s gross premium tax provision.

A taxpayer brought a mandamus action to compel state officials to collect the gross premium tax from Real Parties in Interest. Real Parties in Interest contended, inter alia, they could not, as a matter of law, be regarded as “insurers” under the Constitution’s gross premium tax provision, because they are “health care service plans” under the Knox-Keene Health Care Service…