# United Stat es Court of Appeals For the First C ircuit

No. 03-1527 IN RE BOSTON REGIONAL MEDICAL CENTER, INC. Debtor, Appellant,

v. COMMONWEALTH OF MASSACHUSETTS DIVISION OF HEALTH CARE FINANCE AND POLICY, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Mark L. Wolf, U.S. District Judge ]

Before Howard, Circuit Judge , Campbell and Stahl, Senior Circuit Judges .

HaroldB. Murphywith whom D. Ethan Jeffery and Hanify& King were on brief for appellant. James J. Arguin , Assistant Attorney General, Office of the AttorneyGeneral, with whom Thomas F. Reilly , Attorney General, was on brief for appellee. April 14, 20041 Mass. Gen. Laws ch. 118G, § 18 was added by 1996 Mass. Acts

ch. 151, § 275, which repealed and replaced an earlier and substantiallyidentical version of the same law, Mass. Gen. Laws ch. 118F, § 15. The debt at issue relates to the years 1996 through 1999, so the earlier version of the statute is not pertinent. Likewise, the numerous amendments to section 18 in the year 1996 and after do not affect our analysis. 1996 Mass. Acts ch. 203 , § 18; 1997 Mass. Acts ch. 47, § 14; 1997 Mass. Acts ch. 170, § 27; 1998 Mass. Acts ch. 319, § 9; 1998 Mass. Acts ch. 463, § 100; 2001 Mass. Acts ch. 17 7, § 29; 2003 Mass. Acts ch. 26, §§ 353 to 359. As the parties have stipulated to the facts pertinent to the operation of the statute, we need refer only t o the stipulation, not to the particular statutes themselves. -2- CAMPBELL, Senior Circuit Judge . At issue in this appeal is whether amounts owing by a debtor hospital under Massachusetts general law, chapter 118G, section 18, to a state fund known as the Commonwealth's Uncompensated Care Pool are properly considered to be "excise taxes" enjoying priority in bankruptcy under 11 U.S.C. § 507(a)(8)(e).

Appellant, Boston Regional Medical Center, ("BRMC or debtor") filed a voluntary petit ion fo r reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Massachusetts. Appellee, the Commonwealth of Massachusetts, by its Division of Health Care Finance and Policy ("HCFP"), filed a proof of claim. After resolving a disagreement over the dollar amount, appellee finally asserteda priority of claim for $1,702,714, a sum representing appell a nt's unpaid prepetition obligations as an acute hospital under Mass. Gen. Laws ch. 118G, § 18 to the Commonwealth's UncompensatedCare Pool (the "Pool"). 1 While the debtor agreed to2 "Acute hospital" is defined as "the teaching hospital of the

Universityof Massachusetts Medical Schoo l a nd any hospital licensedunder section fifty-one of chapter one hundred and eleven andwhich co nt ains a majority of medical-surgical, pediatric, obstetric, and maternity beds, as defined by the department of public health." Mass. Gen. Laws ch. 118G, § 1.

3 To maintain their licenses, every Massachusetts acute hospital must pay or credit to the Pool such as the law requires. See In re Ludlow Hosp. Soc'y, Inc. , 216 B.R. 312, 315 (Bankr. D. Mass. 1997). -3- the dollar amount of the claim, it disputed appellee's contention that the claim was ent itledto priority as an "excise tax" under section 507(a)(8)(E) of the Bankruptcy Code. Determining the claim was for an excise tax, the bankruptcy court overruled appellant's objection and granted pr iorit y to the claim. In re Boston Reg'l Med. Ctr. , 264 B.R. 222, 229-30 (Bankr. D. Mass. 2001) (" BRMC II "). Appellant appealed, and the district court affirmed the bankruptcy court's judgment, stating its reasons in t he course of an unpublished bench ruling. We affirm the district court. Facts The case was submitted on stipulated facts, the substance of which are as follows.

Prior to filing its Chapter 11 bankru pt cy petition,

a ppellant, BRMC, owned and operated a 195-bed private, a cut e hospital in Stoneham, Massachusetts. As an acute hospital 2 within Massachusetts, BRMC was r equired by Massachusetts law to participate in the Pool (Pool). 3 The Pool, administeredby the State's Division of Health Care Finance and Policy, is a fund from4 This quoted lan guag e appears in the version of § 18 as

amendedby 1997 Mass. Acts ch. 47, § 14, an emergency act, approved July11, 1997, and by 1997 Mass. Acts ch. 47, § 37, made effective Oct. 1, 1997. This portion of § 18 was again amendedby 2003 Mass. Acts ch. 26, § 353, an emergency act, approved June 30, 2003, and by2003 Mass. A cts ch. 26, § 715 made effective July 1, 2003, in subsec. (a), which substituted "is to reimburse hospitals and communityhealth centers for care provided to low-income, uninsured andunde rinsur ed residents of the commonwealth" for "shall be to pr ovide access to health care for low income uninsure d an d underinsured residents of the commonwealth". -4- which Massachusetts hos pitals are paid or credited for the free health care they furnish to patients who do not have health insurance or cannot otherwise pay for hospital care. Mass. Gen. Laws . ch. 118G, §§ 18(h) and (k). The Pool's stated statutory purpose is "to provide access to health care for low income uninsuredand underinsured residents of the Co mmon wealth." 4 Id. The Massachusetts Supreme Judicial Court has stated, in respect to

an earlier version of the Pool law, that the Pool's purpose is "'to

more equitably distribute the burden of un com pensated acute hospital services across all acute hospitals.'" Gen. Hosp. Corp. , v. Rate Setting Comm'n , 552 N.E.2d 113, 114 (Mass. 1990) (quoting Mass. Gen. Laws ch. 6A, § 75).

Pool funding c omes both from the mandatory assessments made against each acute hospital bas ed on its "private sector charges," infra, and from other governmental funds and assessments. The amounts collected by the Pool are segregated for its own purposes and are not used to fund other governmental programs or otherwise to defray the costs of state government.5 This q uote d language appears in the version of § 18 as

amendedby 1997 Mass. Acts ch. 47, § 14, an emergency act, approved July11, 1997, and by 1997 Mass. Acts ch. 47, § 37, which went into effect on July 11, 1997 and Oct. 1, 1997, respectively. Prior to these amendments, the language was as follows , "Ahospital's liabilityto the pool shall equal the product of: (a) the ratio of its private sector charges; and (b) the private sector liability to the uncompensated care pool as determined by the general court." -5- Section 18 provides for the collection and distribution of Pool funds among the hospitals. According to section 18(e), a hospital's liability to the Pool is proportional to the amount of otherwise uncompensated care each hospital provides. Liability to the Pool (i.e., the assessment based on its private sector charges) "shall equal the pr oduct of ( 1) the ratio of its private sector charges to all acute hospitals' private sector charges; and (2) the private sector liability to the uncompensated care P ool as det ermi nedby law . . . ." 5 In order to determine the debtor hospital's individual liability to the Pool, the HCFP must, therefore, first determine the amount of private sector charges for all hospitals in Massachusetts. " Priv ate sector charges" is defin ed as a hospital's gross patient service revenue, less the amount of gross patient servic e r evenue that is attributable to Medicare, Medicaid and other "publicly aided patient s, f ree care andbad debt." Mass. Gen . Laws ch. 118G, § 1.

In c alcula ting a hospital's liability to the Pool, certain credits are provided. A hospital's assessed liability to the Pool is offset against the amount owed by the Pool to the-6-

hospital for uncompe nsat ed care during the same period, thus resulting in either a net liability to the Pool or a net distrib ution fromthe Pool. Mass. Gen. Laws ch. 118G, § 18(d). The P ool, therefore, charges the hospitals' collective private

s ector revenue to pay for the hospitals' collective burden of uncompensatedcare, resulting, at bottom, in a net transfer of revenue from those hospitals that provide less uncompensated care (as a proportion of the hospital's total patient service charges) to those that provide more. Mass. Gen. Laws ch. 118G, §§ 18(d) and 18(h). To the extent a hospital receives reimbursement for free

care directly from Medicare, Medicaid or another source other than the Pool, the amount owedby all other hospitals is reduced because the amount of funding required from the Pool is reduced.

Furthermore, "disproportionate share hospitals" -- which

are hospitals that have "a payer mix where a minimum of sixty-three percent of the a cute hospital's gross patient service revenue is attributable to [certain government payments] and free care" -- and "non-disproportionate share hospitals" -- which do not hav e that payer mix -- receive different treatment under section 18. Mass. Gen. Laws ch. 118, § 1. In the event that the Pool does not have sufficient funds to reimburse all hospitals for all of the free

care provided, the amount paid from the Pool is weighted towards disproportionate share hospitals.-7- Pursuant to section 18, BRMC owes appellee a total of $1,702,714, representing the total amount due to the Pool for the following fiscal years:

a. 1996 - $1,580,506 b. 1997 - $ 60,639

c. 1998 - $ (77,744) credit d. 1999 - $ 139,313 The bankruptcy court concluded that the foregoing total Pool claim was entitled to priority as an excise tax, thus giving rise to the single issue presented in the current appeal. BRMC II , 264 B.R. at 229-30.

Present Contentions and the Opinions Below As it did below, the appellant now argues that the claim for the Pool assessment owed by BRMC is not for an "excise tax," thus not entitled to priority, under § 507(a)(8)(E) of t h e BankruptcyCode. In BRMC's view, the bankruptcy an d dist rict courts failed to engage in an adequate "functional analysis" of the nature of the statutory assessment underlying the Pool claim. BRMC contends that the Pool statute is in form a nd functio n merely a risk sharing plan imposed on acute hospitals -- a plan, that, insteadof being a tax, is really only a regulatory fee imposed for the privilege of operating an acute hospital in Massach use tts.

In response, appellee argues that the mandatory exaction placed by Massachusetts law upon the state's acute hospitals is a-8-

tax, having been legislatively established to raise monies to advance the public purpose of promoting continued access to acute hospital services by low-income uninsured and underinsured residents of Massachusetts.

In ruling that the Pool assessment is a tax, not a fee, the bankruptcy court similarly laid particular emp hasis upon the

exac tion's public purpose -- the promotion of hospital access to low-income uninsured and underinsured residents of Massachusetts. BRM C II , 264 B.R. at 225. That, coupled with its involuntary character and its other functional attributes, was found to differentiate it from a regulatory fee. Id. at 225-30.

In affirming the bankruptcy court's opinion, the district court stated from the bench that the bankruptcy court's reasoning was persuasive with "one possible exception." The court said the

mere fact that the Pool exaction was paid in order to serve the public welfare would not necessarily demonstrate it was an excise tax. Almost everything paid t o t he government, the court suggested, is intended for a public purpose. Here, however, the court found the exaction to be targeted specifically at paying for medical care for members of the public unable to pay for themselves. Unlike the case of a driver's license or ot her f ee, the money is not collected by the governm ent simply to confer a benefit on the payer or to pay itsel f fo r a government service renderedto the payer. "Functionally andunder the so-called6 The district court stated:

Black's Law Dictionary, the 7t h edition, page 585, defines an excise tax as a tax imposed on the manufacture, sale, or use of goods, or on an occupation or activity. Since the tax here is a tax that is levied as a result of operating the hospital and measured by a hospital's share of industry's revenues, it is an excise tax, I find, as opposed to a tax of some other sort. -9- Subu rban f actors, this is a tax," the district court said. Further, the tax is an excise, the court continued, citing a definition found in Black's Law Dictionary. 6 Discussion At issue is whether the assessments for the Uncompensated Care Pool imposed upon appellant under state law constitute "excise taxes" and, therefore, are entitled to priority under section 507(a) of the Bankruptcy Code. This is a federal question. City of New York v. Feiring , 313 U.S. 283, 285 (1941); State of New Jersey v. Anderso n , 203 U.S. 483, 491 (1906). The parties have stipulatedto the facts, leaving only the application of the statu te, a matter we examine on appeal de novo. Commonwealth of Mass. Div. of Employment and Training v. Boston Regional Med. Ctr., Inc. (In re Boston Reg'l Med. Ctr., Inc. ), 291 F.3d 111, 119 (2002) (" BRMC I ").

Provisions that grant prio rity in bankruptcy are to be narrowlyconstrued. See Cramer v. Mammoth Mart, Inc. (In re Mammoth Mart, Inc.) , 536 F.2d 950, 953 (1st Cir. 1976) (stating, "We begin with the premise that the theme of the Bankruptcy Act is-10-

'equalityof distribution.' 'If one is to be preferred over others, the purpose should be clear from the statute.'") (quoting Nathanson v. NLRB , 344 U.S. 25, 29 (1952)); see also Northwest Fin. Express, Inc. v. JWD, Inc. (In re Northwest Fin. Express, Inc.) , 950 F.2d 561, 563 (8th Cir. 1991).

Sectio n 507(a) sets forth in descending order nine categories of priority claims. Appellee's claim for priority status is stipulated to be based solely upon its being an "excise tax " unde r § 507(a)(8)(E), the eighth category. The relevant language reads as follows:

§ 507. Priorities. (a) The following expenses and claims have priority in the following order:

. . . (8) Eighth, allowed unsecured claims of governmental units, only to the extent that such claims are for --

. . . (E) an excise tax on -- (i) a transaction occurring before the date of the filing of the petition for which a return, if required, is last due, under applicable law or under any extension, after three years before the date of the filing of the petition; or (ii) if a return is not req uired , a transaction occurring during the three years immediatelypreceding the date of the filing of the petition; The parties do not question that appellee is a governmental unit, that it holds an unse curedclaim, that the claim relates only to transactions occurring before the date of the filing of the petition, and that the three-year limitation doe s not bar the-11-

claim. In dispute is only whether the claim is for an "excise tax." Unless so, the claim is without priority.

The Bankruptcy Code does not define "excise tax," nor is the legislative history informative on what the term means. BRMC I , 291 F . 3d at 120. We turn, therefore, to the relevant interpretive case law. See BRMC I , 291 F.3d at 120 (citing United Stat es v. Reorganized CF & I Fabricators of Utah, Inc. , 518 U.S. 213, 224 (1996)). The discussion in the cases has mostly concerned the meaning of the term "tax," with little atten tion paid to the term "excise." See, e.g. , CF & I , 518 U.S. at 224-26 (relying on precedent concerning definit ion of "tax" and concluding that the obligation at issue was a "penalty" rather than a "tax" and, therefore, that the obligation was not entitled to priority as an "excise tax"); Workers' Comp. Trust Fundv. Saunders , 234 B.R. 555, 560 n.8 (D. Mass. 1999); In re Park , 212 B.R. 430, 4 34 (D. M ass. 1997) (not ing t hat courts do not often engage in analysis of the "excise" portion of the phrase "excise tax" once an exaction has been determined to be a "tax").

The Supreme Court has defined taxes as "pecuniary burdens laidu pon individuals or their property, regardless of their consent, for the purpose of defraying the expenses of government or of undertakings authorized by it." Feiring , 313 U.S. at 285-88;

see also Anderson , 203 U.S. at 492; BRMC I , 291 F.3dat 120. This definition is sometimes called the " Feiring-Anderson " standard. CF-12-

& I , 518 U.S. at 222 n.6. The Court has added that courts should look beyond the statutory label of an exaction and evaluate its "actual effects" to determine whether it functions as either a tax

or else as some different kind of obligation, like a debt, fee, or pen alty. CF & I , 518 U.S. at 221, 224-25; see also BRMC I , 29 1 F.3d at 120.

The lower courts have often struggled in applying the Feiring-Anderson analysis to debts in a bankruptcy setting. Some

cou rts ha ve asked whether the tax characteristics of a stateimposedexaction outweigh its non-tax characteristics. In re ChateaugayCorp. , 153 B.R. 632, 641 (Bankr. S.D.N.Y. 1993); Bell v. Brown (In re Payne) , 27 B.R. 809, 817 (Bankr. D. Kan. 1983). Others have asked whether, regardless of non-tax characteristics, there are sufficient tax attributes to call the exaction a tax. See, e.g. , Waldo v. State of Montana Dept. of Labor and I ndustry Uninsured Employers Fund (In re Waldo) , 186 B.R. 118, 125 (Bankr. D. Montana) (1995) (stating, "[t]herefore since all elements of the [list of tax characteristics] are fully satisfied by the UEF's claimagainst Debtor, Debtor's obligation is in the nature of a tax for purposes of the Bankruptcy Code, sp ecific ally 11 U.S.C. § 507(a)(7)(E)."). Some courts have also sought to give particular andseparate weight to the Bankruptcy Cod e's principle of equal dis tri bution of the debtor's estate. See, e.g. , Workers' Comp. Trust Fundv. Saunders , 234 B.R. 555, 565-67 (D. Mass. 1999); see-13-

also Begier v. Internal Revenue Service , 496 U.S. 53, 58 (1990) (stating "Equality of distribution among creditors is a central policy of the Bankruptcy Code.").

Given the difficulty of applying Feiring-Anderson 's general definition of a tax to the unusual state exact ions sometimes encountered in a bankruptcy context, "c our ts have formulatedadditional criteria for determining when a governmental claimis entitled to priority treatment." In re United Healthcare Sys., Inc. , 282 B.R. 330, 335 (Bankr. D. N.J. 2002). Foremost among these has been the multi-factored test developed in the Ninth and Sixth Circuits known as the Lorber/Suburban II analysis. CountySanitation v. Lorber Indus. of Cal ifornia, Inc. (In re Lorber Indus. of California, Inc.) , 675 F.2d 1062, 1066 (9th Cir. 1982); Ohio Bureau of Workers' Comp. v. Yoder (In re Suburban Motor Freight, Inc.) , 36 F.3d 484, 488 (6th Cir. 1994) (" Suburban II "). The bankruptcy court below rel ied heavily upon a Massachusetts bankruptcydecision that applied Lorber/Suburban II to the Pool exaction here. BRMC II , 264 B.R. at 226 (citing In re Ludlow Hosp. Soc'y, Inc. , 216 B.R. at 318-20). The district court seemed largely content with that approach.

In Lorber , the Ninth Circuit held that, to qualify as a tax, an exaction must be: (1) an involuntary pecuniary burden, regardless of name, laidupon individuals or property; (2) imposed by, or under authority of the legislature; (3) for public purposes,-14-

including the purposes of defraying expenses of government or undertakings authorized by it; and (4) under the police or taxing power of the state. Lorber , 675 F.2d at 1066. In Suburban II , the Sixth Circuit expressed concern over the adequacy and possible onesidedness of Lorber 's "public purpose" prong, and it added two additional factors of its own, namely (5) whether the exaction is universallyapplied to all similarly situated entities and (6) whether the granting of priority status to a governmental claimant would prejudice private creditors with like claims. Suburban II , 36 F.3d at 488-89; see also BRMC I , 291 F.3d at 121 n.10 (sharing Suburban II court's concern that Lorber , by itself, was "incomplete andone-sided, and may lead to incorrect results.") (citing Subur ban II , 36 F.3d at 488-89; Indus. Comm'n v. Camilli (In re Camilli ), 94 F.3d 1330, 1333-34 (9th Cir. 199 6) (holding the Suburban cases consistent with Lorber and following the Sixth Circuit's reasoning)).

Debtor contends the Supreme Court implicitly rejected the Lorber/Suburban II standard in United States v. Reorganized CF & I Fabricators of Utah, Inc. , a case decidedafter the Ninth and Sixth Circuits' decisions in Lorber and Suburban II . In CF & I , the Court made no mention of Lorber or Suburban II . Rather, it emphasizedthe "continuing vitality of th e c ases in the Feiring line." CF & I , 518 U.S. at 222. But Lorber and Subur ban II undertook to apply the principles stated in the Feiring line, and-15-

we see nothing in CF & I that renders those circuit precedents no longer useful constructs. We faced this issue recently in BRMC I , holding that Lorber and the Suburb an c ases remained persuasive after CF & I . We said in BRMC I :

The BAP treated Anderson and [ Feiring ] on the one hand, and Lo rber and the two Suburban cases on the other, as developing different andapparently mutually exclusive tests. It then concluded that the Supreme Court had chosen the former test rather than the latter in CF & I . We consider Lorber andth e Su b urban cases to be refinements of the law generatedin Anderson and Feiring , which remain persuasive to although not binding on this court after CF & I . BRMC I , 291 F.3d at 121 n.10 (citations omitted). The Lorber/Suburban II approach therefore remains an available tool of analysis, although, of cou rse, subject at all times to the overarching authority of Feiring and Anderson . See, e.g. , San Juan Cellular v. Public Serv. Comm'n of Puerto Rico , 967 F.2d 683, 684- 687 (1st C ir. 19 92) (utilizing an approach that approximated the first three prongs of Lorber ); In re Ludlow Hosp. Soc'y, Inc ., 216 B.R. at 319 (stating, "This Court disagrees with the Trustee's assertion that [ San Juan Cellular ] represents an approach different fromwhat appears to be a well-settled line of cases commencing with Feiring . Notwithstanding the fact that San Juan Cellular was decidedunder the Tax Injunction Act, we find the thoughts expressedby the panel in San Juan Cellular virtually indistinguishable from those expressed by the Ninth and Sixth-16-

Circ uits i n Lorber and Suburban II , both decided under the Bankruptcy Code."). Many other courts have found Lorber/Suburban II to be consistent with, and useful in applying, the controlling Feiring-Anderson rationale. See In re Cassidy , 983 F.2d 161, 163 (10th Cir. 1992); Indus. Comm'n of Ariz. v. Camilli (In re Camilli) , 94 F.3d 1330, 1331-32 (9th Cir. 1996), cert. denied , 519 U.S. 1113 (1997); In re Park , 212 B.R. 430, 433-34 (Bankr. D. Mass. 1997); Sacred Heart Hosp. v. Penn. Dep't of Labor and Indus. (In re SacredHeart Hosp.) , 209 B.R. 650, 654-58 (E.D. Pa. 1 997); In re Chat eaugayCorp. , 177 B.R. at 637-38; In re S.N.A. Nut C o. , 18 8 B.R. 392, 393-94 (Bankr. N.D. Ill. 1995).

Accordingly, in considering the term "tax" here, we avail ourselves of the analytical approach set out in Lorber/Suburban II . In doing so, we find ourselves in essential agreement with the similar application of Lorber/Suburban II in In re Ludl ow Hosp. Soc'y, Inc . , as adopted by the bankruptcy court below. BRMC II , 264 B.R. at 226 (citing In re Ludlow Hosp. Soc'y, Inc. , 216 B.R. at 318-20). 1. Involuntary Burden

We ask first whether the Pool exaction was an involuntary pecuniaryburden. Lorber , 675 F.2d at 106 6. The Lorber court explainedthat an "involuntary pecuniary burden" was a "noncontractual obligation imposed by state statute upon taxpayers who hadnot consented to its imposition." Id. (citing Dungan v. Dept.-17-

of Agric., State of Calif. , 332 F.2d 793 (9th Cir. 1964), aff'g In

re Farmers Frozen Food Co. , 221 F. Supp. 385 (N.D. Cal. 1963)). The exaction here was imposed by statute; it was neither consented to, nor part of a contract. It was thus an involuntary pecuniary burden. Appellant argues that the assessment was nonetheless voluntarybecause each acute hospital could to some degree regulate its obligation to the Pool by choosing to provide more or less free

care. However, acute hospitals within the ambit of Mass. Gen. Laws ch. 118G, § 18 have no legal optio n but to pay or credit such assessments as are due. And even if appellant enlargedthe quantum of free care it provided, it could not b e certain to avoid liability. An acute hospital's liability is based, in part, upon the amount of free care that all other acute hospitals in the state have provided for that same year -- an unpredictable amount. The onlywayappellant could be certain to avoid sharing in the burdens of the Pool would be to cease all acute care operations. See In re Suburban Motor Freight , 156 B.R. 790, 792 (S.D . Ohio 1992) (concluding that the statute insurance scheme in favor of private insurance was involuntary since employers were not permitted to opt out and rejecting argument that scheme w as v oluntary because employers coul d cho ose not to be under it by refusing to conduct business in the state). By appellant's rationale, the federal income tax would not qualify as a "tax" because the taxpay er ma y7 W hile the Pool benefits disproportionate share hospitals b y

assisting with their reasonable financial requirements relative to caring for indigent patients, the statutoryformula does not allow hospitals to profit from Pool funds. Mass. Gen. Laws ch. 118G, §§ 1 & 18A. -18- volun tarilyminimize his or her tax liability by earning les s income or by taking advantage of deductions. See, e.g. , In re Sacred Heart Hosp . , 212 B.R. at 474 (stating, "All taxes may be avoided by a 'choice' of the taxpayer").

2. Exaction Imposed Under State's Authority Seco ndly, there is no dispute the Pool exaction is im po sedunder the authority of the Massachusetts legislature. Lorber , 675 F.2d at 1066.

3. Exaction Was For A Public Purpose Thirdly, the Pool exaction is for a public purpose, i.e. for the defraying of expenses or undertakings of a type commonly assumedby the government -- namely, those providi ng fre e health care to persons without the resources to pay for it. Lorber , 675 F.2dat 1066. There is no correlation between what a hospital pays andthe receipt in return of some particular service. Rather, the hospital is obliged, based on an equitable formula, to help fund hospita ls aro und the state that serve indigent members of the public, thus enabling Massachusetts to provide free care to residents. Disproportionate share hospitals rely on Pool funds to remain in business. 7 While acute hospi tal s are the exclusive recipients of these funds, the amount each receives relates to the8 It is true that "all money collectedby the Government goes

towards defraying its expenses, and is used for public purposes." Yoder v. Ohio Bureau of Workers' Comp. (In re Suburban Motor Freight, Inc.) , 998 F.2d 338, 341 (6th Cir. 1993). We need not be concernedhere, however, beca use the connection between the Pool payments and the recipient of free care is not tenuous -- the funds are given in direct relation to the amount of free care provided. Mass. Gen. Laws. ch. 118G, §§ 1 &18A. -19- amount of free public services each provides. Under the statutory scheme, individual hos pita ls serve as conduits through which the Pool channels funds to pay for the free care rendered to uninsured

or underinsured patients. This court stated in San Juan Cellular , 967 F.2d at 685, that "[c]ourts facing cases that lie in the middle of this spectrum have tended (sometimes with minor diffe renc es reflecting the different statutes at issue) to e mphasize the

revenu e 's ultimate use, . . . ." 8 The "ultimate use" here is a validgovernmental purpose -- one specifically i dent ified in the relevant Massachusetts statute. See Mass. Gen. Laws Ch. 118G, § 18. Appellant argues that the exaction does not defray costs of the Commonwealth because the Pool merely spreads the cost of

care among the acute hospitals. It further notes that the funds of the Pool are segregated from other state revenues and not used to fundother governmental operations of the Co mmon wealth of Massachusetts. According to appellant, the exaction is merely to defraycosts and provide benefits to hospitals participating in the programrather than to the Commonwealth andthe general public. In-20-

support of this argument, appellant analogizes the Pool to the Unemployment Compensation Fund in BRMC I . We disagree. In BRMC I , we concluded that the fund scheme was not a tax because, among ot her reasons, "The distinction between the payments required to sustain a government undertaking as a whole and those required merelyto compensate for the c osts i mposed by a particular participant is significant." 291 F.3d at 122. Here the payments to the Pool are geared to sustain, as a wh ole, th e stated governmental undertaking of providing access to health care for low-income uninsured and underinsured residents of the Commonwealth. Accordingly, thes e costs are distinguishable from the costs in BRMC I .

Nor is the Pool analogo us to the Unemployment Compensation Fund. To be sure, the Pool operates as a sort of risk sharing plan, but that does not preclude it from satisfying the public purpose requirement. See Williams v. Motley , 925 F.2d 741, 745 (4th Cir. 1991) (pool of funds to be distributed among all of the state's automobile insurers to compensate for uninsured drivers

was a tax, not a regulatory fee, because the pool's purpose was to benefit the general public by reducing the overall costs of uninsuredmotorist insurance coverage). We have expressed a willingness to declare such fund-type mechanisms "taxes." See San Juan Cellular Tel. Co. , 967 F.2d at 685 (stating, "Or, [a tax] may

serve such purposes indirectly by, for example, raising money-21-

placedin a special fund to help defray the agency's regulationrelated expenses.").

4. Pool Assessment ImposedUnder Police Or Taxing Power Fourthly, there is no dispute th at t he Pool assessment

was imposed pursuant to the Commonwealth's police or taxing power. Lorber , 675 F.2d at 1066.

5. Assessment Uniformly Applied To All Fifthly, the Pool assessment is uniformly appliedto all similarlysituated entities. S uburban II , 36 F.3d at 489. The debtor argues that since the Pool statute favors disproportionate share hospitals, it is not uniformly applied. It points out that hospitals providing a disproportionate amount of free care receive the m ost benefi t from the Pool. For example, after years where there is a deficiency in the P ool , those disproportionate share hospit al s with the greatest proportional requirement for Pool income have to pay less of a share into the Pool than do the other hospit al s. Also, in the event that the Pool does not have sufficient funds to reimburse all hospitals for all of the free

care provided, the amount paid from the Pool is weighted towards disproportionate share hospitals. However, all acute hospitals are subject to the s ame rules; all similarly situated hospitals are treatedalike. See , e.g. , Ludlow Hosp. Soc'y, Inc. , 216 B.R. at 320 (finding that Pool satisfied requirement that the assessment be

un ivers allyapplied to similarly situated entities because the-22-

obliga tion to participate in the Pool is "universally imposed on all acute hospitals in the Commonwealth"). Under the Pool assessment scheme, acute hospitals with the same financial profiles in anygiven year will have the same liability in the Pool. Boston Reg'l Med. Ctr. , 264 B.R . at 227. Under debtor's reasoning, the federal personal income tax, which treats people with different incomes differently, would not constitute a tax. We conclude the exaction here is applied uniformly to similarly situated entities.

6. No Prejudice To Private Creditors Lastly, under the final Lo r ber/Suburban II factor, we

con sider if granting priority to the Pool assessment wou l d prejudice private creditors with like claims. Suburban II , 36 F.3d at 489. The Suburban II court framed this sixth requirement because it was concerned that private actors who might, in some cases, perform the same function as the government would be given inferior prio rity. Suburban II , 36 F.3d at 488 (stating " If the State had an optional participation program, or allowed employers topurchase private li ability insurance, it would be unfair and without statutory justification to call state-collected premiums 'taxes' and put the Bureau ahead in line while leaving unpaid private insurers to languish along with the rest of the unsecured creditors. ") (quoting Suburban I , 998 F.2d at 342) (e mpha sis supplied) (citations omitted).-23- The bankruptcy court determined there were "no private credit ors w ith claims sufficiently similar to [appellee's] who would suffer any disadvantage by conferring priority treatment to

a Pool claim." We agree. Appellant points to no private creditor with a role comparable to appellee's. No private entity with power to require hospitals to contribute to a fund for the sake of preserving free care for the indigent has been identified. See Camilli , 94, F.3d at 1334. Instead, appellant seeks to switch the argument to the purported lack of injury to appellee if it does not receive priority as a creditor. According to appellant, appellee state agency (rather than the hospitals themselves) will suffer no loss in any event. Supposedly this indicat es the exa ction is a regulatoryfee. This argument, however, ignores the loss to the government's program, aimed at furnishing free hospital services to the public, if the assessment is unpaid. The argument, moreover, is beside the point; as it focuses on the purported lack of harm to the government creditor rather than on whether granting priority to the Pool assessment will prejudice a private c redito r. As appellant's argument has nothing to do with the government's position in relation to similarly situated private entities, it is not germane.

We conclude that the Pool assessment satisfies all of the Lorber/Suburban II criteria for a tax. Appellant, however, argues t hat a court must additionally inquire whether the non -ta x-24-

characteristics, particularly the regulatory fee characteristics, of the exaction outweigh the tax characteristics. Sin ce the Lorber/Suburban II criteria were developed to subsume that inquiry,

we arguably need not entertain i t. But be cause the exercise is illuminating, we take it on, fin ding that it leads to the same result as was reached under Lorber/Suburban II .

Regulatoryfees have been defined as "monies paid to the government incident to a voluntary act that bestows a benefit on the applicant, not shared by other members of society." N. Dakota Workers Comp. Bureau v. Voightman (In re Voightman) , 239 B.R. 380, 383 (8th Cir. 1999); see also Nat'l Cable Television Ass'n, Inc. v. UnitedStates , 415 U.S. 336, 340-41 (1974) (defining regulatory fees same way in non-bankruptcy context). Similarly, in San Juan Cellular , we approved of the a ppr oach utilized by other courts, which -- in distinguishing a tax from a regulatory fee -- focused

on the "revenue's ultimate use, asking whether it pro vides a general benefit to the p ubl ic, of a sort often financed by a general tax, or whether it provides a more narrow benefit[] to regulatedcompanies or defray[s] the agency's cost of regulation." 967 F.2d at 685. The ultimate design and use of the exaction here

are to help finance the provision of hospital care to people unable to pay for it the mse lves. While specialized and somewhat intricate, it finances a general ben efit to the public of a kind that could properly have been financed fr om mor e ordinary tax9 If we are to understand appellant's argument as a claim that

appellee is not a creditor, let alone an involuntary creditor, it nevertheless fails. Appellant has stipulatedthat it owes appellee $1,702,714. Accordingly, appellee is a creditor. 11 U.S.C. § 101 (defining "creditor," inter alia, as "entity that h as a c laim against the debtor that arose at the time of or before the order for relief concerning the debtor," and defining "cla im," inter alia, as a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured."). -25- revenues. Per contra, the Pool scheme is not aimed at bestowing a narrow benefit upon the payer hospital, nor defraying the cost of regulation. We conclude the exaction is a tax.

Appellant makes variou s othe r arguments not so far addressed. We briefly discuss some of them, finding none to have merit. Relying on BRMC I , appellant argues that since appellee, itself, does not have to pay any shortfall in the Pool, it is not

an involuntary creditor. 9 In BRMC I , we stated that "[o]ne of the important reasons for giving special priorit y in bankruptcy to taxes is that state and federal governments do not generally choose their tax debtors." 291 F.3d at 123. Taxing authorities receive prior it ytreatment because, inter alia, they are "involuntary creditor[s] of the debtor," who are unable to "take security in advance of the time that taxes become due." Id. In concluding that the exaction in BRMC I was not a tax, we noted the law would have allowed the Commonwealth to have required BRMC to post a suretyto secure its anticipated future liability to the fund at-26-

issue. Here, however, appellee has no authority to require securityin advance. Its remedies are ex post facto. Upon nonpayment by an acute hospital, appellee can only then either recalibrate the Pool in accordance with the statutory formula for the next year or choose, for exam ple, to refuse to renew the expired licenses of a defaulting acute hospital. The appellee cannot be said, therefore, to choose its debtors, nor is appellee other than an involuntary creditor. Id.

On a different tack, appellant contends that for an exaction to be a tax, the statute must provide the government with

an automatic lien to secure payment. The existence of an automatic lien provision was one of several attributes of a tax listed by the bankrupt cy court in Parkand Columbia Packing . However, the absence of such a lien was not said to prevent an exaction from being a tax. Here, appellee has different remedies at its disposal, including the ability to of fset p ayments due to the defaulting hospital's Medicaid claims. BRMC II , 264 B.R. at 225, 228 (citing Mass. Gen. Laws ch. 118G, § 18(g)). Appellant's argument in this r egard seems inconsistent with our statement in BRMC I that the absence of pre-default security for payment would militate in favor of finding a priority claim. BRMC I , 291 F.3dat 123. Appellant also argues that the amount of an exaction must be fixed by statute in order to qualify as a tax and that, sinc e-27-

the amount of the assessment here varies depending on the amount of free care given by all acute hospitals, the exaction is not sufficientlyfixed by statute. In support of this claim, appellant relies solely on In re Freymiller Trucking, Inc. . There, the BankruptcyCourt for the Western District of Oklahoma stated, "I am unable to think of a 'tax' . . . that is not based on a percentage of something, be it income, sales, corporate capital, or the value of pro perty, a g ift or inheritance." 194 B.R. 914, 915 (Bankr. W.D. Okla. 1996). In concluding that a tax assesses at a "fixed rate," the Freymiller court principally reli ed o n Anderson , in which the Supreme Court required that the amount of tax be fixed by statute. Id.

However, the Anderson court did not state that a tax must be based on a percentage, as the Freymiller court and appellant suggest. Rather, the Anderson court sought to deter mine w hether the debt hadarisen from a contract with the government as opposed to b eing a tax. 203 U.S. at 492-93. Since the govern ment ha d fixedthe amount of tax in a statute, the debtor was unable to negotiate the amount of the tax, andthe Court determined that the exaction was a tax rather than a contract with the government. Anderson , 203 U.S. at 493 (stating, "But this imposition is in no just sense a contract. The amount to be paid, fixed by the statute, is subject to control and change at the wi ll of the state . . . . The corporation is not con sultedin fixing the-28-

amount of the tax, and under the laws of New Jersey the charter of such corporations as this may be amended or repealed. The form of the col lection of taxes is left to the discretion of the taxing power . . . ."). Thus, the Cou rt 's use of the term "fixed by statute" seems to have meant merely that the exaction is based on

an amount determined by the government through statute. Id. Here, the amount of the exaction has been determined by a statutory formula, so the exaction satisfies the requirement.

Appellant also appeals to equity, arguing that granting priori ty t reatment to appellee would contravene the "fundamental bankruptcyprincipal of equality of distribution among creditors." See Boston Reg'l Med. Ctr. , 256 B.R. 2 12, 218 (Bankr. D. Mass. 2000) . In support of this argument, appellant reiterates the contention that the Commonweal th doe s not, itself, suffer a loss because any loss ultimately passes only to the acute ho spi tals. However, the hospitals are the instruments of the government's intendedservices to indigents: losse s to them impact adversely the public program, whic h the legislature and state government entrustedto appellee to administer. We can see no difference between the equities here and those that support the granting of priority to other taxes.

F inally, we ask whether this tax fits within the t er m "excise tax." 11 U.S.C. § 507(a)(8)(E). In another case, we have quotedBlack's Law Dictionary to the effect that, "[a]n excise tax-29-

is '[a] tax imposed on the manufacture, sale, or use of goods . .

. or an occupation or activity . . . .'" United Parcel Serv., Inc.

v. Flores-Galarza , 318 F.3d 323, 326 n.1 (1st Cir. 2003) (quoting Black's Law Dictionaryat 585 (7th ed. 1999)). The tax here can be saidto be levied on the Massachusetts acute hospital ind ust ry, using an overall formula to determine each hospital's share. Like the district court, we think it fits sufficiently within the broad definition of an excise. We hold appellee's claim is entitled to prioritytreatment as an "excise tax" pursuant to 11 U.S.C. § 507(a)(8)(E).

Affirmed.