The opinion of the court was delivered by: Signed by Royce C. Lamberth, Chief Judge, on March 22, 2012.
Before the Court are the parties' cross-motions for summary judgment  . The plaintiff, an association of tax-exempt secondary schools and universities in Florida organized to pool risk and obtain insurance, seeks a declaratory judgment that it too is tax-exempt. Upon consideration of the motions, the objections and replies thereto, the applicable law, and the entire record herein, the Court will enter summary judgment in favor of the defendants.
The plaintiff, Florida Independent Colleges and Universities Risk Management Association, Inc. ("FICURMA"), is a Florida corporation that facilitates provision of insurance to its member organizations. FICURMA filed its articles of incorporation on December 10, 2003, pursuant to Fla. Stat. § 624.4623. That statute, passed in 2003, permits accredited, independent, non-profit colleges, universities, and secondary schools in Florida to form self-insurance funds "for the purpose of pooling and spreading liabilities of its group members in any property or casualty risk or surety insurance" and exempts those funds from the normal rules governing self-insurance funds, including the taxation of premiums, see id. §§ 624.4621, 624.509, 624.5092. FICURMA's articles of incorporation reflects its status as a Florida independent educational institution self-insurance fund, and prohibits the corporation from engaging in activities that would jeopardize its status as a federally tax-exempt corporation under 26 U.S.C. § 501(c)(3).
FICURMA purchases group insurance policies for the benefit of its member institutions and self-insures a certain amount of risk, the self-insured retention ("SIR"), which FICURMA compares to a deductible.*fn1 FICURMA asserts that its structure permits member institutions to obtain coverage at reduced rates, and to save on the administrative cost of handling insurance matters individually. Member contributions are set in accordance with each member's specific risk profile,*fn2 and contributions exactly cover the costs of the policies, the SIR, and administration; excess contributions are proportionally refunded. In addition to setting up the insurance scheme, FICURMA additionally administers the policies and supervises claims adjustment. Full membership is limited to members of the Independent Colleges and Universities of Florida, Inc.; FICURMA has alternated between eight and eleven full members, and has admitted two secondary schools as "associate members." Some former members have withdrawn from FICURMA, and other institutions have considered but refrained from joining FICURMA. The board of directors is comprised of one representative from each member institution.
FICURMA applied for tax-exempt status under § 501(c)(3) of the Internal Revenue Code on March 20, 2006. The IRS responded on January 19, 2007, stating that FICURMA would need to amend its articles of incorporation to specify that it is organized exclusively for exempt purposes, that the organization is a non-profit organization that will not engage substantially in politics, and that upon dissolution assets will be distributed for exempt purposes. The IRS further indicated that the articles of incorporation would need to include the following language: "In addition, said organization will operate for the benefit of institutions of higher learning or educational organizations in the State of Florida." FICURMA made the requested amendments on February 5, 2007 and sent notification of the amendments to the IRS on February 16, 2007. The Agency forwarded the application to the EO Rulings & Agreements section on or about May 18, 2007 because of the novel issues presented.
The IRS sent a request for further information on July 17, 2007. The IRS noted that under § 501(m)(1) a "commercial-type insurance company" is not exempt, and solicited details regarding FICURMA's insurance scheme, the relationship between members, the organization's minutes, and other information. FICURMA responded on September 14, 2007. FICURMA argued that it was not a "commercial-type insurance company" but rather a risk pool that purchased third-party insurance for its members at "substantially lower commercial rates" than its members could purchase individually; although it maintained its SIR, it purchased additional insurance from outside companies. FICURMA noted that if its members were all religious-affiliated institutions, it would qualify as tax-exempt under § 501(m)(3)(C). It also asserted that it qualified as exempt under § 501(n) as a charitable risk pool, although it had not complied with § 501(n)'s requirements for charitable start-up capitalization. In the response, FICURMA attached its bylaws, a sample third-party insurance contract, tax documents, minutes, and other information.
The IRS sent its initial adverse determination letter on May 27, 2008. The Agency concluded that FICURMA was organized to "seek the prevention or lessening of casualty and property losses for" its members through the creation of a risk management pool. Because FICURMA self-insured a certain level of risk, the IRS determined that FICURMA "provide[d] insurance for" its members and was barred from exemption by § 501(m)(1). Further, although FICURMA would otherwise qualify for exemption under § 501(n), which grants exemption to a "qualified charitable risk pool," it had failed to solicit the requisite charitable startup capital.*fn3
FICURMA filed its protest statement on June 25, 2008. It again argued that it did not provide commercial-type insurance but rather purchased insurance from other providers for its members; that it qualified as a charitable risk pool under § 501(n); and that it operated for exempt purposes under § 501(c)(3). FICURMA sent two supplements on September 16, 2008, and October 24, 2008, each of which provided thorough briefing of the relevant legal issues; the latter supplement attached various affidavits from officers at member institutions, legislative history of the Florida bill, and other information. The IRS issued its final adverse determination letter on July 14, 2009. FICURMA filed a complaint  in this Court against the IRS on October 13, 2009, seeking a declaratory judgment that FICURMA is eligible for tax-exempt status under the Code. The parties filed the instant motions for summary judgment on June 6 and 7, 2011.
Under Federal Rule of Civil Procedure 56(c), summary judgment is appropriate when the moving party demonstrates that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In determining whether a genuine issue of material fact exists, the trier of fact must view all facts, and all reasonable inferences drawn therefrom, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986).
FICURMA argues that the IRS incorrectly denied it tax exempt status. To show its eligibility, FICURMA must establish both that it is an "exempt organization" under 26 U.S.C. § 501(c)(3), and that § 501(m)(1)'s denial of exemption where a "substantial part" of a § 501(c)(3) organization's "activities consists of providing commercial-type insurance" does not apply. Assuming without deciding that the IRS erred in deeming FICURMA outside the ambit of § 501(c)(3), FICURMA would still need to demonstrate that it is not principally engaging in "providing commercial-type insurance."
First, FICURMA argues that it does not "provide" insurance to its members; it merely purchases insurance for its members. FICURMA notes that 81 percent of the funds solicited from members go to the purchase of group policies from commercial insurance companies, and that only 19 percent is retained for the SIR, which FICURMA compares to a normal deductible. And, FICURMA stresses, even if the SIR counts as the provision of insurance, it does not constitute a "substantial part" of its activities, which primarily involve the purchasing of outside group plans. Next, FICURMA argues that even if it is "providing" its members with insurance, that insurance is not "commercial-type insurance." FICURMA asserts that the term refers to insurance that is offered to the general public, as opposed to insurance limited to a specific group. Further, FICURMA stresses its small membership; its use of other entities to perform underwriting activities; its lack of advertising and marketing to the general public; and its treatment under Florida law. Accordingly, FICURMA alleges its activities fall outside § 501(m)(1)'s bar.
This contention is squarely contradicted by governing case law.*fn4 In particular, the Tax Court's ruling in Paratransit Ins. Corp. v. Commissioner demonstrates that § 501(m) bars tax exemption for FICURMA. Paratransit involved a non-profit association formed under California law to pool risk among its members, § 501(c)(3) organizations providing transportation as a social service to the elderly and the handicapped, among others. The Tax Court conducted an extensive survey of the legislative history behind § 501(m) and stressed a number of points. Most relevant here, the court noted a House report, which provided an example of the sort of institution precluded from exemption by § 501(m): "two or more unrelated tax-exempt organizations pooling funds in a separate entity to be used to satisfy malpractice claims against the organizations." 102 T.C. 745, 753 (T.C. 1994) (quotations omitted). Although the report referred to malpractice claims, it also made frequent reference to insurance generally, and the court found "no basis whatsoever to conclude that automobile liability insurance would ...