IHC Health Plans, Inc. v. Commissioner of Internal Revenue
United States Court of Appeals for the Tenth Circuit
325 F.3d 1188 (2003)
IHC Health Services (Health Services), a tax-exempt nonprofit operating 22 hospitals, formed three separate entities, IHC Health Plans, IHC Care, and IHC Group (plaintiffs), to operate health maintenance organizations providing insurance rather than direct medical services; the Commissioner (defendant) denied all three entities tax-exempt status and retroactively revoked Health Services' own exemption. The entities sued in Tax Court for a declaratory judgment reversing the Commissioner, the Tax Court denied relief, and the entities appealed.
Whether a separately incorporated entity may qualify for tax-exempt status under 26 U.S.C. section 501(c)(3) if its activities are integral to an exempt affiliate's activities, and whether a health care corporation must operate primarily for a charitable purpose serving the whole community plus an additional public benefit to obtain that status.