IHC Health Plans, Inc. - Page 9

                                        - 9 -                                         
          recognition that HMOs were gaining in popularity.  IHC also                 
          decided to organize an affiliate to operate as an HMO in order to           
          gain practical experience, to attempt to realize its own cost               
          savings by enrolling IHC employees in the HMO, and to counter a             
          potential competitive threat posed by the combination of national           
          for-profit hospital chains and HMOs (and their perceived capacity           
          to direct large numbers of patients to Health Services’                     
          competitor hospitals).                                                      
               During 1983, IHC organized petitioner as a nonprofit                   
          affiliate.  IHC was petitioner’s sole corporate member.                     
          Petitioner’s articles of incorporation stated that petitioner               
               is  organized and shall be operated exclusively for                    
               charitable, educational or scientific purposes as described            
               in section 501(c)(3) * * *.                                            
                    In furtherance of such purposes, the Corporation may              
               develop and operate alternative health care delivery plans             
               and financing systems to provide cost-effective and high               
               quality care to participating employer groups and patients             
               including elderly and disadvantaged persons, and conduct               
               research and educational demonstration projects with various           
               health care delivery systems.                                          
          The articles also stated that petitioner’s business and affairs             
          would be conducted by a board of trustees elected by IHC and                
          composed of physicians, hospital personnel, and “buyer-                     
          employers”; i.e., employers offering petitioner’s health plans to           
          their employees.3  Petitioner was organized as a separate entity            

          3  Petitioner’s By-Laws stated in pertinent part:                           

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011