- 34 -
Rev. Rul. 69-545, supra. Specifically, Sound Health Association
adopted a plan to accept contributions for the purpose of
subsidizing membership for those who could not otherwise afford
to pay the full amount of monthly dues. Further, Sound Health
Association’s practice of offering membership to the public at
large demonstrated that the class of persons eligible to benefit
from the organization’s activities was practically unlimited.
Sound Health Association v. Commissioner, supra at 184-185.
We rejected the Commissioner’s argument that Sound Health
Association provided an unwarranted private benefit to its
members. We reasoned that, like the hospital deemed exempt in
Rev. Rul. 69-545, supra, which (except in emergency cases)
limited its treatment to paying patients, Sound Health
Association was permitted to restrict its services to paying
members. Sound Health Association v. Commissioner, supra at 186-
187.
The tax-exempt status of an HMO arose again in Geisinger
Health Plan v. Commissioner, T.C. Memo. 1991-649 (Geisinger I),
revd. and remanded 985 F.2d 1210 (3d Cir. 1993) (Geisinger II),
opinion on remand 100 T.C. 394 (1993) (Geisinger III), affd. 30
F.3d 494 (3d Cir. 1994) (Geisinger IV). Geisinger HMO, like
petitioner in the instant case, was part of a group of related
organizations forming a large health care network (the Geisinger
system).
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