IHC Health Plans, Inc. - Page 37

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          enrollees.  Geisinger Health Plan v. Commissioner, T.C. Memo.               
               In Geisinger II, the United States Court of Appeals for the            
          Third Circuit reversed and remanded our decision in Geisinger I.            
          Geisinger Health Plan v. Commissioner, 985 F.2d 1210, 1218-1219             
          (3d Cir. 1993).  Although the Court of Appeals agreed with the              
          Court that an HMO seeking tax-exempt status must provide a                  
          community benefit, see id. at 1218-1219, the Court of Appeals               
          concluded that Geisinger HMO did not provide a primary benefit to           
          the community but, rather, provided benefits solely to its                  
          members.  The Court of Appeals, looking at the totality of the              
          circumstances, stated:                                                      
               GHP standing alone does not merit tax-exempt status                    
               under section 501(c)(3).  GHP cannot say that it                       
               provides any health care services itself.  Nor does it                 
               ensure that people who are not GHP subscribers have                    
               access to health care or information about health care.                
               According to the record, it neither conducts research                  
               nor offers educational programs, much less educational                 
               programs open to the public.  It benefits no one but                   
               its subscribers. [Id. at 1219.]                                        
          Further, the Court of Appeals attached little significance to               
          Geisinger HMO’s subsidized dues program, stating in pertinent               
                    The mere fact that a person need not pay to belong                
               does not necessarily mean that GHP, which provides                     
               services only to those who do belong, serves a public                  
               purpose which primarily benefits the community.  The                   
               community benefited is, in fact, limited to those who                  
               belong to GHP since the requirement of subscribership                  
               remains a condition precedent to any service.  Absent                  
               any additional indicia of a charitable purpose, this                   

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