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enrollees. Geisinger Health Plan v. Commissioner, T.C. Memo.
1991-649.
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
part:
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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