MN Supreme Court sides with Perham Health in battle over tax status of its clinics – Detroit Lakes Tribune
The case went all the way to the Minnesota Supreme Court, but Perham Health prevailed in its legal battle with Otter Tail County over whether it should pay property taxes on its clinics in Perham, Ottertail and New York. Mills.
According to an estimate provided by Perham Health, the county must now reimburse them about $800,000 in taxes paid.
Otter Tail County classified the clinics as commercial and assessed property taxes on them from 2014 to 2018, after determining that the state tax exemption for hospital districts was only available to hospitals and not for clinics.
“The Minnesota Supreme Court released its decision in Perham Hospital District v. Otter Tail County last week,” Otter Tail County Attorney Michele Eldien said in an email. mail. (Hospital) Neighborhood. The parties disagreed on the scope of each exemption.”
She added that “the court clarified Minn. Stat. 447.31, subd. 6 and determined that the three clinics met the criteria for exemption due to their relationship with the district. The court did not analyze the other exemptions The county is in the process of reimbursing taxes that the (hospital) district previously paid. The impact this decision will have on local governments and individual ratepayers is difficult to determine. Whether ratepayers will see an increase in the property tax will depend on market conditions and the financial condition of each government unit involved.
The Perham Health Hospital District, which includes a hospital in Perham and the three clinics, first successfully argued in tax court that its clinics were tax-exempt under state law.
The county then asked the state Supreme Court to review the tax court’s decision.
On January 24, the state Supreme Court sided with Perham Health, agreeing with the tax court that the Hospital District uses the clinics “to improve and manage Perham Hospital,” and that it operates clinics within the scope of his hospital, as required by law. state tax law.
“Perham Health is pleased that the Minnesota Supreme Court upheld the decision of the Minnesota Tax Court,” the health care organization said in a written statement provided to the newspaper. “Perham Health and Otter Tail County have a good working relationship. The disparity has resulted in a difference in interpretation of Minnesota law…Perham Health is pleased to have a resolution and to have this issue behind we.”
Perham Health was established in 1976 as a not-for-profit public health organization to provide healthcare to Perham and the rural communities near Perham. He then started with just the hospital and bought the three clinics in 2011 as part of his hospital district.
In 2012 the district opened a new hospital in Perham and moved the clinic from Perham inland.
The 25-bed critical access hospital provides a full continuum of care on an annual basis to more than 900 inpatients, 6,500 emergency room patients and 40,000 clinic visits, according to court records.
The tax tribunal found that the Perham Hospital District was using the clinics to improve and run Perham Hospital as required by tax exempt status. And the Minnesota Supreme Court found that the tax court did not err in its findings.
Otter Tail County, relying on dictionary definitions and licensing requirements for hospitals, argued that hospitals and clinics are separate and distinct establishments, based on the different health services provided by these establishments. But the court rejected this argument.
“The Tax Court credited the testimony of the CEO of the hospital (Chuck Hofius), who explained that the clinics were critical to the hospital’s ability to attract and retain physicians to provide care and patient services, and to attract patients,” the Supreme Court said in its 17-page affirmation.
‘The record establishes that the clinics were operated to improve and run Perham Hospital’, and should therefore not be taxed, the court ruled.