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No. 88-196
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988

THE DEPARTMENT OF REVENUE OF THE
STATE OF MONTANA,

Petitioner and Respondent,
-vs-

GALLATIN OUTPATIENT CLINIC, INC.,
INSUPANCE COMPANY,

Respondent and Appel-lant.

APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Thomas A. Olson, Judge presiding.

COUNSEL OF RECORD: For Appellant: Dorsey & Whitney; Stephen D. Bell, Billings, Montana For Respondent : Larry Schuster, Dept. of Revenue, Helena, Montana
Submitted on Briefs: Aug. 26, 1988
~~~id~d:

November 1, 1988

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Filed: T-'
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Clerk

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Mr. Justice John C. Sheehy delivered the Opinion of the
Court..

The District Court, Eighteenth Judicial District,
Gallatin County, determined that Gallatin Outpatient Clinic,
Inc. was not a "hospital," and therefore its personal
property was not exempt from state taxation. In so holding
the District Court reversed the decision of the State Tax
Appeal Board (STAB) which had concluded that Gallatin
Outpatient Clinic was a hospital within the personal property
exemption statute, and that the personal property of the
Gallatin Outpatient Clinic was being used for hospital
purposes. The Outpatient Clinic has appealed the decision of
the District Court to this Court. We affirm the District
Court, holding that Gallatin Outpatient Clinic is not a
"hospital" which would be entitled to a personal property tax
exemption.

Gallatin Outpatient Clinic also known as Same Day
Surgery Center (Clinic) filed an application for a property
tax exemption with the property assessment division of the
Montana Department of R.evenue (Department). The exemption
was denied on April 14, 1986. The Clinic appealed the
Department's decision to the State Tax Appeal Board.

On May 22, 1986, the Gallatin County Treasurer assessed
the Clinic $11,299.54 as taxes on the Clinic's personal
property. The Clinic paid the sum to the Gallatin County
Treasurer under protest.

In the contested proceedings before STAB, after a
hearing and a tour of Gallatin Outpatient Clinic by members
of STAB, that agency made findings of fact and conclusions of
law. It found that the Clinic was a corporation organized
under the laws of the state of Montana and that its primary

business was to provide outpatient surgical services and
nonsurgical procedures to patients in the Bozeman, Montana
area. It was licensed by the Montana Department of Health
and Environmental Sciences.

STAB further found that the purpose of the Clinic was to
lower medical costs and provide high quality medical services
for patients whose surgeries did not require an overnight
stay. It found the physical facilities of the Clinic were
essentially identical to those found in any outpatient
surgery area In any hospital. It also determined that the
personal property which was the subject of the appeal before
STAB included anesthesia equipment, oxygen and carbon dioxide
equipment, a "crash cart" available to resuscitate patients,
suction machines, eye surgery laser, gurneys, sterilization
equipment for surgical instruments, special surgical
lighting, and other property used for surgical and medical
procedures. It determined that the same kind of equipment
would be found in the outpatient surgical area of any
hospital. The Clinic's nonsurgical procedures included
chemotherapy, transfusions and dialysis. STAB further found
that the Clinic's only source of income was its billings to
patients and that if its tax-exemption were denied, the
Clinic would have to increase patient charges.

Thereupon, STAB made a conclusion of law that Gallatin Outpatient Clinic was a "hospital" within the meaning of

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Montana Law