MEMORIAL HERMANN ACCOUNTABLE CARE ORGANIZATION, Appellant, versus COMMISSIONER OF INTERNAL REVENUE, Appellee., 120 F.4th 215

Summary

HOLDINGS: [1]-In a case where the appellant appealed from a judgment which rejected the appellant’s claim that it was an organization described in 26 U.S.C.S. § 501(c)(4) and exempt from federal income tax, the court declined to disturb the judgment of the tax court on the ground that it applied the incorrect legal standard as the court applied a substantial nonexempt purpose test in determining whether the appellant qualified as an organization operated exclusively for the promotion of social welfare. Therefore, it concluded that the appellant’s non- Medicare Shared Savings Program activities primarily benefited its commercial payor and healthcare provider participants, rather than the public, and constituted a substantial nonexempt purpose.