corruption

SUTTER COAST HOSPITAL’S LOOPHOLE, “WELFARE EXEMPT”

By Linda Sutter – March 10, 2016 –  The meeting at Del Norte County Health Care District lead me to Del Norte County court house, where I spent three days reading six volumes of legal files regarding the two entities.

What is Welfare Exempt?

Welfare exempt is utilized on non-profit hospitals so county assessors cannot tax them for property taxes. In other words Sutter Coast Hospital has been tax exempt for more than a decade. However, upon reading the rules of Welfare Exemption, it was discovered, that Sutter Coast Hospital, under penalty of perjury, stated in their annual Board of Equalization form for the last ten years that they had no businesses operating from their hospital for profit under Internal Revenue Code 512.

In order to understand Internal Revenue Code 512, you have to know what a reference laboratory is.  A reference Laboratory is one where outside patients come to get their blood drawn or any other lab test conducted. Sutter Coast Hospital profits from these laboratory test. However, in a rural setting 512 states it is ok to have a reference laboratory if there are no other laboratories within a reasonable distance that conduct these tests. Oops, I guess Sutter Coast Hospital forgot about the internal medicine commercial laboratory here in town also conducts the same laboratory test as the hospital.

The Sutter Coast hospital also has the radiology group, the cat scan, the MRI, and physical therapy. All separate businesses that make bit profits under the welfare exempt non-profit status. Big No No!

Under the penalty of perjury the Sutter Coast Hospital directed staff to check box number 9 on the Board of Equalization form 267 that states there are no businesses within the hospital that generate profits. This box was checked over a course of 10 years.

This was brought to the attention of our newly elected County Assessor Jennifer Perry, who is currently investigating the possibility that the Sutter Coast Hospital may owe money in back taxes for operating businesses within the hospital under the false pretense that they were welfare exempt non-profit hospital, when in fact they were operating businesses for profit within a non-profit hospital.

According to Doctor Duncan, this could mount up to approximately $2 million that Sutter Coast may have to pay back to the Del Norte County Tax Assessor’s office, not to mention a $500,000.00 potential fine on the Sutter Coast Hospital Corporation.

There are many factors involving this particular case and in time we should have the answers back from the state who oversees the licensing for non-profit organizations.

What should also be brought before the public’s eye is how much the Doctor Duncan’s have contributed in  out-of-pocket expenses for legal representation for the benefit of this community that they love so much. $30,000!

They want our community to have the best affordable real medical care that is not regionalized or of critical access.

One Response to SUTTER COAST HOSPITAL’S LOOPHOLE, “WELFARE EXEMPT”

  1. Linda sutter Reply

    March 10, 2016 at 1:01 pm

    I forgot to mention even if SCH slides by the Internal Revenue code 512, they will be hard pressed in explaining the 10% over operational cost rule. Especially when they made $10.8 million in profit in 2014. To survive the 10% rule Sutter’s operational cost would need to have been in excess of $100 million dollars. I think not.

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