Skaggs Community Hospital Association v. Chuck Pennel, Assessor Taney County

November 22nd, 2016


                      Complainant, )
v. ) Appeal No. 15-89509
                      Respondent. )




Decision of the County Board of Equalization sustaining the assessment made by the Assessor is SET ASIDE.  Complainant presented substantial and persuasive evidence establishing the property is exempt under Article X, Section 6 of the Missouri Constitution.


Complainant (Skaggs) contests the taxability of the subject property.


            The Complainant filed the following Exhibits which were admitted without objection

A Decree of Circuit Court
B Decree of Circuit Court
C Petition for Approval of Articles of Acceptance
D Certificate of Acceptance by Secretary of State
E Articles of Amendment to the Articles of Acceptance
F Bylaws of Skaggs Community Hospital Association
G Certificate of Good Standing
H IRS Correspondence
I IRS Correspondence
J Financial Information
K Property Uses
L BOE Correspondence
M Taney County Application of Real Property Tax Exemption
N BOE Decision
O Complaint for Review of Assessment
P Statement of Profit and Loss for Period Ending 9/30/14
Q Statement of Profit and Loss for Period Ending 4/30/15
R Composition of Board of Directors


The Respondent filed no exhibits.

The parties agreed to submit the appeal solely upon the submission of the Complainant’s Exhibits.


  1. Jurisdiction. Jurisdiction over this appeal is proper.  Complainant timely appealed to the State Tax Commission from the decision of the County Board of Equalization.  The appeal was submitted on the record by agreement of the parties.
  2. Identification of Subject Property. The subject property is located at 121 Cahill Road, Branson, Missouri.  The property is identified by map parcel number 08-9.-32-001-004-001.001.
  3. Description of Subject Property   The subject property is a one-story brick building with a walkout basement and parking lot located on the Real Property, which houses what is generally referred to as the “Ortho-Neuro” building.  The building is used to house hospital clinics and departments.  Skaggs provides health care services on this Real Property, including physical therapy, drug screenings for new employees, orthopedic and MRI services, pain and neurology services, and rheumatology services.  For example, on the basement floor of the building, Skaggs provides rehabilitation and therapy programs.  The first floor houses an Occupational Medicine hospital clinic, which provides care for all occupational and work-related healthcare needs.  This includes injury and illness prevention and management services which are designed to significantly reduce workers’ compensation costs and improve the health of employees.  In addition, the Rheumatology hospital clinic provides the diagnosis and treatment of arthritis and other diseases of the joints, muscles and bones.  Also on the first floor is Pain and Neurology, a hospital clinic, which includes providing treatment for disorders and injuries that affect the brain and nervous system, including stroke, Alzheimer’s disease, dementia, Parkinson’s disease, epilepsy, and chronic headaches and migraines.  The Pain Center clinic offers the evaluation, diagnosis, and interventional treatment for the management of pain and related disorders.  Finally, the Skaggs Orthopedic clinic is located on the first floor, as well as the MRI department.

The Articles of Acceptance provide that Skaggs is organized exclusively for charitable purposes, specifically to establish, among other things, a hospital in Branson, Missouri.  Furthermore, the Articles provide that Skaggs is:

“formed for the purpose of purchasing a location of the site of [a] hospital.  And also for the further purpose of building, erecting, maintaining, operating and supervising the carrying on of a first class hospital for the care, welfare and benefit of the patients, and where the best medical and surgical ministration of the sick, infirmed, and disabled may be obtained.  And finally for the purpose of fighting and combating disease of the human mind and body and doing all things or anything legally necessary in the operation and supervision of said hospital, in a first class manner, to the best interest and care of those entering its portal.”


The Real Property was purchased by Skaggs on February 28, 2007.  Skaggs is exempt from federal income tax under § 501(c)(3). Contributions made to Skaggs are tax deductible.  Skaggs received exempt status as a charitable organization from the State of Missouri for Sales and Use Tax on purchases and sales under section 144.040.2, RSMo.  (Direct Testimony of David Strong, Exhibit C, Exhibit H, Exhibit I, Exhibit J, Form 990 and Exhibit K).

  1. Ownership of the Property   Complainant Skaggs is organized under the Missouri Nonprofit Corporation Act, and is a not-for-profit corporation that owns and operates a hospital and clinics in Southwest Missouri.  Skaggs was originally incorporated for the construction and operation of a hospital for the care, welfare, and benefit of its patients.
  2. Use of the Property   Skaggs purpose is to improve the health of the communities served by Skaggs through quality health care, education, and research.  An indefinite number of individuals benefit from the services provided by Skaggs.  Those individuals include members of local and surrounding communities, without regard to race, religion, age, sex, or national origin.  Skaggs also has an indigent care policy for individuals that need health care services but that cannot afford them.  The Real Property is occupied exclusively by Skaggs.  No part of the Real Property is used by persons or organizations other than Skaggs.  Furthermore, the Real Property is not held or used as an investment.  No portion of the Real Property is leased or rented to other parties or organizations.  (Direct Testimony of David Strong, Exhibit A, Exhibit B, Exhibit C, Exhibit D, Exhibit E and Exhibit F).
  3. Operation of the Property No part of the net earnings or other assets of Skaggs inure to the benefit of, or are distributable to any director, officer, contributor, or other private person with a direct or indirect, personal or private interest in the activities of Skaggs, except for reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth in the Articles of Acceptance.  Skaggs does not carry on any other activities not permitted to be carried on by a corporation exempt from federal income taxation under § 501(c)(3) of the Internal Revenue Code of 1986, as amended, or of a corporation, contributions to which are deductible under § 170(c)(2) of the Internal Revenue Code of 1986, as amended.

In the event of a dissolution of Skaggs, the assets are to be distributed to the Skaggs Foundation, or for one or more exempt purposes within the meaning of § 501(c)(3) of the Internal Revenue Code, or shall be distributed to the federal government, or to any state or local government, for a public purpose.  Skaggs accepts Medicaid, Medicare, insurance or private payment as payment for its services.  Skaggs is designated by Medicare as a sole community hospital and as such, is the sole source of hospital care within a 35-mile radius.  Serving patients with government health benefits, such as Medicare, is a component of the community benefit standard that tax-exempt hospitals are held to.  In addition, Skaggs screens all self-pay patients for Medicaid.  If an individual does not qualify, they are directed to speak with a financial counsel who screens for charity care/indigent care.  By accepting Medicaid and Medicare, Skaggs is available to people who could not otherwise afford health care.  In the case of Medicaid and Medicare, the amount of money the patient must pay is determined by Medicaid or Medicare, not by Skaggs.

Skaggs has an indigent care policy.  Through its indigent care policy, Skaggs provides free or discounted health care services to those in the community who are unable to afford treatment based partially on federal poverty household income guidelines.  Skaggs has a process in place to identify financially or medically indigent patients, qualify them for charity care according to written guidelines, and provide quality health care.  Skaggs uses point of service individuals, outside agencies and vendors, and financial counselors to identify financially and medically indigent individuals.  Financial assistance availability is proactively communicated to uninsured patients by customer service staff and other means.  In the event that a patient is determined to have no means of paying the amount indicated as their responsibility due to extenuating circumstances, consideration may be given to waiving deductibles and/or increasing the discount amount up to a 100% discount of the patient portion.  Skaggs attempts to collect payment for services from those that have the ability to pay.  By collecting payment from those who can afford to pay, Skaggs is able to continue providing health care services to the community at large.  However, Skaggs does not charge interest on any balance remaining after applying financial assistance discounts.  These services are provided in rural areas where there would be a shortage of quality medical care without the services.  Skaggs continues to provide these services as a benefit to the community despite knowing that financial shortfalls will be sustained.   (Direct Testimony of David Strong, Exhibit C, Exhibit D, Exhibit E,  Exhibit F, Exhibit J and Exhibit M).

  1. Taxation of the Property.   The evidence presented as to the current use of the property establishes that the property should be exempt from taxation



The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.  The Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the Board of Equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.  Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo

Presumption In Appeal

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.  Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).   This presumption is a rebuttable rather than a conclusive presumption.   The presumption of correct assessment is rebutted when the taxpayer presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse, supra.   Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.  The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.   Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

Issuance of Decision Absent Evidentiary Hearing

            The Hearing Officer, after affording the parties reasonable opportunity for fair hearing, shall issue a decision and order affirming, modifying or reversing the determination of the Board of Equalization, correcting any assessment which is unlawful, unfair, improper, arbitrary or capricious.  Section 138.431.5 RSMo; 12 CSR 30-3.080 (2).   Both parties agreed to submit this case upon the record.  The filing of exhibits and written direct testimony establishes the basis upon which opportunity for an evidentiary hearing can be held.  The Complainant has the burden to present substantial and persuasive evidence.  The Hearing Officer considered all the exhibits and written direct testimony and then proceeded to ascertain if said exhibits and written direct testimony met the standard of substantial and persuasive evidence to establish the market value of the property.


Tax exemptions are not favored in the law and statutes granting exemptions are to be strictly, yet reasonably, construed against the one claiming the exemption. Missouri Church of Scientology v. State Tax Commission, 560 S.W.2d 837, 844 (Mo. Banc 1987), State ex rel. Union Electric Co. v. Goldberg, 578 SW2d 921,923 (Mo. Banc 1979).  The legal authority for property tax exemptions is located in Article X, Section 6, of the Missouri Constitution and at Section 137.100, RSMo.  The exemptions include:

…all property, real and personal, not held for private or corporate profit and used exclusively for religious worship, for schools and colleges, for purposes purely charitable, or for agricultural and horticultural societies…. Article X, Section 6, of the Missouri Constitution.


Charitable Exemption

The legal test for a charitable exemption is whether:

(1)        The property is dedicated unconditionally to the charitable activity;

  • The property is owned and operated on a not for profit basis; and
  • The dominant use of the property is for the benefit of an indefinite number of people and directly or indirectly benefits society generally. Franciscan Tertiary Province of Missouri v. State Tax Commission, 566 S.W.2d 213, 224 (Mo Banc 1978); Twitty v. State Tax Commission, 896 S.W.2d 680, 684 (Mo. App. S.D. 1995).


Owner and Operated on a Not-for-Profit basis

The property must be owned and operated on a not-for-profit basis. The property “must be dedicated unconditionally to the charitable activity in such a way that there will be no profit, presently or prospectively, to individuals or corporations. Any gain achieved in use of the building must be devoted to achievement of the charitable objectives of the project.” Franciscan Tertiary Province v. State Tax Commission, 566 S.W.2d 213, at 224 (Mo. banc 1978).  This does not mean that the property or charity cannot operate “in the black”.

Actual and Regular Use for Charitable Purpose

In order for a property to be exempt from taxation for state, county or local purposes, the property must be actually and regularly used exclusively for a charitable purpose, as charity is defined by Salvation Army v. Hoehn, 188 S.W.2d 826 (Mo. banc 1945). “Charity” is therein defined as “. . . a gift, to be applied consistently with existing laws, for the benefit of an indefinite number of persons, either by bringing their hearts under the influence of education or religion, by relieving their bodies of disease, suffering or constraint, by assisting them to establish themselves for life, or by erecting or maintaining the public buildings or works or otherwise lessening the burdens of government.” Salvation Army at 830.  Exemption rests on the use of the property not merely charitable character of the owner.  The phrase “regularly used exclusively” has been interpreted to mean the primary inherent or dominate use of the property as opposed to a mere secondary and incidental use.

Dedicated Unconditionally to the Charitable Activity

The property must be used such that it is available to an indefinite group of people, rendered at cost or less, which brings their hearts under the influence of education or lessens the burden of government.  The public nature of a charity is diminished when it is systematically denied to those who need and can least afford the service.


Jackson County v. State Tax Commission, 521 S.W.2d 378 (Mo. banc 1975),  held that a charitable use includes a hospital so long as it is operated in a not-for-profit manner and is available to rich and poor alike. A hospital which meets the test is a charity.  No further proof that a certain number or percentage of indigent patients are served is necessary. In Jackson County, there was no evidence that anyone had been denied admission to the hospital because of inability to pay.



Complainant (Skaggs) provides rehabilitation and therapy programs, occupational medicine care; rheumatology services; neurological diagnosis and treatment; pain management evaluation, diagnosis and treatment; orthopedic care; and MRI services.  Such leads to  rehabilitating individuals with injuries so that they can lead productive lives; assisting individuals with work-related healthcare needs; preventing injuries and illnesses; diagnosing and treating arthritis and other diseases of the joints, muscles and bones; providing treatment for neurological diseases and disorders, including stroke, Alzheimer’s disease, dementia, Parkinson’s disease, epilepsy, chronic headaches and migraines; providing pain management services; as well as orthopedic care and MRI services.  The provision of medical services in a clinic or hospital setting clearly qualifies as an appropriate use under the Salvation Army definition in that medical treatment directly benefits people by relieving their bodies of disease, suffering, or constraint.  See St. John’s Health System v. Strahan, Appeal No. 00-89501 and 00-89502.

Based upon the facts presented, Complainant submitted substantial and persuasive evidence that it fulfills the requirements as set forth above and in Affiliated Medical Transport, Inc. v. State Tax Comm’n, 755 S.W.2d 646, 650 (Mo. App. E.D. 1988) and Callaway Community Hospital v. Craighead, 759 S.W.2d 253, 256 (Mo. App. W.D. 1988).  There was no evidence that anyone had been denied admission to the medical facilities because of the inability to pay.  No evidence that any non-hospital areas did not dovetail or rounded out the charitable use.  Lastly, there was no evidence of profit to individuals or corporations.



The determination of taxability of the subject property as determined by the BOE is SET ASIDE.   The subject property is determined to be exempt.

Application for Review

A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision.  The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous.  Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.

            Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, RSMo

Disputed Taxes

The Collector of Taney County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.

Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.  Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.

SO ORDERED November 22, 2016.



John Treu

Senior Hearing Officer


Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 22nd day of November, 2016, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.;;

Jacklyn Wood

Legal Coordinator


[1] Substantial portions of the Findings of Fact are Direct Quotes from Complainant’s Brief or paraphrased from such.