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, 

-vsGALLATIN 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 

0 

Filed: T-' 

Submitted on Briefs: Aug. 26, 1988 

~~~id~d: November 1, 1988 

--_-- w 

-i 

i 

Clerk -/ 
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 § 

15-6-201(1) (c), MCA; that the use of the personal property by 

the Clinic fell within the purpose of exempting personal 

property for hospitals; and that therefore the personal 

property of the Clinic was exempt from taxation under Montana 

law. 

The Department of Revenue appealed the decision of STAB 

to the District Court. In mixed findings of fact and 

conclusions of law, the District Court determined: 
Section 15-6-201 (1) (c) , MCA, exempts from taxation 

property used exclusively for hospitals. The 1987 

legislature substituted "non-profit health care 

facilities for hospitals." The record clearly 

establishes that respondent does not operate a 

hospital. While it may perform minor surgeries, it 

did not have x-ray, laboratory, rehabilitation, 

major surgery, in-patient, obstetrical, 

pharmacological, blood banking, full time nursing 

staff, or emergency room facilities. As the name 

implies, the facilities in question are for minor 

"same-day" surgeries. 

Clearly, the Same Day Surgery Center is a profit 

enterprise, not a hospital. It is closer to a 

doctor's office than to a full-service hospital. 

We do not permit doctors to exempt their own 

equipment, even though it is used in a 

hospital-like fashion. I do not believe that the 

legislature intended to apply the exemption for a 

mutually owned service facility. 

Thereupon, the court entered its order reversing the 

decision of STAB and directed that taxes be levied against 

the personal property for the years 1986 and 1987. 

On appeal to this Court, the Clinic propounds these 

issues: (1) Does substantial credible evidence support 

STAB'S finding that the Clinic's property was used 

exclusively for hospital purposes? 2) Did STAB correctly 

hold that the definition of "hospital" in S 50-5-101(23), 

MCA, (1985) does not control whether the Clinic is a hospital 

for the purposes of tax exemption? (3) Did STAB correctly 

focus on how the personal property was used and the 

legislative intent with respect to that use? and (4) Does 

the surgery center have to be a non-profit organization to 

qualify for the tax exemption? 

In response on appeal, the Department of Revenue 

contends that the District Court properly reversed STAB under 

the applicable law; that. the Clinic is not a hospital and so 
not entitled to the personal property tax exemption; and that 

the legislative intent with respect to tax exemptions did not 

include property used by outpatient clinics. 

The District Court correctly divined that the principal 

issue came down to whether the personal property must be 

used in a hospital to be exempt, or merely be put to use for 

hospital-like purposes, as the Clinic urged. We hold that 

under the applicable statutes, only hospitals are entitled to 

the property tax-exemption, and that the Clinic is not a 

hospital. 

The statute in effect at the time is clear and brooks no 

argument : 

Section 15-6-201. Exempt categories. (1) The 

following categories are exempt from taxation: 

(c) Property used exclusively for agricultural and 

horticultural societies, for educational purposes, 

and. for hospitals. (Emphasis supplied.) 

In Montana Deaconess Hospital v. Cascade County (1974) , 

164 Mont. 256, 260, 521 P.2d 203, 205 in construing a nearly 

identical statute, this Court adhered to the well accepted 

principle of statutory construction that the function of this 

Court is to interpret the intention of the legislature, if at 

all possible, from the plain meaning of the words used, and 

if the meaning of the statute can be determined from the 

language used, this Court is not at liberty to add or detract 

language from the statute in question. The property 

tax-exemption in this case applies only to property used "for 

hospitals." The statute does not apply to property used "for 

hospital purposes." The careful wording of the statute to 

limit the exemption to property used "for hospitals" excludes 

the exemption for personal property owned by entities which 

are not hospitals, even though the personal property may have 
been used for hospital purposes. Unless, therefore, the 

entity is a "hospital", its personal property is not entitled 

to the exemption. 

In the proceedings before it, STAB recognized that the 

entity must be a "hospital". It made a specific conclusion 

of law that the Clinic was a hospital within the meaning of 5 

15-6-201 (1) (c) , MCA. That conclusion of law is a 

determination of a legal question, which when reviewed by a 

court is subject to a broader scope of review than are 

findings of fact made by an administrative agency. City of 

Billings v. Billings Firefighters (1982), 651 ~.2d 627, 200 

Mont. 421. The expertise of courts in determining legal 

questions supersedes the deference owed to administrative 

determinations. 

We have statutes which were in effect at the time and 

which define various health care facilities. Both a hospital 

and an outpatient facility were "health care facilities. " 

Section 50-5-101(18), MCA, (1985). An outpatient facility 

was defined as follows: 

"Outpatient facility" means a facility, located in 

or apart from a hospital, providing, under the 

direction of a licensed physician, either diagnosis 

or treatment, or both, to ambulatory patients in 

need of medical, surgical, or mental care. An 

outpatient facility may have observation beds. 

(Emphasis supplied.) 

Section 15-5-101 (33), MCA. 

On the other hand, our statutes defined a hospital as 

follows: 

"Hospital" means a facility providing, by or under 

the supervision of licensed physicians, services 

for medical diagnosis, treatment, rehabilitation, 

and care of injured, disabled, or sick persons. 

Services provided may or may not include 

obstetrical care, emergency care, or any other 

service as allowed by state licensing authority. A 

hospital has an organized medical staff which is on 
call and available within 20 minutes, 24 hours per 

day, 7 days per week, and provides 24-hour nursing 

care by licensed registered nurses. This term 

includes hospitals specializing in providing health 

services for psychiatric, mentally retarded, and 

tubercular patients. 

Section 50-5-101 (23) , MCA. 

As STAB determined, the Clinic in this case was licensed 

by the Department of Health and Environmental Sciences. Its 

license must have been acquired under $ 50-5-201, MCA. It 

could be licensed as a health care facility only as an 

outpatient facility under the definitions above set out. 

STAR was not deterred by the obvious definitional 

differences between a hospital and an outpatient facility 

under the statutes. It concluded that the definition of 

"hospital" in S 50-5-101, MCA, was applicable to only parts 1 

through 4 in Chapter 5 of Title 50, relying on the first 

sentence of that statute which said "as used in parts 1 

through 4 of this chapter, unless the context clearly 

indicates otherwise, the following definitions apply." Here 

STAB incorrectly limited the application of the definitions 

for hospital and outpatient facilities. However, § 1-2-107, 

MCA, provided then and still provides that whenever the 

meaning of a word or phrase is defined in any part of our 

code, that definition is applicable to the same word or 

phrase wherever it occurs, except where a contrary intention 

plainly appears. The use by the legislature in S 50-5-101, 

MCA, of the phrase "as used in parts 1 through 4 of this 

chapter" does not show the legislature's plain intent that 

the definitions were only to be applied in those parts of the 

code. Those words only indicate that the legislature 

intended the particular application of the definitions in 

those parts of the cod.e, without limitation to the general 
use of the definitions in other parts of the code, pursuant 

to § 1-2-107, MCA. 

The tax-exemption was limited to property used "for 

hospitals." The outpatient clinic here is not a hospital. 

Therefore we affirm the District Couqt. 

.-- ) 'L I: ,g~~/ A 

Justice dl 

We Concur: 

ef Justice 

f/&, I / Justices