CareAlliance Health Services v. SCDOR

Believing the purchase of orthopaedic prosthetic devices and other implants were eligible for a sales tax exemption, CareAlliance Health Services (the Hospital) sought a refund from South Carolina Department of Revenue (DOR). Following an audit, DOR denied the request as to orthopaedic prosthetic devices on the grounds they did not require a prescription to be sold and a prescription was not used in the purchase of the devices. The DOR also held other bone, muscle, and tissue implants were not exempt because they did not replace a missing part of the body, as required for the exemption. The Hospital filed for a contested case hearing. After discovery, both parties filed motions for summary judgment. Following a hearing on the motions, the ALC granted summary judgment in favor of the Hospital, finding orthopaedic prosthetic devices qualified for the exemption and other bone, muscle, and tissue implants replaced a missing part of the body. The DOR appealed, arguing the ALC erred in finding a prescription was required for the sale of an orthopaedic device between the Hospital and vendor because of federal regulations. The Supreme Court agreed and reversed: "The ALC's broad interpretation of the federal regulation is fundamentally at odds with the plain reading of the regulation and the strict construction afforded a tax exemption." Further, the Court reversed the ALC's finding that other bone, muscle and tissue implants replace a missing body part because it was not supported by substantial evidence in the record. The Court reversed the ALC and found the Hospital was not entitled to a tax exemption. View "CareAlliance Health Services v. SCDOR" on Justia Law