CTRL_VT_HOSP_V_TOWN_OF_BERLIN.94-591; 164 Vt 456; 672 A.2d 474

[Filed 15-Dec-1995]

  NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 94-591


Central Vermont Hospital, Inc., et al.            Supreme Court

                                                  On Appeal from
    v.                                            Washington Superior Court

Town of Berlin                                    October Term, 1995


Alan W. Cheever, J.

       Richard Linton Brock, Sandra E. Levine and James S. Brock of Cheney,
  Brock, Saudek & Mullett, P.C., Montpelier, for plaintiffs-appellants

       Robert Halpert of Paterson & Walke, P.C., Montpelier, for
  defendant-appellee


PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


       DOOLEY, J.   Plaintiffs Central Vermont Hospital, Inc. (CVH) and
  Woodridge, Inc. appeal the Washington Superior Court's finding that the
  nursing home facility owned by Woodridge on land leased from CVH is subject
  to property taxation by defendant Town of Berlin.  Plaintiffs claim that a
  nonprofit nursing home, which benefits hospital patients and is located on
  land leased to it by a hospital, is exempted from property taxation by 32
  V.S.A. § 3802(4), and is not subject to taxation, under 32 V.S.A. §
  3832(7), as property "used primarily for health . . . purposes."  We
  affirm.

       CVH is a nonprofit hospital in Berlin, Vermont, providing acute,
  short-term health care to members of the public without regard to their
  ability to pay.  In 1993, Woodridge began operation as a Level I & II
  skilled nursing care facility in Berlin on property owned by CVH and leased
  to Woodridge for one dollar per year.  Admission to Woodridge is by order
  of physician.  Woodridge accepts all patients regardless of their ability
  to pay as long as a bed is available, although a preference is given to CVH
  patients.  The facility has run at a 99%

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  occupancy rate, with 80% to 83% of the patients receiving Medicaid.

       The management of Woodridge and CVH is essentially the same, although
  the corporations have separate boards of trustees.  Some of the trustees
  serve on both boards.  The holding company of Woodridge and CVH is Central
  Vermont Medical Center, Inc. (CVMC). CVMC is the sole member of both
  Woodridge and CVH.  Its mission is carried out by assigning short-term,
  acute-care responsibilities to CVH and long-term care responsibilities to
  Woodridge.

       In July of 1993, defendant sent a property tax bill to CVH for the
  twelve acres of land leased by CVH to Woodridge, and a bill to Woodridge
  for its nursing facility.  The taxability of only the nursing home is at
  issue.

       Under 32 V.S.A. § 3802(4), real and personal property used for
  charitable purposes is exempt from local property taxes.  There is no
  dispute that the Woodridge facility is a charitable use covered by §
  3802(4), unless an exception applies.  Defendant argues that Woodridge is
  "used primarily for health . . . purposes" and is therefore excepted from
  property tax exemption by § 3832(7).  Plaintiffs respond that because of
  other exceptions within § 3832, the exception relied upon by defendants
  cannot extend to plaintiffs.  Specifically, they argue that the Woodridge
  facility is directly connected to CVH and is exempt from property taxation
  as a "home" or a "hospital,"(FN1) and is not used for health purposes because
  "health" means being free from disease.

       The analytical framework for this dispute is set forth in Medical Ctr.
  Hosp., Inc. v. City of Burlington, 152 Vt. 611, 623, 566 A.2d 1352, 1358
  (1989), in which we upheld the property tax exemption status of the Medical
  Center Hospital and related properties.  As here, the City
 
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  of Burlington argued that the hospital's property was used primarily for
  health purposes and therefore fit within the exception of § 3832(7).  We
  noted that exceptions in § 3832(2), (6) specifically applied to hospitals
  under certain narrow circumstances, showing a legislative intent that the
  hospital would remain exempt if not within these exceptions.  Thus, we held
  that because the term "hospital" is specifically used in § 3832(2) and (6),
  subsection (7)'s reference to property used for "health . . . purposes"
  could not be considered as encompassing hospital property since such an
  interpretation "would lead to the irrational result of rendering portions
  of subsections (2) and (6) meaningless." Id. at 622, 566 A.2d at 1358.

       The two exceptions relied upon in Medical Ctr. Hosp. are central to
  the issues before us because plaintiffs rely on language within them. 
  Subsection (2) permits a town to tax "[r]eal estate owned or kept by a
  religious society other than a church edifice, a parsonage, the
  outbuildings of the church edifice or parsonage, a building used as a
  convent, school, orphanage, home or hospital . . . ."  32 V.S.A. § 3832(2)
  (emphasis added).  Subsection (6) permits a town to tax "property owned or
  kept by an orphanage, home or hospital including diagnostic and treatment
  center not used for the purpose of such institution but leased to others
  for income or profit . . . ."  Id. § 3832(6) (emphasis added).  In Medical
  Ctr. Hosp., there was no question that the entity in dispute was a
  hospital.  Here, the nature of Woodridge is central to the dispute.

       We understand plaintiffs to make three arguments from the statutory
  language: (1) Woodridge is a "home" for purposes of § 3832(2), (6); (2)
  Woodridge is directly connected to CVH so that its facilities are part of
  CVH for purposes of § 3832(2), (6); and (3) Woodridge is a treatment center
  and therefore a "home or hospital" as set out in §3832(6).  We take these
  in turn.

       First, we do not read the term "home" in § 3832(2), (6) as including
  nursing homes.  In reaching this conclusion, we emphasize the rationale of
  Medical Ctr. Hosp. that the "plain and ordinary language" of § 3832(7) does
  not create a general exception for hospitals, because the specific
  treatment of hospitals in § 3832(2), (6) showed a legislative intent to
  exempt hospitals

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  from property taxation in most circumstances.

       Plaintiffs argue that we should use the same analysis herein because a
  skilled nursing facility is a home for purposes of § 3832(2), (6).  This
  argument, however, sets up an unnecessary conflict between the subsections
  of § 3832.  We have recognized  "a fundamental rule of statutory
  construction that statutes dealing with the same subject matter should be
  construed with reference to each other as parts of one system."  Emmons v.
  Emmons, 141 Vt. 508, 512, 450 A.2d 1113, 1115 (1982).  Where two statutes
  cover the same subject and one is more specific than the other, we
  harmonize them by giving effect to the more specific provision according to
  its terms.  See State v. Buelow, 155 Vt. 537, 541, 587 A.2d 948, 951 (1990)
  (holding that more specific statutory sections on jurisdiction control). 
  Further, we normally enforce a newer statute over an older one in conflict
  with the newer statute.  Lomberg v. Crowley, 138 Vt. 420, 423, 415 A.2d
  1324, 1326 (1980).  Subsection (7) of § 3832 was added in 1955, see 1955,
  No. 178, § 1 (property tax exemption does not include "land, buildings, and
  tangible personal property . . . used primarily for health or recreational
  purposes . . . "), whereas subsections (2) and (6) have existed since 1910
  and 1933 respectively, see 1910, No. 32, § 1 (exemption does not include
  "lands or buildings owned or kept by a religious society . . . "); 1933,
  No. 10, § 1 (exemption does not include "any lands or buildings owned or
  kept by any orphanage, home or hospital and not used directly for the
  purpose of such institution, but leased to others for income or profit . .
  . ").

       Here, the more specific and later provision, § 3832(7), which clearly
  makes property used "primarily for health . . . purposes" taxable, controls
  over the more general and vague term "home," which can describe virtually
  any facility in which persons stay overnight for any reason.  The way to
  harmonize the provisions is to conclude that "home" does not include
  property used primarily for health purposes.  In this way, finding that §
  3832(7) controls does not lead to "the irrational result of rendering
  portions of subsections (2) and (6) meaningless," the essential component
  of the Medical Ctr. Hosp. analysis.  See 152 Vt. at 622, 566 A.2d at
 
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  1358 (holding that subsection (7) does not remove hospital's tax-exempt
  status).

       Independent of the conflict question, we also find it likely that this
  construction of "home" reflects the Legislature's intent.  Nursing homes
  are defined by statute as providing primarily health-related medical and
  nursing services.(FN2)  The word "home" first appeared in § 3832 in 1904, see
  1904, No. 25, § 1 (amending 1894 V.S. § 364) ("[T]he lands or buildings
  exclusively used for the support of . . . homes . . . which receive and
  care for, without pay, indigent, old or infirm patients or inmates, shall
  be exempt from taxation."),  when nursing homes were not common in this
  country.  Although the forerunners of modern nursing homes were founded in
  the late nineteenth and early twentieth centuries, the nursing home, as we
  now know it, is actually an indirect creation of the Social Security Act of
  1935.  B. Vladec, Unloving Care, 37-38 (Basic Books 1980).  We doubt that
  when it first used the term "home," the Legislature intended a medical care
  provider.

       Second, Woodridge cannot be considered a "hospital."  Relying on
  Medical Ctr. Hosp., plaintiffs argue Woodridge is "directly connected" and
  essential to CVH and therefore exempt as part of a hospital.

       We think this argument faces an initial insurmountable obstacle.  The
  property found exempt in Medical Center Hosp. was owned by the hospital. 
  See 152 Vt. at 624-25, 566 A.2d at 1359 (finding that hospital provides
  space for parking lot, anesthesologists' and radiologists' offices, data
  processing, and laboratories).  The property involved here is owned by
  Woodridge, Inc., a separate corporation.  The logic of plaintiffs' argument
  requires them to show that CVH

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  "owned or kept" the Woodridge property because of the use of that language
  in subections (2) and (6).  Whatever the meaning of "kept" in this context,
  we do not see factual support for its application here.

       We recognize that plaintiffs are affiliated through a common holding
  company.  There is, however, insufficient factual development for us to
  conclude that irrespective of the formal corporate arrangements, CVH really
  owns or keeps the Woodridge facility.

       Apart from the ownership, we do not believe that plaintiffs'
  circumstances are comparable to those in Medical Ctr. Hosp.  In that case,
  we found that a parking garage, anesthesiologists' and radiologists'
  offices, staff sleeping area, and data processing and lab facilities were
  not taxable because they were sufficiently "directly connected" to the
  operation of a hospital and used "`in a way that is essential to the
  operation of the [hospital] and in furtherance of its charitable purpose.'" 
  Id. at 624, 566 A.2d at 1359 (quoting Shelburne Museum, Inc. v. Town of
  Shelburne, 129 Vt. 341, 344, 278 A.2d 719, 721 (1971)).  For example, the
  hospital's parking needs would not have been met absent the parking lot,
  and thus the parking lot is tax-exempt as directly connected and essential
  to the hospital.  Id. at 624-25, 566 A.2d at 1359.

       Unlike the parking lot, however, the relationship Woodridge has with
  CVH is cooperative, rather than integral.  Woodridge's primary purpose is
  to provide the long-term care aspects of CVMC's mission, a medical service
  that acute-care hospitals do not provide.  Its by-laws and articles of
  association were implemented to facilitate patient care, rather than to
  integrate Woodridge's subacute-care program into CVH's functions.  Patients
  who are transferred from CVH to Woodridge are moved because CVH has
  completed all hospital-acute care services, and the patients desire to go
  to a nursing home for subacute health care.  Although it provides nursing
  care for CVH patients and is convenient to the hospital, Woodridge accepts
  nonCVH patients and is not essential to the operation of CVH.  If Woodridge
  did not exist, patients in need of long-term care would either stay in CVH
  or be transferred to another nursing

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  facility.  Without the hospital, the nursing home would still provide a
  much-needed service separate and distinct from services provided by an
  acute-care hospital, unlike the parking lot, which was only necessary
  because of the hospital's demand for parking.  As a result, we do not
  consider Woodridge directly connected to CVH under § 3832.

       Third, we do not agree that because Woodridge is a treatment center,
  it is necessarily a "home or hospital."  In construing a statute, our
  objective is to give effect to the intention of the Legislature.  Lemieux
  v. Tri-State Lotto Comm'n, 6 Vt. L. Wk. 199, 200 (Aug. 11, 1995). If the
  statute is unambiguous, we look first to the plain, ordinary meaning of the
  language.  Id. "We look to the whole of the statute and every part of it,
  its subject matter, the effect and consequences, and the reason and spirit
  of the law."  Id.  A tax exemption will be "strictly construed against the
  party claiming it."  Medical Ctr. Hosp., 152 Vt. at 615, 566 A.2d at 1354.

       Plaintiffs argue that Woodridge is a treatment center and therefore
  should not be included in § 3832(7)'s exception from the property tax
  exemption because the term "treatment center" is used in subsection (6),
  and reading subsection (7) as including treatment centers would lead to the
  irrational result of rendering portions of subsection (6) meaningless. 
  This argument miscontrues the very limited way in which the term "treatment
  center" is used in subsection (6). The subsection covers a specific
  circumstance where property owned or kept by an orphanage, home, or
  hospital is leased to a diagnostic and treatment center.  It does not
  suggest that by this leasing arrangement the treatment center somehow
  becomes transformed into an orphanage, home, or hospital.  Because we find
  Woodridge is not owned by a home or a hospital, and clearly not an
  orphange, it does not come within subsections (2) or (6).  Thus, there is
  no reason to read Woodridge out of subsection (7).  By virtue of subsection
  (7), it is not tax exempt.

       Affirmed.
 
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                              FOR THE COURT:



                              _______________________________________
                              Associate Justice


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                                  Footnotes


FN1.  Defendant claims plaintiffs did not argue below that Woodridge
  is a "home," and therefore the issue is not properly preserved.  The trial
  court, however, wrote that the "only issue in this case is whether the
  exceptions to the exemption found in 32 V.S.A. Subsection 3832, apply." It
  reviewed all parts of § 3832.  Furthermore, the court considered and denied
  "all other requests" in its entry regarding plaintiffs' motion to amend
  judgment.  The motion specifically, albeit cursorily, asserted plaintiffs'
  argument that Woodridge is a "home."  We conclude that the issue of
  Woodridge's status as a "home" was, therefore, properly preserved.

FN2.  Nursing home' means an institution or distinct part of
  an institution which is primarily engaged in providing to its residents any
  of the following:  (A) Skilled nursing care and related services for
  residents who require medical or nursing care.  (B) Rehabilitation services
  for the rehabilitation of injured, disabled, or sick persons.  (C) On a
  24-hour basis, health related care and services to individuals who because
  of their mental or physical condition require care and services which can
  be made available to them only through institutional care."  33 V.S.A. §
  7102(7).