Surgeons Win Battle Over Plan To Raise Rates

0

Surgeons in Beverly Hills are breathing a little easier after the defeat of the city’s attempt to force a pair of surgery centers to pay higher taxes.

Specialty Surgical Center last week convinced a tax appeal panel to halt the city’s effort to classify the company’s two Beverly Hills surgery centers as real estate landlords and tax them at a rate roughly four times what they now pay.

The panel’s decision will save Specialty Surgical Center’s owners more than $100,000 a year in business taxes, as well as more than $1 million in back taxes.

“We’re very relieved,” said Allan Cooper, partner in the Beverly Hills law firm Ervin Cohen & Jessup LLP, which represented Specialty Surgical Center in the case.

The panel decision also carries broader ramifications for surgical centers, which is a sizable industry in Beverly Hills. City tax officials had been reviewing the books of several of the 75 other surgical centers in the city. It’s now unlikely the city will pursue reclassifications of these other surgical centers.

As reported in the Feb. 14, 2011 issue of the Business Journal, the two Specialty Surgical Center facilities – one on Brighton Way and the other on Wilshire Boulevard – had been paying the same business tax rate as doctors, lawyers and other professional companies. The tax is a flat fee of about $1,300 for the first 2,080 billable hours and 62 cents for each additional billable hour.

But city officials contended that the surgical centers lease or rent out unused space to other doctors, in essence making the center owners landlords. They planned to raise the tax on most of Specialty Surgical Center’s income to the rate commercial landlords pay, about $23 for every $1,000 of gross receipts. That translates to $150,000 a year, nearly four times what the company pays now.

Specialty Surgical Center – which is jointly owned by a group of local surgeons and Symbion Inc., a Nashville, Tenn. surgery center company – filed an appeal to the tax hike plan. The company argued it does not receive rental payments for space that outside surgeons use and that the reclassification amounts to an illegal tax hike that should have been put to voters.

The centers specialize in routine outpatient procedures such as colonoscopies.

No posts to display