OMAHA, NE — The battle between a wellness center and a for-profit health club in Omaha, NE, is headed to the Nebraska State Supreme Court, and that court's decision could affect not-for-profit fitness facilities in the state.
Alegent Hospital recently lost its case before the Nebraska Tax Equalization Review Commission (TERC). The commission ruled that the Lakeside Wellness Center, part of Alegent's hospital and medical center campus in Omaha, NE, was not a charitable entity and therefore could not receive tax-exempt status.
“We are going to vigorously appeal it,” Amy Protexter, spokesperson for the wellness center, said of the decision. “We firmly believe we are abiding by the state law for being a not for profit.”
The Lakeside Wellness Center has been open for five years, much of that time in a legal battle brought on by Dan Rasmussen at Prairie Life Center in Omaha. Rasmussen contends that the wellness center competes with one of his clubs and is not a charitable facility, meaning it should not receive tax exemptions that Rasmussen's for-profit facilities do not receive. Prairie Life Center has two clubs in Omaha and five more in the Midwest.
When the wellness center opened, Rasmussen's club near the wellness center lost some members to the hospital facility, he said. Many of his clubs compete with wellness centers, YMCAs and Jewish Community Centers, but he decided to pursue the case against one facility rather than all of them to see if the effort warranted battles with other facilities.
The cost to fight the case has been substantial for both sides although neither would say how much they have spent. Rasmussen used some of his own money, but he also received financial assistance and legal help from IHRSA, he said.
The time and financial burden was worth it, Rasmussen said.
“We decided that even if the decision with the TERC went the other way, we would have appealed it,” he said. “The most important thing was that we get to the finish line.”
The case came before the Douglas County Commission three times. Each time, the county commission ruled in favor of the wellness center. However, Rasmussen continued to pursue the case, going to the TERC, which ruled against the wellness center.
On a daily basis, the wellness center sees about 200 nonmembers, Protexter said. They come for health education or medical treatment after being referred for rehabilitation by their physicians. Fifty-seven of the 87 classes are designed for people with health issues, she said.
“Although we offer memberships, that's not the primary focus,” she said. “The primary focus is offering medically based cases and supervised exercise for people with medical conditions.”
The wellness center markets to the community at large in addition to patients, but “the focus of our marketing is really not vanity; it is health,” Protexter said. “When we market to the broader community, it's about exercise being an important component of a healthy life.”
Regardless of the purpose for either facility, the decision by the state supreme court could affect many not-for-profit facilities in the state.
“I would assume that there would be a lot of county assessors and boards out there that would want to take a strong look at this and decide there might be some entities out there that they should be collecting taxes for,” Rasmussen said.
Protexter said, “Some of those organizations aren't as large as we are. So we have tried to carry the flag for other not-for-profit wellness centers who provide charitable purposes.”