Intermountain Health Care, Inc. (IHC) (plaintiff) formed IHC Health Services (Health Services), a non-profit corporation that operated 22 hospitals in Utah and Idaho and provided nearly $1.2 billion in medical services to paying patients and $91 million in free health care services between 1997 and 1999. The Commissioner of Internal Revenue (Commissioner) (defendant) recognized Health Services as a tax-exempt organization under 26 U.S.C. § 501(c)(3). Health Services then formed three entities, IHC Health Plans, IHC Care, and IHC Group, to operate as health maintenance organizations. The Commissioner denied the three entities tax-exempt status under § 501(c)(3) and retroactively revoked Health Services’ tax-exempt status. IHC Health Plans, IHC Care, and IHC Group, brought suit against the Commissioner in U.S. Tax Court seeking a declaratory judgment reversing the Commissioner’s determinations. The court denied the declaratory judgment. The three entities appealed to the court of appeals.