Did prescription CPM pads and hypothermia blankets qualify as exempt orthotic devices?

Plain-English summary

California treated the described CPM pads and hypothermia blankets as taxable rather than exempt orthotic devices. They were prescribed for post-operative healing and used with Hot/Ice Machines, but the pads and blankets had no function without those machines and therefore were not fully worn, self-functioning devices on the patient.

The products also had uses beyond acting as a brace, support, or correction for body structure, including use after implantation surgery and to control body temperature. Those facts further prevented the orthotic classification.

Common questions

Did prescription-only use make the products exempt?

No. They still had to meet the orthotic-device definition.

Did physical contact with the patient count as being fully worn?

No. Their dependence on the separate Hot/Ice Machine meant the full functioning system was not worn by the patient.

Citations and references

• California Sales and Use Tax Regulation 1591 — historical orthotic-device and prescription-medicine framework applied in the letter

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/425-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/425-0292.pdf

Original ruling text

425.0292

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-5589

August 1, 1989

Mr. [H]
President
[M]
XXXX --- ----- ---, California XXXXX
S- -- XX-XXXXXX
Dear Mr. [H]:
This is in response to your letter of June 21, 1989, to the Audit Evaluation and Planning Unit regarding your company’s sales of CPM Pads and Hypothermia Blankets. You would like to know whether the CPM Pads and Hypothermia Blankets qualify as exempt prescription medicines under Sales and Use Tax Regulation 1591. Both the CPM Pads and Hypothermia Blankets are used in conjunction with Hot/Ice Machines as part of the orthopedic surgical process post operatively to promote the healing process in human beings. They may only be used on a prescription basis. Effective October 1, 1977, certain orthotic devices “designed to be worn on the person of the user as a brace, support, or correction for the body structure” were included in the definition of exempt prescription medicines. Each orthotic device must be fully worn on the patient. According to the information supplied in your letter, the CPM Pads and Hypothermia Blankets are only used in conjunction with the Hot/Ice Machine and in fact have no function without the machine. Additionally we note that they have other uses aside from acting as a “brace, support, or correction” for the body structure since they are also used after implantation surgery and to control body temperature. Because the pads are not functional without the machines and thus cannot be fully worn on the patient, we are of the opinion that neither the CPM Pads nor the Hypothermia Blankets qualify as exempt orthotic devices under Regulation 1591.

Mr. [H]

-2-

August 1, 1989
425.0292

If you have further questions concerning this matter, please write this office again. Very truly yours,

Mary C. Armstrong
Senior Tax Counsel
MCA:wak
cc:

Phillip K. Klepin
Audit Supervisor, San Diego