Unan­swered ques­tions

No clo­sure with Illi­nois tax-ex­empt rul­ing: ex­pert

Modern Healthcare - - The Week In Healthcare - Gregg Blesch

The Illi­nois Rev­enue Depart­ment stacked up about 85 applications from not-for-profit hos­pi­tals seek­ing prop­erty-tax ex­emp­tions over the past four years, wait­ing for the courts to sort out what’s de­manded of hos­pi­tals in re­turn.

A long-awaited Illi­nois Supreme Court rul­ing failed to de­liver much clar­ity, so un­less the Leg­is­la­ture in­ter­venes, the next test may come from within that stack.

The Illi­nois con­tro­versy is spe­cific to lo­cal prop­erty-tax ex­emp­tions as al­lowed un­der the state con­sti­tu­tion, yet the de­bate has par­al­leled a broader na­tional dis­course about what hospi­tal ac­tiv­i­ties and ex­penses con­sti­tute char­ity and how much is enough.

Last month the court af­firmed that state’s de­ci­sion to strip the prop­erty-tax ex­emp­tion from 202-bed Provena Covenant Med­i­cal Cen­ter in Ur­bana (March 22, p. 12). But the Illi­nois court did so with only three of seven jus­tices stand­ing be­hind Rev­enue Di­rec­tor Brian Hamer’s fo­cus on the strict value of char­ity care and dis­missed other forms of com­mu­nity ben­e­fit and Medi­care and Med­i­caid short­falls.

“This de­ci­sion did not con­clude the de­bate at all,” said John Durso, a lawyer who is a part­ner in the Chicago law firm Un­garetti & Har­ris. “It’s go­ing to be years for an­other case to find its way through the process.”

A Rev­enue Depart­ment spokes­woman de­clined to pro­vide an in­ter­view with Hamer and said it’s too early to com­ment on how he will ap­proach the back­log in light of the opin­ion.

Many of those applications are for small an­cil­lary prop­er­ties rather than hospi­tal cam­puses, and some are du­pli­cates filed over the years as the depart­ment de­ferred act­ing on them. Oth­ers, though, rep­re­sent parcels that are home to re­place­ment hos­pi­tals and hos­pi­tals re­quired to reap­ply for an ex­emp­tion fol­low­ing a change of own­er­ship.

The next main event could in­volve Provena’s Ur­bana neigh­bor 279-bed Carle Foun­da­tion Hospi­tal. In 2004 the Cham­paign County as­ses­sor added four hospi­tal parcels to the tax rolls and the Rev­enue Depart­ment up­held the move.

Carle Foun­da­tion is pur­su­ing the ad­min­is­tra­tive ap­peals process that landed the Provena case in the state’s high court, and that re­view has been idle pend­ing the court’s de­ci­sion. Carle Foun­da­tion has a sep­a­rate law­suit, how­ever, that would cir­cum­vent the messy de­tails of the char­ity de­bate. The law­suit ar­gues of­fi­cials over­stepped their au­thor­ity in tar­get­ing pre­vi­ously ex­empt prop­er­ties without any change in own­er­ship or use.

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