Carle Health Foundation Retains Property Tax Exemption After 20 year (and counting) Battle

Everybody knows that exempt health care is under constant scrutiny, primarily regarding the amount of charity care dispensed.  Pennsylvania and Illinois appear to be the leaders in state scrutiny of tax exemptions for nonprofit hospitals.   So there is always plenty to learn from developments from either of those states.  

Last week, the Illinois Fourth District Court of Appeal issued a 60 page opinion that touches on almost every aspect of hospital property tax exemption in that state.  Here is a good recap of the Carle litigation history, complete with all the briefs and filings.  The easy conclusion is that after 20 years of litigation, Carle Foundation’s property tax exemption for its hospital and related holdings has been upheld against a 2004 challenge by several local taxing districts.   The fight might still not be over as the tax authorities have not stated whether they will appeal and cause the case to be heard a second time by the Supreme Court.  If so, that might add another two years or so.  

The opinion is required reading if charitable property tax is your thing, but its way too full of analysis for me to pick anything out in particular.  Plus I would have to read it closely two or three more times.  It is the start of the semester, though.  It talks about community benefit, old Illinois law, new Illinois law, the transition from the former to the latter, and everything in between regarding Illinois hospital property tax exemption.  But it is particularly interesting to note that Illinois’s charitable property tax exemption law has specific provisions for charitable health care, conditioning tax exemption on whether a hospital provides more in “community care” than it reaps from tax exemption.  I note that the statute uses “community” rather than “charity” care which makes me think that a hospital that provides very little free health care can still qualify.  If so, we oughta stop playing word games.  Either require hospitals to provide free health care in quantifiable amounts greater than the dollar value of exemption, or admit we aren’t that serious about it.    

darryll k. jones