The state Supreme Court ruled Thursday that an Urbana hospital doesn’t provide enough charitable services to qualify for exemption from a county property tax, in a decision being closely watched by hospital administrators across the state.
The state Supreme Court ruled Thursday that an Urbana hospital doesn’t provide enough charitable services to qualify for exemption from a county property tax, in a decision being closely watched by hospital administrators across the state. The decision capped a five-year fight by the Provena Covenant Medical Center to regain the Champaign County tax exemption status the Illinois Department of Revenue revoked. The court said "there was ample support for the Department of Revenue’s conclusion that Provena failed to meet its burden of showing that it used the parcels in the PCMC complex actually and exclusively for charitable purposes." It said evidence showed that both the number of uninsured patients receiving free or discounted care and the dollar value of the care they received from the Roman Catholic Church-affiliated medical center were minimal. "As a practical matter, there was little to distinguish the way Provena Hospitals dispensed its ‘charity’ from the way in which a for-profit institution would write off a bad debt," the court said in its decision, written by Justice Lloyd Karmeier. The medical center’s chairman, Jon "Cody" Sokolski, said in a statement that he was "deeply disappointed" by the decision. "Provena Covenant Medical Center cares for all of our community who need our health services regardless of their ability to pay," he said. Sokolski said the medical center provided "more than $38 million in free care and other community benefits" in 2008 and hopes to "carry on in our charitable works, despite the fact that this ruling restricts our ability to do so." Department of Revenue spokeswoman Sue Hofer issued a statement saying the department was pleased to have won its battle. "It seems only fair that, when our communities are in serious financial difficulties, we carefully review exemption requests to ensure they meet the intent of both the Illinois Constitution and the law," she said. Nonprofit hospitals around the country are facing similar challenges to tax breaks from local, state and federal authorities seeking more accountability about hospital charity care. Maryjane A. Wurth, the president of the Illinois Hospital Association, said in a statement that her organization was "extremely disappointed by the court’s decision, which could do great harm to a hospital and its ability to serve its patients and community." "Imposing new tax burdens on a hospital could force it to reduce services and increase health care costs — jeopardizing access to quality hospital services as well as the hospital’s financial viability," she said. Property taxes are collected by county governments but deciding which institutions are eligible for tax exemption is the responsibility of the Department of Revenue. The department declined to renew the PCMC tax exemption in 2004. The decision obligated Provena to pay more than $1 million a year in property taxes and launched a long-running court battle between the hospital and the department. The Illinois Appellate Court upheld the department in August 2008 and Provena then took its case to the Illinois Supreme Court. Provena Hospitals, which operates the medical center, is a subsidiary of Provena Health, a corporation created in the merger of health care operations of three church organizations. Justices Karmeier, Bob Thomas and Thomas Fitzgerald concurred with the decision completely. Justices Anne Burke and Charles Freeman concurred in part and dissented in part, and Justices Thomas Kilbride and Rita Garman did not take part in the decision. Copyright 2010 The Associated Press.
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