Illinois Supreme Court Affirms Decision to Strip Hospital of Tax Exempt Status - March 31, 2010

On March 18, the Illinois Supreme Court ruled that county officials were justified in denying tax exemption for Provena Covenant Medical Center (“PCMC”), forcing it to pay property taxes totaling almost $1 million annually. In the decision, the Court determined that there was little evidence that Provena Hospitals, PCMC’s parent organization and “true owner” of the land operated by PCMC, received most of its funds from private or public donations, as required by law. Further, there was no evidence that Provena Hospitals satisfied its obligation to dispense charity to all who need it without obstacles. The Court went on to note that, even if PCMC had been able to prove these elements, the evidence failed to show that PCMC itself used the property “actually and exclusively” for charitable purposes. Instead, the court found that the number of uninsured patients receiving free or reduced-fee care was de minimus. The decision is expect to have major implications for non-profit hospitals nationwide, which may now have to reassess the nature and amount of charitable care they provide. A copy of the opinion may be found here.