June 18, 2008
No Surprises at Provena Oral Argument
Well, I wish I could say that the Provena oral argument held this morning at the Illinois 4th District Court of Appeals in Springfield was riveting, or that it really illuminated some specific aspect of the case or the policy debate about hospital tax exemption, but it wasn't and didn't. I suppose I shouldn't be surprised; as I noted in my earlier blog post here, the issues in Provena have been hashed and rehashed for over 20 years at the state and federal levels without much progress, so I'm not sure there is anything new to say about tax exemption for nonprofit hospitals. Each attorney (Evan Siegel from the State AG's office for the State, Patrick Coffey of Lord Bissell & Brook for Provena) stuck to their main points: on the government side, these points were that Provena provided inadequate charity care and sent charity patients to debt collectors; on the Provena side, the main points were emphasizing the vast array of "community benefits" that Provena claims it offers and the testimony from its witnesses in the administrative record regarding its commitment to serving all patients without regard to ability to pay.
I was somewhat surprised at the relatively few questions asked by the 4th District panel (Judge Appleton, presiding, with Judges McCullough and Knecht); in fact the court asked only two questions in the State's opening argument, both pretty predictable (Judge Appleton asked how the court should "draw the line" regarding how much charity care was required for exemption about 15 seconds into oral argument and then toward the end of Siegel's opening argument he also asked whether the current standards for tax exemption outlined in a 40-year-old Illinois Supreme Court case could rationally be applied to modern health care). Patrick Coffey got a little more heat; when he claimed that the Provena case was "unprecedented," Judge Appleton interrupted him to note that the Illinois Court of Appeals had decided FOUR health care exemption cases fairly recently -- ergo, this case was not so "unprecedented." Coffey also got questions from Judges McCullough and Knecht about the size of Provena's charity care program and whether it was advertised to potential charity patients, but again these were pretty predictable questions. When Judge Knecht asked Coffey to pick out something that a marketing person would trumpet as a major benefit to the community, Coffey used Medicaid shortfalls as his example (undoubtedly because in the year in question, Provena claimed it suffered over $10 million in such shortfalls, while giving out only about $800,000 in outright charity care). In fact, it was only at the very end of the argument, in Siegel's rebuttal, that Judge Knecht asked the tough policy question, which was whether the various "community benefits" cited by Provena as grounds for its exemption (e.g., running an ambulance service, a men's shelter and a charity nursery) should "count" for exemption. I was a little disappointed in Siegel's response, which stuck to the technical argument that no activity should count that was not conducted on the property in question; though this may have been the right tactical move, I sort of wish he had taken on the policy question more directly and noted that many of the "community benefits" cited by Provena were in fact a way to get paying customers to their hospital (to his credit, he did make that point very briefly with respect to the ambulance service).
I also had hoped to gain more insight into how the appellate court might view Provena's claim to exemption as a religious institution, but the panel asked nary a question about that, and only Siegel mentioned it in argument (and his argument on that point was that Provena was really a commercial enterprise, not a religious organization).
So not much to say here other than we'll all wait for the court's opinion, and then what almost inevitably will be the next step no matter who wins this round: an appeal to the Illinois Supreme Court.
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