Monday, September 12, 2011

Illinois Hospital Exemption Battle Advances; Professor John D. Colombo Quoted

We previously blogged about the Illinois Department of Revenue’s recent denial of property tax exemption to three Illinois hospitals that provided charity care at a level that was deemed insufficient to merit exemption.  In State Challenging Hospitals’ Tax Exemptions, the New York Times reports that an Illinois Department of Revenue spokesman said the agency was also reviewing parcels owned by 15 hospital systems.  Referring to the recent denial of exemption to three hospitals, the agency spokesperson not only cited the level of charity care provided, but also commented that each hospital had been operating as a “for profit” business, notwithstanding that “only charities are entitled to a tax exemption” under the Illinois Constitution.  The Times further reports that Illinois hospitals will lobby for legislation that grants tax exemptions to hospitals that demonstrate their production of community benefit in forms not limited to charity care – such as bearing the financial burden of patients’ unpaid debts, costs of medical care not covered by Medicare and Medicaid programs, direct costs that teaching hospitals pay to train doctors and conduct research, and costs of non-lucrative services (e.g., providing emergency care, trauma care, burn units and neonatal intensive care units).

Fellow blogger John D. Colombo, Albert E. Jenner, Jr. Professor of Law at the University of Illinois College of Law, is quoted in the article as follows:

Hospitals think they should get tax exemptions for merely what they do in the community. …  It’s problematic: The overall number that each of these hospitals is reporting is abysmally low. Given the state of the economy, one would expect the charity services going up.


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