Battle over Illinois hospital tax exemptions heads back to court

Carle Foundation Hospital in Urbana, Ill., intends to appeal a court ruling issued earlier this month that deemed part of a law that allows nonprofit hospitals to avoid paying property taxes unconstitutional, according to The News-Gazette.

In 2010, the Illinois Supreme Court weighed in on the issue and handed down a decision that suggested nonprofit hospitals in the state that behave like businesses should not qualify for tax exemptions. Subsequently, the Illinois Department of Revenue denied tax exemptions to three hospitals. However, Illinois hospitals were issued a win in 2012 when state lawmakers passed legislation that simply required a nonprofit hospital's charitable services to exceed its property tax liability to qualify for tax exemptions.

The tax exemptions were once again brought into question this month when the Illinois 4th District Appellate Court ruled the 2012 law is unconstitutional. The ruling was issued in a case brought by Carle Foundation Hospital against the city of Urbana and other local taxing districts. Carle Foundation was seeking relief from taxes for 2004-2011.

The battle over the tax exemptions is not over, as Carle intends to take the case to the Illinois Supreme Court.

"Carle believes it is entitled to its property tax exemptions granted decades ago, so people in need can get care regardless of their ability to pay — something that is critical to our mission as a nonprofit healthcare provider," Carle officials said in a statement, according to the report. "Therefore, Carle will file an appeal of the 4th District Appellate Court opinion with the Illinois Supreme Court prior to the Feb. 9, 2016, deadline."

Knowing it was likely the case would be appealed to the state supreme court, the Illinois Department of Revenue said it will put off issuing any new property tax exemptions to hospitals until the matter is resolved. The Champaign County Board of Review is not waiting for a decision from the state high court before moving forward. The board voted Wednesday to place Carle and Presence Covenant Medical Center in Urbana back on the tax rolls, according to the report.

More articles on healthcare industry lawsuits:

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