Illinois Supreme Court Upholds Denial of Provena's Tax Exemption

In a case that has been watched closely by tax-exempt hospitals around the country, the Illinois Supreme Court ruled the state was justified in stripping Provena Covenant Medical Center of its state property tax exemption because it did not prove it provided enough charity care.


In the ruling, the Supreme Court said Provena did not show "by clear and convincing evidence" that it provided charity care to all who needed it and that it did not appear to place obstacles in the way of those who needed and would have availed themselves of its charitable benefits.

The Court sided with an earlier appeals court decision arguing that Provena's charitable care record did not demonstrate the hospital was a charitable institution. The ruling affects Provena Hospitals, which owns six hospitals including Provena Covenant Medical Center in Urbana, Ill., and is based in Mokena, Ill.

The case dates back to 2003, when the Illinois Department of Revenue ruled Provena was not eligible for a charitable tax exemption for 2002. Provena subsequently filed a complaint for administrative review in the Sangamon County circuit court, which approved the exemption. This decision was subsequently reversed by an appeals court. Provena then appealed to the state Supreme Court, which upheld the original decision of the Department of Revenue.

"Today the Illinois Supreme Court upheld over a century of Illinois law that requires tax-exempt hospitals to provide free healthcare in exchange for the enormous tax breaks they choose to receive from the people of the state of Illinois," Illinois Attorney General Lisa Madigan said in a written statement. "This decision is good news for the nearly two million uninsured Illinoisans who lack access to affordable healthcare."

Provena officials expressed disappointment in the ruling, noting in a press release that the hospital provided more than $38 million in free care and other community benefits in 2008.

Download the Illinois Supreme Court decision on Provena Covenant Medical Center (pdf).

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