Hospital executives in Illinois Thursday fought before the state Supreme Court to maintain not-for-profits' property tax exemption.
In the case before the state high court, the city of Urbana and other taxing bodies argue that a local hospital, Carle Foundation Hospital, should pay property taxes.
In 2012, Illinois passed a law exempting not-for-profit hospitals in the state from paying property taxes so long as the value of their charitable services was equal to or greater than their tax liabilities. But local governments say the state's hospitals are plenty profitable and therefore should contribute their share of taxes to help fund cash-strapped municipalities. The state Constitution allows such exemptions only if the property in question is used exclusively for charitable purposes, they say.
Attorneys for the taxing bodies in Illinois argue that the 2012 law goes beyond the constitutional statute by assigning a value to the exemption, which is that hospitals can be exempt if their charitable services are at, or exceed, the value of what it would pay in property taxes.
Some of the justices Thursday questioned whether the Illinois 4th District Appellate Court last year had the jurisdiction to consider the case. That court ruled the law unconstitutional.
The justices also questioned whether they should weigh in on another upcoming case, Oswald v. Hamer, instead of this one. That case ruled the law exempting hospitals from paying property taxes as constitutional.
The term charitable purposes has been interpreted to mean that hospitals provide care to patients regardless of their ability to pay, said Steven Pflaum, Carle's attorney. Pflaum argued that Carle's charitable services far exceeds what it would pay in yearly property taxes. He said Carle paid roughly $20 million in property taxes from 2004 to 2011.
Carle provided $30.6 million in charity care in 2015, according to the hospital.
The Illinois Health and Hospital Association filed an amicus brief in August 2016 supporting Carle Foundation. The American Hospital Association also weighed in on behalf of Carle.
The case is being closely watched by Illinois' roughly 150 not-for-profit hospitals.
A decision in the case is expected in coming months.
