Illinois Supreme Court hears case regarding hospital’s charity care, tax-exempt status – MedCity Morning Read, Sept. 24, 2009

SPRINGFIELD, Illinois – The question of how much charity care a nonprofit hospital should provide was the basis for “spirited” arguments before the Illinois Supreme Court on Wednesday, The Chicago Tribune reported.

The Illinois attorney general’s office, representing the state department of revenue, maintained that when a hospital’s charity care is less than 1 percent of its revenue, it does not deserve a property tax exemption, the Tribune said.

Illinois Assistant Attorney General Evan Siegel told Supreme Court justices that, in 2002, Provena Covenant Medical Center in Urbana gave 302 patients free or discounted care, according to the Tribune. That cost the hospital $831,724, or about 0.7 percent of its revenue for that year.

Patrick Coffey, Provena Covenant’s attorney, argued that a hospital’s property tax exemption involves more than the amount of free care provided. He said the hospital made charity care available to everyone in need and provided millions of dollars in other community benefits, the Tribune reported.

The newspaper noted that the Provena Covenant tax exemption case has worked its way through the courts in Illinois for years. But both the Tribune and The Wall Street Journal pointed out that the issue goes beyond Illinois.

For one thing, U.S. Senator Charles Grassley, the top Republican on the Senate Finance Committee, has spent years looking into the tax breaks enjoyed by nonprofit hospitals.

In July, the Journal reported that Grassley and Senate Finance Committee Chairman Max Baucus were considering health-care overhaul ideas that included setting a minimum threshold of charity care and imposing a tax on nonprofit hospitals that fail to comply. But the bill currently being debated by committee members does not include such a measure, the Journal reported Wednesday.

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