More Non-Profit Hospitals Denied Tax-Exempt Status

The Illinois Department of Revenue recently issued decisions denying charitable property tax exemption to three prominent hospitals: Prentice Women's Hospital at Northwestern Memorial in Chicago, Edward Hospital in Naperville and Decatur Memorial Hospital in Decatur. The hospitals' requests had been pending at the Department since at least 2010, when the Illinois Supreme Court issued a ruling upholding the Department's denial of charitable exemption in Provena Covenant Medical Center v. Department of Revenue (see May 2010 Extra Mile).

In Provena, the hospital had spent 0.7% of revenue on charity care and was found not to qualify for charitable exemption. Here, the hospitals' reported charity care expenditures were 1.85% for Northwestern, 1.04% for Edward and 0.96% for Decatur. While the Department does not set a threshold percentage or dollar amount on charity care and considers broader community benefits hospitals offer, it is clear that the Department is considering hospital exemption claims more critically in the wake of Provena. Edward and Decatur have stated that they will appeal the Department's rulings.

The Department is expected to issue rulings for another 30 or so health care providers statewide in the upcoming weeks or months. Local taxing districts, including school districts, may be affected by these cases and have rights to intervene. For questions concerning such matters, contact Steve Richart.