Hospital's loss of tax exemption overturned

In a victory for a hospital industry under attack over how much medical care it provides the poor and uninsured, an Illinois state judge on Friday reversed the state Revenue Department director's decision to strip an Urbana hospital of its property tax exemption.

The decision overturns a ruling last fall by Brian Hamer, who said Provena Covenant Medical Center's charity care in 2002 represented less than 1 percent of its revenue and, therefore, was not enough to justify an exemption.

Since then, Provena has paid more than $5 million in property taxes and become a flash point of a national debate over exactly how much charity care non-profit hospitals should provide to warrant such a tax break.

Although Provena won this round, the case hasn't settled that issue, leaving lawmakers to continue their pursuit of legislation that would provide specifics. At both the Illinois and federal levels, lawmakers are pushing for such measures, but so far they have not become law.

Throughout the four-year case, which started when the Champaign County Board of Review first recommended the state strip the hospital of its property tax exemption, the issue of what non-profit hospitals must do to warrant such exemptions has only intensified.

Provena has said its Urbana hospital alone provided more than $13 million in care and services for which it was not compensated in 2002, the year before the local review board moved to strip its exemption, citing overly aggressive efforts to collect money from the poor and uninsured.

Madigan has been pushing for legislation that would require hospitals to provide a specific percentage of their revenue on charity care. But lawmakers and Illinois hospitals have not been able to agree on the amount or how it would be defined.

Federal lawmakers also are trying to craft such legislation. Non-profit hospitals do not have to pay federal income tax and are allowed to issue tax-exempt bonds for capital projects.

A proposal by influential U.S. Sen. Charles Grassley (R-Iowa) would mandate non-profit hospitals spend at least 5 percent of their budgets on charity care, among other measures. Hospitals that did not do so would lose their federal tax exemptions. Source: Chicago Tribune

For more details on 2004 lawsuits see Physician's News Digest

See also Clifford Law Offices list of 46 lawsuits