Non-profit Illinois hospital must pay property tax

In a closely watched case, Illinois’ highest court Thursday determined that a not-for-profit hospital had to pay property taxes, because it didn’t offer enough charity care to qualify for a tax exemption.

The decision is the culmination of a five-year fight over whether Provena Covenant Medical Center, a Catholic hospital in Urbana, provided enough of a benefit to the community to justify the tax break. Provena came under scrutiny by state regulators for its aggressive collection policies, especially toward uninsured patients.

“The record showed, however, that during the period in question here, Provena Hospitals did not advertise the availability of charitable care at PCMC. Patients were billed as a matter of course, and unpaid bills were automatically referred to collection agencies,” Justice Lloyd Karmeier wrote for the court.

“As a practical matter, there was little to distinguish the way in which Provena Hospitals dispensed its ‘charity’ from the way in which a for-profit institution would write off bad debt,” he added.

However, two of the seven justices recused themselves, and the remaining vote was 3-2. This split may minimize the impact of the decision.

well in the future when everyone has insurance there won’t be any needy, so there won’t be any hospitals providing care for the needy, so they can all be taxed (they will all certainly be non-profit however). [play Jaws theme]

You know, when I heard about this decision I had two reactions.

On the one hand, I think it is potentially disastrous as it provides yet another club for the government to drive Catholic hospitals, etc. out of business and force everyone to depend on the government for healthcare and other needs. (The other club, of course, will be federal funding and guaranteed access to abortion.)

On the other hand… I couldn’t help but think that if the Catholic Health Association (which defended the hospital in this case) believes government funded health care is so wonderful – enough to compromise their church’s teaching authority and moral principles over it – maybe it’s only right they should have to share in the cost.

It’s worth noting that one of the ways in which this Obamacare plan will allegedly take care of the uninsured is by simply making more of them eligible for Medicaid. Medicaid, however, is funded jointly by states and the federal government, and many states (including Illinois) can barely pay for their Medicaid patients as it is. Adding millions more could drive more states into “bankruptcy” (well, states can’t legally go bankrupt, but you get the idea), and in turn, mean greater tax burdens for local governments. So in some ways, one could interpret this decision as just what they (Catholic Health Association and other “Catholic” supporters of Obamacare) have coming to them.

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