November 9, 2006 | Read Time: 1 minute
In a legal battle being watched by nonprofit hospitals around the country, an Illinois medical center is appealing the state’s decision to revoke the organization’s exemption from property taxes.
The State of Illinois last month upheld a 2003 county ruling affecting the status of Provena Covenant Medical Center, in Urbana.
The state said that the amount Provena spent on charity care — which represents less than 1 percent of its revenue — was insufficient to restore its exemption from property taxes.
The American Hospital Association said similar challenges are under way at hospitals in other localities.
In addition, members of Congress have been looking into whether federal law should redefine how hospitals must fulfill their charitable commitment to avoid paying federal taxes.
Provena officials say that charity care is only part of the benefit it provides to the public.
The hospital estimates that it is responsible for nearly $22-million annually in other charitable benefits, such as free immunization programs.
“We don’t think [the charity-care figure] accurately reflects what we do in terms of charity care, care to the poor, and community benefit,” said Wiliam Foley, Provena’s president.
The Champaign County Board of Review, which oversees property taxes in Urbana, had removed the hospital’s tax exemption, citing aggressive collection policies it said the nonprofit hospital was using with patients who could not afford to pay their bills. It said the hospital had sued patients and their relatives for unpaid medical care and even made civil arrests.
Provena said it has since changed its collection policies.
Since the original county ruling in 2003, Provena said it has paid $4.8-million in property taxes.
