Provena Covenant Medical Center v. Department of Revenue

JUSTICE BURKE, concurring in part and dissenting in part:

I join that portion of the plurality opinion which holds that Provena Hospitals failed to demonstrate it was entitled to a religious exemption based on the lack of sufficient evidence. See 236 Ill. 2d at 390-93.

I also join the plurality opinion’s conclusion that Provena Hospitals failed to establish it is a charitable institution. The defining characteristics of a charitable institution include, inter alia, that the institution dispenses charity to all who need it and apply for it, and that it does not appear to place any obstacles in the way of those who need and would avail themselves of the charitable benefits it dispenses. Methodist Old Peoples Home v. Korzen, 39 Ill. 2d 149, 157 (1968). There is evidence in the record detailing Provena Covenant Medical Center’s (PCMC) charity care policy, evidence that PCMC’s staff engaged in outreach efforts to communicate the availability of charily care and encouraged patients to apply, and evidence that charitable care would be considered by PCMC at any time. However, there is no such evidence in connection with Provena Hospitals, the actual owner of the subject property. Accordingly, the record in the case at bar is inadequate to establish that Provena Hospitals is a charitable institution, a necessary prerequisite to receiving a charitable exemption. For this reason alone, I agree with the plurality that Provena Hospitals is not entitled to a charitable exemption in this case.

I do not join that portion of the plurality opinion which addresses the doctrine of charitable use. Without citation to authority, the plurality holds that Provena Hospital’s use of the property in 2002 was not a “charitable use” because the charity care provided was de mini-mus. Specifically, the plurality concludes that “there was ample support for the Department of Revenue’s conclusion that Provena failed to meet its burden of showing that it used the parcels in the PCMC complex actually and exclusively for charitable purposes. As our review of the undisputed evidence demonstrated, both the number of uninsured patients receiving free or discounted care and the dollar value of the care they received were de minimus.” 236 Ill. 2d at 397. I disagree with this rationale. By imposing a quantum of care requirement and monetary threshold, the plurality is injecting itself into matters best left to the legislature.

The legislature did not set forth a monetary threshold for evaluating charitable use. We may not annex new provisions or add conditions to the language of a statute. Hines v. Department of Public Aid, 221 Ill. 2d 222, 231 (2006). Yet, this is exactly what the plurality does. The Michigan Supreme Court in Wexford Medical Group v. City of Cadillac, 474 Mich. 192 , 713 N.W.2d 734 (2006), aptly set out this principle. In Wexford, the court held that “there can be no threshold [dollar amount of free medical services provided] imposed under the statute. The Legislature provided no measuring device with which to gauge an institution’s charitable composition, and we cannot presuppose the existence of one. To say that an institution must devote a certain percentage of its time or resources to charity before it merits a tax exemption places an artificial parameter on the charitable institution statute that is unsanctioned by the Legislature.” Wexford, 474 Mich. at 213 , 713 S.W.2d at 745.

Not only did the Wexford court reject a monetary threshold because it was not provided for in the statute, the court also believed it would be unwise to impose such a requirement, finding that such a requirement “would be, by its very nature, quite arbitrary.” Wexford, 474 Mich. at 213 , 713 S.W.2d at 745. In addition, the court stated:

“As petitioner aptly pointed out, there are multiple reasons why inventing legislative intent in this regard would be ill-advised and most unworkable. In fact, the difficulties with formulating a monetary threshold illuminate why setting one is the Legislature’s purview, not the courts’. To set such a threshold, significant questions would have to be grappled with. For instance, a court would have to determine how to account for the indigent who do not identify themselves as such but who nonetheless fail to pay. A court would have to determine whether facilities that provide vital health care should be treated more leniently than some other type of charity because of the nature of its work, or even if a health care provider in an underserved area, such as petitioner, is more deserving of exemption than one serving an area of lesser need. A court would need to consider whether to premise the exemption on whether the institution had a surplus and whether providing below-cost care constitutes charity. Clearly, courts are unequipped to handle these and many other unanswered questions. Simply put, these are matters for the Legislature.” Wexford, 474 Mich. at 214 , 713 S.W.2d at 745-46.

The Wexford court concluded: “[I]t does not follow that an institution must present evidence of a particular level of charitable care because there is no such threshold level contained in the statute. And we refuse to create one.” (Emphasis omitted.) Wexford, 474 Mich. at 220 , 713 S.W.2d at 748.

Similarly, in Medical Center Hospital of Vermont, Inc. v. City of Burlington, 152 Vt. 611 , 566 A.2d 1352 (1989), the Vermont Supreme Court, in rejecting the taxing authority’s argument that the amount of free care dispensed must exceed revenues, concluded there was nothing in any Vermont case that required an institution to dispense any free care to qualify as charitable for purposes of the charitable property tax exemption. Medical Center Hospital of Vermont, 152 Vt. at 616 , 566 A.2d at 1354 . In fact, the court had previously held that “ ‘[t]he fact that none of its patients are cared for without charge does not deprive [an institution] of its charitable feature.’ [Citation.]” (Emphasis omitted.) Medical Center Hospital of Vermont, 152 Vt. at 616 , 566 A.2d at 1355 . The court further concluded, “[T]his state has never required a certain percentage of free care to be rendered before finding an organization to be a tax-exempt charity ***.” Medical Center Hospital of Vermont, 152 Vt. at 616 , 566 A.2d at 1355 . The court declared: “In our opinion, pegging charitability to a stated amount of free care rendered would not be workable in determinating an organization’s taxable status. Instead, uncertainty would reign ***.” Medical Center Hospital of Vermont, 152 Vt. at 616 , 566 A.2d at 1355 . Rather, “[t]he better inquiry, it seems to us, is the one used by the trial court in this case: whether health care was made available by the plaintiff to all who needed it, regardless of their ability to pay.” Medical Center Hospital of Vermont, 152 Vt. at 617 , 566 A.2d at 1355 .

In addition to the difficulties in formulating a monetary threshold pointed out by the Wexford court, the Medical Center court noted another problem that would be encountered if a quantum approach is imposed — uncertainty. Specifically, taxability would necessarily be determined on a year to year basis, depending upon economic factors which are not in the control of an organization. Medical Center Hospital of Vermont, 152 Vt. at 617 , 566 A.2d at 1355 . The court stated: “As plaintiff pointed out at trial, if the economy in the Burlington area were to fall off dramatically and unemployment to soar, fewer people would be covered by health care insurance through employers and, consequently, more free care would be rendered to those in need. Should the economy make a turnaround the following year, the amount of free care given might fall again should unemployment levels drop.” Medical Center Hospital of Vermont, 152 Vt. at 617 n.3, 566 A.2d at 1355 n.3. See also City of Richmond v. Richmond Memorial Hospital, 202 Va. 86, 90 , 116 S.E.2d 79, 81-82 (1960) (“A tax exemption cannot depend upon any such vague and illusory concept as the percentage of free service actually rendered. This would produce chaotic uncertainty and infinite confusion, permitting a hodgepodge of views on the subject. Thus there would be no certainty nor uniformity in the application of the section involved”).

I find these authorities persuasive. I do not believe this court can, under the plain language of section 15— 65, impose a quantum of care or monetary requirement, nor should it invent legislative intent in this regard. Setting a monetary or quantum standard is a complex decision which should be left to our legislature, should it so choose. The plurality has set a quantum of care requirement and monetary requirement without any guidelines. This can only cause confusion, speculation, and uncertainty for everyone: institutions, taxing bodies, and the courts. Because the plurality imposes such a standard, without any authority to do so, I cannot agree with it.

I also disagree with the plurality’s conclusion that Provena Hospitals was “required to demonstrate that its use of the property helped alleviate the financial burdens faced by the county or at least one of the other entities supported by the county’s taxpayers.” 236 Ill. 2d at 396 n.10. Alleviating some burden on government is the reason underlying the tax exemption on properties, not the test for determining eligibility. Despite acknowledging this (236 Ill. 2d at 395-96), the plurality converts this rationale into a condition of charitable status. I neither agree with this, nor do I believe that Provena Hospitals failed to show it alleviated some burden on government.

In Wexford, the court, similar to the plurality, defined charity as:

“ ‘[Charity] *** [is] a gift, to be applied consistently with existing laws, for the benefit of an indefinite number of persons, either by bringing their minds or hearts under the influence of education or religion, by relieving their bodies from disease, suffering or constraint, by assisting them to establish themselves for life, or by erecting or maintaining public buildings or works or otherwise lessening the burdens of government.’ ” Wexford, 474 Mich. at 211 , 713 N.W.2d at 744 , quoting Retirement Homes of the Detroit Annual Conference of the United Methodist Church, Inc. v. Sylvan Township, 416 Mich. 340, 348-49 , 330 N.W.2d 682, 686 (1982), quoting Jackson v. Phillips, 96 Mass. 539, 556 (1867).

See 236 Ill. 2d at 394-95, quoting Crerar v. Williams, 145 Ill. at 643, quoting Jackson v. Phillips, 96 Mass. 539, 556 (1867).

The Michigan court then concluded: “Implicit in the definition is that relieving bodies from disease or suffering is lessening the burden of government.” (Emphasis omitted.) Wexford, 474 Mich. at 219 , 713 N.W.2d at 748 . That court specifically held that “petitioner does not have to prove that its actions lessen the burden of government. Rather, it has to prove, as it did, that it £reliev[es] their bodies from disease, suffering or constraint,’ which is, by its nature, a lessening of the burden of government.” Wexford, 474 Mich. at 219 , 713 N.W.2d at 748 . I believe the Michigan Supreme Court’s conclusion is correct. While “lessening the burden of government” is a component of the definition of charity, it is inextricably tied to the public policy justifying the exemption itself and is not a requirement for demonstrating entitlement to the exemption. The plurality here errs in requiring Provena Hospitals to specifically demonstrate some burden of government it relieved. There is no such requirement.

For the above reasons, I cannot join in the charitable use portion of the plurality opinion. I note that the discussion of charitable use does not command a majority of the court and, therefore, is not binding under the doctrine of stare decisis.

JUSTICE FREEMAN joins in this partial concurrence and partial dissent.