Jonathan Bilyk May 25, 2016, 4:21pm

The Illinois Supreme Court will weigh in on the question of whether Illinois law can constitutionally exempt hospitals from paying property taxes.

On May 25, the state’s highest court announced it would allow Urbana’s Carle Foundation Hospital to appeal a decision handed down earlier this year by the Illinois Fourth District Appellate Court in Springfield. In that opinion, a three-justice panel of the Fourth District court had struck down a state law shielding hospitals from having to pay local property taxes.

That decision was just the latest step in a long-running legal dispute between the Carle Foundation and a group of tax collecting public bodies, including the Illinois Department of Revenue and local governments in Champaign County and the city of Urbana.

The state and local governments argued the hospital should owe property taxes, despite the Carle Foundation’s nonprofit status.

However, the hospital said a 2012 state law have it and other Illinois hospitals tax exempt status, provided a hospital’s services to “low-income or underserved individuals” offset its estimated annual property tax liability.

The appellate justices, however, said the state law fails to pass muster under the Illinois constitution, which requires nonprofit organizations to use property primarily for “charitable purposes” to be eligible for a property tax exemption. The justices noted the law was intended to clear up a controversy over just how much charity care hospitals should provide to qualify as charitable organizations, and thus be eligible for tax exempt status. But they said this kind of test - balancing a hospital’s purported benefits to the community against the hospital’s obligation to pay property taxes - effectively produces an unconstitutional system in which hospitals can purchase tax exemptions.

The appellate decision overturned a different conclusion reached by a Champaign County judge in 2014.

Now, the state Supreme Court will wade into the question, and is expected to hear arguments in coming months.

The arguments will come even as a class action case is pending in Cook County Circuit Court, brought by a Chicago real estate investment entity against Evanston-based NorthShore Health System and a defendant class of all other Illinois hospitals, asserting the hospitals owe taxpayers for years of skirting their obligations to pay into the property tax system. Essentially, the case argues the tax burden on everyone else would have been lower if hospitals had not obtained unconstitutional property tax exemptions.

The Cook County class action complaint relied heavily on the Fourth District’s opinion in the Carle Foundation case. It asks the court to order Illinois hospitals to pay an amount equal to what they would have paid in property taxes since 2014, plus interest.

The Carle Foundation case was one of seven cases the state high court agreed to take up in coming weeks and month.

The court also granted leave to appeal to those representing a group of Occupy movement protesters, who challenged the city of Chicago’s ability to use curfew restrictions to kick protesters out of Grant Park during overnight hours under threat of arrest, which, when it happened in 2011, the protesters said unconstitutionally impinged their First Amendment rights to assemble.

Should the state Supreme Court hear arguments in the case, it would mark the second time the high court has taken up the question. In December 2014, justices had vacated a First District Appellate Court ruling in favor of the city, ordering the appeals panel to reconsider in light of the protesters First Amendment claims.

However, in December 2015, the appeals court again sided with the city, saying the protesters did not have a constitutional right to simply occupy Grant Park for as long as they wished, preventing the Chicago Park District from maintaining the public property.

“Free assembly … is not without its limits,” the appellate justices wrote.

Other cases granted leave to appeal included:

Board of Education of Springfield School District 186 vs The Attorney General of Illinois, No. 120343 (Fourth District)

Christopher Wardwell vs Union Pacific Railroad Company, No. 120438 (Fifth District)

People of State of Illinois vs Archie C. Howard, No. 120443 (Third District)

Village of Bartonville vs Salvador Lopez, et. al., No. 120643 (Third District).

The court also declined to hear appeals in about 200 other cases.

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Organizations in this Story

Carle Foundation Hospital
611 W. Park Street
Urbana, IL 61801

Illinois Supreme Court
200 E Capitol Ave
Springfield, IL 62701

City of Chicago
121 N LaSalle St
Chicago, IL 60602

Chicago Park District
541 N Fairbanks Ct
Chicago, IL 60611

Illinois Department of Revenue
101 W Jefferson St
Springfield, IL 62702

Union Pacific
1400 Douglas St
Omaha, NE 68179

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