Hospital operators in Illinois have won a battle in the
fight over a state law blocking local governments from making them pay property
taxes, as the Illinois Supreme Court determined an appellate court had erred on
procedural grounds in using the case to strike down the state law as
However, the high court did not go so far as to declare the
2012 law to be constitutional, setting the stage for more legal tussles to come
on the question.
Illinois Supreme Court
March 23, in a unanimous opinion, the state Supreme Court dismissed an
appellate panel’s determination the law essentially allows hospitals to “buy a
charitable exemption,” which the Illinois Fourth District Appellate Court justices
said violated constitutional language
empowering the General Assembly to grant tax exemptions.
The ruling comes a little over two months since justices for
the state’s high court heard arguments over the appeal of the Fourth District
court’s Jan. 5, 2016, opinion.
The Fourth District court convenes in Springfield.
The Supreme Court’s decision comes as the latest chapter in
the long-running conflict over whether a hospital in downstate Urbana – and, by
extension, other Illinois hospitals - should be required to pay property taxes.
While the hospital’s owners, the Carle Foundation, hold nonprofit status, the
city of Urbana, Champaign County and other local governments have argued a
state law appearing to grant the hospital and others like it across the state
tax exemptions should be stricken because it violates the state constitution.
Robert Thomas wrote the opinion for the state Supreme Court. When justices
heard arguments on the case Jan. 12, Thomas was among the justices who focused
on “procedural questions,” suggesting the case’s baggage could prevent them
from ruling on the matter, as the case is a less inviting test for the 2012 law
than a more streamlined case decided in the state’s First District Appellate Court
in Chicago — a case that may not reach the Supreme Court docket for
opinion focused first on whether the appellate court had jurisdiction in the
Carle case. He cited Rule 304(a), and specifically established Supreme Court
distinction “between judgments that dispose of ‘separate, unrelated claims,’
which are immediately appealable under Rule 304(a), and orders that dispose
only of ‘separate issues relating to the same claim,’ which are not immediately
appealable under Rule 304(a).” The distinction, he noted, discourages unnecessary
the Carle matter, Thomas wrote the justices concluded the circuit court’s order
granting the plaintiffs’ motion for summary judgment resolved only one issue
and not an entire claim. With that being the case, the circuit court’s order
would not be eligible for appellate review under Rule 304(a).
summary judgment affected count two of the fourth amended complaint. That count
sought a declaration for what law governs counts two through 34 of the same
complaint, which Thomas wrote makes it “a textbook example of an ‘issue’ that
exists only because of and ancillary to a ‘claim.’ ”
further detailed how proceedings between the two sides further showed how count
two could not be separated from the larger complaint, including in the
plaintiffs’ own motion for summary judgment, which asserted “cross-motions for
summary judgment did not dispose of an entire cause of action.”
justices also, Thomas wrote, felt “compelled” to consider whether the plaintiffs
made an exemption claim significantly distinct from the declaratory judgment
claim the circuit court granted. That argument could only be made if count two
were “a proper declaratory judgment count. In fact, it is not.”
claimed right in this case is a right to a charitable-use tax exemption for the
tax years in question,” Thomas wrote. “The circuit court’s order granting
plaintiff’s motion for summary judgment on count two does nothing to determine
whether such a right exists. Indeed, whether plaintiff possesses such a right
is as open a question today as it was in 2007, when plaintiff first filed its
complaint. And this is because, rather than asking the circuit court to
determine whether such a right exists, plaintiff asked only for a declaration …
a declaration of what law applies to the determination of a party’s rights is
not itself a determination of that party’s rights. Yet a determination of what
law applies is the only determination that count II of the fourth amended
Thomas wrote the justices felt it “would be decidedly premature” to consider
whether the law in question is constitutional. With the appellate court’s Rule
304(a) finding deemed improper, the case was remanded back to the circuit court
for further proceedings.