The Charity Care Requirement for Hospital Property Tax Exemptions

proves unable to pay after the economic situation of the patient is established—perhaps
after a debt collector is involved.
The Provena court accepted that a hospital should collect amounts from patients
who can pay. Moreover, the court acknowledged the need to employ collection agencies.
The court, however, concluded that a bad debt is not charity, even if the end result is the
same with the hospital discounting or writing off the cost of its services. The appellate
court would contrast the providing of services without the expectation of compensation,
which is charity, from the providing of services and proceeding as a creditor but then
concluding as a matter of business judgment to abandon the collection of the fee. The
court concluded that the creditor relationship even without collection is still the negation
of charity.
The appellate court rejected qualification for exemption based on the existence of
other charitable benefits provided to the community by Provena, which the court
characterized as the use of the federal income tax community benefit standard, rather than
the standard employed for the Illinois property tax. These other contributions asserted by
Provena were the following:
Crisis Nursery Services & Support;
Volunteer (community benefit) classes/services;
Emergency Medical Services (training & support
to community and area agencies);
Charitable subsidy of an ambulance service;
Donations to Other Not-for-Profits (less value
of participation);
Behavioral health community benefits; and
Subsidy for graduate medical education.
Finally the appellate court rejected the public policy concerns raised by the amici
in the case. The court acknowledged that public policy issues were the responsibility of
the legislature and not the courts. The Provena court then turned that argument against
Provena by declining to permit continuation of the charitable exemption for Provena until
the legislature addressed the concerns expressed by the appellate court on the Provena
record. The court concluded its reasoning as follows:
It is of obvious public benefit for any community to have
available one or more modern hospitals, but until such time
as the legislature sees fit to either change or make definite
the formula for the determination of the medical/charitable
8