UPDATED: Prussing says ruling vindicates city's stance on Carle

UPDATED: Prussing says ruling vindicates city's stance on Carle

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URBANA — The state's 2012 charity care law has been declared unconstitutional by the Fourth District Appellate Court in a ruling that also scored a major victory for the city of Urbana and local taxing districts in a long-standing legal battle with the Carle health system.

Here is the 46-page ruling.

A jubilant Urbana Mayor Laurel Prussing said Wednesday the decision vindicated the city's position to fight Carle and the state law after Carle properties became tax-exempt, taking $60 million of assessed value with them.

It also vindicated the city's decision to turn down Carle's offer to pay Urbana for some city services to make up for some lost tax revenue, she said.

"People kept saying you should take the money and run," Prussing said.

In an appeal of now-retired Champaign County Judge Chase Leonhard's ruling that allowed the state's charity care law (section 15-86 of the state Property Tax Code) to be applied retroactively to Carle's pending tax exemption claims on four of its properties for tax years 2004-2011, the higher court wrote that it concluded the following:

"Because section 15-86 is unconstitutional, it is inapplicable to the question of whether the four parcels are exempt from taxation. Therefore, we reverse the trial court's judgment, and we remand this case for further proceedings."

The four pieces of land in the case include 611 W. Park St., 503 N. Coler Ave., 607 N. Orchard St. and 809 W. Park St., all in Urbana.

An appeal of Leonhard's decision was filed by the city of Urbana, Cunningham Township, Champaign County, the county Board of Review and its members, County Treasurer Dan Welch and the Illinois Department of Revenue.

A major goal for Urbana in the appeal was to have the charity care law declared unconstitutional, Prussing said. The new law redefined the terms by which nonprofit hospitals qualify for tax exemptions, requiring them to provide at least as much charity care as their tax breaks are worth.

What immediate impact will result from the court's finding on the state law is unknown. Danny Chun, spokesman for the Illinois Health and Hospital Association, said the organization's attorneys have reviewed the decision and they believe it won't have any immediate impact because it isn't final.

"The Illinois Health and Hospital Association is disappointed with the Appellate Court ruling," the organization said in a statement. "The bipartisan legislation enacted by the Illinois General Assembly in 2012 had ended a decade of uncertainty regarding the test for hospital property tax exemption. The law is clear, fair and reasonable. Illinois hospitals provide $5.5 billion in benefits to their communities annually, including more than $1 billion in charity care alone (measured at cost). It's important to note that this is not a final decision and has no immediate impact."

In a recent interview, Prussing said she expects the case will wind up in the state Supreme Court, but she also said Wednesday what happens next is up to Carle.

Carle officials couldn't be reached for an interview, but in a written statement, Carle spokeswoman Jennifer Hendricks Kaufmann said, "We are disappointed in the Appellate Court's opinion. We will thoroughly review the opinion and then determine our next steps, which could include an appeal to the Illinois Supreme Court. As always, we remain focused on providing care to our patients throughout the region, regardless of their ability to pay."

Prussing said this isn't just a local issue. It's an issue affecting taxpayers and hospitals throughout Illinois and the nation.

"This is a huge issue of who is not-for-profit and who should be paying taxes," she said.

For local taxpayers, though, Prussing said, there's some $6.5 million in annual Carle taxes at stake, much of which would be paid to the schools.

Prussing also said she sees a solid appeals court decision in this ruling finding the new state charity care law unconstitutional.

The law is unconstitutional on its face, the higher court concluded, because it purports to grant a charitable exemption on the basis of an unconstitutional criterion — providing services or subsidies equal in value to the estimated property tax liability without requiring that the subject property be used exclusively for charitable purposes.

The court's decision was written by Justice Thomas Appleton of Springfield, with Justice John Turner of Lincoln and Justice Robert Steigmann of Urbana concurring.

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kaw wrote on January 06, 2016 at 3:01 pm

Yes!!!!!  Thank you, Laurel Prussing, for standing by the taxpayers in Urbana and continuing to fight the state of Illinois for what it has done to us.  

Rocco146 wrote on January 06, 2016 at 3:01 pm

Maybe this will be the begining for the City of Urbana to pay their METCAD bill on time like the rest of the surrounding communities and not consider jeopordizing the safety of the community. 

Joe American wrote on January 06, 2016 at 4:01 pm

It's too bad that Carle has overbuilt in Urbana.  We'd more than welcome them into Champaign.  Maybe it's time for Carle to invest more into their Champaign infrastructure and less into Urbana, setting the course for a future move.

Can you imagine that? 

I'm Lovin' It wrote on January 06, 2016 at 7:01 pm

This ruling applies to Champaign as well since Champaign is on the 4th district - if Carle moves to Champaign they'll still owe the property tax. 

flushontheflop wrote on January 08, 2016 at 10:01 am

Does Champaign offer the charity loophole that Carle exploits?  

Alex M. Mobley wrote on January 06, 2016 at 4:01 pm
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If Carle has to pay taxes to Urbana, I wonder how this might affect the Carle Illinois College of Medicine.

rsp wrote on January 06, 2016 at 7:01 pm

You know Carle has plenty of money, right?

Marv wrote on January 06, 2016 at 8:01 pm

This article fails to mention that the day care facility isn't just for Carle employees. I feel the wording makes this article sound petty as if they are just finding a way to put down Carle as much as possible. 

NeverLookDown wrote on January 07, 2016 at 7:01 am

Bike paths and roundabouts for everyone!!!!

IlliniwekMerica wrote on January 07, 2016 at 8:01 am

I'm glad Laurel feels vindicated in the fit she's been throwing for the past few years. Throwing that fit instead of, you know, doing her job and adjusting Urbana's budget to match the new tax income, maybe even paying their METCAD bill on time.  

But, Carle really did give that charity care. And if this keeps going and is really found unconstitutional, and the ultimate result is Carle doing less and less charity care, I don't see how this is a good thing for Urbana or the local community on the whole. 

Cuthbert J. Twillie wrote on January 07, 2016 at 9:01 am

Lets review:


This was a bill sponsored by 

a democratic represenative from Urbana  ( N. Jackobsonn)


it was passed by a democratic legislature and a democratic govenor signed it.




why did the current Democratic Senator and Represenative not file a bill taking this away?  Why the MFL blaming Carle for this mess, when in reality, it was her own party who enacted this legislation. Where is her outrage against them?  Where is the NG article asking those who voted for this, why they voted for it and do they have regrets, esp the ones who represented Champaign County at the time?  Where is the followup?


I get it for the MFL


Carle Bad


Urbana good


Now.. pay the Metcad bill today....

andrewscheinman wrote on January 07, 2016 at 10:01 am

Actually Naomi did push a bill that would have narrowed down the original bill, as far as I know that latter bill is still "stuck" somewhere in the legislative process. "DIC" I believe it's called ("Dead in Committee.")

My understanding is that the original bill was part of a grand bargain enacted in the legislature to keep charity care going, again I'm not an expert but from what I'd read it worked relatively well for much of the state, but there were a few communities where the tax base was badly affected, CU among them.

What I find really amazing is that people see this as a fight between good capitalism and bad Urbana.  Treating Carle as a non-charity-care entity doesn't mean it's not qualified as a non-profit, and that level of regulation doesn't mean anyone is anti-capitalist.

Regulations came into existance in order to prevent the worst abuses of unchecked and uncontrolled capitalism: child labor, industrial accidents, slave wages,  No one thinks over regulation is great, but holding Carle as having a mission other than as a charity enterprise doesn't mean it will be treated as a non-hospital, or non-profit.

As far as the charity care goes, Carle's own statements seem to indicate that everything's up in the air now that we have Obamacare and other changes in federal regulations regarding care.  So who knows where this is going, it certainly doesn't seem to be putting Carle out of business.

Not that that's a justification for additional regulation, that the new regs "won't put someone out of business."  On the other hand, again I don't understand why people think that any attempt to enforce these laws is an "attack" on Carle.  You can certainly separately fault Urbana for its own failures, there are many, unfortunately like too many other municipalities,and indeed too much of the Great State of Illinois.  But Urbana's failures, however myriad they might be, don't change the requirement that Carle comply with the law, do they?

Do people really think that we're so lucky to have Carle (or any other employer) here that they should be free from complying with the laws and paying their fair share?  By way of actual property taxes, assuming (as the Court concluded) that they're NOT a charitable entity, since their primary mission isn't charity care (see the ruling, paragraph 141, page 38).

kaw wrote on January 07, 2016 at 1:01 pm

Okay...you need to realize that the biggest winner in this situation is the Urbana School District, not the City of Urbana.  USD116 is by far the biggest (dollar amount) taxing body for Urbana taxpayers.  The Urbana Park District will also see revenues from this decision, if the supreme court ruling upholds the appellate court ruling.  Quit knocking the city (and its mayor).  

Secondly, to better understand the 2012 legislation, pretend that EVERYONE gets a real estate tax break based upon their charitable donations, because that's basically what the legislation said.  So, the person with a $5,000 tax bill gives away $5,000, should that person get a pass on real estate taxes?  Hardly.  Illinois funds far too many things with real estate taxes; that's another issue.  No one else gets a pass on real estate taxes in a similar manner, why should a hospital?  

The Illinois constitution clearly spells out what organizations are exempt from paying real estate taxes, e.g. schools, churches, etc.  The Illinois General Assembly cannot pass legislation broadening those exemptions and changing the constitution.  That's not how we change a constitution.  The courts simply interpreted the language of the constitution and applied it in this case.  

Carle provides "charitable care" in 44 counties, but since most of its real estate holdings are in Urbana, it's Urbana taxpayers who foot the bill for that charitable care.  I don't understand why my tax burden has to include people who live in 43 counties other than the one where I live, including counties in Indiana.  If you got to vote on such a measure, would you vote in favor of it? 

Lastly, please stop looking at this as a Carle/City of Urbana issue.  The 2012 legislation applied to all hospitals in Illinois, not just Carle.  Perhaps in providing differing viewpoints, we should use the word "hospital" and not the proper name of a specific place.  Then the appellate court decision begins to make a lot more sense.  


Trailmom wrote on January 07, 2016 at 2:01 pm

You say it's not a Carle/Urbana issue yet you bemoan Urbana paying for the other 43 counties.

Not accurate.  Carle's publicly reported information shows that charity care provided (at cost) to people in Urbana alone in 2013 totaled more than $7Million.  That's more than the value of the tax exemption.


andrewscheinman wrote on January 07, 2016 at 2:01 pm

So excellent points, a few questions if I may.

First, how much is this going to matter to Illinois hospitals writ large?  I remember having read that the effect of the legislation in terms of the single aspect (of many) of repayment of taxes by municipalities to hospitals was pretty small, as I recall only a couple of Chicagoland towns were in the same situation as here.  So will the push-back on this ruling come from Carle only, or will all Illinois hospitals be equally upset?

Second, you're right that the school district was most affected.  Since they already signed off on paying back $ to Carle (as did the Park district), in theory are they now due refunds of that money?  Obviously it's "in theory" because Carle's already stated they'll appeal to the state Supreme Court, so it's not as if the $ are changing hands anytime soon.

Third ... hmmm, I remember Prussing as arguing Carle wasn't a charitable institution as well as that 15-86 was unconstitutional.  The Appellate court found the latter, did they rule on whether or not Carle is charitable.  I don't think they did, but I haven't carefully read the opinion.

Kudos to your command of the subject, I find it hideously confusing, although the bit of the opinion I did read threw a huge amount of light on at least that single simple concept that expanding the concept of "charitable" as 15-86 did violates the state constitution.


kaw wrote on January 07, 2016 at 5:01 pm

Andrew, I don't know what will happen with the school district since they settled for a portion of what Carle owed them with the caveat they will not enter litigation to recoup anymore funds.  The park district did the same.  I think the question of additional payments to the school and park districts remains to be seen once all the dust has cleared.  Realistically, that's several years down the road.  However, if the supreme court upholds the appellate court decision, that changes the playing field dramatically for the school district in the future. 

As I understand it, the appellate court ruling did not rule on whether the hospital was charitable, it ruled on whether the General Assembly gets to broaden the criteria by which a hospital is determined as charitable and the answer was no.  You're the attorney, I'm sure your grasp on this is much better than mine. 

The hospital lobby is very powerful, as we see by the fact that the 2012 legislation was enacted within days of the supreme court decision regarding Provena/Covenant's standing as a charitable organization, finding against Provena.  

It ain't over til it's over, we're nowhere near the end.  



kaw wrote on January 07, 2016 at 5:01 pm

Trailmom, I don't believe your figure is accurate.  In a meeting with Carle leadership about 15 months ago over this issue, Carle said they had provided $3 million in charitable care to Urbana residents.  They reported they spent $10 million in charity care to Champaign residents.  And those figures are before they implement collections procedures to recoup any of those costs of "charity care."   But the dollar amounts really aren't the issue.   

MPCPlatinum wrote on January 09, 2016 at 12:01 pm

Instead of spending so much time and energy fighting Carle and Presence over the tax exempt issue, how about Ms. Prussing use some of that energy to focus on all the churches, mosques, and synagogues and their tax exempt status that they've been exploiting for a century or more in this town/country. At least Carle and Presence offer 24/7 benefit to the community in keeping us healthy and saving lives, let alone their tens of millions of dollars in charity care offered to the community each year. What do churches provide? Sure, the occasional food drive or clothing drive, but let's be real. If these two hospitals are no longer able to use the tax exempt status, then neither should these places of worship. I'd love to see what the grand total of all of their combined properties would equate to in property tax revenue.