March 23, 2017
The Illinois Supreme Court today vacated the Fourth District Appellate Court’s decision in the case of The Carle Foundation v. Cunningham Township—one of two cases challenging the constitutionality of Section 15-86, the 2012 legislation addressing hospital property tax exemption.
The appellate court had declared Section 15-86 unconstitutional. The Supreme Court concluded that the appellate court did not have proper jurisdiction to take the appeal. The Supreme Court’s ruling nullifies the appellate court ruling—as if it never occurred. This is great news.
Because appellate court decision was vacated, the Supreme Court did not address the constitutionality of Section 15-86, which means the favorable decision in the other constitutional challenge— Oswald v. Hamer—is now the “law of the land.”
In December, the First District Appellate Court ruled in Oswald that Section 15-86 is constitutional. The plaintiff asked the First District to reconsider its December ruling, and the appellate court is considering that request. However, there is no indication that the court will change its decision.
Although IHA had hoped the Supreme Court would address the constitutionality of Section 15-86, we understand and respect the Supreme Court’s decision in the Carle to vacate the appellate court decision case on non-constitutional grounds. We are very pleased that the appellate court decision case upholding the constitutionality of Section 15-86 in the Oswald case is now the controlling case in Illinois.
Section 15-86 is a bipartisan and reasonable approach to hospital property tax exemption. It accomplished a number of important goals:
- Providing hospitals and taxing bodies with clarity that had been lacking for many years;
- Ensuring that communities receive the “benefit of the bargain” for hospital tax exemption;
- Promoting healthcare delivery to low-income and underserved individuals; and
- Helping ensure that hospitals have the resources to serve their communities, in a time of increased financial stress on hospitals.
What Happens Next
Assuming the Oswald decision remains unchanged, the plaintiff has the right to file a petition for leave to appeal to the Illinois Supreme Court seeking review the constitutionality of Section 15-86.
IHA will reach out to the Department of Revenue to discuss next steps in light of today’s decision. Recall that DOR has been holding exemption applications awaiting the outcome in Carle. IHA and AHA each filed amicus briefs in support of the statute.