Second Champaign hospital loses its exempt status

Health Business Policy has a news flash that the Champaign County (IL) "Board of Review reports that the Illinois Department of Revenue (“DOR”) has revoked the property tax exemption of a second hospital in Champaign-Urbana, the Carle Foundation Hospital in Champaign, Illinois, agreeing with the original recommendation filed by the Board of Review to the Illinois DOR in the spring of 2005." There's nothing on the DOR web site about the alleged affirmance.

The Board of Review's letter brief argued that the hospital was guilty of inurement by providing a practice platform for the for-profit physician group that operated it. Granted, this is the position of a single taxing authority (and maybe the state as well), but if that analysis is adopted widely, a lot of multi-specialty physician groups (at least the ones that aren't organized as nonprofits) with an affiliated health or hospital group are going to want to take a close look at whether they are organized and operated for a charitable purpose. Every entity's facts will be a little different, and exempt status is a "facts and circumstances" determination, but counsel for any such organization will want to pay close attention to the County's analysis of the inurement issue, as well as the other facts relied on in their brief.