The Journal of The DuPage County Bar Association

Back Issues > Vol. 21 (2008-09)

NIU's Northern Exposure
The Charitable Purpose Exemption and Illinois Hospitals: It’s time to Retire the Methodist Test
By Joseph Hylak-Reinholtz

State and federal policy makers, over a century ago, realized that nonprofit hospitals gave significant amounts of charity1 to many Americans and, in turn, offered some relief to these hospitals by creating various tax exemptions, including exemptions from the property tax.2 Based on the historical basis for tax relief, clearly, a nonprofit hospital today cannot be granted a tax exemption if the hospital does not provide some amount of charity. What if a nonprofit hospital administrator asked his or her attorney what was required, at a minimum, to guarantee the continuation of the hospital’s property tax exemption? The attorney could not provide a clear answer because the relevant statutes and case law fail to answer some of the most important questions. For example, what services qualify as charity and what amount of qualified charity is sufficient to meet the intent of the charitable purpose exemption?

In Illinois, the current analysis used to examine whether an institution is serving a charitable purpose was outlined in Methodist Old People’s Home v. Korzen, an Illinois Supreme Court opinion issued in 1968.3 Despite being created over forty years ago, the Methodist test continues to be utilized, without question, in court opinions across the State.4 The Illinois Supreme Court issued an extremely detailed test in 1968, too narrow and inflexible to adapt to the rapidly changing hospital industry, and it should be abandoned in 2009.5 This year, the Illinois Supreme Court has the opportunity to create a modern test for determining whether a nonprofit hospital is fulfilling a charitable purpose.6 In Provena Covenant Medical Center v. Department of Revenue the state’s high court will consider whether Provena, a nonprofit hospital in Champaign, Illinois, provided enough charity care to justify a charitable purpose property tax exemption.7 Nonprofit hospitals across the State fear the court will affirm an unrealistic charity care standard and effectively end charitable exemptions.

First, this article will discuss the test factors stated in Methodist which are most problematic. Second, this article argues that the current test should be replaced with a more flexible analysis. For example, the Illinois Supreme Court should require that a nonprofit hospital provide a reasonable amount of charity to impoverished or uninsured persons. However, the meaning of charity should include more than what lower court decisions have allowed.8 In other words, the analysis should not narrowly focus on a hospital’s charity care program. Any new test must carefully consider a hospital’s financial situation, payor mix,9 and other relevant factors such as the amount of bad-debt incurred by the hospital.10 In addition, any new standard must recognize the continuing evolution of health care and should consider the total benefit a nonprofit hospital offers the community which it serves.

The question of whether property was exclusively used for charitable purposes was addressed by the Illinois Supreme Court in Methodist Old People’s Home v. Korzen.11 In this landmark case, the Court addressed whether the property of a retirement home was exempt from taxation.12 The Methodist home was a nonprofit organization operating senior housing, specifically for persons able to pay large entry fees and monthly rent.13 Methodist’s bylaws precluded entry by low-income seniors and did not provide for resident retention in the event of financial insolvency.14 The City of Evanston asserted that the home was not a charitable organization and declared the property taxable.15 Methodist contended that all homes serving the elderly population were exempt from property taxation under section 19.7 of the Revenue Act of 1939—providing a tax exemption for “all property of old people’s homes, when all property is actually and exclusively used for such charitable . . . purposes, and not . . . used with a view to profit.”16 To make a final determination, the court developed a test to analyze whether the home was serving a charitable purpose and, therefore, should retain its tax exempt status.17 The test developed in Methodist lists six factors:

(1) The property in question must be used “for the benefit of an indefinite number of persons for their general welfare – or in some way reducing the burdens of government; (2) the charitable institution must have the “distinctive characteristics” of a charitable institution, thus, it has no capital, capital stock or shareholders, and earns no profits or dividends; (3) it must derive its funds mainly from public and private charity; (4) the institution must “dispense charity to all who need and apply for it; (5) the institution “does not appear to place obstacles of any character in the way of those who need and would use” the charitable services; and (6) the institution has the burden of proving that its property actually and factually is so used. [T]he term ‘exclusively used’ means the primary purpose for which property is used and not any secondary or incidental purpose.18

The Court applied the test and held that the Methodist home was not able to claim a property tax exemption; according to the Court, the home’s bylaws were not consistent with a charitable purpose.19 The Court’s landmark decision provides the test used to ascertain whether property is used exclusively for charitable purposes—a test that remains unchanged and unchallenged to this day. The Methodist holding is also significant because it moved in the opposite direction from the federal test for charitable exemptions.20 In comparison, on the federal level, the “community benefits test” was adopted just one year later in 196921 and it created a broad test for an entity’s charitable status.22 The Internal Revenue Service ruling noted that a nonprofit hospital could show how it generally benefited the community, i.e. that it accepted Medicare and Medicaid patients, and provided emergency room services—it was not essential to offer a charity care program.23 To the contrary, Illinois adopted the antithesis of the federal test in Methodist, focusing on much more specific elements when evaluating an entity’s charitable status.24

Why The Methodist Test Needs to be Dramatically Revised for the Provena Decision
The first factor of the Methodist test requires that the “the property in question must be used for the benefit of an indefinite number of persons in some way that confers a gift . . . or in some way reduces the burdens of government.” The Attorney General’s brief to the Illinois Appellate Court for the Fourth District in the Provena case, analyzing the first factor, focuses on three questions.25 The Attorney General evaluates whether the nonprofit hospital (1) dispenses charity as a gift, (2) uses the property for an indefinite number of persons, and (3) in some way relieves a burden on the government.26

Addressing the first question, the Attorney General argues that a gift is a benefit when the recipient does not incur any costs, and that Provena’s charity care program, designed to provide discounted health care, was the antithesis of gift giving.27 The Attorney General further argues that Provena does not provide a gift to its charity patients because the hospital expects payment and pursues aggressive debt collection efforts against many charity care recipients.28 Overly aggressive debt collection is not consistent with a charitable purpose, and the point should be conceded. The appellate court’s opinion, however, briefly discusses gift law and does not answer the question of whether Provena offered a public gift.29

The second step of the Attorney General’s analysis reviews the Methodist test’s requirement that the provision of benefits must be given to an indeterminate number of individuals.30 The Attorney General argues that a proper charity care program is one offered to all persons in need of charity care.31 The Attorney General contends that Provena fails to meet this standard because the hospital credited only $831,724 towards charity care services—an amount totaling only 0.7 percent of the hospital’s overall revenue.32 This analysis is problematic, in that it focuses too narrowly upon the hospital’s charity care program and does not look at the overall benefits the hospital provides to the community. For example, a nonprofit hospital may have a large number of Medicare and Medicaid patients for which its costs are not adequately reimbursed by the government. Reimbursement shortfalls and untimely payments are well known and can create operating deficits that can imperil a hospital with a poor payor mix.33 Consequently, untimely payments force many hospitals to secure private bank loans, with interest, in order to maintain a successful operation—a clear example of the state shifting the burden to the nonprofit hospital. Should a nonprofit hospital losing millions due to inadequate reimbursement, subject to payment delays from the state, and on the brink of closure be required to provide charity care at all? Under the Attorney General’s rigid view, the answer is an unrealistic yes.

In addition, a strict reading of the word “indeterminate” could lead a court to infer that charity care must be offered to all who enter the hospital and need such care. However, this would not be a sound conclusion because nonprofit hospitals do not have the means or resources to cover the costs of the entire uninsured population—a number presently holding at nearly 1.8 million people in Illinois.34 The court should only look to see whether a nonprofit hospital makes a reasonable effort, within its financial ability, to provide free or reduced cost care to the uninsured. The court must also recognize that a hospital can still serve a charitable purpose, regardless of the number of people served solely by a charity care program. The court should also include the burden of insufficient reimbursement and payment delays to the analysis of a hospital’s charitable status.

The Methodist test’s first element, according to the Attorney General, also requires that a nonprofit hospital should in some way reduce the burdens on government.35 The Attorney General’s argument asserts that Provena fails to meet this factor because the hospital provided $831,724 towards charity care but saved $1.1 million due to its property tax exemption; inferring that the spending on a charity care program must, at a minimum, be equal in value to the amount of money saved by the tax exemption.36 Again, the Attorney General’s argument merely focuses on the hospital’s charity care program and fails to examine the overall efforts of the nonprofit hospital. A more reasonable approach would be to have the court examine the total efforts a nonprofit hospital provides to the community it serves, plus, losses incurred due to participation in government programs. After all, the test calls for the “reduction,” not the “elimination,” of the government’s burden.37

The third factor38 in Methodist identified that a nonprofit hospital must derive its funds from public and private charity, and this factor must be revised to reflect modern trends in charitable giving. In Methodist, the Illinois Supreme Court examined the percentage of a retirement home’s revenue that was derived from an entry fee compared with the amount derived from gifts or contributions.39 Because the Methodist home’s revenue was mainly generated by private financial contributions through an entry fee, and not through gifts and contributions, the court held that the home failed to satisfy this factor of the test.40 The Illinois Supreme Court, however, did not state a bright line standard. Instead, the court avoided the issue, and omitted a ruling asserting exactly what percentage of revenue the Methodist home should have received from charitable contributions. The court’s opinion provided nothing more than ambiguity when it held that an entity must derive its funds “mainly” from public and private donations.41 In a later case, Riverside Medical Center v. Illinois Department of Revenue, an Illinois Appellate Court similarly ruled against a nonprofit provider seeking an exemption.42 The Riverside court found the provider’s charitable contributions were insufficient, totaling only 0.05 percent of the center’s funding.43

Both Methodist and Riverside failed to put forth a bright line standard, leaving an unanswered question: what amount of charitable contributions is required to meet the court’s meaning of “mainly” derived from public and private donations? In Provena, according to the Attorney General, Provena fails to meet this element because it raised only $6,938 in charitable contributions, an amount representing only 0.006 percent of the hospital’s overall revenue and lower than the amount raised in Methodist and Riverside.44 The appellate court, although concerned about the level of charitable contributions, wisely notes that this element “by itself, is not dispositive.”45

The Illinois Supreme Court should carefully consider the realities of modern charitable giving when analyzing this element. In a recent article examining charitable contributions, the author notes that “very few nonprofit hospitals receive significant donations . . . overall, nonprofit hospitals receive less than two percent of their revenues from private philanthropy.46 The author concludes that “[m]aking significant donations a central part of the test for property tax exemption . . . would be the equivalent of ending the exemption for most hospitals and other health care providers.”47 If the Attorney General’s argument is accepted, today’s fundraising reality does not bode well for nonprofit hospitals. People give generously to the fashionable cause of the day48 but demonstrate diminishing support for nonprofit hospitals.49 Accordingly, the court should investigate charitable contribution amounts for proof that an entity is a charity, but it should avoid making donations a dispositive factor when determining that entity’s charitable status.

The Illinois Supreme Court should also be circumspect when it analyzes the fourth factor from Methodist (requiring that a nonprofit hospital dispense charity to all who need and apply for it50) and it should avoid any holding that infers a nonprofit entity must serve unrealistically large numbers of people. In Methodist, the court cited two examples where exemptions were upheld because those entities served “many persons who could not and did not pay anything [but] were admitted without question.”51 Again, the court never defined “many.” However, in Provena, the Attorney General argued to the appellate court that “the facts establish[ed] that there were many more patients who needed charity care than Provena treated” and that the hospital should have provided free or discounted care to a greater number of patients.52

However, both the Methodist decision and the Attorney General’s argument do not indicate how much free and discounted care would be required to meet this test.53 One solution proposed suggests the use of a baseline standard, e.g. requiring all nonprofit hospitals to dedicate at least eight percent of their revenue towards charity care.54 The Illinois Hospital Association cogently argues in its amicus curiae brief that a rigid formula, a one-size-fits-all approach, is not the right approach because it does not account for the difficulty some hospitals would face in reaching the stated baseline amount.55 The court must ensure that its analysis recognizes that all hospitals are not the same—some provide general care, others specialty care, some operate over 200 beds, others operate less than 20 beds. The bottom line is that some hospitals would never achieve the required baseline and would lose their exempt status. If the Illinois Supreme Court decides to mandate a bright line test, one that specifies a minimum percentage of charity care that a nonprofit hospital must provide, it would eliminate the present ambiguity regarding how much charity care is enough. But, the court should make that percentage a goal, giving courts the flexibility to address facts that may have affected the ability to reach that goal.

The Attorney General also argues that Provena does not dispense charity to all who need it because the hospital presents bills to every patient without providing information on the charity care program56 and that many of those accounts are forwarded to outside collection agencies.57 However, a hospital should not be prohibited from any methods of debt collection when it provides discounted care to a patient because recovery of funding is essential to hospital revenue.
In addition, the court must avoid setting public policy that might encourage the non-payment of medical bills. By allowing a nonprofit hospital to conduct reasonable collection efforts, hospitals can serve more people who truly cannot afford the high cost of medical bills. Thus, the court should reconsider its view that bad-debt is not relevant to the determination of a hospital’s charitable status.

The Fourth District Appellate Court in Provena recently reaffirmed the proposition that writing off bad debt (uncollectible billings and losses from Medicare and Medicaid) is not charity, echoing the precedent set in three other Illinois Appellate Districts.58 The Provena case provides a good example of what hospitals face: on one hand, the hospital is attacked for providing allegedly inadequate levels of charity care but, on the other hand, the hospital is brushed off when it requests a fair consideration for losses incurred through bad debt and by its voluntary participation in the Medicare and Medicaid programs.

How can the courts continue to argue that nonprofit hospitals’ bad-debt and other shortfalls are irrelevant? The simple answer is reliance on bad precedent. For example, the Third District’s holding in Riverside59 argued that losses from Medicare and Medicaid could not be credited towards charity care programs60 and reasoned that the hospital negotiated “preferential rates” for these programs and that there was no indication the hospital agreed to accept these patients due to its charitable mission or to ensure an adequate flow of patients.61

The Riverside court’s analysis was based on a misunderstanding of reimbursement rates in Medicare and Medicaid. The court erred because it is incorrect to compare Medicare and Medicaid with the process other large insurers use to set reimbursement; the government does not “negotiate” a reimbursement rate for covered services.

The provider has two choices: participate in the programs and accept the predetermined reimbursement rates or decline to participate.62 Therefore, when a provider makes an affirmative choice to enter the program and accept patients, the provider accepts the reimbursement rate knowing, from the onset of care, that a loss may be incurred,63 a process quite similar to providing free care in a traditional charity care program. The federal “community benefits test” recognizes that hospitals participating in Medicare and Medicaid provide an important service requiring provider enrollment as a condition of receiving a federal tax exemption.64 Illinois should follow the lead of the federal government and recognize that provider participation in Medicare and Medicaid is vital65 and include these programs as a relevant consideration for tax exemption determinations.

The sixth factor66 of the Methodist test tracks closely with the language of Article IX, Section 6 of the Illinois Constitution and with the Illinois Property Tax Code. Both the constitutional provision and the tax code identify that property must be used “exclusively” for charitable purposes in order to receive a tax exemption.67 In Methodist, the court noted that the term “exclusively used” means that the property’s primary use is for charitable purposes and not a secondary or incidental purpose.68

The Attorney General argues that Provena does not meet the requirements of this factor because of the hospital’s reliance on outside, for profit entities to provide healthcare services,69 and contends that the use of such vendors proves that the hospital is not exclusively operating for charitable purposes.70 The Attorney General’s brief reports that Provena paid a vendor to provide emergency services and entered contractual relationships financially benefiting for profit providers.71 However, to accept this argument, the Court will essentially remove the tax exempt status from many hospitals because Provena’s practices are illustrative of the way every modern hospital operates. The Court must be cautious and avoid setting a policy that places nonprofit hospitals at a competitive disadvantage with for profit competitors.

The Illinois Supreme Court should not move forward like a horse wearing blinders—the court must make the effort to see the entire picture. Provena Covenant Medical Center’s total community benefit (accounting for every program directed to help the community including charity care), totaled approximately $2.2 million,72 double the amount of Provena’s $1.1 million property tax exemption.73 In 2002, Provena’s Medicare shortfall was $7.4 million and its Medicaid shortfall was $3.1 million.74 Provena voluntarily enrolled as a Medicare and Medicaid provider, accepted the mandated reimbursement rates, knowing up front that the hospital would incur financial losses by doing so. Provena spent $2.2 million on charity programs and lost $10.4 million from government sponsored programs. However, the courts and the Attorney General focus on one component—comparing spending on charity care with a hospital’s overall revenue. Provena relieved the government of a burden when the data indicates the hospital, in one year alone, absorbed nearly $13 million in non-reimbursable costs.
Reviewing the six-factor Methodist test, it is obvious that the forty-year old analysis has not evolved along with the ever-changing nonprofit hospital. The Illinois Supreme Court should adopt a new standard that fully accounts for the provider’s benefit to the community. The court should use the federal “community benefits test” as a model because it appropriately examines the impact Medicare and Medicaid have on providers and recognizes efforts beyond charity care programs, such as immunization programs and financial support of local clinics.

Courts needs a broad standard that will recognize a hospital’s need to constantly evolve in the hospital marketplace to remain competitive with for-profit rivals, but also challenge the hospital to maximize its ability to provide charitable services. The time has come for the Illinois Supreme Court to abandon the strict test used in Methodist Old People’s Home v. Korzen. It is hoped that the court will be circumspect in its holding—if not, the Provena opinion could undermine the charitable tax exemption not only in Illinois but across the country. At what cost? If the court requires unrealistic performance, nonprofit hospitals might decide to convert to for-profit ventures, a likely result if all the benefits of nonprofit incorporation are removed.

1 Charity, for the purpose of this article, is used in a broad sense and considers all forms of giving. However, this article’s references to ‘charity care” refer only to programs in place at nonprofit hospitals where a person seeks free care, enters a specific program, and the hospital waives all or a portion of the cost up front.
2 Gabriel O. Aitsebaomo, The Nonprofit Hospital: A Call for New National Guidance Requiring Annual Charity Care to Qualify for Federal Tax Exemption, 26 Campbell L. Rev. 75, 75 (2004) (noting that the Tariff Act of 1894 was the first federal law to exempt hospitals from the corporate income tax, and that many states also began to provide tax exemptions for entities serving the poor) [hereinafter Aitsebaomo, The Nonprofit Hospital].
3 Methodist Old Peoples Home v. Korzen, 39 Ill. 2d 149, 156-59, 233 N.E.2d 537, 541-42 (Ill. 1968); see also Eden Retirement Ctr. v. Ill. Dep’t of Revenue, 213 Ill. 2d 273, 287, 821 N.E.2d 240, 287 (Ill. 2004) (affirming the Methodist factors and applying the factors to determine charitable use).
4 See, e.g., Highland Park Hosp. v. Ill. Dep’t of Revenue, 155 Ill. App. 3d 272, 507 N.E.2d 1331 (Ill. App. Ct., 2d Dist. 1987), Alivio Med. Ctr. v. Ill. Dep’t of Revenue, 299 Ill. App. 3d 647, 702 N.E.2d 189 (Ill. App. Ct., 1st Dist. 1998).
5 For example, Medicare and Medicaid were created only three years before the Methodist opinion and a full understanding of how these programs would evolve could not have been on the court’s mind in 1968. These programs, providing comprehensive health care coverage for the poor and aging Americans, eliminated many people who would have historically been treated by a free, charity hospital. See, e.g., Medicare and Medicaid at 40, July 26, 2005, (last visited Feb. 26, 2009).
6 Although the principal focus of this article is to suggest the revision of the Methodist test, it is important to note that the Illinois Supreme Court must first determine the proper standard of review in the Provena case. As a result, the court’s choice on what standard of review to use will have a significant impact on the final outcome of the Provena opinion. See generally Provena Covenant Med. Ctr. v. Dep’t of Revenue, 384 Ill. App. 3d 734, 894 N.E.2d 452 (Ill. App. Ct., 4th Dist. 2008) (discussing different standards of review); see also Kathleen L. Coles, Mixed Up Questions of Fact and Law: Illinois Standards of Appellate Review in Civil Cases Following the 1997 Amendment to Supreme Court Rule 341, 28 S. Ill. L.J.13 (Fall 2003) (discussing how Illinois appellate courts differ in their determination on what is the appropriate standard of review).
7 Provena Covenant Med. Ctr. v. Dep’t of Revenue, 384 Ill. App. 3d 734, 894 N.E.2d 452 (Ill. App. Ct., 4th Dist. 2008).
8 See, e.g., Highland Park Hosp. v. Ill. Dep’t of Revenue, 507 N.E.2d 1331 (Ill. App. Ct., 2d Dist. 1987), Alivio Med. Ctr. v. Ill. Dep’t of Revenue, 299 Ill. App. 3d 647, 702 N.E.2d 189 (Ill. App. Ct., 1st Dist. 1998).
9 Payor mix refers to a hospital’s patient types, e.g., 45% on Medicare, 20% on Medicaid, 33% on private insurance, and 2% on charity care or other assistance programs.
10 Bad debt refers to losses a provider incurs when a patient, who was expected to pay, fails to do so and the provider exhausted all collection efforts—generally, providers expect to write off a predetermined amount of bad debt every year. This article does not consider a provider’s losses due to Medicare and Medicaid shortfalls bad debt.
11 Methodist Old People’s Home v. Korzen, 39 Ill. 2d 149, 233 N.E.2d 537 (Ill. 1968).
12 Id. at 150, 233 N.E.2d at 538.
13 Id. at 151-53, 233 N.E.2d. at 538-40.
14 Id., 233 N.E.2d at 538-40.
15 Id. at 150, 233 N.E.2d at 538.
16 Id. at 153-54, 233 N.E.2d at 540.
17 Methodist Old People’s Home v. Korzen, 39 Ill.2d 149, 233 N.E.2d 537 (Ill. 1968).
18 Id.
19 Id. at 157-59, 233 N.E.2d at 541-43.
20 Compare Rev. Rul. 69-545, 1969-2 C.B. 117 with Methodist Old People’s Home v. Korzen, 39 Ill. 2d 149, 233 N.E.2d 537 (Ill. 1968).
21 Rev. Rul. 69-545, 1969-2 C.B. 117.
22 John D. Colombo, Hospital Property Tax Exemption in Illinois: Exploring the Policy Gaps, 37 Loy. U. Chi. L.J. 493, 97 (Spring 2006) [hereinafter Colombo, Hospital Property Tax Exemption].
23 Colombo, Hospital Property Tax Exemption, supra note 21, at 497; see also Rev. Rul. 69-545, 1969-2 C.B. 117.
24 See Methodist Old People’s Home v. Korzen, 39 Ill. 2d 149, 233 N.E.2d 537 (Ill. 1968).
25 Brief of Defendant-Appellant at 10-15, Provena Covenant Med. Ctr. v. Dep’t of Revenue, 384 Ill. App. 3d 734, 744, 894 N.E.2d 452, 462 (Ill. App. Ct., 4th Dist. 2008) (No. 4-07-0763) [hereinafter Brief of Defendant-Appellant].
26 Brief of Defendant-Appellant, supra note 24, at 10-15.
27 Id. at 10.
28 Id. at 10-11.
29 Provena Covenant Med. Ctr. v. Dep’t of Revenue, 384 Ill. App. 3d 734, 744, 894 N.E.2d 452, 462 (Ill. App Ct., 4th Dist. 2008) (highlighting that “to be for a charitable use or purpose, the gift must be a public, rather than a private, gift” . . . and the court was “unclear” if Provena provided a gift).
30 Brief of Defendant-Appellant, supra note 24, at 11-12.
31 Id. at 30.
32 Id. at 12.
33 See, e.g., Bruce Japsen, St. Francis Makes Recovery: Name Will Change to MetroSouth With New Owners, Chi. Tribune, May 9, 2008, at 1 (discussing the demise of St. Francis Hospital in Blue Island, Illinois, the result of poor Medicaid reimbursement and a growing patient base that could not pay for their health care costs).
34 United States Census Bureau, Current Population Survey: 2005 to 2008, Annual Social and Economic Supplements, available at (last visited Feb. 26, 2009).
35 Brief of Defendant-Appellant, supra note 24, at 12.
36 Id.
37 Methodist Old People’s Home v. Korzen, 39 Ill. 2d 149, 159 233 N.E.2d 537, 543 (Ill. 1968).
38 The second factor of the Methodist test is not considered to be controversial, as a result, this article does not address this factor. See Colombo, Hospital Property Tax Exemption, supra note 21, at 510.
39 Methodist, 39 Ill. 2d at 158, N.E.2d at 542.
40 Id.
41 Id.
42 Riverside Med. Ctr. v. Ill. Dep’t of Revenue, 342 Ill. App. 3d 603, 795 N.E.2d 361 (Ill. App. Ct., 3d Dist. 2003).
43 Id.
44 Brief of Defendant-Appellant, supra note 24, at 15.
45 Provena Covenant Med. Ctr. v. Dep’t of Revenue, 384 Ill. App. 3d 734, 742, 894 N.E.2d 452, 463 (4th Dist. 2008).
46 Colombo, Hospital Property Tax Exemption, supra note 21, at 519-20.
47 Id. at 520.
48 See Gary A. Tobin & Aryeh K. Weinberg, Mega Gifts in American Philantrophy: Giving Patterns 2001-2003, Report by the Institute for Jewish and Community Research, at 6-9 (showing that the Hurricane Katrina Relief Fund raised over $4 billion and relief fund for the victims of the unexpected tsunami in late 2004 raised an estimated $1.9 billion).
49 Id.
50 Methodist Old Peoples Home v. Korzen, 39 Ill. 2d 149, 159, 233 N.E.2d 537, 543 (Ill. 1968).
51 Id. (emphasis added).
52 Brief of Defendant-Appellant, supra note 24, at 16.
53 See generally Methodist Old People’s Home v. Korzen, 39 Ill. 2d 149, 233 N.E.2d 537 (Ill. 1968); see also Brief of Defendant-Appellant, supra note 24.
54 See, e.g., H.B. 5000, 94th G.A. (2006), available at 5000&GAID=8&DocTypeID= HB&LegisID=2424&SessionID= 50&GA=94 (calling on hospitals to provide a baseline amount towards charity care—mandating no less than 8 percent of the hospital’s income as reported on its Medicaid cost reports. Ultimately, the legislature did not act upon this proposal).
55 Brief of the Illinois Hospital Association at 9, as Amici Curaie Supporting Plaintiff, Provena Covenant Med. Ctr. v. Dep’t of Revenue, 384 Ill. App. 3d 734, 894 N.E.2d 452 (Ill. App. Ct., 4th Dist. 2008) (2006 MR 00597) (wherein the IHA points out the key differences between rural critical access hospitals, inner-city disproportionate share (safety net) hospitals, and specialty hospitals such as cancer centers or psychiatric care centers).
56 Brief of Defendant-Appellant, supra note 24, at 16.
57 Id. at 17.
58 See generally Alivio Med. Ctr. v. Ill. Dep’t of Revenue, 299 Ill. App. 3d 647, 702 N.E.2d 189 (Ill. App. Ct., 1st Dist. 1998); Highland Park Hosp. v. Ill. Dep’t of Revenue, 155 Ill. App. 3d 272, 507 N.E.2d 1331 (Ill. App. Ct., 2d Dist. 1987); Riverside Med. Ctr. v. Ill. Dep’t of Revenue, 342 Ill. App. 3d 603, 795 N.E.2d 361, 367 (Ill. App. Ct., 3d Dist. 2003).
59 Riverside Med. Ctr. v. Ill. Dep’t of Revenue, 342 Ill. App. 3d 603, 609-10, 795 N.E.2d 361, 367 (Ill. App. Ct., 3d Dist. 2003).
60 Id., 233 N.E.2d at 609-10.
61 Id., 233 N.E.2d at 609-10.
62 American Hospital Association, Underpayment by Medicare and Medicaid Fact Sheet, Oct. 2007,
63 Id.
64 See Rev. Rul. 69-545, 1969-2 C.B. 117, available at
65 See generally Memisovski v. Maram, No. 92C 1982, 2007 WL 4232716 (N.D. Ill. Nov. 29, 2007); see also, John Bouman et al., Litigation to Improve Access to Health Care for Children: Lessons From Memisovski v. Maram, Clearinghouse Review, Journal of Poverty Law and Policy, May-June 2007 (cogently arguing that insufficient reimbursement rates led to inadequate physician participation in the Illinois Medicaid program) available at (last visited Feb. 26, 2009).
66 The fifth factor of the Methodist test is not considered controversial, therefore, it is not discussed. See Colombo, Hospital Property Tax Exemption, supra note 21, at 510.
67 Brief of Defendant-Appellant, supra note 24, at 7, 23.
68 Methodist Old Peoples Home v. Korzen, 39 Ill. 2d 149, 158, 233 N.E.2d 537, 542 (Ill. 1968).
69 Brief of Defendant-Appellant, supra note 24, at 25.
70 Id.
71 Id. at 25-26.
72 Id. at 28.
73 Id. at 4.
74 Dep’t of Revenue of the State of Ill. v. Provena Covenant Med. Ctr., 04-PT-0014, at 16 (2006).

Joseph J. Hylak-Reinholtz, Law Student, NIU College of Law; B.A., 1996, University of Illinois at Springfield; J.D. anticipated 2009, NIU College of Law.

DCBA Brief