Appeal from the Circuit Court of Du Page County. No. 93-MR-365. Honorable Bonnie M. Wheaton, Judge, Presiding.
Petition for Leave to Appeal Denied December 6, 1995.
The Honorable Justice Geiger delivered the opinion of the court: Inglis and Hutchinson, JJ., concur.
The opinion of the court was delivered by: Geiger
JUSTICE GEIGER delivered the opinion of the court:
This is an appeal from a judgment in the circuit court of Du Page County, holding that the defendant, the Joint Commission on Accreditation of Healthcare Organizations (the Joint Commission), was not entitled to a charitable and educational tax exemption under section 19.7 of the Revenue Act of 1939 (35 ILCS 205/19.7 (West 1994)) (the Act) for its land and an office building thereon. On appeal, the Joint Commission argues that the circuit court applied an incorrect legal standard to the facts. Specifically, the Joint Commission argues: (1) that the circuit court erred in ignoring the relevant substantive identity between the Joint Commission and the American College of Surgeons (the American College), which our supreme court found entitled to a charitable tax exemption in American College of Surgeons v. Korzen (1967), 36 Ill. 2d 340, 349, 224 N.E.2d 7, overruled on other grounds in Christian Action Ministry v. Department of Local Government Affairs (1978), 74 Ill. 2d 51, 57; (2) that the circuit court erred in holding that Methodist Old Peoples Home v. Korzen (1968), 39 Ill. 2d 149, 156-57, 233 N.E.2d 537, creates an inflexible six-part standard, which requires a charity to meet every element in its entirety regardless of the particular circumstances; and (3) that the circuit court misapplied the existing law to the Joint Commission's facts in holding that the Joint Commission met none of the Methodist Old Peoples Home guidelines. We affirm.
The Joint Commission was incorporated in 1951 as an Illinois not-for-profit corporation. The members of the Joint Commission are the American College of Physicians, the American College of Surgeons, the American Dental Association, the American Hospital Association, and the American Medical Association, which are all not-for-profit organizations. The Joint Commission's articles of incorporation and bylaws explain that its very existence is foundedsolely and exclusively for the purpose of providing charitable and educational services, and not for any profit-making ventures.
The Joint Commission's primary and most complex functions are to develop standards of accreditation for health care organizations, to perform on-site evaluations of those organizations, to make the decision whether to issue those organizations a certificate of accreditation, and to make recommendations for improvement in standards compliance. The Joint Commission is continually doing research for the purpose of refining those standards for evaluation in order "to maintain and improve the quality of care through providing a clear focus on the elements that are essential to the provision of high-quality care."
To further accomplish its goal of high-quality health care, the Joint Commission conducts exhaustive surveys of health care programs throughout the country. Teams of specialized and expert medical professionals perform on-site inspections of health care organizations and meet with each organization's representatives to determine whether the particular facility conforms to established standards. The survey team also affords consumers and the general public an opportunity to comment or complain about any facility undergoing a survey and inspection.
After the survey team has discussed its preliminary findings with the organization's administrators and staff, it sends a recommendation as to whether the organization should be accredited to the Joint Commission's Oakbrook Terrace headquarters, where the recommendation is analyzed. The Joint Commission then makes a report to the organization with a series of recommendations regarding the steps the organization may take to improve patient care. The process does not end with the decision whether to issue a certificate of accreditation. Rather, the Joint Commission continually follows up on whether its recommendations are implemented.
In addition, the Joint Commission provides educational services by offering national symposia, teleconferences, seminars, workshops, and custom-designed programs in order to "enhance health care professionals' understanding of accreditation and quality of care issues." These educational programs are led by a variety of health-care professionals. The Joint Commission also answers questions and provides information about health care issues free of charge to any citizen who calls, publishes a wide variety of written materials in an effort to educate providers and thereby improve health care, and offers on-site technical assistance so that health care organizations may improve the effectiveness of their quality assurance and risk management activities.
In April 1990, the Joint Commission occupied its newly-constructed office and conference building located in Oakbrook Terrace, Illinois, which was financed by tax-exempt bonds. Since its construction, the building has been occupied solely by the Joint Commission.
On December 20, 1990, the Joint Commission applied for a charitable and educational tax exemption pursuant to section 19.7 of the Act (35 ILCS 205/19.7 (West 1992)). On January 31, 1990, the Du Page County Board of Review (the Board), one of the plaintiffs, recommended that the application be denied. However, on May 8, 1991, the Department of Revenue reversed the Board's decision and approved the exemption. The Board and the Villa Park School District No. 45 (the School District) requested a formal hearing on the matter.
On October 26, 1992, the hearing was held before an administrative law judge of the Illinois Department of Revenue (the ALJ). On May 14, 1993, the ALJ rendered a decision, recommending an exemption. The ALJ specifically found that the Joint Commission "was organized to establish standards for hospitals and other health-related facilities and to conduct surveys, and where appropriate, accredit such facilities. [The Joint Commission] also provided training for administrators and employees of said facilities, and on-site technical assistance to said facilities upon request during 1990." In reaching his recommendation, the ALJ concluded that, because the Joint Commission's work both provides a service that benefits the public as a whole and reduces the burden of government, not all of the guidelines in Methodist Old Peoples Home, 39 Ill. 2d at 156-57, were relevant to the Joint Commission's case. The Board and the School District appealed the ALJ's decision to the circuit court.
On June 3, 1994, the circuit court reversed the ALJ's decision, holding that the ALJ misapplied the relevant law. The circuit court based its holding on its interpretation that our supreme court in Methodist Old Peoples Home, 39 Ill. 2d at 156-57, imposed on all charitable institutions a six-part test, which, under the circuit court's application of the law to the Joint Commission's facts, the Joint Commission failed to meet.
On June 29, 1994, the Joint Commission filed a timely notice of appeal and on July 1, 1994, a timely amended notice of appeal. On appeal, the Joint Commission argues that the circuit court applied an incorrect legal standard to the facts. Specifically, the Joint Commission argues: (1) that the circuit court erred in ignoring the relevant substantive identity between the Joint Commission and the American College, which our supreme court found entitled to a charitable tax exemption in American College, 36 Ill. 2d at 349; (2) that the circuit court erred in holding that Methodist Old Peoples Home, 39 Ill. 2d at 156-57, creates an inflexible six-part standard, which requires a charity to meet every element in its entirety regardless of the particular ...