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Midwest Palliative Hospice and Care Center v. Beard

Court of Appeals of Illinois, First District, First Division

February 25, 2019

CONSTANCE BEARD, as Director of Revenue, and THE ILLINOIS DEPARTMENT OF REVENUE, Defendants-Appellees.

          Appeal from the Circuit Court of Cook County, No. 17-L-50714; the Hon. Daniel J. Kubasiak, Judge, presiding.

          Michael J. Wynne, Jennifer C. Waryjas, and Douglas A. Wick, of Jones Day, of Chicago, for appellant.

          Lisa Madigan, Attorney General, of Chicago (David L. Franklin, Solicitor General, and Carl J. Elitz, Assistant Attorney General, of counsel), for appellees.

          JUSTICE GRIFFIN delivered the judgment of the court, with opinion. Justices Pierce and Walker concurred in the judgment and opinion.



         ¶ 1 This case concerns the property tax status of an inpatient hospice care center. The hospice care center filed an application for tax-exempt status on the basis that it is a charitable institution. The Illinois Department of Revenue denied a property tax exemption to the care center, finding that it failed to meet its burden to demonstrate by clear and convincing evidence that the property was being put to an exclusively charitable use. The hospice care center filed a complaint for administrative review. On administrative review, the circuit court affirmed the Department of Revenue's determination. The care center appeals, and we affirm the circuit court's judgment and affirm the Department of Revenue's decision to deny the application for an exemption.

         ¶ 2 I. BACKGROUND

         ¶ 3 Plaintiff Midwest Palliative Hospice and Care Center (Midwest) operates a large end-of-life care facility in Glenview, Illinois. In 2008, Midwest operated a palliative care center on a 4.1-acre parcel of property in order to provide palliative care for patients and provide services to their families. The property was designated as tax exempt after the Department of Revenue entered into an agreement with Midwest granting it a 91.9% charitable property tax exemption for the property.

         ¶ 4 In 2011, Midwest began the construction of an inpatient hospice center pavilion on the same property as the palliative care center. Midwest previously offered in-home hospice care but sought to offer inpatient care because, among other reasons, it saw a need for providing end-of-life care for patients who could not be adequately cared for in their homes. In the hospice care pavilion, Midwest provides terminally ill patients with the interconnected network of professionals needed to provide proper end-of-life care.

         ¶ 5 Midwest filed an application for a charitable property tax exemption for the 2013 tax year for the property that houses both the palliative care center and the hospice care pavilion. The defendant in this case, the Department of Revenue, found that, while the palliative care center remained property-tax exempt, the hospice care pavilion was not. Accordingly, the Department of Revenue denied Midwest's application for a charitable property tax exemption. The matter proceeded to an administrative hearing.

         ¶ 6 At the administrative hearing before the Department of Revenue, Midwest produced evidence about its endeavors with the aim of convincing the administrative law judge that it was entitled to a charitable property tax exemption. The parties entered into certain stipulations and, according to the administrative law judge, "the only issue [was] whether the Pavilion was used for charitable purposes in 2013." Several witnesses testified at the hearing and exhibits were introduced about Midwest's mission and its financial and operational endeavors.

         ¶ 7 For income tax purposes, Midwest is classified as a 501(c)(3) organization (26 U.S.C. § 501(c)(3) (2012)). Midwest's bylaws provide that its purposes are "exclusively charitable," and its articles of incorporation provide that its earnings cannot benefit any person. The articles of incorporation further provide that Midwest cannot discriminate against protected classes in conducting its operations and that it must admit patients that meet the applicable admission criteria without regard to the prospective patient's ability to pay, meaning that it does not turn away patients that lack insurance or government program coverage.

         ¶ 8 As part of its mission, Midwest provides adult bereavement services, counseling and support services to children, and a camp for grieving children and teenagers. Midwest trains volunteers to provide vigil support and companionship to families and patients, and its volunteers provide comfort services and goods for suffering patients. Midwest also trains medical students, free of charge, in providing hospice services, which it claims helps to supply appropriately trained physicians for palliative and hospice patients in the Chicagoland area.

         ¶ 9 To further its position that the hospice pavilion should be a property-tax-exempt charitable institution, Midwest pointed out at the administrative hearing that its hospice care pavilion is on the same plot of land as the tax-exempt palliative care center, is owned by the same entity, and operates under the same charitable principles. The patient population is essentially the same with the only real difference between the two divisions being that the care is delivered at a different space on the property depending ...

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