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IL Supreme Court Avoids Ruling on Constitutionality of Hospital Exemption

Property Tax Publications

The Illinois Supreme Court has issued an opinion in Carle Foundation v. Cunningham Township, the case involving the constitutionality of the statute granting hospitals a special property tax exemption. In remanding this case back to the circuit court, Illinois’ highest court declined to rule on the merits of whether Section 15-86 of the Property Tax Code is constitutional and whether the plaintiff, the Carle Foundation, was entitled to an exemption on four of its properties.

In our most recent alert on this ongoing litigation, we reported that the Illinois Supreme Court raised several procedural questions during the January oral arguments, in this case, signaling that the Court may not rule on the substantive issues. Those concerns crystalized as the Court vacated the appellate court’s decision that Section 15—86 was unconstitutional, finding the appellate court lacked jurisdiction. Specifically, the Court found that the appellate court should have never ruled on the issue because the circuit court had not yet rendered a final decision on the remainder of the claims associated with this matter. The Court found that the question of whether Section 15—86 governs the plaintiff’s claims is inextricably linked to the overall resolution of the case, and as such, appellate jurisdiction was not proper under Illinois Supreme Court Rule 304(a). The Illinois Supreme Court vacated the case and remanded it back to the circuit court, where the issue of whether Section 15—86 governs plaintiff’s claims and the ultimate outcome of this case can be adjudicated together.

In remanding this case, the Illinois Supreme Court declined to address the substantive issues (e.g. the constitutionality of Section 15—86 and whether it retroactively applies to plaintiff’s claims for exemption) so as not to promote piecemeal litigation. Additionally, The Court relied on its long-standing rule that cases should first be decided on non-constitutional grounds whenever possible, reaching constitutional issues only as a last resort.

The Illinois Supreme Court may have that opportunity sooner than initially thought, as a petition for rehearing was filed in January on the First District appellate court case, Oswald v. Hamer, which found Section 15—86 constitutional. While the appellate court decision in Carle Foundation v. Cunningham Township may be vacated, the fact that two appellate courts are split on whether Section 15—86 is constitutional increases the likelihood that the Illinois Supreme Court will take up this issue in the future. Stay tuned for more updates on this long-running saga.