Finding Answers to Our Health Care Prayers: Implementing Legislatively Mandated Charity Care Requirements for Nonprofit Hospitals

Kathryn Fuehrmeyer

affiliation not provided to SSRN

April 1, 2008

In November 2003, attorneys in Chicago, acting on research conducted by the Hospital Accountability Project, began to file class action suits on behalf of former patients against nonprofits hospitals for neglecting their duties to the community in which they operate, in particular to uninsured individuals. A Mississippi attorney took up the same crusade, filing at least 49 class action lawsuits between June and December 2004 charging approximately 370 nonprofit hospitals in 24 states with failing to provide adequate charity care. While federal judges have dismissed the majority of these cases, the issue of nonprofit hospitals providing charity care gains notoriety.

Although Senator Grassley argues otherwise, imposing more stringent requirements on hospitals in order to qualify for the federal tax exemption is unlikely. Thus, some states have begun to combat this problem through the enactment of state charitable care requirement statutes in order to force hospitals to examine the amount of charity care they provide. While some states have instituted statutorily mandated charitable care requirements, Illinois has yet to implement this requirement, though there is legislation pending. Part I of this Note looks at the tax-exemption received by hospitals, both at the federal and state level. Part II looks at the charitable care requirement as enacted in Texas. While many states have discussed a charity care requirement and some have gone so far as to implement one, the Texas statute provides a good benchmark for examining the analogous proposed Illinois statute. Part III examines the Provena case and the proposed legislation in Illinois which has garnered national attention and found a place in a national debate. Part IV examines the overarching policy questions of whether a charity care requirement is good healthcare policy and whether the various benefits should be linked to specific requirements.

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Date posted: November 17, 2008  

Suggested Citation

Fuehrmeyer, Kathryn, Finding Answers to Our Health Care Prayers: Implementing Legislatively Mandated Charity Care Requirements for Nonprofit Hospitals (April 1, 2008). Available at SSRN: http://ssrn.com/abstract=1301007

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Kathryn Fuehrmeyer (Contact Author)
affiliation not provided to SSRN ( email )
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