NorthShore University Healthsystem v. The Illinois Department of Revenue
2017 IL App (1st) 153647
| Ill. App. Ct. | 2017Background
- NorthShore University Healthsystem (not-for-profit) applied for property tax exemptions for Skokie Hospital for tax years 2009–2012; Department of Revenue issued exemption certificates (statutory basis not identified).
- Niles Township High School District No. 219 (the District) submitted written requests to the Department seeking formal hearings to challenge the exemptions; the letters did not identify specific alleged mistakes or new evidence.
- NorthShore moved to dismiss the District’s petitions, arguing section 8-35(b) of the Property Tax Code requires hearing applications to “state concisely the mistakes alleged to have been made or the new evidence to be presented,” and that failure to do so deprives the Department of jurisdiction.
- The Administrative Law Judge (ALJ) denied NorthShore’s motion, relying on the Administrative Code’s protest standards and reasoning the District’s letters adequately identified the action being protested given the exemption certificates’ lack of statutory detail.
- NorthShore sued in circuit court seeking equitable relief (writs, declaratory relief) to enjoin the administrative proceedings; the circuit court dismissed under section 2-619 for lack of subject-matter jurisdiction because NorthShore had not exhausted administrative remedies.
- The appellate court affirmed, holding the ALJ’s order was voidable (not void), the Department had personal and subject-matter authority, and NorthShore was required to exhaust administrative remedies before judicial review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the District’s hearing requests satisfied statutory/administrative pleading requirements | NorthShore: letters failed to comply with 35 ILCS 200/8-35(b) (didn’t state mistakes or new evidence) so they were not valid applications | District/Dept: letters timely, in writing, identified the action protested and requested hearings; Administrative Code allows amendment and ALJ oversight | Held: ALJ permissibly treated letters as valid protests under Administrative Code; sufficiency can be addressed in agency proceedings |
| Whether failure to meet 8-35(b) makes the Department’s action void for lack of jurisdiction | NorthShore: the statutory “shall” makes the requirement jurisdictional; noncompliance strips agency of authority | Defendants: agency retained authority to act; failure to comply makes an order voidable/error, not jurisdictional defect | Held: Requirement is mandatory but not jurisdictional; agency had authority; order was voidable, not void |
| Whether NorthShore could bypass administrative process and obtain immediate judicial relief | NorthShore: collateral attack allowed where intervenor’s applications are incurably deficient; challenge presents pure legal question | Defendants: exhaustion of administrative remedies required unless agency lacks jurisdiction; here agency had jurisdiction | Held: Exhaustion required; NorthShore must pursue administrative remedies and then seek review after final agency action |
| Proper vehicle and timing for judicial review of Department decisions | NorthShore: sought immediate equitable relief in circuit court before final agency decision | Defendants: review is by Administrative Review Law after final Department action per statute | Held: Circuit court lacked jurisdiction to review interlocutory ALJ order; statutory scheme requires final agency action before judicial review |
Key Cases Cited
- Provena Covenant Med. Ctr. v. Dep’t of Revenue, 236 Ill. 2d 368 (Illinois 2010) (prompted statutory changes and moratorium on hospital-exemption re-evaluations)
- Newkirk v. Bigard, 109 Ill. 2d 28 (Illinois 1985) (agency acts beyond statutory authority are without jurisdiction; orders erroneous but not necessarily void)
- Ultsch v. Ill. Mun. Retirement Fund, 226 Ill. 2d 169 (Illinois 2007) (special statutory jurisdiction requires strict procedural compliance)
- Business & Professional People for the Public Interest v. Ill. Commerce Comm’n, 136 Ill. 2d 192 (Illinois 1990) (agencies have only the authorization given by statute)
- J&J Ventures Gaming, LLC v. Wild, Inc., 2016 IL 119870 (Illinois 2016) (statutory construction and review de novo principles)
- Millennium Park Joint Venture, LLC v. Houlihan, 241 Ill. 2d 281 (Illinois 2010) (Property Tax Code is a comprehensive statutory scheme)
- Castaneda v. Ill. Human Rights Comm’n, 132 Ill. 2d 304 (Illinois 1989) (exhaustion doctrine exceptions and purposes)
- Ill. Bell Tel. Co. v. Allphin, 60 Ill. 2d 350 (Illinois 1975) (exhaustion of administrative remedies is a long-standing principle)