Posted by Post Authored by Alexandra Verven
It is well-known in Illinois that the Local Government and Governmental Employees Tort Immunity Act (“Tort Immunity Act”) insulates governmental organizations, or “local public entities,” from claims of ordinary negligence. 745 ILCS 10/, et seq. Less commonly known is the fact that the Tort Immunity Act also applies to not-for-profit organizations under certain circumstances. 745 ILCS 10/1-206.
In addition to the traditionally defined governmental organizations, including municipalities; schools; and park districts, the Tort Immunity Act includes “any not-for-profit corporation organized for the purpose of conducting public business” as a “local public entity.” Id. One ambiguous phrase in particular, “for the purpose of conducting public business,” has been interpreted by Illinois courts in a variety of ways.
For instance, courts have found that when an organization pursues an activity that benefits the entire community without limitation and is tightly enmeshed with government, it conducts public business. Brugger v. Joseph Academy, Inc., 202 Ill.2d 435, 445 (2002). Such close relationships between the organization and the government can also be shown through evidence of government ownership, operation, or funding. Id. One way to show that the government retains some level of control over an organization is to determine whether the entity remains subject to state statutes, such as the Open Meetings Act and the Freedom of Information Act. O’Toole v. Chicago Zoological Society, 396 Ill. Dec. 120 (2015). Complying with local ordinances is also persuasive. Id.
Illinois courts have also relied on a three-prong test to determine whether a not-for-profit is organized for the purpose of conducting public business: (1) whether the corporation participates in the business of government by providing the type of services that governments have been traditionally obliged to provide in the areas of public health, safety, welfare and education; (2) whether and to what degree the corporation is government funded; and (3) whether and to what degree the corporation is government run or regulated or part of a government unit. Barnes v. Chicago Housing Authority, 326 Ill.App.3d 710, 729 (1st Dist. 2001). However, this test has not always been consistently applied.
For example, in Brugger, the Illinois Supreme Court declined to extend tort immunity protections to a private, not-for-profit school that educated students with special emotional needs, based on contracts with public schools; in that case, a student at the private school filed a personal injury lawsuit, resulting from injuries the student sustained in physical education class. 202 Ill.2d at 435. Tort immunity did not apply to the case because the private school was not enmeshed with the government. Id. It was not subjected to outside governmental control, had no governmental entity or public official acting in an official capacity on the school board, did not receive operational funds from the government, and was not open to the public at large. Id.
Along the same lines, the court in Johnson found that the Young Women’s Christian Association (“YWCA”) was not a “local public entity” entitled to immunity from liability for negligence under the Tort Immunity Act, despite the fact that it was a not-for-profit corporation that received some public funding and had women’s empowerment as its mission. Johnson v. Decatur Park Dist. 301 Ill.App.3d 798 (4th Dist. 1998). This was because the court found the YWCA was a membership-based organization that existed for the benefit of its members, not the public at large. Id.
However, in McQueen, a nonprofit organization incorporated to engage in scientific, literary and educational activities and improve mental health was found to be a “local public entity” under the Tort Immunity Act. McQueen v. Shelby County, 730 F.Supp.1449, 1453 (C.D. Ill. 1990).
In its decision, the court relied on an Affidavit from the organization’s director, which stated that over 90% of the organization’s financing was provided by state and local sources. Id.
Similarly, the court in Smith held that a nonprofit corporation that operated a commuter rail line for the public interest, received public funds, and had no shareholders was a local public entity exempt from punitive damages liability under the Tort Immunity Act. Smith v. Northeast Illinois Regional Commuter R.R. Corp., 210 Ill.App.3d 223 (1st Dist. 1991).
Like all areas of the law, “it depends” on whether a not-for-profit organization is protected under the Tort Immunity Act. But, based on general trends, if a not-for-profit receives a large amount of government funding, it will likely be found immune under the Tort Immunity Act.
About the Author:
Alexandra Verven is an associate attorney with the law firm of Barker, Castro, Kuban & Steinback LLC. Alexandra has concentrated her practice in the area of medical negligence serving in the defense of hospitals, physicians, and medical staff members. Her medical malpractice defense work involves pre-litigation investigation and counseling, as well as guidance and recommendations to her clients in various risk management strategies. She also handles a wide variety of civil defense litigation where she represents not-for-profit organizations and health care facilities in cases involving premises liability and personal injury. Prior to joining Barker, Castro, Kuban & Steinback LLC, Alexandra worked as a law clerk at one of Chicago’s prevalent plaintiff litigation firms, where she gained invaluable experience she uses to defend her current clients.