Pittsburgh Mayor Luke Ravenstahl announced today that the city would challenge the tax exempt status of regional medical giant UPMC, a court battle that he likened to “the David versus the Goliath.”

“They’re not a charity,” the mayor said at a press conference today. “They haven’t been operating as a charity and it’s time that this community step up in that regard. The reality of the situation is the taxpayers … are currently subsidizing UPMC’s non-profit status.”

The mayor said he was emboldened to make the challenge by a Pennsylvania Supreme Court decision last year that reaffirmed tax-exempt organizations must meet five criteria outlined in a previous court case, including one that requires them to operate without profit motive.

The mayor said UPMC’s behavior mimicked that of a for-profit company.

The mayor cited UPMC’s closure of hospitals in low-income communities, like Braddock, in favor of building hospitals in more affluent communities and facilities abroad. He also talked about the company’s hard stand with rival Highmark insurance, some of whose customers have been denied care in UPMC’s facilities.

“Is UPMC acting as a purely public charity?” Mr. Ravenstahl asked. “In my opinion, it doesn’t even pass the smell test.”

In an emailed response, UPMC spokesman Paul Wood said “The challenge to UPMC’s tax-exempt status appears to be based on the mistaken impression that a non-profit organization must conduct its affairs in a way that pleases certain labor unions, certain favored businesses, or particular political constituencies.”

“UPMC has always been a significant contributor to the City in a myriad of ways that are often disregarded, including as the primary funder of Pittsburgh Promise college scholarships for the city’s public high school graduates,” he said.

The legal challenge will come in two parts.

Today, the city will file a civil action against UPMC in the Allegheny County Court of Common Pleas, asking the court for an injunction to remove the organization’s tax-exempt status and compel it to pay the city’s payroll tax.

Second, the city plans to go before the Allegheny County Board of Property Assessment, Appeals and Review to challenge the organization’s exemption from property taxes.

Allegheny County Controller Chelsa Wagner said her office has conservatively estimated that city would stand to gain $11 million in property tax revenue if UPMC was not tax-exempt. Pittsburgh Public Schools could get another $14 million.

Moriah Balingit: mbalingit@post-gazette.com, 412-263-2533 or on Twitter @MoriahBee.

First Published March 20, 2013 1:14 pm

Link: http://www.post-gazette.com/stories/local/region/ravenstahl-pledges-challenge-to-upmcs-tax-exempt-status-680094/