Pittsburgh Starts Legal Battle with UPMC over Nonprofit Status
Pittsburgh Mayor Luke Ravenstahl announced Wednesday the city will embark in a legal battle against the University of Pittsburgh Medical Center's nonprofit status.
The Pennsylvania Supreme Court developed a nonprofit test as a result of the case Hospital Utilization Project v. Commonwealth. An organization must act within the following five "HUP" test parameters in order to be considered a purely public charity:
1. Advances a charitable purpose
2. Donates or renders gratuitously a substantial portion of its services
3. Benefits a substantial and indefinite class of persons who are legitimate subjects of charity
4. Relieves the government of some of its burden
5. Operates entirely free from private profit motive
Ravenstahl said UPMC fails three out of five. He added UPMC's city property and payroll taxes would amount to approximately $20 million.
"When they had revenues of over $5.7 billion dollars, to give less than 2 percent back to the community, in my mind, is a clear failure of meeting one of the prongs of that HUP test," Ravenstahl said.
He noted the city's goal isn't to make UPMC declare themselves a for-profit organization, but rather to encourage the conglomerate to "step up and pay its fair share."
UPMC has not responded to a request for comment on the lawsuit.
Ravenstahl noted the lawsuit will most likely extend into the next mayoral administration and said he doesn't think the threat of a legal battle will force UPMC to lay off workers or stop funding the Pittsburgh Promise, a college scholarship program for graduates of Pittsburgh Public Schools.
Ravenstahl said UPMC has already begun to "fight back," which he said was expected.
Allegheny County Controller Chelsa Wagner said the effort is about fairness and accountability.
"The average citizen pays residential or business property taxes," she said. "The organizations who receive exemptions, who receive that privilege, from those same taxes are deserving of that privilege."
Wagner said if the organization is not deserving of exemptions, the burden then falls on the taxpayer.
State Senator Jim Ferlo (D-Allegheny) also spoke out against UPMC's non-profit status. He said UPMC operates like a for-profit company.
"Paying its executives multi-million dollar salaries with perks, privileges, the renting of fancy offices and leasing corporate jets and corporate helicopters while jumping into new business activities," Ferlo said.
He asked UPMC to either pay its fair share in taxes or start acting more like a charitable organization.
Others supporting the legal action are Pittsburgh City Council President Darlene Harris, District 1 Councilwoman Theresa Kail-Smith, District 5 Councilman Corey O'Connor, District 6 Councilman Daniel Lavelle and city Controller Michael Lamb.