Judge rules that Pittsburgh must bill all UPMC subsidiaries to challenge tax-exempt status

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PITTSBURGH — A judge ruled Wednesday that the city of Pittsburgh can't issue one bill to the University of Pittsburgh Medical Center if it wants to challenge the giant medical system's tax-exempt status.

Judge R. Stanton Wettick said that the city can't legally ignore the existence of UPMC's subsidiaries. Pittsburgh's lawsuit claimed that the hospital network behaves more like a business than a nonprofit and should therefore pay city taxes on its properties and payrolls. Wettick noted his ruling does not settle whether any of its subsidiaries are charitable organizations, just that the city can't issue one bill to all of them.

Pittsburgh Mayor William Peduto said in a statement that the ruling was "procedural" and not a decision on the merits of the lawsuit. "We are eager to continue to meet with UPMC and other nonprofit partners" to reach a long-term agreement on the tax issue, Peduto said, adding that city lawyers are reviewing the decision.

Peduto wants nonprofits to contribute money for city services because UPMC, city universities and other nonprofits don't pay taxes on most of the real estate they control.

UPMC spokesman Paul Wood said they are very pleased with the decision and are prepared to defend the organization's charitable status if there are further lawsuits. Wood previously said that UPMC has 23 subsidiaries that are tax-exempt and 21 that pay taxes.

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