A judge has delayed University of Pittsburgh Medical Center's federal civil rights lawsuit against the city of Pittsburgh and Mayor Luke Ravenstahl, deciding it cannot move forward until the city's challenge to UPMC's tax exemption is decided in state court, according to a Pittsburgh Post-Gazette report.
The city and Mayor Ravenstahl sued UPMC in March, claiming the health system does not qualify for a tax exemption and should pay payroll taxes. UPMC sued the two parties in federal court shortly afterward, claiming they were conducting a campaign to target and damage the health system. UPMC later amended that suit, claiming Mayor Ravenstahl was challenging its tax-exempt status to divert attention from a city scandal involving the Pittsburgh Police Department.
The city sought dismissal or a stay of the civil rights case. UPMC opposed both. The health system said it wanted to conduct discovery before Mayor Luke Ravenstahl's administration leaves at year's end.
District Chief Judge Joy Flowers Conti said that to rule on the civil rights case before the tax dispute is decided "would be the epitome of federal interference in state tax matters and would pose a real risk of disrupting the city's administration of its tax scheme," according to the report.
The judge ordered the city to preserve potential evidence.
In one of the first hearings for the city's tax-exempt challenge last week, UPMC claimed it had no employees. An attorney for the health system said UPMC employees work for the system's legal subsidiaries, including its hospitals, which file separate forms.
The judge overseeing that hearing ended the session, saying he could not continue until the issue of UPMC's employee status was addressed. He asked Pittsburgh's attorneys to amend their complaint because if UPMC has no employees, the city would have to pursue wage taxes on a subsidiary-by-subsidiary basis. UPMC has 37 subsidiaries in total.
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UPMC Claims it Has No Employees to Keep Tax-Exempt Status