In one of the first hearings for the city of Pittsburgh's lawsuit to strip University of Pittsburgh Medical Center of its tax-exempt status, lawyers for the healthcare behemoth claimed it does not have any employees, according to a Pittsburgh Post-Gazette report.
Common Please Judge R. Standton Wettick opened the hearing by saying he was told in discovery UPMC does not have employees. William Pietragallo, an attorney representing UPMC, affirmed that statement. He explained that, for the purposes of Pittsburgh's wage taxes, UPMC's subsidiaries file separate forms. Therefore, employees work for the system's legal subsidiaries, which include its hospitals. Mr. Pietragallo maintained that UPMC itself does not have employees.
"You can't pay employment taxes unless you have employees," Mr. Pietragallo said, according to the report.
The issue is an important one, as the city of Pittsburgh wants to strip UPMC of its charity status, which exempts the organization from property and payroll taxes, more commonly known as wage taxes.
Judge Wettick ended the hearing, 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, there's nothing more I can do," the judge said, according to the report.
It's an interesting development that suggests UPMC's legal structure may significantly differ from what the system frequently markets to the public, according to the report. On its website and press materials, UPMC has claimed to be Pennsylvania's largest employer, with more than 55,000 employees.
UPMC spokesman Paul Wood, who technically works for one of UPMC's subsidiaries, told the Pittsburgh Post-Gazette that Pittsburgh will have to challenge UPMC's tax-exempt status on a subsidiary-by-subsidiary basis if it wants to do so at all. UPMC has 37 subsidiaries, although Mr. Wood was unable to specify how many of those are in Pittsburgh.
Ronald Barber, an attorney representing the city, said UPMC's public relations campaign may work against its employment claim in the hearing. "We're going to amend the complaint to address the judge's concern and we're confident that we can do that based on UPMC's own pronouncements that they have tens of thousands of employees," he told Pittsburgh Post-Gazette.
As the reporter for the Pittsburgh Post-Gazette points out, there is another implication in UPMC's claim that it is comprised of separate subsidiaries: "When UPMC made the top rankings of U.S. News & World Report's Best Hospitals, it did so as a conglomeration of several facilities attorneys are now arguing are separate subsidiaries," Moriah Balingit wrote in the report.
The city will file an amended complaint in a week. UPMC will then have a week to respond. Future court dates have not been determined, according to the report.
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Pittsburgh's Case Challenging UPMC Tax Exemption to Stay in State Court