Ceasefire with UPMC might not be atrocious

the usual

the usual

I wish we were not accepting UPMC’s rhetoric voguish rhetoric* about how challenging their tax-exempt status is like “holding a gun to their heads”.

We all pay taxes. Dunkin’ Donuts pays taxes. Dollar Bank pays taxes. Going to court to ensure that a profitable enterprise pays the taxes that they owe is nothing like robbing someone at gunpoint, it is like instructing them to “make their bed” or “put some pants on already.”

Be that as it may, it took Pittsburgh one full year, and Lord knows how many hundreds of thousands of dollars in attorney fees, only to see the case get tossed out at the first technicality. We might appeal the decision, but legal appeals are not quite like picking up dice and throwing them a second time. The judge had a sound enough rationale, it would almost certainly be further waste.

We could file new challenges against each of UPMC’s hospitals. Aah, that’d be sweet! 

There seem to be ten of them. Add Allegheny General and West Penn Allegheny to the mix, because the law insists we have to be faiair, and that’s a dozen lawsuits. Each would require quite a bit more research and elbow grease than simply mimeographing Mayor Ravenstahl’s original lawsuit after editing a few pronouns. Each would entail motions, counter-motions, and years of time, attention and taxpayer expense as the Leviathan drags it out.

Turns out, challenging the nonprofit status of an Orthodox Jewish summer camp is a bit different from challenging the status of a $10 billion integrated global health enterprise.

Meanwhile, all people who do not think the way we do — people who identify more closely with capital-and-real estate heavy nonprofits than with urban residents and the officials who scramble on their behalf, and people who only pay occasional and shallow attention — can quite correctly note that #NextMAYOR Bill Peduto has never yet even attempted negotiating with the nonprofits using diplomacy and creativity. Sure, that course has been repeatedly rebuffed, and sure we know that a lot of nonprofit honchos would rather be whipped through the streets naked in wintertime than turn over a dime to urban Democrats and their (shudder) pension funds.

But seeing as how this horde of lawsuits would likely take more than three years to litigate (heck, sometimes they last five before even getting to trial!) and seeing as how we all have lives to lead here, and progress to make on many other matters of mutual interest… sigh… a breather aimed at constructive dialogue probably makes sense.

I can’t comment much on the direction peace talks are headed. In theory, a fund that helps finance housing and development could be wonderful! Or, it could warp and bastardize City redevelopment to UPMC’s own advantage at the expense of the common good for generations. A fund would certainly be better if it included upgraded public infrastructure. It would be even better if it addressed our common legacy obligations. But I can acknowledge that maybe Next Pittsburgh has not yet had time to volte-face and fully authenticate its commitment to responsibility and reform, so truce could be a valuable interlude.

The City could always be quietly sharpening its knives, anyhow.

MORE: P-G says as much

FLASHBACK: UPMC and the Upsides to Class War

18 thoughts on “Ceasefire with UPMC might not be atrocious

      • I think that both before and after his campaign, our Mayor committed to challenging the poisonous legal fictions that have allowed UPMC to wield such damaging imbalance of power and wealth for so long.
        As Kris Mamula in the Pittsburgh Business Times recently wrote “…judges have been loathe to ‘pierce the corporate veil,’ holding the parent corporation accountable for the actions of its subsidiaries except in unusual circumstances.”

        “Unusual circumstances” have been clearly demonstrated by UPMC’s exploitation and domination of the Pittsburgh Metro Region by a corporate entity that so clearly does not meet the criteria of the HUP test of qualifications as an institution of “purely public charity”

        As the City’s attorney, E.J. Strassburger, stated last year:
        UPMC’s enormous organizational structure and business affairs make its standing unique.”I don’t think this is a floodgates situation,” he said. “UPMC is an unusually large, diverse business that is subject to laws of Pennsylvania. There aren’t a lot of UPMCs around.”

        And the Peduto Administration legal team certainly would seem to have strong evidence to appeal Judge Wettick’s ruling that UPMC can’t be challenged as a single taypayer with subsidiaries:

        UPMC files a consolidated Form 990. This, Mr. Strassburger says, makes it harder to follow the money that goes in and out of the system’s 20 hospitals. For instance, it presents the possibility that one hospital may provide significantly less charitable care than its counterparts but is insulated by the system’s combined financial information.

        “We only know what they claim systemwide,” says Mr. Strassburger. He says there are entries in the Form 990s that are categorized as “other expenses” that cover hundreds of millions of dollars. “I’m sure there are a lot of components to that, but it’s not itemized,” he adds. “There are no transfers between entities listed.”

        No, I don’t think the nature of the lawsuit has essentially changed – I think that the City’s legal team could follow through on using such accounting evidence to hold UPMC accountable. In a system that relies on checks and balances between the three branches of government, I think it is the responsibility of our City’s Chief Executive to challenge what seems to be a legally shaky judicial ruling – and to work to overturn a judicial precedent which is clearly so highly damaging to the long-term public interest.

      • Judge Wettick? I didn’t know that. And I was afraid of that. He’s never been overturned on appeal. EDIT: Oops, yes he was, h/t Helen. Well, not in 8 years. I might have been thinking of Joe James.

  1. I think a lot of ‘Burghers won’t feel great about UPMC giving some random amount of their choosing to a suspicious housing fund, instead of to the costs and debt the rest of us pay for. Also, we’re expecting the Mayor to talk UPMC in to reversing their firmly held position because… he’s not Luke?

  2. In reply to Helen’s comment “I think that both before and after his campaign,”: I agree that someone needs to burst UPMC’s BS non-profit bubble, but I fear the time and cost of the City of Pittsburgh waging that war. We might be on the right side, but unless we have the most expensive lawyers, it doesn’t much matter. The team with the most expensive lawyers always wins, and that will be UPMC.

    There’s a very strong possibility, if the City pursues this, that we will spend millions of dollars on a cause that is almost impossible to win. It stinks to back down in the face of possible consequences, but the reality of the situation is that the City is not in a good position to take on this fight.

    • The lawyers were handling the case pro bono. Next argument? Cases get bounced on summary judgment or dismissal stages all the time. Sometimes that means re-filing the complaint with a different structure. I think Helen is correct.

      • The lawyers were handling the case pro bono??? Can you link me to something that confirms that? Would they have continued to do so?

        EDIT: While not definitive, this March 2013 article suggests otherwise:

        “Mayor Luke Ravenstahl will leave his successor in an expensive and time-consuming brawl with the city’s biggest employer…

        “He had not budgeted its cost to the city but said it “will be significant and substantial but it’s in my mind an investment worth making …”

      • I”m trying to figure out why the law department wouldn’t handle this case. Isn’t that what they are for? If the City is paying an outside firm for this case that should be an entirely different story.

  3. The very first sentence of this article is completely wrong. UPMC NEVER said challenging its tax-exempt status is like “holding a gun to their heads”. Mayor Peduto said it, not UPMC.

    • I’m almost positive Peduto adapted it from rhetoric that the nonprofits use about negotiating while under legal or legislative threat. Because it sounded very familiar. But now the Google isn’t being helpful. Still searching…

      • See first line of the PG’s story by Robert Zullo in Wednesday’s paper: Negotiating is tough with “guns pointed at each others’ heads,” Mayor Bill Peduto said.

        Also see a similar story published on WESA’s website.

        Obviously, the author of this article is incompetent or has an axe to grind but owes it to readers to get simple basic facts correct.

      • I’m quite aware that Peduto used the gun line. For those who lack reading comprehension, my contention was that he borrowed it from stuff UPMC & other nonprofits have stated earlier when it comes to negotiating PILOTs. Now, it appears I may be mistaken about that detail, but I’m too stubborn to concede without another few hours of Googling.

        You are correct however I have an axe to grind. UPMC was built with generations of taxpayer investment, reaps billions in profit, and to date holds itself aloof from contributing to the city and county which enable it to thrive. It hides behind churches and food banks who actually contribute a far larger percentage of their proceeds to the Public Service Fund than UPMC has ever deigned to. As a result our infrastructure is crumbling, our public transit is medieval, and our schools are in the red and getting redder. I’ll happily keep grinding that axe until it strikes pay dirt.

  4. Anon 6:01, I agree with you that I think the money should go into the cities operating expenses.
    We have invested a ton of money into subsidized housing at this time. Maybe it’s time to help everyone in the city take a break from tax fatigue and spread the money around. I recall that a lot of the nonprofits were unhappy about how their previous money was being spent.
    I’m starting to like the mayor less and less. To get this money and then have him decide to throw it all to this project is not my idea of how to spend it.

    • The mayor is turning out to be no different from anyone else on policy. in fact he is worse. Lamar will still get big signs on Mt. Washington, UPMC gets a pass on whether they are tax exempt, favorite developers will get sweetheart deals at the URA and special interest groups get whatever they want. He is worse because the only thing that makes him different is that he is awarding all the elites but going after any regular middle class person who was associated with Ravenstahl. Petty politics never makes for good policy.

      • If he gives Lamar an LED screen on Mt. Wash., it’ll be his [bleep]!!

        Expound more on “favored developerers” and “sweetheart deals”. Obviously a developer will develop something now and again, but what’s the beef here?

  5. What do people think of the idea that UPMC in turn abandoned its countersuit? Its aspects seemed beneath consideration, but was that a welcome gesture? And is it dropped for good, or was it the kind of gift that keeps on giving?

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