Pittsburgh Drops Suit Seeking Taxes From Hospital Network

The City of Pittsburgh and the University of Pittsburgh Medical Center have called an end to their legal battle over municipal officials’ effort to strip the nonprofit health system of its tax-exempt status, the Pittsburgh Tribune-Review and the Pittsburgh Post-Gazette report.

Mayor Bill Peduto’s office notified UPMC on Friday that the city was dropping its suit seeking to collect payroll and property taxes from the health-care giant, Pennsylvania’s largest private employer. UPMC in turn abandoned a countersuit on Monday. The two sides now hope to establish a fund for nonprofits to invest in Pittsburgh neighborhoods and housing, said Kevin Acklin, the mayor’s chief of staff.

“I think what both sides were trying to accomplish here was just to have a period of peace,” Mr. Acklin said. “To have these discussions outside of litigation.”

The truce comes a month after an Allegheny County judge dealt a blow to Pittsburgh’s case, ruling that UPMC’s more than 60,000 employees work for 37 subsidiaries, meaning the city couldn’t pursue tax payments through a single suit against the network.

Mr. Peduto, who took office in January, inherited the court battle instigated last year by his predecessor, Luke Ravenstahl, who contended UPMC functioned more like a corporation than a charity. Pittsburgh officials have long sought to increase payments in lieu of taxes from hospitals, colleges, and other major nonprofits in the region. The city has annually collected about $2.6-million from nonprofits in recent years.