Pittsburgh, UPMC drop lawsuits over hospital network's nonprofit status; seek nonprofit fund

The city of Pittsburgh and the University of Pittsburgh Medical Center have dropped opposing lawsuits over the hospital network's nonprofit status.

Mayoral spokesman Kevin Acklin said the city dropped its lawsuit in hopes the city and UPMC can craft an agreement for nonprofits to invest in city neighborhoods, the Pittsburgh Tribune-Review first reported Tuesday.

Since then, Mayor Bill Peduto expanded on the reasons for dropping the lawsuit, in comments to the Pittsburgh Post-Gazette and the Tribune-Review.

Peduto said he's hoping UPMC — and other nonprofits — can be persuaded to not just contribute money for city services in lieu of taxes, but possibly invest in housing developments, or programs that focus on youth or job training.

"That's where the conversations are headed and that's where they've been headed," Peduto said. "The problem was ... they had a gun to our head and we had a gun to theirs."

After the city dropped its lawsuit Friday, UPMC dropped its own federal court countersuit, alleging the city's tax challenge status violated UPMC's constitutional rights.

"Now that the city has terminated the lawsuit initiative by former Mayor (Luke) Ravenstahl seeking to strip UPMC of its payroll tax exemption, UPMC believed it was appropriate to drop our countersuit," UPMC spokesman Paul Wood told the Tribune-Review.

Ravenstahl, who didn't run for re-election before Peduto was elected in November, had argued that UPMC didn't deserve nonprofit status because the health care giant "didn't act like one" in competing with other providers and paying its executives lucrative salaries, among other issues. UPMC countered by saying it was being singled out in a city known for its universities and other nonprofits, and has cited hundreds of millions in charitable donations and free care.

The city has collected some money from nonprofits in recent years, but those payments have been irregular and are budgeted to be less than $1 million after this year. Peduto has said he hopes to develop a stronger, more predictable revenue stream from UPMC and other nonprofits.


Information from: Pittsburgh Tribune-Review, http://pghtrib.com