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City fires back in tax dispute with UPMC

| Tuesday, June 25, 2013, 3:27 p.m.

Pittsburgh and UPMC at least agree on something: the pleadings in the lawsuits between them are “breathtaking” and “bizarre.”

They continue to debate, however, Mayor Luke Ravenstahl's motivation for challenging the hospital system's tax-exempt status, whether UPMC — the city's largest employer — actually employs anyone, and even how Congress treated Richard Nixon.

The city on Tuesday fired back at a federal lawsuit UPMC filed this month, saying claims that the city challenged the system's tax-exempt status to divert attention from a federal investigation into Ravenstahl's administration are as “irrelevant as they are ridiculous.”

What started as a state challenge to the nonprofit brought “such an irresponsible, overwrought paroxysm of a response as to raise legitimate questions of UPMC's sincerity and purpose before this court,” E.J. Strassburger, the private lawyer representing the city, wrote in a response to the UPMC complaint.

“The amended complaint contains a breathtaking mix of innuendo and illogical leaps in attempting to show that the city's declaratory judgment action was somehow motivated by a federal investigation that resulted in the indictment of former police Chief Nate Harper,” he wrote.

UPMC responded by blasting the mayor.

“The idea that the city and mayor would see any benefit to suing with baseless allegations and blind-siding its greatest economic and charitable benefactor without any due process or discussion is shameful,” UPMC spokesman Paul Wood said. “Mayor Ravenstahl's attack on UPMC was bizarre and breathtakingly improper. We're confident the courts will ultimately agree.”

Wood said the city's response missed a filing deadline by five days. Strassburger said if that's true, “I don't see that argument going anywhere.”

“We expected UPMC would be defensive with our lawsuit,” Ravenstahl said this month. “I'm not going to fire back with any crazy rhetoric like they did.”

A federal investigation of police spending that resulted in Harper's indictment in March appears to be circling closer to Ravenstahl, as authorities question his bodyguards and secretary and review home improvement records. Ravenstahl denies wrongdoing and says he's not a target of the investigation.

The city challenged UPMC's tax status in state court. UPMC had the case moved to federal court, claiming it raises federal questions, but the city has a pending motion asking U.S. District Judge Joy Flowers Conti to send the case back to state court.

UPMC claimed in the federal lawsuit the city violated the health system's constitutional rights by challenging its public charity designation. UPMC's amended lawsuit made reference to Nixon's use of the IRS to target enemies and said “any cautionary tales from American history, however, have been wasted on this mayor.”

The city's response this week mentioned the “bizarre, unexplained references to ‘Nixon's impeachment,' ” by UPMC and notes that he was not impeached. The UPMC complaint cites articles of impeachment adopted by the House Judiciary Committee in 1974.

The city asked Conti to dismiss the lawsuit on several grounds. The case should be heard in state court, Strassburger argues. Ravenstahl, whom UPMC names as a defendant, is immune to such lawsuits over actions in office, the lawyer said. UPMC can't argue that the city's tax challenge deprives the hospital system of constitutional due process rights because the lawsuit provides just that, he argued.

UPMC called the tax challenge a sham because it's a parent company and itself has no employees that could be subject to a payroll tax. The city responded that UPMC admits its subsidiaries employ more than 40,000 people.

Brian Bowling and David Conti are staff writers for Trib Total Media. Bowling can be reached at 412-325-4301 or bbowling@tribweb.com. Conti can be reached at 412-388-5802 or dconti@tribweb.com.

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