Excela Health sues Westmoreland County over taxes on surgical center

Laurel Surgical Center, in Hempfield Township, photographed on Wednesday, Mar. 9, 2016.
Laurel Surgical Center, in Hempfield Township, photographed on Wednesday, Mar. 9, 2016.
Photo by Evan Sanders | Tribune-Review
| Thursday, March 10, 2016, 11:00 p.m.

Excela Health is suing Westmoreland County to get its Laurel Surgical Center on Donohoe Road in Hempfield taken off the tax rolls.

The nonprofit argues that the facility, which has an assessed value of $375,000, is part of Excela Health Latrobe Hospital and should be exempt from taxes under state law. The lawsuit against the Board of Assessment Appeals was filed Feb. 2 in the Westmoreland County Court of Common Pleas.

“The mere fact that (the surgical center) is located several miles away from the main hospital, in and of itself, should not be sufficient to deny it an exemption,” said Aaron Kress, the New Kensington attorney representing the hospital.

The appeals board in January denied the hospital's request for a tax exemption.

“It's a surgical center,” said Darrell Arbore, the board's solicitor. “It's not the hospital as such. It's not licensed as a hospital.”

The state Department of Health website shows the center licensed as an ambulatory care center. Latrobe Area Hospital — the not-for-profit group listed in court records as the owner of Laurel Surgical — owns 59 properties in Westmoreland County. Of those, 35 have been granted tax exemptions as operations under the three-hospital system's nonprofit umbrella, according to court records.

The surgical center includes a 16,000-square-foot, one-story medical facility and four acres of land. Excela Health bought it in 2013 for nearly $11 million.

The purchase price prompted a separate lawsuit filed by the Hempfield Area School District challenging that the assessment did not reflect the property's fair market value. The lawsuit was filed Dec. 3 after the district's request to increase the assessment was denied by the appeals board last year. A court hearing in that case in pending.

The surgical center previously was home to a for-profit private practice and subject to taxes. Taxes on the property this year are $36,946, and officials from the county, school district and township believe the hospital should not be exempt from paying them.

Hempfield solicitor Scott Avolio said surgical centers compete with for-profit businesses, unlike hospitals, whose purposes are charitable.

“That structure was for-profit for a reason,” Avolio said. “There's a lot of case law that says that charitable organizations that venture into other operations may be responsible (for taxes) and may not be eligible for an exemption.”

Judge Anthony Marsili is hearing both appeals of the assessment board's rulings. A status conference on Excela's case is scheduled April 12.

Gideon Bradshaw is a Tribune-Review staff writer. Reach him at 724-836-6660 or gbradshaw@tribweb.com.

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