UPMC will have to wait until the city of Pittsburgh's challenge to its tax exemption is decided in state court before it can pursue a federal civil rights lawsuit against the city and its mayor, a judge ruled Friday.
U.S. District Chief Judge Joy Flowers Conti wrote that she declined to dismiss UPMC's case "out of an abundance of caution" until the state court case is concluded.
The city in March sued UPMC, claiming it did not qualify for a tax exemption and should pay payroll levies.
UPMC countered by suing the city, saying it was being unconstitutionally singled out and its due process rights violated.
"UPMC will only be entitled to [civil rights] damages if it proves that the City Defendants violated its constitutional rights by attempting to collect taxes from it by filing and publicizing a state court lawsuit that challenges its continued status" as a charity, Judge Conti wrote in a 30-page opinion.
She said that to rule on the civil rights case before the tax dispute is decided "would be the epitome of federal interference in state tax matters and would pose a real risk of disrupting the City's administration of its tax scheme."
In the tax challenge, Allegheny County Common Pleas Judge R. Stanton Wettick has asked the city to file an amended complaint to replace its initial lawsuit claiming that UPMC owed payroll taxes.
UPMC had countered that it has no employees, although its subsidiaries do. The city's amended complaint is expected to name the subsidiaries.
The city sought dismissal or a stay of the civil rights case. UPMC opposed both, saying it wanted to conduct discovery before Mayor Luke Ravenstahl's administration leaves at year's end.
The judge ordered the city to preserve potential evidence.
Rich Lord: email@example.com, 412-263-1542 or Twitter @richelord.