… and hell froze over.

It used to be there was only one thing in the world that would drive me to shoot tequila at noon on a weekday — being ten or more days past my column due date for Pittsburgh Magazine. I write better when I’ve got a bit of tequila in me.

Today, I learned there is one other thing that will have me frantically opening the liquor cabinet and taking a swig straight from the tequila bottle: Luke Ravenstahl announcing he’s formally and legally challenging UPMC’s questionable non-profit status.

What?!

That’s right. Today at a press conference, Mayor Luke Ravenstahl announced that the city would be mounting a legal challenge to UPMC’s claim that they are operating as a non-profit, exempt from taxes, including millions of dollars in property taxes that they should have started paying years ago when it became very clear they were as close to a nonprofit as Enron ever was.

From Chris Potter’s tweets, you can get an idea of what Luke said:

Chris Potter  CPotterPgh  on Twitter

 

Now, I really want you to understand, Pittsburgh, why I believe this matters. Why it’s important. What doesn’t matter and why. And why the hell Luke suddenly found his inner Chuck Norris and went [roundhouse kick] on the most powerful entity in all of Pittsburgh.

1. Since a few months after he took the mayorship, Luke Ravenstahl has hung his legacy hat on the coatrack of The Pittsburgh Promise. Sure the pieces of that machine were moving long before Luke ever took office, but he got the credit for a landmark program that was designed to bring more families to the city. Luke’s partner in that legacy-building program has long been UPMC — the largest donor to the fund. Luke and UPMC have been like THIS since then. We cannot know what arrangements were in place. We cannot know if UPMC bought Luke in the vein of, “We’ll fund the Promise if you leave us alone on the tax issue.” We can have our suspicions, as I have mine, but what matters is Luke and UPMC were definitely french-kissing and heavy-petting if they weren’t fully in bed together. And that meant UPMC was protected, despite it being very very obvious to every person in the city that UPMC was no longer a nonprofit. What nonprofit do you know of in America that spent $800,000 to put their name on the side of a skyscraper? What nonprofit do you know of that earned annually half a billion dollars in “excess margin” or … well … PROFIT?

2. It matters that UPMC hasn’t been paying property taxes and has been permitted to take advantage of hundreds of millions of dollars in tax breaks, because by not doing so, they’ve been robbing the city and the Pittsburgh Public Schools of precious, greatly needed income.

3. It matters that UPMC, despite incredible revenues and the claim of being a charity, has only given 2% of revenues to helping the poor and has been notoriously stingy in paying employees. In fact, instead of increasing wages, they had the nerve to open a FOOD BANK for employees.

4. It matters that Luke Ravenstahl has, for all intents and purposes, stopped giving a single shit. Out from under the oppressive thumb of the powers that held his reelection chances in their hands, out from under UPMC and the unions and the good ole boys, Lukey has decided to finally be a real mayor. He has decided that The Pittsburgh Promise won’t be his legacy; taking on King Kong will. Going down in a blaze of glory and not caring one flip who he takes with him. This is a man who has been joined at the hip to UPMC for years and now he’s gone Brutus on them in spectacular, mouth-gaping “Et tu?” fashion. He’s biting the hand that probably fed him caviar, and shooting the engine of the jet that probably flew him privately to New Orleans. I can honestly say that if you told me last month he would do this, I would have laughed in your face and then told you to shut your whore mouth. ┬áIt is stunning.

5. It doesn’t matter what his motive is. It really honestly doesn’t. Is he doing it to grasp at the fleeting thread of a lasting legacy other than “questionable ethics?” Possibly. Is he doing it to drag our attention away from the FBI investigation into the slush fund? Maybe. Is he doing too little, too late? Probably. Has he been promised a high-paying job at Highmark? We’ll find out soon enough.

But it doesn’t matter. The WHY of it doesn’t matter. What matters is he has legally set in motion something that should have been done long ago. He manned up and formally brought to the forefront what has been merely talked about casually before. He has shined a light on the elephant in the previously dark room, acknowledged it, pointed right at it and said, “I’m not going to pretend it’s not there anymore. It’s a freaking elephant. It’s there. Look at it. It stinks.” He has started something big.

6. It doesn’t matter if you’re a UPMC employee who loves your job. Good! It doesn’t matter if I’ve spent three years raising money for the sick kids at Children’s Hospital, a UPMC hospital. Those kids still need those games and those distractions. Your job is important to you. UPMC is made up of people. It’s not all evil. But their insistence on maintaining nonprofit status when they clearly are not a nonprofit is HURTING the city. It’s hurting the schools. It’s got to be fixed.

7. It matters how UPMC will retaliate. Keep an eye on it. Will they threaten layoffs or wage freezes? Will they threaten to pull their funding from The Pittsburgh Promise? Will they take a look at their billions of dollars in revenue and hundreds of millions of dollars in profits and take their lumps knowing they got away with it for a long time? Let’s see if pettiness rears its ugly head here. Let’s see how they interpret the word “charity.”

8. It matters what happens now. Luke has until the end of his term to see this thing through, at which time it becomes the responsibility of the new mayor. Now is the time for the candidates to let us know where they stand on this. Do they agree? Can they be bought? Will they be bought? Will they stand up and say, “I WILL NOT BE BOUGHT BY UPMC. I will see this thing through. I will make it right, because it’s not about what’s best for me and my political aspirations; it’s about what’s best for Pittsburgh’s bottom line?” Make a note as to which candidates make that promise, and then hold them to it.

Because when it all is said and done, that’s what’s going to matter the most — not that it started, but that it was finished.

Buckle up, Pittsburgh.

It’s about to get good.





31 Comments

  1. Cassie
    March 20, 2013 2:00 pm

    As a UPMC employee, I can say with 100% certainty, they pay us shit. Like, if they could, they’d give us a paycheck of steaming shit, in a brown bag, possibly lit on fire.

    Good for Luke.



    • Cassie
      March 20, 2013 2:04 pm

      Also, they did hold our raises a few years back, then a week later an article came out stating that the CEO had a private helicopter that he just had to have.

      I swear, I’m not bitter.



      • Kelly
        March 20, 2013 2:18 pm

        As Cassie’s coworker, I completely agree. Reminder to Cassie: they held our raises, posted that the CEO made $400,000+/year, then we found out they spent the loads of money on the “rebranding” of UPMC with the big sign and apparently the creation of “UPMC Gray” and “UPMC Purple”, which are just gray and purple.

        I’ve always questioned the “non-profit” line of bs…



      • Lynn Haraldson
        March 20, 2013 4:43 pm

        What the hell are you complaining about, child? You have a FOOD BANK you can go to! Jeez. What more do you want from that poor non-profit?



  2. Sooska
    March 20, 2013 2:04 pm

    I can just hear Jeffrey Romoff on the phone with Luke’s high-priced Philadelphia lawyer asking how he’d go about silencing the media on this issue, like he did on Luke’s divorce.



  3. AngryMongo
    March 20, 2013 2:08 pm

    Perhaps he watched Batman too many times.



    • philmatt24
      March 20, 2013 9:59 pm

      If Mayor Luke “goingdown in a blaze of glory” involves saving our fine city by flying a nuclear bomb out over Cleveland and/or Philadelphia just before it explodes, and perishing in said explosion, I’m all in.



  4. DG
    March 20, 2013 2:22 pm

    Time Magazine published an in-depth article about the problems with the cost of health care in this country a few weeks ago. One of the issues that was cited was the compensation of top administrators. If I recall correctly (and I may not be) the person who runs UPMC Presby has a higher compensation than the person who runs the Cleveland Clinic. I do specifically recall that the person who runs UPMC Presby was listed highest among all hospital administrators listed. I don’t know if Time published different charts for distribution to different regions in an effort to sensationalize. I highly recommend the article.



    • Ben
      March 20, 2013 2:44 pm

      That was a great article!



      • Sheila
        March 20, 2013 3:23 pm

        Really good article
        http://www.time.com/time/magazine/article/0,9171,2136864,00.html

        And this is why we should argue against term limits or even multiple years in office b/c the longer politicians are beholden to those that pay them off, the less they do what is right.

        I just hope that this move by Luke doesn’t change his legacy – i.e. that he was a horrible mayor that only loved the publicity.

        I guess Lukey isn’t looking for that advisor position with UPMC like Onorato with Highmark. Better watch where you tread Luke, UPMC’s reach stems far & wide.



  5. Concerned Burger
    March 20, 2013 2:23 pm

    Since, we know that Luke is incapable of engaging in anything other than self-serving behavior, reasonable persons can only surmise that there is something in this for him. Was he promised a high-paying job at Highmark? Or is he using this as leverage for the promise of a job from UPMC? (Will he offer to drop or settle this legal action in exchange some sort of benefit from UPMC?)

    NOTE: that one of Luke’s toadies has been boasting (since before this legal action was filed) that Luke will get a $200,000 a year job from either UPMC or Highmark.

    If the braggart is right, it sounds like Luke is using the power of his office to engage in some sort of quid pro quo with either UPMC or Highmark.

    Sorry to say this but this is yet another matter that the FBI probably should be investigating.



    • Bram R
      March 20, 2013 2:56 pm

      Was he promised a high-paying job at Highmark?” Your comment is paranoid, baseless and outrageously irresponsible, Concerned Burger. And I salute you for it. Until and unless Ravenstahl spreads around the tax scrutiny to the other faux nonprofits like Bill Peduto is already recommending, it’s probably worth it for some reporter to ask, “Are you going to work for Highmark?”



    • Ex-Pat Pittsburgh Girl
      March 20, 2013 5:26 pm

      I’m not a conspiracy theorist so I actually don’t believe that there’s any ulterior motivations at work here. The City law department has been studying the May 2012 PA Supreme Court decision clarifying the law in regards to non-profits and tax exempt status since it came down. It was a completely unexpected decision and ruling, as prior courts generally came down on the side of the non-profit and not the political subdivision challenging the status. Even though the challenge was just recently filed, it takes quite a bit of work and time to draft these filings.



  6. jd
    March 20, 2013 2:35 pm

    While I don’t disagree with anything that you’re saying here, I can sadly point to a number of nonprofits that fit the same description of UMPC. Susan G. Koman (though they’ve cleaned up their act in recent years) comes to mind.



  7. Catherine
    March 20, 2013 3:03 pm

    Just a quick note: non-profit status – in general – doesn’t mean an organization can’t make a profit, it just means they cannot distribute it to shareholders or to the personal gain of a single employee. The profit must be reinvested into the mission of the organization. I’m not making a judgement about what UPMC is doing at all… clearly something shady is going on when a hospital admin has a helicopter… but it is a false statement to say that non-profits can’t make a profit. It’s what the non-profit DOES with their profit that makes the difference.



  8. Concerned Burger
    March 20, 2013 3:27 pm

    Virginia,

    I read your comment before posting mine. I note that I make my comment not only in response to your statement but from what I have heard from a member of Luke’s inner circle. The rumour that I heard from a member of the inner circle was a boasting of Luke’s future, lucrative, employment with EITHER Highmark or UPMC.



  9. Nathan J Shaulis
    March 20, 2013 3:38 pm

    I hold a small (very small) hope that one of the results of this will be to remove those awful looking UPMC letters from the Steel Building. I’m tired of Photoshopping them out of photos.



  10. Toni
    March 20, 2013 3:39 pm

    Wasn’t that a UPMC sponsered event that Lukey crashed to buddy up to Tiger Woods??? UPMC and Lukey have been hand to glove for years.

    UPMC hasn’t been a non-profit in God knows how long, and they are merciless. When I worked at Children’s Hospital in the 90′s, the kids had old beds with those ancient hand cranks at the foot of the bed. The equipment was so old that half the cranks didn’t work anymore. Try to give posteral drainage to a kid with Cystic Fibrosis in 1 of these beds…BUT!!!! the CEO at the time got a 70,000 face lift to his office!

    I moved from Children’s to Divine Providence…a sweet little hospital that was eventually bought ut by…….UPMC! While at Divine Providence, taxi cabs used to pull up at the ER with indigent patients UPMC didn’t want to admit….they have no money, you see. The sweet Divine Prov nuns agreed to let UPMC buy them out instead of the other interested hospital (Allegheny General) as they wanted the Catholic standard to stay in place. You know, the service to others, the compassion…everything the Providence nuns believed in. Gullibly, they believed in the Mercy vultures who promised they would keep current workers in their jobs without lay-offs and run the hospital according to their religious beliefs. Ink wasn’t dry on the contract before they were reniging on it. And I knew they would. Sister Patricia the lawyer nun, made the round of department meetings to “reassure us”. I remembered her well, she closed my high school, “Dominic High School” ( above St Peter’s grade school, now Cardinal Wright) after she promised parents she was working to keep it open.

    I’d love to see Mercy get hit below the belt and that it sticks but I won’t hold my breath. As per Lukey, too little too late…and as somebody said, he does nothing without getting a benefit out of it. I’m betting on the Highmark angle with Lukey being raised to Godlike stature for taking on Goliath.



  11. Jane
    March 20, 2013 4:27 pm

    The County has asked non profits back in Jan that own property to prove their status but it made little news.
    http://triblive.com/news/allegheny/3601199-74/tax-exempt-county#axzz2O752rx9W

    The City may be going after UPMC but the County is not discriminating and their reach is much more widespread. Of course UPMC is their target but they are making everyone prove their status.



  12. Ex-Pat Pittsburgh Girl
    March 20, 2013 5:14 pm

    Before we go off congratulating our elected officials for this renewed look at non-profits and property tax, it is very important to note that this probably would not be happening were it not for a PA Supreme Court decision that came down in May 2012 that ruled in against an entity claiming non-profit status and clarified what the law actually is and means. To read more about this decision, here’s the link http://bit.ly/IMjEGP (you can get to the court case from this article.

    THAT decision, and not any come to your senses I’ve seen the light moment, is the impetus behind not just Pittsburgh’s and Allegheny County’s challenges but many places (mostly school district driven, btw) to tax exempt status. The Mayor’s office is just going after the biggest fish first.



    • Ex-Pat Pittsburgh Girl
      March 20, 2013 5:20 pm

      And yes, I know this would affect more than property taxes. I should have written tax exempt status.

      By just going after UPMC right now, it does lessen the initial legal challenges, so in that regard the City doesn’t have the legal expenses that will come from challenges to all non-profits. My understanding of what the County is doing is the information gather stage, prior to determining which non-profit tax exempt status to challenge. The big uncertainty is whether or no the PA Supreme Court decision sets forth the analysis and standard for ALL non-profit tax exemption status challenges or will they use a case-by-case process.



  13. Kathy
    March 20, 2013 6:14 pm

    Having experienced litigating against UPMC, you can bet that they will now revoke the Pittsburgh Promise, layoff employees, and basically do everything else you can think of that falls into the dirtbag category, all the while claiming that the City made them do it. Personally, I’d like to see both the execs at UPMC and Lukey-Luke go down.



  14. JackR
    March 20, 2013 11:42 pm

    More than half of the real estate in the city is tax exempt. It’s well past time to question the entire idea of tax exempt status. UPMC is certainly the most visible but also consider the buildings that have been purchased by local universities and then taken off the tax rolls. It will be interesting to see if a new line will be drawn to identify true non-profits from the pretenders.



    • bucdaddy
      March 21, 2013 10:38 am

      Well, square-mileage-wise, it’s not a big city. People just tend to think it is because they lump the 110 or 120 surrounding municipalities into “Pittsburgh.”

      But still … more than half? Wow. That’s a lot of colleges and churches.



  15. Tina
    March 21, 2013 10:31 am

    To answer your question about the deal that UPMC made with Pittsburgh Public was in the Post-Gazette today:

    Pittsburgh Public Schools solicitor Ira Weiss was unsettled by the mayor’s decision to challenge UPMC because he worried it would jeopardize the funding for the Promise, around $100 million over 10 years. Under the Promise, the district agreed it would never challenge UPMC’s tax status or seek tax income.

    If push comes to shove, the district will do whatever it needs to protect the agreement, Mr. Weiss said.

    So UPMC has avoided paying a possible $25 million a year in property taxes by paying $10 million a year to the Pittsburgh Promise. (That is .18% of UPMC’s yearly revenue)

    The UPMC spokesperson has said if they run their business like government UPMC wouldn’t be in business. I would say this is true because UPMC wouldn’t be able to just raise rates without public awareness and a public vote, doesn’t have to deal with voters ever 2-4 years, wouldn’t be allowed to have a CEO useing his private jet and helicopter, and UPMC would actually have to offer services for free or at a lower cost.



  16. Emme Kay
    March 26, 2013 5:12 am

    My health insurance for years was UPMC. The result is that reading those initials have me fighting a horrible case of keyboard Tourette’s syndrome. Razza frazza…