decided: December 31, 1981.
WEST ALLEGHENY HOSPITAL
BOARD OF PROPERTY ASSESSMENT, APPEALS AND REVIEW OF ALLEGHENY COUNTY WEST ALLEGHENY SCHOOL DISTRICT, APPELLANT
Appeal from the Order of the Court of Common Pleas of Allegheny County in the case of In Re: Appeal of West Allegheny Hospital, from the action of the Board of Property Assessment, Appeals and Review of Allegheny County on property situate on Old Steubenville Pike, North Fayette Township, Allegheny County, Pennsylvania, No. G.D. 75-3752.
D. R. Pellegrini, with him W. Theodore Brooks, Brooks & Ewalt, for appellant.
Samuel Y. Stroh, P.C., with him Raymond H. Bogaty, William J. Fahey, and John M. Silvestri, for appellee.
Judges Mencer, MacPhail and Palladino, sitting as a panel of three. Opinion by Judge Palladino. Judge MacPhail dissents.
[ 63 Pa. Commw. Page 557]
West Allegheny School District appeals an order of the Court of Common Pleas of Allegheny County which sustained the consolidated appeals of West Allegheny Hospital (West Allegheny) from a denial of real estate tax exemptions by the Board of Property Assessment, Appeals and Review of Allegheny County (Board). We reverse the order of the court of common pleas and deny a tax exemption to West Allegheny.
On April 5, 1956, West Allegheny was chartered as a non-profit corporation. Through an application filed June 2, 1966, and a supplemental application filed June 7, 1974, West Allegheny sought a tax exemption for a building purchased for use as a medical facility. In January of 1975 the Board denied West Allegheny's requested exemption. On March 1, 1974, West Allegheny filed an application for a tax exemption covering an edifice newly constructed as part of its health complex. This application was denied by the Board on April 23, 1974. The appeals of West Allegheny from the Board's denials of tax-exempt status were consolidated before the court of common pleas which held that West Allegheny qualified for tax exemptions as a purely public charity. We disagree.
To be eligible for an exemption pursuant to Article VIII, Section 2 of the Constitution of the Commonwealth of Pennsylvania*fn1 and Section 204 of The General
[ 63 Pa. Commw. Page 558]
County Assessment Law, Act of May 22, 1933, P.L. 853, as amended, 72 P.S. § 5020-204,*fn2 an institution "'must affirmatively show that the entire institution, (1) is one of "purely public charity"; (2) was founded by public or private charity; (3) is maintained by public or private charity.'" Robert Morris College v. Board of Property Assessment, Appeals and Review, 5 Pa. Commonwealth Ct. 648, 656, 291 A.2d 567, 572 (1972) (quoting Woods Schools Tax Exemption Case, 406 Pa. 579, 584, 178 A.2d 600, 602 (1962)); Point Park Junior College v. Board of Property Assessment, Appeals and Review of Allegheny County, 23 Pa. Commonwealth Ct. 367, 351 A.2d 707 (1976). "This Court has more recently restated the requisite characteristics which an institution must prove [as] . . . freedom from a private profit motive, significant charitable support for the institution, and provision of charitable services through . . . financial assistance." Wayne County Board of Assessment v. Federation of Jewish Philanthropies, 43 Pa. Commonwealth Ct. 508, 511, 403 A.2d 613, 615 (1979).
Because the taxation of real estate is the rule and exemption is the exception, statutory provisions providing exemptions from taxation are strictly construed against the taxpayer. S.D. Richman Sons, Inc. v. Board of Finance and Revenue, 53 Pa. Commonwealth Ct. 110, 416 A.2d 1161 (1980); Appeal of Doctor's Hospital, 51 Pa. Commonwealth Ct. 31, 414 A.2d 134 (1980); Section 1928(b)(5) of the Statutory Construction Act of 1972, 1 Pa. C.S. § 1928(b)(5). "The resolution of whether an institution is a 'purely public charity' is a mixed question of law and fact and each
[ 63 Pa. Commw. Page 559]
case must be decided on its unique factual composition." Appeal of Doctor's Hospital, 51 Pa. Commonwealth Ct. at 34-35, 414 A.2d at 316; Appeal of Marple Newtown School District, 39 Pa. Commonwealth Ct. 326, 395 A.2d 1023 (1978).
Although an institution may receive some reimbursement for its services and yet constitute a charity, Appeal of Marple Newtown School District, "to qualify as a 'purely public charity' the institution 'must donate or render gratuitously a substantial portion of its . . . services.'" Robert Morris College v. Board of Property Assessment, Appeals and Review, 5 Pa. Commonwealth Ct. at 659, 291 A.2d at 574 (emphasis added) (quoting Woods Schools Tax Exemption Case, 406 Pa. 579, 587, 178 A.2d 600, 604 (1962)). "'[A]n institution claiming to be charitable . . . must possess an eleemosynary characteristic not possessed by institutions . . . devoted to private gain or profit. What is "given" must be more nearly gratuitous than for a price which impresses one as being proportionate to the services rendered.'" Robert Morris College v. Board of Property Assessment, Appeals and Review, 5 Pa. Commonwealth Ct. at 658, 291 A.2d at 573 (emphasis in original) (quoting Ogontz School Tax Exemption Case, 361 Pa. 284, 294, 65 A.2d 150, 154 (1949)); Appeal of Doctor's Hospital. A "charity becomes exempt because it is providing services to a group of recipients which would ordinarily be provided by the government at little or no cost." Homewood-Brushton Citizens Renewal Council v. Department of City Treasurer, City of Pittsburgh, 27 Pa. Commonwealth Ct. 630, 634, 367 A.2d 405, 407-08 (1976).
The present case is controlled by the decision of Judge Crumlish (now President Judge) in Appeal of Doctor's Hospital. Like the revenues of Doctor's Hospital, the revenues of West Allegheny derive from
[ 63 Pa. Commw. Page 560]
Blue Cross/Blue Shield, Medicare, Medicaid, other third-party insurers, and self-paid patients.*fn3 Although West Allegheny adheres to an open admission policy*fn4 required by its receipt of federal funding,*fn5 West Allegheny, like Doctor's Hospital, bills all patients who utilize its services regardless of the patients' ability/inability to pay. To assist in obtaining payment, West
[ 63 Pa. Commw. Page 561]
Allegheny also employs a debt collection agency. As did Doctor's Hospital, West Allegheny regards uncollected payments as bad debts.
Doctors at West Allegheny directly bill their patients for all treatment except emergency room care for which West Allegheny directly bills patients.*fn6 According to the testimony of West Allegheny's administrator, aggregate costs, including overhead, for the operation of the emergency room in 1978, a typical year, totaled approximately $210,000 while charges to patients for emergency treatment in 1978 totaled approximately $210,704, i.e., billings to patients equaled West Allegheny's actual costs.
" [Q]uid pro quo permeates the entire operation" of West Allegheny. Lutheran Home at Topton, Pennsylvania Tax Appeal, 6 Pa. Commonwealth Ct. 199, 210, 293 A.2d 888, 894 (1972) (emphasis in original).*fn7 Accordingly, since with respect to West Allegheny the
[ 63 Pa. Commw. Page 562]
record does not disclose any objects of charity,*fn8 we will enter the following
And Now, December 31, 1981, the order of the Court of Common Pleas of Allegheny County, dated April 17, 1980, docketed at G.D. 75-3752, is reversed.
Judge MacPhail dissents.