Pa. Supreme Court won’t hear Tower Health’s appeal of Phoenixville Hospital’s property tax case
A Commonwealth Court decision in February ruled that Phoenixville Hospital is not eligible for property tax exemptions.
The Pennsylvania Supreme Court issued an order Tuesday denying Tower Health’s bid to appeal its loss of a property tax exemption for Phoenixville Hospital.
Phoenixville Area School District said the decision will allow it to keep nearly $5 million in property taxes paid by Tower since the company acquired the hospital in 2017.
“This ruling is a victory for the district as well as the greater Phoenixville community, but most importantly for our students,” the district said in a statement.
The Supreme Court action effectively upheld the Pennsylvania Commonwealth Court’s decision in February that three Tower hospitals in Chester County were not eligible for property tax exemptions, even though Tower is a nonprofit corporation. Commonwealth Court is an appeals court below the Supreme Court.
Two of the Chester County hospitals — Brandywine and Jennersville — had already been closed when Commonwealth Court ruled. Phoenixville is still in operation, dealing with the consequences of the initial October 2021 decision by Chester County Court of Common Pleas Judge Jeffrey R. Sommer.
Sommer found that the three Chester County hospitals did not qualify for property-tax exemption for three main reasons: They did not provide enough free services, the hospitals’ businesses were too intertwined with the interests of doctors working at for-profit practices, and they didn’t operate free of private profit motives given their executive compensation packages.
The court cases send a signal that nonprofit health systems should not expect taxpayers to subsidize exorbitant executive salaries, a lawyer representing Phoenixville Area School District said.
“It is common sense that if you act like a for-profit business, you should not be rewarded with a charitable tax exemption,” said Howard L. Kelin, an attorney with Sweet, Stevens, Katz & Williams LLP.
Tower said it was evaluating its options regarding the tax situation in Phoenixville.
In a separate case, the state’s highest court agreed in October to hear Tower’s appeal involving Pottstown Hospital. The Pottstown case was more narrowly focused on issues involving executive pay and whether a parent company’s activities have bearing on a hospital subsidiary’s property tax exemption.