Justices side with hospital on $2M tax bill

CHARLESTON — The West Virginia Supreme Court of Appeals says United Hospital Center of Clarksburg doesn’t have to pay a tax bill that, with interest, is now up to about $2.25 million.

In an opinion filed Wednesday, the Supreme Court reversed a Harrison Circuit Court order in favor of the state tax commissioner and the county assessor. The property in question was assessed during 2010 for the 2011 tax year, and it was done before UHC moved from Clarksburg to the newly constructed site in Bridgeport in October 2010.

Justice Allen Loughry wrote the 4-1 opinion. Chief Justice Robin Jean Davis reserved the right to file a dissenting opinion.

In January 2013, Harrison Circuit Judge John Lewis Marks Jr. denied UHC’s appeal of the Harrison County assessor’s finding in January 2013. Marks’ ruling stated that property owned by a charity that isn’t used “primarily and immediately” for its charity purpose isn’t exempt from taxes.

Attorney Mike Garrison of Spilman Thomas & Battle represented UHC.

“The taxability issue is one of extreme importance to UHC and any health-care organization looking to build a new facility,” he said. “The ruling was very gratifying. I believe it was absolutely the right place for the court to land on this issue.

“One, there was a pretty clear misapplication with what the regulations said. But on the broader scale, it will encourage more state-of-the-art healthcare in West Virginia. Now, healthcare facilities won’t have to worry about extensive tax burdens it shouldn’t have.

“We appreciate the time and interest the court put into the issue. They were engaged and put a lot of thought into the matter."

Garrison said the decision is important for all hospitals and health care facilities that contemplate building or expanding facilities in West Virginia. He said the ruling encourages charitable hospitals in West Virginia to modernize their health care facilities.

“We are very pleased with the Court’s ruling," Garrison said. "West Virginia residents deserve the highest quality, modern health care and charitable hospitals should be encouraged to develop new state of the art facilities like those found at United Hospital Center.”

A UHC official agreed.

“We firmly believe the Supreme Court made the right decision in this case – not only for UHC, but for the entire West Virginia health care industry,” said Doug Coffman, UHC’s Vice President of Finance and CFO. “Garrison and the Spilman team did an excellent job representing our interests throughout this litigation process.”

In 2006, construction began on a hospital in Bridgeport to replace an aging facility in Clarksburg. The new hospital was still under construction in 2010 when UHC received its 2011 assessment of property taxes.

Hospital attorneys said UHC claimed the land is exempt from property tax. They argued UHC was preparing the property for charitable purposes.

The state tax commissioner and the local assessor had concluded the Bridgeport property was taxable.

Garrison said UHC obviously was pleased with the verdict.

“It was a more than $2.25 million difference for them,” he said. “It was nice to read the analysis the justices made. We made many similar observations. We were just pleased with the outcome.”

Garrison said he and fellow Spilman attorneys Kelly J. Kimble and Dale W. Steager worked on the case.