A judge has ordered Monroe (Wis.) Clinic to pay property taxes on its clinic wing to the tune of more than $400,000 per year.
The clinic sued the city and went on trial last July to reclaim property taxes paid on its new north wing, which it claimed should be tax-exempt.
The decision by Madison, Wis., Judge Richard J. Callaway, acting as Green County Circuit Court judge, was announced Jan. 17. It put at least a temporary end to a long-running civil suit between the clinic and the city of Monroe.
Timothy Frautschi of the Milwaukee law firm Foley and Lardner represented the clinic. He said he hadn't had a chance to talk to the clinic about appealing the decision.
"We just got (the decision), and we haven't had a chance to talk to my client about that," Frautschi said.
Monroe Clinic has until sometime in April to file an appeal, he said.
The judge's decision came down to the question of whether or not the wing is a doctor's office. According to state law, not-for-profit hospitals are tax-exempt, but doctors' offices are not.
St. Clare Hospital, a Roman Catholic not-for-profit hospital, added the wing to house physicians after it acquired the former Monroe Clinic, a for-profit physicians' practice, in 1992. At the same time, the entire merged entity became known as Monroe Clinic.
C. Thompson Hardy, a healthcare expert testifying on behalf of the clinic, argued during the trial that the wing is not a doctor's office because the hospital owns it, not the doctors. Callaway, however, found the argument invalid.
"Although the day before (the merger) Hardy testified that the clinic was used as a doctor's office, he would have us believe that the very next day it was no longer used as a doctor's office because of a change in ownership," Callaway said in his decision. "Does a rose lose its fragrance and its luster because of who owns it? To contradict Gertrude Stein, Hardy would have us believe that a rose is a rose is not a rose."
Callaway visited the clinic's north wing during the trial.
"What counts is how the medical office building is used, not who owns it," Callaway said. "In this case, the property in question clearly is used as a `doctor's office' and so is not entitled to a property-tax exemption."
The suit against the city was only over taxes levied on the clinic during the north wing's construction in 1993, which totaled $73,000, Callaway said. However, the case will decide future taxing of the clinic. Monroe Clinic already has started a separate lawsuit for 1994, seeking a refund of another $424,000 in property taxes.
Callaway said if the plaintiff's theory were to prevail, many if not all not-for-profit hospitals would buy private clinics and "tuck them under tax-exempt wings," creating a further burden on the taxpayer.
The clinic, in a statement, said state lawmakers may eventually have to resolve the issue through legislation.