North Smithfield Settles Prime Lawsuit Over Nonprofit Tax Status | New


NORTH SMITHFIELD – On April 5, city council members approved a $ 197,243 settlement with Prime Healthcare Services after the company sued the city over its tax status.

In 2016, the Canadian company, which operates the Landmark Medical Center in Woonsocket and the Rehabilitation Hospital of Rhode Island in North Smithfield, applied to convert the two facilities to nonprofit status. The Rhode Island Department of Health approved the change two years later in January 2018.

The discrepancy between the application date and the approval date created tensions in North Smithfield, where the health chain applied for and was denied tax-exempt status based on its 2017 assessment. The company then sued the city and two of its tax assessors to recover the lost revenue.

According to the city administrator, Paul Zwolenski, the settlement represents a partial refund of taxes paid to the city between 2018 and 2020. Over those three years, he said, the company paid slightly less. of $ 700,000 in taxes for the Eddie Dowling Freeway property. The refund, he said, will be provided as a proportional reduction in future taxes.

“It was the best deal so that we could continue working with them. If we had pleaded this, we would have lost a lot more money, ”he said.

In 2020, four years after applying to convert to nonprofit status, Prime sold a stake in the rehab hospital to Kentucky-based Kindred Healthcare. As part of the new joint venture, the North Smithfield facility is once again operating as a for-profit business.

As a result, Zwolenski said, the tax status issue has been resolved and the new entity will pay 100% of all taxes.

At the same time, Prime’s non-profit entity will continue to own half of the tangible assets in the building, resulting in a tangible tax credit negotiated as part of the settlement.

Zwolenski described it as a “reasonable settlement”.

Prior to the hospital’s conversion to for-profit status, former tax assessor Sarah Frew said The Breeze North Smithfield was at risk of losing about $ 250,000 in annual tax revenue due to the nonprofit change.

Landmark Medical Center spokeswoman Carolyn Kyle said Prime had no comment on the settlement.

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