The Wisconsin Supreme Court last week overturned an appeals court ruling and upheld the tax-exempt status of an outpatient facility operated by nonprofit Wheaton Franciscan Healthcare.

The system had applied for an exemption from property taxes on several floors of the facility, but the city of Wauwatosa denied it.

The city took the position that the facility served primarily as a physician’s office with a commercial purpose.

The court in its opinion found that the property does warrant a tax exemption under state statutes because it’s used for the primary purposes of a not-for-profit hospital.

Nonprofit health care providers in the state had been following the case closely, fearing they could face similar challenges as cash-strapped municipal governments scrutinize their tax-exempt properties.

Wheaton will seek a refund of more than $8.5 million in taxes and interest, according to published reports.

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