New Jersey Supreme Court Rejects Hospital Challenge to Charity Care Program

The lawsuit, which was filed on behalf of several hospitals, including Englewood Hospital and Hackensack Meridian Health, alleged that the State’s requirement to provide free charity care to individuals that are uninsured and meet certain income and asset requirements constitutes an unconstitutional taking under the New Jersey and United States Constitutions. According to the lawsuit, while hospitals are partially reimbursed under the State’s Health Care Subsidy Fund, the fund is not intended to provide full reimbursement of a hospital’s expenses in providing charity care, and the State’s failure to provide at-cost reimbursement constitutes a taking of the hospital equipment and facilities that are required to be used without full reimbursement.

In its decision, the Court held that requiring hospitals to provide care regardless of patients’ ability to pay and barring billing for qualifying patients does not constitute a per se physical taking, finding that there is no evidence that the government physically appropriates hospital property or deprives hospitals of their economically beneficial use. While recognizing that the charity care program imposes economic burdens, the Court underscored that these are not constitutionally compensable takings, particularly given the program’s paramount public interest and the explicit administrative and legislative mechanisms available to hospitals, such as appeals of subsidy amounts and legislative advocacy, for addressing financial shortfalls.