Governor Chris Christie, following the State of New Jersey’s legislative session on Monday, January 18, 2016, had until noon on Tuesday, January 19, 2016, to take action on 158 pieces of legislation. Any piece of legislation for which no action was taken automatically expired in the form of a pocket veto. Three healthcare related pieces of legislation were passed during the January 18th session; two of which were subsequently pocket-vetoed by Governor Christie. These included: (1) Bill S-3299/A-4903, The Hospital Community Service Contribution Bill, (2) A-4476/S-2876 which requires certain surgical practices and ambulatory care facilities licensed in this State to be owned by a hospital or medical school located in the State, and (3) A-4636/S-2878 which establishes minimum certified nursing assistant-to-resident ratios in nursing homes.
The Hospital Community Service Contribution Bill
On December 7, 2015, Senate President Steve Sweeney (D), Senator Robert Singer (R) and Senator Joe Vitale (D) introduced The Hospital Community Service Contribution Bill.
On January 19th, the Governor pocket-vetoed The Hospital Community Service Contribution Bill which would have required New Jersey tax-exempt acute-care hospitals to make payments, or annual service contributions, to offset the cost of services provided by the municipality in which they are located. This Bill was introduced in response to the recent Morristown Medical Center tax court decision (“Decision”).
Following the Decision, Atlantic Health, the parent corporation of Morristown Medical Center, settled with the Morristown Town Council agreeing to pay an upfront payment of $10 million and, in addition, annual installments for the next 10 years to cover $5.5 million in penalties and interest for the years 2006 through 2015. In addition, prospectively, approximately one-quarter of the property will be taxed at an assessed value of $40 million from 2015 to 2025 which will approximate another $1.05 million in annual tax payments; to be shared between the town and the Morris School District.
The Bill would have required New Jersey tax-exempt acute-care hospitals to make an annual service contribution of $2.50 per day for each licensed hospital bed and $250 per day for each facility providing satellite emergency care. The fees collected would have been used to fund services provided by the local municipalities such as emergency services, police and fire protection or to reduce any existing property tax levies. In addition, a hospital would have had the ability to reduce its annual service contribution by any amount that it already contributes to the municipality through a voluntary payment.
New Jersey Hospital Association’s (“NJHA”) President and Chief Executive Officer Betsy Ryan said, “We are disappointed with the pocket veto of The Hospital Community Service Contribution Bill. NJHA, along with its hospital members and both houses of the Legislature, firmly believed the bill provided a consistent statewide approach for hospitals to support their host municipalities with added community contributions.”
Additional Bills Addressed by Governor Christie
Bill A-4476/S-2876, which requires certain surgical practices and ambulatory care facilities licensed in New Jersey to be owned by a hospital or medical school located in the state, was signed into law by Governor Christie. This Bill was sponsored by Assemblyman Herb Conaway, M.D. (D) and Senator Richard Codey (D) and was strongly supported by NJHA. The Bill was drafted in an effort to prevent out-of-state organizations from opening surgical practices and ambulatory care facilities in New Jersey.
In addition, Governor Christie also pocket-vetoed Bill A-4636/S-2878 which was sponsored by Assemblywoman Angelica Jimenez (D) and Senator Brian Stack (D). This Bill would have established strict certified nurse assistant ratios in nursing homes. NJHA testified in opposition to this legislation as it moved through the Legislature.
Conclusion
Various opinions as to why The Hospital Community Service Contribution Bill was pocket-vetoed by the Governor have been expressed. Senator Singer stated “since there is no more time in the legislative session, the pocket-veto was the only option. He felt that the Bill could have been conditionally vetoed if the legislative session were not at its end.” Senator Singer also noted a problem with the Bill in determining if it really represents a true “payment in lieu of tax.” Other members of the Legislature expressed the sentiment that the Bill was pocket-vetoed by the Governor due to the fact that he did not want to sign anything into law that could be seen as an increase in taxes.
Betsy Ryan also stated, “Now that the Bill has been vetoed, we will work to present a constructive and refined approach that will provide certainty to hospitals and municipalities while addressing any concerns the Governor may have.” We will continue to closely monitor and keep you informed of this situation as future developments occur with The Hospital Community Service Contribution Bill and other healthcare-related legislation.
For more information related to this topic, view the following previous Withum Weekly Pulse articles:
Atlantic Health Settles Property Tax Dispute with Town of Morristown
New Jersey Hospital Loses Property Tax Exemption Case
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