New Jersey hospital's property tax settlement could open floodgates

A New Jersey hospital's management decision to pay back property taxes could set off a flurry of similar demands to other acute care facilities statewide.

Atlantic Health reached a settlement with the city of Morrisontown, New Jersey, to pay $10 million upfront and another $15 million, reported. The city and healthcare system had been battling for nearly a decade over whether the hospital should be exempt for property taxes based on how Atlantic operated seemingly as a for-profit business venture.

But the settlement is likely to press many other cities and municipalities in New Jersey to ask their local hospitals to pony up as well.

"In light of the property tax epidemic in New Jersey, it will come as no surprise that a number of towns are starting to look at hospitals and see dollar signs," healthcare attorney Mark Manigan told "Unless the Legislature steps in, the Morristown settlement will be the first of many." also reported that hospitals in the Garden State will come under similar pressure. "Clearly, this is an open invitation for a number of towns," Frank Ciesla, another healthcare attorney, told the publication. "I think you're going to see a lot more in the way of litigation."

Atlantic Health had its tax exemption in Morristown revoked earlier this year. It was one of the first losses of a non-profit hospital's tax exemption since Illinois regulators removed Provena Health's exemption for some properties several years ago--a decision that led to the passage of a law in that state that makes future revocations highly unlikely.

However, Barry Ostrowsky, CEO of Barnabas Health System, New Jersey's largest hospital system, has said that he doesn't mind if non-profit hospitals in the state pay some property taxes.

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