N.J. hospitals under pressure to ease tax exemptions

Local municipalities in New Jersey have filed lawsuits against 35 not-for-profit hospitals challenging their property tax exemptions, NJ.com has reported. The challenges have already resulted in some settlements.

Trinitas Regional Medical Center will contribute $250,000 a year to the town of Elizabeth between this year and 2019, according to NJ.com. The hospital and municipality will renegotiate for 2020 and beyond. In another settlement, JFK Medical Center will pay Edison, New Jersey $500,000 annually this year and in 2017, with payments likely continuing after that unless a new settlement is renegotiated.

The settlements come on the heels of a much larger deal reached between Atlantic Health Systems, owner of Morristown Medical Center, and the municipality of Morristown. The hospital lost its property tax exemption last year after a state judge ruled that the hospital did not keep its not-for-profit and for-profit enteprises intermingled. Atlantic reached a settlement with Morristown late last year, offering to pay $10 million upfront and a longer-term payout totaling $15 million.

The Morristown case appears to be what set off a cascade of tax reform. When the state of Illinois eliminated some property tax provisions for Provena Health System, the state reformed the property tax statutes in favor of hospitals as a response.

Despite the surge of litigation, the "issue seems to be resolving itself, with the negotiations and settlements,” Mike Cerra, assistant executive director for the New Jersey League of Municipalities, told NJ.com.

But the hospital community sees it a little differently. Betsy Ryan, chief executive officer of the New Jersey Hospital Association, told NJ.com that she was annoyed over the situation. "These cases take years and years to get through the system. Morristown took five years," Ryan said. "It's frustrating we have all these lawsuits and the only ones getting rich are the lawyers."

– read the NJ.com article