Englewood Hospital & Medical Center v. State, ___ N.J. ___ (2025). New Jersey has had a charity care program, in one form or another, for 178 years. As Justice Fasciale summarized the current charity care program in his opinion for a unanimous Supreme Court, under the current program “hospitals cannot turn away a patient for inability to pay, N.J.S.A. 26:2H-18.64, and patients who qualify for charity care shall not be billed for services rendered, N.J.A.C. 10:52-11.4. Instead, ‘disproportionate share hospitals’ (DSHs), or hospitals that serve a disproportionate number of low-income patients, see N.J.S.A. 26:2H-18.52, receive annual subsidies from the Health Care Subsidy Fund (HCSF) in exchange for providing charity care, see N.J.S.A. 26:2H-18.52, .58, .58d.”

Some DHSs challenged the program as an unconstitutional taking. On cross-motions for summary judgment, the Law Division rejected that contention, viewing plaintiffs’ claims as “as-applied” challenges rather than a facial attack on the statutory regime, and dismissed other claims as unripe due to failure to exhaust administrative remedies. The Appellate Division, in an opinion reported at 478 N.J. Super. 626 (App. Div. 2024), affirmed, though characterizing plaintiffs’ claims as a facial challenge. On further review, the Supreme Court affirmed as modified, applying de novo review. In reaching that result, the Court did not decide whether this was a facial attack or an as-applied challenge, stating that “[r]egardless of whether the challenge is facial or as-applied, we hold that the charity care program in its current form does not constitute an unconstitutional per se or regulatory taking.”

After a detailed review of the history, structure, and purpose of the charity care program, Justice Fasciale proceeded to analyze the various potential ways in which the charity care program might be labeled as a taking. He observed that there are two general types of takings:  “per se” takings and “regulatory” or “use-restriction” takings. Then there were “two main sub-categories” of per se takings:  “physical appropriation,” such as “when the government directly takes private property for its own use or use by a third party, as through the exercise of its power of eminent domain to formally condemn property or by physically taking possession of property without acquiring title to it,” and “government-authorized physical invasion[]” or a physical occupation of private property,” which can be takings because they violate a property right in “the right to exclude.” A regulatory taking, Justice Fasciale said, “occurs when the government restricts an owner’s ability to use his own property.”

There followed a veritable treatise on the law of takings, as Justice Fasciale analyzed the various categories and sub-categories with regard to three different things that plaintiffs asserted were unconstitutionally taken:  “supplies, services, and facilities.” His lengthy, scholarly discussion is well worth reading in full.  The bottom line, however, was that there was no unconstitutional taking.

But plaintiffs were not without a remedy. If any of them believed that the subsidies available were insufficient, a plaintiff could “challenge its subsidy allocation by, for example, filing an administrative appeal with the [Department of Health], N.J.A.C. 10:52-13.4(f)(1) to (2), or seeking adjustment of the Medicaid rate issued annually by the Division [of Medical

Assistance and Health Services] within the [Department of Health], id. at -14.17(c).” Quoting a First Circuit case, Justice Fasciale concluded by saying that “the better course of action is to seek redress through the state’s political process” rather than under the Takings Clause.”