Bill Text: NJ S4291 | 2026-2027 | Regular Session | Introduced
Bill Title: Establishes process to judicially appoint receiver to administer closed hospital.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced) 2026-05-14 - Introduced in the Senate, Referred to Senate Health, Human Services and Senior Citizens Committee [S4291 Detail]
Download: New_Jersey-2026-S4291-Introduced.html
Sponsored by:
Senator RAJ MUKHERJI
District 32 (Hudson)
SYNOPSIS
Establishes process to judicially appoint receiver to administer closed hospital.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning hospital closures, and supplementing Title 26 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. The Legislature finds and declares that:
(1) Many residents of New Jersey living in urban areas receive their health care at acute care general hospitals located in their community. Their life, safety, health, and welfare is largely dependent upon that care remaining affordable and accessible at such facilities.
(2) The certificate of need (CN) process is designed to protect the role that urban hospitals play in the Statewide health care system, and to guard against the closing of such facilities and the transfer of services in a manner which is harmful to the public interest.
(3) Pursuant to State law and Department of Health regulations, if the Commissioner of Health determines that a hospital is in financial distress, the commissioner may appoint a monitor to assist in resolving such distress through methods including, but not limited to, the provision of State stabilization grants in extraordinary circumstances. However, the voluntary closure of a hospital requires a full review through the CN process.
(4) Nevertheless, it is necessary in order to protect the public welfare and the health care services of residents of such urban communities to establish a summary statutory procedure in the event that the licensee of an acute care general hospital closes such facility or discontinues an essential service provided at such facility in violation of the CN requirement.
b. As used in this section:
(1) "Commissioner" has the definition set forth in section 2 of P.L.1971, c.136 (C.26:2H-2).
(2) "Department" has the definition set forth in section 2 of P.L.1971, c.136 (C.26:2H-2).
(3) "Health care service" has the definition set forth in section 2 of P.L.1971, c.136 (C.26:2H-2).
(4) "Licensee" means the holder or holders of a license to operate a general hospital pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.).
(5) "Person" means an individual, corporation, company, association, society, firm, limited liability company, limited liability partnership, partnership, joint stock company, or any other legal entity, however organized.
c. Whenever the Commissioner finds that a general hospital has closed without first having obtained a certificate of need authorizing the closure, or is in imminent threat of closure but has not applied for a certificate of need to authorize closure, the Commissioner shall notify the Attorney General and the governing body of the municipality in which the hospital is located.
Upon such finding and notice, the Department, the Attorney General, or the municipality shall each have standing to bring a civil action in the Superior Court for an order directing the appointment of a receiver to maintain the operation of the hospital and all health care services being provided at such hospital. If the action is not brought by the Department, the Department shall be served with a copy of the complaint. An action brought pursuant to this subsection shall be heard by the court within three days.
d. A complaint filed pursuant to subsection c. of this section shall:
(1) Set forth all material facts showing that the licensee has closed or imminently threatens to close the hospital, or has discontinued essential health care services, without filing an application for a certificate of need or without completing the certificate of need process;
(2) Certify that the facts set forth pursuant to paragraph (1) of this subsection have been brought to the attention of the licensee and all persons with a financial interest in the hospital, but the health care services have not been restored;
(3) Set forth a brief description of what is necessary to reopen or prevent the closure of the hospital, together with an estimate of the costs required; and
(4) State the relief sought, including, but not limited to, the appointment of a receiver.
e. It shall be an affirmative defense to a complaint filed pursuant to subsection c. of this section that the licensee has filed an application for a certificate of need, and has restored all previously discontinued health care services pending a determination by the Commissioner.
f. Upon a finding of the need for emergent relief, the court may appoint a receiver to immediately assume the powers set forth in subsections g. and h. of this section. The receiver shall be a person approved by the Department, except that no person who holds a financial interest in the licensee, or any family member of such person, shall be appointed as the receiver.
g. The receiver, upon appointment, may either assume the role of the administrator or manager of the licensee and take control of all operations, or direct the current administrator or manager to restore and maintain all previously discontinued health care services. The receiver is authorized to continue the business of the hospital and maintain the care of its patients in all aspects, and to do all acts necessary or appropriate to conserve the property and assets of the hospital, to promote the health, safety, and welfare of its patients, and to implement the orders of the court. If the receiver determines that the hospital is in financial distress which may necessitate closure, the receiver shall file an application for a certificate of need with the Department.
h. The court shall allow from the revenues of the hospital a reasonable amount of compensation for the services and expenditures of the receiver appointed pursuant to this section. The receiver may be required to furnish a bond in an amount and form as directed by the court. The cost of such bond shall be paid jointly and severally by such persons found to have caused the licensee to violate any requirements concerning the certificate of need.
2. This act shall take effect immediately.
STATEMENT
This bill establishes a procedure for the Superior Court to appoint a receiver to administer a hospital that has closed or is in imminent threat of closure.
Under current law, N.J.S.A.26:2H-5.1a and 26:2H-5.1b, if the Commissioner of Health determines that a hospital is in financial distress, the commissioner may appoint a monitor to assist in resolving the financial difficulties. Current law also allows the commissioner, under N.J.S.A.26:2H-18.77, to award State grants to a hospital where extraordinary circumstances threaten access to essential health services for residents in a community. Furthermore, under N.J.A.C.8:33-3.2 of the Department of Health regulations, a hospital undergoing voluntary closure must apply for a certificate of need (CN), which must be approved by the department.
Under the bill, if a hospital closes without going through the CN process, or if a hospital is in imminent threat of closure but has not applied for a CN, the Department, the Attorney General, or the municipality in which the hospital is located may file an action in the Superior Court for the appointment of a receiver to maintain hospital operations. An action filed pursuant to the bill is required to set forth the facts concerning the hospital's closure, certify that the owners of the hospital have been notified but either have not restored services or have not complied with the CN process, and set forth a description of what is necessary to keep the hospital open. It is an affirmative defense that the hospital owner has in fact filed an application for a CN, and has restored services pending further action by the Department.
Under the bill, if a receiver is appointed, the receiver may immediately assume all administrative control directly, or allow the hospital's existing administration to continue to function. The receiver will be empowered to exercise all powers necessary and appropriate to maintain hospital function and patient care, and to implement the orders of the court. The bill provides that the receiver must be a person approved by the Department, but may not be a person with a financial interest in the hospital or the family member of such a person. Finally, the bill provides for the receiver to receive reasonable compensation from hospital revenues, and may require the receiver to furnish a bond.
