Bill Text: NJ S4395 | 2026-2027 | Regular Session | Introduced
Bill Title: Revises regulation of certain health care facilities.
Sponsorship: Partisan Bill (Democrat 3)
Status: (Introduced) 2026-06-01 - Introduced in the Senate, Referred to Senate Health, Human Services and Senior Citizens Committee [S4395 Detail]
Download: New_Jersey-2026-S4395-Introduced.html
Sponsored by:
Senator RAJ MUKHERJI
District 32 (Hudson)
Senator BRIAN P. STACK
District 33 (Hudson)
Co-Sponsored by:
Senator McKnight
SYNOPSIS
Revises regulation of certain health care facilities.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning certain health care facilities and revising various parts of statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 8 of P.L.1970, c.334 (C.26:2G-28) is amended to read as follows:
8. Any person, firm, corporation, partnership, society or association who shall operate or conduct a narcotic and substance use disorder treatment center without first obtaining the certificate of approval required by this act, or who shall operate such establishment after revocation or suspension of a certificate of approval, shall be liable to a penalty of [$25] $12,500 for each day of operation in violation hereof for the first offense and for any subsequent offense shall be liable to a penalty of [$50] $25,000 for each day of operation in violation hereof.
The penalties authorized by this section shall be recovered in a summary proceeding instituted by the Attorney General, at the request of the commissioner, pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). Money penalties, when recovered, shall be payable to the General State Fund.
Notwithstanding any law, rule, or regulation to the contrary, on and after the effective date of P.L. , c. (pending before the Legislature as this bill), the department shall, by regulation adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), impose a graduated penalty commensurate with the facility's licensed-bed capacity. The department may annually increase the penalties authorized by this section, with any increase to the penalties authorized by this section not to exceed the cumulative annual percentage increase in the Consumer Price Index for the five fiscal years prior to the date of the proposed subsequent increase.
(cf: P.L.2017, c.131, s.92)
2. Section 5 of P.L.1971, c.136 (C.26:2H-5) is amended to read as follows:
5. a. The commissioner, to effectuate the provisions and purposes of [this act] P.L.1971, c.136 (C.26:2H-1 et seq.), shall have the power to inquire into health care services and the operation of health care facilities and to conduct periodic inspections of such facilities with respect to the fitness and adequacy of the premises, equipment, personnel, rules and bylaws and the adequacy of financial resources and sources of future revenues.
b. The commissioner, with the approval of the board, shall adopt and amend rules and regulations in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to effectuate the provisions and purposes of [this act] P.L.1971, c.136 (C.26:2H-1 et seq.), including but not limited to: (1) the establishment of requirements for a uniform Statewide system of reports and audits relating to the quality of health care provided, health care facility utilization and costs; (2) certification by the department of schedules of rates, payments, reimbursement, grants and other charges for health care services as provided in section 18; and (3) standards and procedures relating to the licensing of health care facilities and the institution of certain additional health care services.
c. The commissioner may enter into contracts with any government agency, institution of higher learning, voluntary nonprofit agency, or appropriate planning agency or council; and such entities are authorized to enter into contracts with the commissioner to effectuate the provisions and purposes of [this act] P.L.1971, c.136 (C.26:2H-1 et seq.).
d. The commissioner may provide consultation and assistance to health care facilities in operational techniques, including but not limited to, planning, principles of management, and standards of health care services, and, in the case of a general hospital, to appoint a monitor if the commissioner determines that a monitor is warranted for a hospital that is in financial distress or at risk of being in financial distress, and to participate in the development and oversight of corrective measures to resolve a hospital's financial or potential financial difficulties, pursuant to section 2 of P.L.2008, c.58 (C.26:2H-5.1a).
e. At the request of the commissioner, health care facilities shall furnish to the Department of Health and Senior Services such reports and information as it may require to effectuate the provisions and purposes of [this act] P.L.1971, c.136 (C.26:2H-1 et seq.), excluding confidential communications from patients.
f. The commissioner may institute or cause to be instituted in a court of competent jurisdiction proceedings to compel compliance with the provisions of [this act] P.L.1971, c.136 (C.26:2H-1 et seq.) or the determinations, rules, regulations and orders of the commissioner, including seeking injunctive relief against any person, firm, corporation, partnership, or licensed healthcare facility.
g. Notwithstanding any rules and regulations governing private long-term health care facilities and enforcing the 1967 Life Safety Code, as amended and supplemented, the commissioner shall permit third floor occupancy of such facilities by owners, members of their immediate families, and licensed professionals employed at such facilities.
(cf: P.L.2008, c.58, s.1)
3. Section 8 of P.L.1971, c.136 (C.26:2H-8) is amended to read as follows:
8. a. No certificate of need shall be issued unless the action proposed in the application for such certificate is necessary to provide required health care in the area to be served, can be economically accomplished and maintained, will not have an adverse economic or financial impact on the delivery of health care services in the region or Statewide, and will contribute to the orderly development of adequate and effective health care services. In making such determinations there shall be taken into consideration (a) the availability of facilities or services which may serve as alternatives or substitutes, (b) the need for special equipment and services in the area, (c) the possible economies and improvement in services to be anticipated from the operation of joint central services, (d) the adequacy of financial resources and sources of present and future revenues, (e) the availability of sufficient manpower in the several professional disciplines, (f) the impact on the cost of health care services to consumers, (g) the quality, equity, or access to health care services in any region in the State, and (h) such other factors as may be established by regulation. The State Health Plan shall also be considered in determining whether to approve a certificate of need application.
b. In the case of an application by a health care facility established or operated by any recognized religious body or denomination the needs of the members of such religious body or denomination for care and treatment in accordance with their religious or ethical convictions may be considered to be a public need.
c. The Commissioner of Health shall be permitted to debar a health care facility or any individual in the ownership structure of a health care facility that is licensed under the "Health Care Facilities Planning Act," P.L.1971, c.136 (C.26:2H-1 et seq.) from eligibility for a certificate of need after a determination that the health care facility has substantial prior or continuing violations of the "Health Care Facilities Planning Act," P.L.1971, c.136 (C.26:2H-1 et seq.) or certificate of need requirements. In each case, the decision to debar shall be made at the discretion of the Commissioner of Health, who may consider the following factors as material in each decision to debar:
(1) the record of violations by the health care facility or the facility's owners, including, without limitation, any member, manager, partner, shareholder, trustee, trust beneficiary, corporate officer or director, or any person holding a direct or indirect interest through a trust, limited liability company, limited partnership, or corporation, regardless of the percentage of ownership, controlling or not; and the record of violations of other health care facilities within the same ownership system;
(2) the significance or scale of the violations, including but not limited to, whether the violations risk life or safety or restrict access to care;
(3) the existence of outstanding audits or failure to pay previous fines or penalties;
(4) the existence of a record of convictions for any offense related to healthcare fraud, patient abuse or neglect, bribery, embezzlement, kickbacks, or financial crimes within the past 10 years by the facility's owners, including, without limitation, any member, manager, partner, shareholder, trustee, trust beneficiary, corporate officer or director, or any person holding a direct or indirect interest through a trust, limited liability company, limited partnership, or corporation regardless of the percentage of ownership, controlling or not;
(5) failure to respond to a request from the Commissioner of Health to produce records, forms, or documents; and
(6) submission of falsified or altered records, forms, or documents.
d. If the Commissioner of Health debars a health care facility or individual from eligibility for a certificate of need, the health care facility or individual shall be furnished with a written notice stating that:
(1) debarment has been imposed, the date on which debarment becomes effective, and the reasons therefor; and
(2) if the health care facility or individual chooses to appeal the debarment, the health care facility or individual shall submit the appeal in writing to the Department of Health within 30 days of receipt of the notification of debarment pursuant to this section.
e. If the Commissioner of Health receives a timely request for appeal of debarment pursuant to this section, the commissioner, within 15 days of receipt of the appeal, shall refer the matter to the Office of Administrative Law for adjudication.
f. (1) If a hospital is debarred, the license for any other associated health care facility within the hospital's health system shall be made provisional pending the completion of a financial audit and the implementation of a comprehensive improvement plan, which shall incorporate all of the hospitals in the hospital's health system and shall be submitted by the hospital to, and approved by, the department prior to implementation of the plan. The plan shall propose:
(a) cost containment measures, which shall include an evaluation of how such measures will impact the standard charges for items and services provided by each applicable hospital;
(b) solutions to existing disparities in the provision of health care services to medically underserved groups, such as low-income persons, racial and ethnic minorities, immigrants, and persons with disabilities; and
(c) a plan to restructure the hospital's health system such that all hospitals within the system provide adequate services and access to care for the communities served by the health system.
(2) Licenses made provisional pursuant to paragraph (1) of this subsection shall automatically convert to a full license to operate in the State of New Jersey one year following the implementation of an approved comprehensive improvement plan pursuant to this subsection.
g. As used in this section:
"Health system" means an organization or group of entities, including at least one hospital and one or more physician groups providing comprehensive, coordinated care through shared ownership, joint management, or a common governance structure.
"Hospital" means a general acute care hospital licensed by the Department of Health pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.).
(cf: P.L.1992, c.31, s.2)
4. (New section) a. For the purposes of this section,
"Health care real estate investment trust" means a real estate investment trust, as defined by 26 U.S.C s.856, whose assets consist of real property held in connection with the use or operations of a health care facility or a provider of health care.
"Satellite facility" means a facility that is either created by, or acquired by, a health care facility for the purpose of furnishing health care services within the scope of the health care facility's license under the name, ownership, and financial and administrative control of the health care facility and located farther than 250 yards from the parent health care facility's campus, including areas determined by the department to be part of the parent health care facility's campus.
b. No certificate of need, as required by section 7 of P.L.1971, c.136 (C.26:2H-7), shall be provided to a health care facility constructed or expanded after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) if the proposed or transferred site of the health care facility is leased from a health care real estate investment trust; provided, however, that any health care facility that is leasing its site from a health care real estate investment trust as of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be exempt from the provisions of this section and the commissioner may waive the provisions of this section and provide a certificate of need to the proposed or transferred site leased from a health care real estate investment trust of a satellite facility that provides outpatient services.
5. Section 14 of P.L.1999, c.154 (C.26:2H-12.12) is amended to read as follows:
14. Effective 12 months after the adoption of regulations establishing standard health care enrollment and claim forms by the Commissioner of Banking and Insurance pursuant to section 1 of P.L.1999, c.154 (C.17B:30-23), a health care facility licensed pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.) is responsible for filing all claims for third party payment, including claims filed on behalf of the health care facility's patient for any health care service provided by the health care facility that is eligible for third party payment, except that at the patient's option, the patient may file the claim for third party payment.
a. In the case of a claim filed on behalf of the health care facility's patient, the health care facility shall file the claim within 60 days of the last date of service for a course of treatment, on the standard claim form adopted by the Commissioner of Banking and Insurance pursuant to section 1 of P.L.1999, c.154 (C.17B:30-23).
b. In the case of a claim in which the patient has assigned the patient's benefits to the health care facility, the health care facility shall file the claim within 180 days of the last date of service for a course of treatment, on the standard claim form adopted by the Commissioner of Banking and Insurance pursuant to section 1 of P.L.1999, c.154 (C.17B:30-23). If the health care facility does not file the claim within 180 days of the last date of service for a course of treatment, the third party payer shall reserve the right to deny payment of the claim, in accordance with regulations established by the Commissioner of Banking and Insurance, and the health care facility shall be prohibited from seeking any payment directly from the patient.
(1) In establishing the standards for denial of payment, the Commissioner of Banking and Insurance shall consider the length of delay in filing the claim, the good faith use of information provided by the patient to the health care facility with respect to the identity of the patient's third party payer, delays in filing a claim related to coordination of benefits between third party payers and any other factors the commissioner deems appropriate, and, accordingly, shall define specific instances where the sanctions permitted pursuant to this subsection shall not apply.
(2) A health care facility which fails to file a claim within 180 days and whose claim for payment has been denied by the third party payer in accordance with this subsection may, in the discretion of a judge of the Superior Court, be permitted to refile the claim if the third party payer has not been substantially prejudiced thereby. Application to the court for permission to refile a claim shall be made within 14 days of notification of denial of payment and shall be made upon motion based upon affidavits showing sufficient reasons for the failure to file the claim with the third party payer within 180 days.
c. The provisions of this section shall not apply to any claims filed pursuant to P.L.1972, c.70 (C.39:6A-1 et seq.).
d. A health care facility which violates the provisions of subsection a. of this section may be subject to a civil penalty [of $250] for each violation [plus $50 for each day after the 60th day that the health care facility fails to submit a claim] in accordance with section 13 or 14 of P.L.1971, c.136 (C.26:2H-13 or C.26:2H-14). The penalty shall be sued for and collected by the Department of Health pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.).
(cf: P.L.2012, c.17, s.184)
6. Section 2 of P.L.1988, c.113 (C.26:2H-13.1) is amended to read as follows:
2. A person making application for, or who has been issued, a license to operate a residential health care facility who conceals the fact that the person has been denied a license to own or operate a residential facility, or that the person's license to own or operate a residential facility has been revoked by a department or agency of state government in this or any other state is liable for a civil penalty [of not more than $5,000.00] in accordance with section 13 or 14 of P.L.1971, c.136 (C.26:2H-13 or C.26:2H-14), and any license to operate a residential health care facility which has been issued to that person shall be immediately revoked.
(cf: P.L. 1988, c.113, s.2)
7. Section 14 of P.L.1971, c.136 (C.26:2H-14) is amended to read as follows:
14. Any person, firm, partnership, corporation or association who shall operate or conduct a health care facility without first obtaining the license required by this act, or who shall operate such health care facility after revocation or suspension of license, shall be liable to a penalty of not more than [$2,500] $12,500 as provided for by regulation for each day of operation in violation hereof for the first offense and [$5,000] $25,000 for any subsequent offense. Any person, firm, partnership, corporation or association who violates any rule or regulation adopted in accordance with this act as the same pertains to the care of patients and physical plant standards shall be subject to a penalty of not more than [$5,000] $25,000 as provided for by regulation for each day that he is in violation of such rule or regulation. Upon notification to the facility of such violations as pertain to the care of patients or to the hazardous or unsafe condition existing in or upon the structure in which the licensed facility is maintained, the commissioner shall allow the facility 72 hours in which to correct any such violation and if at the end of such period the violation is not corrected and it poses an imminent threat to the health, safety or welfare of the public or the residents of the facility, he may, in his discretion, summarily suspend the license of the facility without a hearing and may order immediate correction of such violation as a prerequisite of reinstatement of licensure. If a licensee that is subject to summary suspension shall deny that a violation exists or has occurred, he shall be have the right to apply to the commissioner for a hearing. Such hearing shall be held and a decision rendered within 48 hours of receipt of said request. If the commissioner shall rule against the licensee, the licensee shall have the right to apply for injunctive relief against the commissioner's order. Jurisdiction of such injunctive relief shall be in the Superior Court of New Jersey. Nothing herein shall be construed to prevent the commissioner from thereafter suspending or revoking the license in accordance with the procedure set forth in section 13. If, within one year after such violation such person, firm, partnership, corporation or association is found guilty of the same violation such penalties as hereinbefore set forth shall be doubled, and if there be a third violation within such time, such penalties shall be tripled. In addition thereto the department may, in its discretion, suspend the license for such time as it may deem proper or revoke said license.
Any person, firm, partnership, corporation or association who shall, except in cases of an emergency, maintain more patients in his premises than he is licensed so to do, shall be subject to a penalty, in accordance with the procedure set forth in section 13, in an amount equal to the daily charge collected from such patient or patients plus $25.00 for each day each extra patient is so maintained.
Notwithstanding any law, rule, or regulation to the contrary, on and after the effective date of P.L. , c. (pending before the Legislature as this bill), the department shall, by regulation adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), impose a graduated penalty commensurate with the facility's licensed-bed capacity. The department may annually increase the penalties authorized by this section, with any increase to the penalties authorized by this section not to exceed the cumulative annual percentage increase in the Consumer Price Index for the five fiscal years prior to the date of the proposed subsequent increase.
(cf: P.L.2003, c.117, s.18)
8. Section 15 of P.L.1971, c.136 (C.26:2H-15) is amended to read as follows:
15. Whenever a residential health care facility, boarding house or rooming house, not licensed hereunder, by public or private advertising or by other means holds out to the public that it is equipped to provide postoperative or convalescent care for persons with mental illness or intellectual disabilities or who are suffering or recovering from illness or injury, or who are chronically ill, or whenever there is reason to believe that any such facility or institution, not licensed hereunder, is violating any of the provisions of this act, then, and in such case, the department shall be permitted reasonable inspection of such premises for the purpose of ascertaining whether there is any violation of the provisions hereof. If any such residential health care facility, boarding house or rooming house, shall operate as a private mental hospital, convalescent home, private nursing home or private hospital in violation of the provisions of this act, then the same shall be liable to the penalties which are prescribed and capable of being assessed against health care facilities pursuant to this act.
Any person, firm, association, partnership or corporation, not licensed hereunder, but who holds out to the public by advertising or other means that the medical and nursing care contemplated by this act will be furnished to persons seeking admission as patients, shall cease and desist from such practice and shall be liable to a penalty [of $100.00 for the first offense and $500.00 for each subsequent offense] in accordance with section 13 or 14 of P.L.1971, c.136 (C.26:2H-13 or C.26:2H-14), such penalty to be recovered as provided for herein.
(cf: P.L.2010, c.50, s.18)
9. Section 14 of P.L.1995, c.133 (C.26:2H-18.59c) is amended to read as follows:
14. All acute care hospitals licensed pursuant to P.L.1971, c.136 (C.26:2H-1 et al.) shall submit to the department all demographic and financial data specified in this section, in a manner and time frame specified by the commissioner.
a. A hospital shall submit demographic information about the persons who qualify for charity care or to whom the hospital provides uncompensated care, which includes, at a minimum: the individual's age, sex, marital status, employment status, type of health insurance coverage, if any, and if the individual is a child under 18 years of age who does not have health insurance coverage or a married person who does not have health insurance coverage, whether the child's parent or the married person's spouse, as the case may be, has health insurance.
b. A hospital shall submit all financial data required by the department for the purposes of calculating the payer mix factor as defined in sections 12 and 13 of P.L.1995, c.133 (C.26:2H-18.59a and C.26:2H-18.59b) and section 7 of P.L.1996, c.28 (C.26:2H-18.59e).
c. A hospital which fails to provide the information required pursuant to this section in a manner and time frame specified by the commissioner, shall be liable to a civil penalty [not to exceed $1,000] in accordance with section 13 or 14 of P.L.1971, c.136 (C.26:2H-13 or C.26:2H-14) for each day in which the hospital is not in compliance. The commissioner shall recover the penalty in an administrative proceeding held pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
d. The Commissioner of Health may make a determination that a hospital has substantial prior or continuing violations of the provisions of this section. In each case, the determination shall be made at the discretion of the commissioner, who may consider the following factors as material in each determination:
(1) the record of violations by the hospital or the facility's owners, including, without limitation, any member, manager, partner, shareholder, trustee, trust beneficiary, corporate officer or director, or any person holding a direct or indirect interest through a trust, limited liability company, limited partnership, or corporation, regardless of the percentage of ownership, controlling or not; and the record of violations of other health care facilities within the same ownership system;
(2) the significance or scale of the violations, including, but not limited to, whether the violations risk life or safety or restrict access to care;
(3) the existence of outstanding audits or failure to pay previous fines or penalties;
(4) the existence of a record of conviction for any offense related to healthcare fraud, patient abuse or neglect, bribery, embezzlement, kickbacks, or financial crimes within the past 10 years by the facility's owners, including, without limitation, any member, manager, partner, shareholder, trustee, trust beneficiary, corporate officer or director, or any person holding a direct or indirect interest through a trust, limited liability company, limited partnership, or corporation regardless of the percentage of ownership, controlling or not;
(5) failure to respond to a request from the Commissioner of Health to produce records, forms, or documents; and
(6) submission of falsified or altered records, forms, or documents.
e. If the Commissioner of Health determines that a hospital has substantial prior or continuing violations of the provisions of this section, the hospital shall be:
(1) furnished with a written notice stating that:
(a) the hospital has been found to have substantial prior or continuing violations and the reasons therefor; and
(b) the hospital shall be required to submit a financial audit of the hospital and a comprehensive improvement plan pursuant to paragraph (2) of this section; and
(2) required to submit to the department, at the hospital's expense, a third-party financial audit of the hospital and a comprehensive improvement plan, which shall incorporate all of the hospitals in the hospital's health system, as applicable and shall be approved by the department before implementation of the plan. The plan shall propose:
(a) cost containment measures, which shall include an evaluation of how such measures will impact the standard charges for items and services provided by each applicable hospital;
(b) solutions to existing disparities in the provision of health care services to medically underserved groups, such as low-income persons, racial and ethnic minorities, immigrants, and persons with disabilities; and
(c) a plan to restructure the hospital's health system such that all hospitals within the system provide adequate services and access to care for the communities served by the health system.
The hospital's license shall be made provisional and shall automatically convert to a full license to operate in the State of New Jersey one year following the implementation of an approved comprehensive improvement plan pursuant to this paragraph.
f. As used in this section, "health system" means an organization or group of entities, including at least one hospital and one or more physician groups providing comprehensive, coordinated care through shared ownership, joint management, or a common governance structure.
(cf: P.L.1996, c.28, s.5)
10. (New section) If a hospital that receives a subsidy payment pursuant to P.L.1992, c.160 (C.26:2H-18.51 et al.) closes before June 30 of a given calendar year, the hospital shall reimburse the State for any portion of the subsidy payment covering the period following the closure date until June 30 of that calendar year, calculated on a standard monthly basis. If the hospital fails to reimburse the State, in accordance with the provisions of N.J.A.C.8:31B-5.1 and subject to the approval of the Commissioner of the Department of Health, the State may elect to apply an offset to Medicaid payments to other hospitals within the same hospital system, as defined by N.J.A.C. 8:33-1.3.
11. Section 14 of P.L.1992, c.160 (C.26:2H-18.64) is amended to read as follows:
14. No hospital shall deny any admission or appropriate service to a patient on the basis of that patient's ability to pay or source of payment.
A hospital which violates this section shall be liable to a civil penalty [of $10,000] for each violation in accordance with section 13 or 14 of P.L.1971, c.136 (C.26:2H-13 or C.26:2H-14). The penalty shall be sued for and recovered pursuant to "the penalty enforcement law," N.J.S.2A:58-1 et seq. and shall be deposited in the fund.
(cf: P.L.1992, c.160, s.14)
12. Section 3 of P.L.1975, c.397 (C.26:2H-31) is amended to read as follows:
3. Any person who violates the provisions of this act shall be liable for a penalty [of $100.00] in accordance with section 13 or 14 of P.L.1971, c.136 (C.26:2H-13 or C.26:2H-14) to be collected by a summary proceeding instituted by the Attorney General at the request of the Commissioner of Health pursuant to the Penalty Enforcement Law (N.J.S. 2A:58-1 et seq.).
(cf: P.L.1975, c.397, s. 3)
13. (New section) a. As used in the section:
"Commissioner" means the Commissioner of Health.
"Department" means the Department of Health.
"Hospital" means an acute care hospital licensed by the Department of Health pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.).
b. The department shall identify hospitals that may:
(1) be in acute financial distress or at risk of filing for bankruptcy protection, including as provided for in section 2 of P.L.2008, c.58 (C.26:2H-5.1a);
(2) have a condition or conditions in substantial violation of the standards of health, safety, or patient care established under federal or State law or regulations; or
(3) have a pattern and practice of habitual violations of the standards of health, safety, or patient care established under federal or State law or regulations.
c. Upon finding that a hospital suffers from the conditions set forth in paragraph (1) of subsection b. of this section, the department shall, as appropriate:
(1) provide, at the hospital's expense, or direct such hospital to management support services and resources, as well as any other supports as may be necessary and appropriate to avoid bankruptcy proceedings or cessation of operations;
(2) if the hospital does not take sufficient and timely action to avoid an impending bankruptcy or closure, and if the department finds the bankruptcy or closure would have a significant adverse effect on the health, safety, and welfare of the patients of the hospital or would leave the area in which the hospital is located lacking sufficient services after assessing the need for and availability of other hospitals in the area, initiate proceedings in a court of competent jurisdiction for the appointment of a receiver for the hospital; and
(3) take such other steps and actions as may be available to ensure continuity of care for, and the safety of, patients of the hospital.
d. Upon finding that a hospital suffers from the conditions set forth in paragraph (2) or (3) of subsection b. of this section, the department shall, as appropriate:
(1) initiate proceedings in a court of competent jurisdiction for the appointment of a receiver for the hospital for the purposes of remedying a condition or conditions of a hospital in substantial violation of the standards of health, safety or patient care established under federal or State law or regulations or of remedying a pattern and practice of habitual violations of the standards of health, safety or patient care established under federal or State law; and
(2) take such other steps and actions as may be available to ensure continuity of care for, and the safety of, patients of the hospital.
e. A receiver appointed pursuant to subsection c. or d. of this section shall have the powers and authorities conferred by the order of receivership, which may include, but shall not be limited to, the authority to:
(1) hire any consultants or to undertake any studies of the hospital that the receiver deems appropriate;
(2) make any repairs or improvements as are necessary to ensure the safety of hospital patients and staff;
(3) hire or discharge any employees, including the administrator or manager of the hospital;
(4) receive or expend in a reasonable and prudent manner the revenues of the hospital due on the date of the entry of the order of receivership and to become due under such order;
(5) continue the business of the hospital and the care of the patients of the hospital in all its aspects;
(6) do all acts necessary or appropriate to conserve the property and promote the health, safety, and welfare of the patients of the hospital; and
(7) exercise such other powers as the receiver deems necessary or appropriate to implement the court order.
f. A receiver appointed pursuant to this section may, in the receiver's discretion, either
(1) assume the role of administrator or manager and take control of all day-to-day operations; or
(2) direct the administrator or manager on actions and procedures to be taken to eliminate or rectify the conditions specified in the complaint.
g. A complaint filed pursuant to subsection c. or d. of this section shall:
(1) set forth material facts showing that there exists in the hospital a condition or conditions set forth in paragraphs (1), (2), or (3) of subsection b. of this section.
(2) set forth that the facts set forth pursuant to paragraph (1) of this subsection have been brought to the attention of the owner and licensee of the hospital and that the condition or conditions have not been remedied within a reasonable period of time or that the condition or conditions although periodically remedied habitually exists in the hospital as pattern and practice;
(3) set forth a brief description of what is necessary to remedy the condition and an estimate of the cost thereof; and
(4) state the relief sought.
14. This act shall take effect immediately and the provisions of section 4 shall apply to certificate of need applications that have been filed on or after the effective date of this act.
STATEMENT
This bill revises the regulation of health care facilities.
The bill permits the Commissioner of Health (commissioner) to debar health care facilities or individuals from receiving a certificate of need. Under the bill, the commissioner is to be permitted to debar a health care facility or any individual in the ownership structure of a health care facility that is licensed under the "Health Care Facilities Planning Act"(act) from eligibility for a certificate of need after a determination that the health care facility has substantial prior or continuing violations of the act or certificate of need requirements. In each case, the decision to debar is to be made at the discretion of the commissioner of who may consider certain factors as material in each decision to debar as outlined under the bill. Under the bill, if the commissioner debars a health care facility or individual, the health care facility or individual is to be furnished with a written notice stating that: debarment has been imposed, the date on which debarment becomes effective, and the reasons therefor; and if the health care facility or individual chooses to appeal the debarment, the health care facility or individual is to submit the appeal to the Department of Health. If the commissioner receives a request for appeal of debarment, the commissioner is to refer the matter to the Office of Administrative Law for adjudication. If a hospital is debarred, the license of any other associated health care facility within the hospital's health system would be made provisional, pending the competition of a financial audit and the implementation of a comprehensive improvement plan.
This bill increases various penalties imposed by the Department of Health (department) for certain health care facilities. Under the bill, various penalties imposed by the department are to increase to $12,500 for the first offense and $25,000 for subsequent offenses. The bill provides that the department shall by regulation increase the penalties as authorized by the bill. However, an increase in such penalties is not to exceed the cumulative annual percentage increase in the Consumer Price Index for the five fiscal years prior to the date of the proposed penalty increase.
Certain provisions of the bill are applicable to the regulation of hospitals. The bill prohibits the Department of Health (DOH) from issuing a certificate of need for the construction or expansion of a hospital if the proposed site of the hospital will be leased from a health care real estate investment trust (REIT). The bill provides an exemption for existing facilities that lease property from a health care REIT, and allows the Commissioner of Health to waive the prohibition for satellite facilities that provide outpatient services.
This bill provides for the receivership and imposition of enforcement remedies of hospitals under certain circumstances.
The bill revises current law to provide that the commissioner may seek certain injunctive relief in order to compel compliance with certain provisions of current law.
The bill establishes certain requirements for hospitals to complete a financial audit and implement a comprehensive improvement plan approved by DOH if the hospital violates certain reporting requirements provided by current law.
The bill provides that if a hospital that receives a subsidy payment closes before June 30 of a given calendar year, the hospital will be required to reimburse the State for a certain portion of the subsidy payment. If the hospital fails to reimburse the State, the State may elect to apply an offset to Medicaid payments to other hospitals within the same hospital system as applicable.
Under the bill, the department will identify hospitals that may: be in acute financial distress or at risk of filing for bankruptcy protection; have a condition or conditions in substantial violation of the standards of health, safety, or patient care established under federal or State law or regulations; or have a pattern and practice of habitual violations of the standards of health, safety, or patient care established under federal or State law or regulations.
If the department identifies any of these conditions by filing a complaint pursuant to the bill, the department may:
1) provide, at the hospital's expense, or direct such hospital to management support services and resources, as well as any other supports as may be necessary and appropriate to avoid bankruptcy proceedings or cessation of operations;
(2) initiate proceedings in a court of competent jurisdiction for the appointment of a receiver for the hospital; and
(3) take such other steps and actions as may be available to ensure continuity of care for, and the safety of, patients of the hospital.
The bill outlines the powers and authorities provided to a receiver appointed pursuant to the bill.
