S4191

An Act concerning hospitals and supplementing Title 26 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares that it is essential to establish certain fundamental rights of hospital operators with respect to the management of hospitals in order to maintain quality health care services for patients and to promote greater efficiency in the health care delivery system in New Jersey.

2. As used in this act:

“Adverse possessory action” means terminating a lease with an operator or successor, evicting or otherwise initiating a unilateral or non-mutual possessory action to dispossess or remove an operator or successor from the real property on which a hospital is located, any other interference with the quiet enjoyment of the premises that are subject to the lease, or any other direct or indirect interference with the operation of a hospital.

“Affiliate” means any person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, another person.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management of a person, whether through the ownership of voting securities, by contract or otherwise.

“Department” means the Department of Health.

“Hospital” means a general acute care hospital licensed pursuant to P.L.1971, c.136 (C.26:2H-1 et seq.).

“Landlord” means the owner or lessor of the real property on which a hospital is located.

“Lease” means an agreement granting a leasehold interest in the real property on which a hospital is principally located.

“Operator” means the person approved by the department that is responsible for the maintenance, supervision, and operation of a hospital, including any affiliates of the person.

“Person” means any individual, general or limited partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated organization, joint venture, firm, association, or other entity or organization.

“Successor” means a person that succeeds in interest to an operator with respect to the maintenance, supervision, or operation of a hospital.

3. a. A landlord shall not initiate an adverse possessory action against an operator or successor without the written approval of the department as provided in subsection b. of this section. An adverse possessory action initiated without the written approval of the department shall be deemed invalid.

b. A landlord may submit a request to the department, in a form and manner as shall be required by the department, to take an adverse possessory action for just cause against an operator or successor. The department may approve a request to take an adverse possessory action upon finding just cause exists for the adverse possessory action.

c. Upon department approval of a successor, based on a finding that the transition of hospital maintenance, supervision, or operation responsibilities from the operator to the successor is in the best interest of the hospital patients and the public, the successor shall also be deemed to succeed in interest to the lease.

d. A landlord that initiates an adverse possessory action against an operator or successor without written approval by the department shall be liable to a civil penalty of up to $1,000,000, which shall be collected by and in the name of the department in summary proceedings before a court of competent jurisdiction pursuant to the provisions of the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.). In addition, the department shall suspend or revoke any license or permit granted by the department to the landlord due to violation of this act. To the extent an adverse possessory action taken without department approval results in the loss of revenue to a hospital, the operator or successor, as applicable, shall be entitled to financial recovery from the landlord to the extent necessary to place the hospital in as good a position as if such adverse possessory action had not occurred, as determined by court appointed arbitration. Any willful violation of this act by a landlord which: (1) results in the closure of a hospital; or (2) interferes with the transition of the maintenance, supervision, or operation of a hospital from an operator to a successor as approved by the department, shall be subject to criminal penalties imposed for disorderly persons offenses (C.2C:43-8).

4. This act shall take effect 30 days after the date of enactment, and shall apply to operators, successors and landlords prior to and subsequent to, the effective date of this act.

STATEMENT

This bill prohibits landlords from initiating adverse possessory actions against an operator of a hospital, or a successor to the operator, without first obtaining written approval for the action from the department. An adverse possessory action initiated without the written approval of the department will be deemed invalid. The department is to establish a process for landlords to submit requests to initiate adverse possessory actions, and will have the authority to approve requests upon finding that just cause exists for the adverse possessory action.

A landlord that initiates an adverse possessory action against an operator or successor without written approval by the department will be liable to a civil penalty of up to $1,000,000. The department shall also suspend or revoke any license or permit granted by the department to the landlord due to violation of the act. To the extent an adverse possessory action taken without department approval results in the loss of revenue to a hospital, the operator or successor, as applicable, shall be entitled to financial recovery from the landlord to the extent necessary to place the hospital in as good a position as if such adverse possessory action had not occurred, as determined by court appointed arbitration. A landlord that willfully violates this act in a manner which results in the closure of a hospital or that interferes with the transition of the maintenance, supervision, or operation of a hospital from an operator to a successor as approved by the department, shall be subject to criminal penalties imposed for disorderly persons offenses.

The bill will take effect 30 days after the date of enactment and will apply to operators, successors and landlords prior to and subsequent to, the effective date of this act.