Jersey City hospital closure spurs bill to appoint a receiver when a hospital closes without state approval

The bill would create a fast-track court process to keep hospitals and essential services operating when owners sidestep state closure requirements.

A bill that would allow the state, attorney general or municipalities to swiftly seek a court-appointed receiver for hospitals that close or threaten to close without going through New Jersey’s required approval process advanced in a state Senate committee Monday.

The Senate Health, Human Services and Senior Citizens Committee advanced the bill, sponsored by state Sen. Raj Mukherji, in response to the March closure of Heights University Hospital, formerly called Christ Hospital.

Jersey City, which is home to more than 300,000 people, is now served by only one hospital.

At a state hearing about the closure in August, residents, former employees, and officials described the fallout from the closure of Heights University Hospital, formerly Christ Hospital.

Speakers said the shutdown strained Jersey City’s remaining hospital, increased emergency-room wait times, and forced ambulances to travel farther or be diverted to other hospitals. A coalition of 70 community organizations urged the Department of Health to reject Hudson Regional Health’s closure application and pursue receivership, and called for a public or nonprofit operator to take over the site. The hearing had been delayed for months after an April session was canceled after Hudson Regional Health obtained a temporary restraining order.

“When an ER disappears, the patients don’t go away,” Mukherji said at the Senate committee meeting Monday. “Our family members’ heart attacks are still going to happen. That stroke is still going to happen. The child will still have an asthma attack. The senior citizen who’s vulnerable is still going to have the fall, unfortunately. And the person in mental health crisis will still need help.”

Under current law, a hospital seeking to close voluntarily must undergo a full certificate-of-need review by the Department of Health. The bill would create a new court process for situations in which an acute care hospital closes or discontinues an essential service without complying with that requirement.

The legislation, Bill S4291, would apply when the health commissioner finds that a hospital has closed without first obtaining a certificate of need authorizing the closure, or is in imminent danger of closing without applying for one.

In those cases, the commissioner would be required to notify the attorney general and the municipality where the hospital is located. The Department of Health, attorney general, or municipality could then file a civil action in Superior Court seeking the appointment of a receiver to maintain the hospital’s operations and health care services. The court would be required to hear the case within three days.

A hospital owner could defend against the action by filing an application for a certificate of need and restoring any discontinued health care services while the Department of Health considers the application.

If the court found emergency relief was necessary, it could appoint a receiver approved by the Department of Health. The receiver could take over as the hospital’s administrator or manager, direct existing management to restore discontinued health care services, continue operating the hospital, and maintain patient care.

Christine Stearns, chief government relations officer for the New Jersey Hospital Association, said her organization opposed the bill at Monday’s committee meeting. The NJHA is the primary trade and advocacy group representing hospitals and health systems across the state.

“New Jersey already has significant mechanisms for monitoring hospitals and responding to financial or operational concerns,” she said. “We believe that any new receivership authority should build upon these existing mechanisms rather than operating as a separate enforcement pathway.”

She also asked for more specificity regarding how much power a receiver would have over a hospital and how long a receiver would be granted that authority.

State Sen. Holly Schepisi asked Renée Steinhagen, executive director of the New Jersey Appleseed Public Interest Law Center, to respond to Stearns’ testimony.

“This is not just a right of receivership that can be done just on ‘we hear a vague notion that a hospital may close sometime in the future.’ It sets forth a judicial process,” Steinhagen said. “I see this bill is actually very, very narrow.”

Under current law, the health commissioner can appoint a monitor when a hospital is in financial distress and can provide stabilization grants in extraordinary circumstances. The bill would create an additional remedy when a hospital closes or threatens to close without complying with the certificate-of-need process.

Mukherji said the New Jersey Hospital Association’s concerns could be addressed after the bill advanced.

“I think their concerns seem to be narrow, so we will be working with them and the stakeholders before the two bills are voted on on the floor,” said Mukherji, referring to the legislation and another bill to regulate hospitals that is still in committee.

Debbie White, president of Health Professionals and Allied Employees, the union that represented nurses at Heights University Hospital, spoke in favor of the bill.

“The DOH was left with only one course of action, and that was fines. And we all know those fines are the cost of doing business for these large health systems. So that was cheaper than keeping the hospital open,” Whitet said. “The Department of Health could not step in because they did not have the authority. This bill would give them the authority to put a hospital in receivership if this happens again.”

The bill advanced with five committee members voting in favor. State Sens. Holly Schepisi and Robert Singer abstained, and state Sen. Renee Burgess did not vote.