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New Jersey Ass'n of Health Care Facilities v. State

May 5, 1995

NEW JERSEY ASSOCIATION OF HEALTH CARE FACILITIES, PLAINTIFF
v.
STATE OF NEW JERSEY, NEW JERSEY DEPARTMENT OF HEALTH, AND BRUCE SIEGEL, M.D., M.P.H., COMMISSIONER, DEFENDANTS



Carchman, A.j.s.c.

The opinion of the court was delivered by: Carchman

CIVIL ACTION

CARCHMAN, A.J.S.C.

The State of New Jersey regulates the bed capacity of health care facilities through the use of a statutory scheme utilizing certificates of need (CON). CONs are issued upon a demonstration that any new or expanded facilities meet stated statutory criteria. See N.J.S.A. 26:2H-8. An exception to this regulatory scheme applies to religiously-affiliated health care facilities which limit admission to members and their immediate families. N.J.A.C. 8:33H-1.2 and 1.11.

In 1993, the legislature enacted N.J.S.A. 26:2H-7.3 which, inter alia, exempted religiously-affiliated nursing homes from CON requirements if at least 65% of the bed capacity is occupied by members of the religious body. The additional 35% may be members of the public-at-large. The statute became effective on June 18, 1993.

Plaintiff, the New Jersey Association of Health Care Facilities, brought this action challenging the constitutionality of N.J.S.A. 26:2H-7.3, asserting that the statute violates the Establishment Clause of the First Amendment to the United States Constitution, U.S. Const. amend. I ("Congress shall make no law respecting an establishment of religion . . . ."), as made applicable to the states by the Fourteenth Amendment. See Everson v. Board of Educ., 330 U.S. 1, 67 S. Ct. 504, 91 L. Ed. 2d 711 (1947).

For the reasons set forth below, this court concludes that N.J.S.A. 26:2H-7.3 violates the Establishment Clause and is unconstitutional.

I.

Plaintiff brings this action challenging the constitutionality of N.J.S.A. 26:2H-7.3 (the statute). Both sides have filed cross-motions for summary judgment, agreeing that there are no factual disputes, and the matter may be decided as a matter of law.

The statute provides:

a. Notwithstanding the provisions of section 7 of P.L. 1971, c. 136 (C. 26:2H-7) to the contrary, a nursing home which is affiliated with a well established religious body or denomination and reserves at least 65% of its licensed bed capacity for patients who are members of that religious body or denomination is exempt from the requirement of obtaining a certificate of need if the nursing home is in compliance with all State regulations governing its licensure.

b. A nursing home which is exempt from the certificate of need requirement pursuant to subsection a. of this section shall be required to meet the Statewide average for the percentage of beds that are to be reserved for patients who are eligible for medical assistance pursuant to P.L. 1968, c. 413 (C. 30:4D-1 et seq.).

The statute became effective on June 18, 1993, after the Legislature voted to override then-Governor Florio's veto of the bill. On August 13, 1993, the Commissioner of the New Jersey Department of Health granted verbal approval to an eight-bed addition at St. Joseph's Catholic Home Nursing Center and Senior Residence without requiring a CON--the first approval granted under N.J.S.A. 26:2H-7.3. The only other approval granted under the statute took place on December 13, 1993--an authorization for an additional ten beds at St. Joseph's Catholic Home Nursing Center and Senior Residence. Defendants represent that no further applications under N.J.S.A. 26:2H-7.3 will be processed while this litigation is pending.

A comprehensive system of regulation is currently in place which governs both the entry of proposed new facilities into the health care marketplace and the expansion of existing facilities. Neither can be accomplished without securing a CON. CONs are not issued unless the proposed addition or expansion 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." N.J.S.A. 26:2H-8. To implement the CON application ...


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