August 1, 1995
NEW JERSEY HOSPITAL ASSOCIATION, A NEW JERSEY NON-PROFIT CORPORATION, ON BEHALF OF ITS MEMBERS, AND, INDIVIDUALLY, ATLANTIC CITY MEDICAL CENTER, BAYONNE HOSPITAL, BAYSHORE COMMUNITY HOSPITAL, BERGEN PINES COUNTY HOSPITAL, BURDETTE TOMLIN MEMORIAL HOSPITAL, CENTRASTATE MEDICAL CENTER, CHRIST HOSPITAL, COLUMBUS HOSPITAL, COMMUNITY MEDICAL CENTER, DEBORAH HEART & LUNG CENTER, EAST ORANGE GENERAL HOSPITAL, ELMER COMMUNITY HOSPITAL, ENGLEWOOD HOSPITAL AND MEDICAL CENTER, GENERAL HOSPITAL CENTER AT PASSAIC, GRADUATE HEALTH SYSTEM, INC., HACKETTSTOWN COMMUNITY HOSPITAL, HOLY NAME HOSPITAL, HUNTERDON MEDICAL CENTER, IRVINGTON GENERAL HOSPITAL, JOHN F. KENNEDY MEDICAL CENTER, KENNEDY MEMORIAL HOSPITAL-UNIVERSITY MEDICAL CENTER, MEADOWLANDS HOSPITAL MEDICAL CENTER, MEDICAL CENTER AT PRINCETON, MEMORIAL HOSPITAL OF BURLINGTON COUNTY, MEMORIAL HOSPITAL OF SALEM COUNTY, MERCER MEDICAL CENTER, MONMOUTH MEDICAL CENTER, MONTCLAIR COMMUNITY HOSPITAL, MORRISTOWN MEMORIAL HOSPITAL, MOUNTAINSIDE HOSPITAL, MUHLENBERG REGIONAL MEDICAL CENTER, NEWARK BETH ISRAEL MEDICAL CENTER, NEWTON MEMORIAL HOSPITAL, OUR LADY OF LOURDES MEDICAL CENTER, OVERLOOK HOSPITAL, PASCACK VALLEY HOSPITAL, RAHWAY HOSPITAL, RARITAN BAY MEDICAL CENTER, ROBERT WOOD JOHNSON UNIVERSITY HOSPITAL AT HAMILTON, SADDLE BROOK HOSPITAL, SAINT BARNABAS MEDICAL CENTER, SHORE MEMORIAL HOSPITAL, SOMERSET MEDICAL CENTER, SOUTH AMBOY MEMORIAL HOSPITAL, SOUTH JERSEY HOSPITAL SYSTEM, SOUTHERN OCEAN COUNTY HOSPITAL, ST. CLARE'S-RIVERSIDE MEDICAL CENTER, ST. ELIZABETH HOSPITAL, ST. MARY'S HOSPITAL, ST. PETER'S MEDICAL CENTER, UNDERWOOD-MEMORIAL HOSPITAL, UNION HOSPITAL, VALLEY HOSPITAL, WALLKILL VALLEY GENERAL HOSPITAL, WAYNE GENERAL HOSPITAL, WEST JERSEY HEALTH SYSTEM, AND WILLIAM B. KESSLER MEMORIAL HOSPITAL, AND, INDIVIDUALLY, BETH ISRAEL HOSPITAL, COOPER HOSPITAL/UNIVERSITY MEDICAL CENTER, FRANCISCAN HEALTH SYSTEM OF NEW JERSEY, GREENVILLE HOSPITAL, HACKENSACK MEDICAL CENTER, HELENE FULD MEDICAL CENTER, HOSPITAL CENTER AT ORANGE, JERSEY CITY MEDICAL CENTER, JERSEY SHORE MEDICAL CENTER, AND ROBERT WOOD JOHNSON UNIVERSITY HOSPITAL, NEW JERSEY NON-PROFIT CORPORATIONS, PLAINTIFFS-APPELLANTS,
LEONARD FISHMAN, ACTING COMMISSIONER OF HEALTH, STATE OF NEW JERSEY, DEFENDANT-RESPONDENT.
On appeal from the Commissioner of the New Jersey Department of Health
Approved for Publication August 1, 1995
Before Judges Michels, Stern and Keefe. The opinion of the court was delivered by Michels, P.j.a.d.
The opinion of the court was delivered by: Michels
The opinion of the court was delivered by
Plaintiff New Jersey Hospital Association (the Association) and the sixty-seven plaintiff New Jersey hospitals which it represents, seek a refund of approximately $20 million in tax assessments which the hospitals paid to the State of New Jersey's now defunct Health Care Cost Reduction Fund (HCCR Fund) between August 1992 and April 1993.
The Association is a voluntary not-for-profit corporation which represents the interests of its member hospitals by obtaining and disseminating information about issues of common interest to its members and acting on its membership's behalf. In this matter, the Association is representing the interests of fifty-seven member and ten non-member not-for-profit corporations which operate or operated acute care hospitals within New Jersey during the period from August 1991 through April 1993. These hospitals provided services for the diagnosis and treatment of human disease and pain and injury as defined under N.J.S.A. 26:2H-2(a).
On July 1, 1991, the New Jersey Legislature enacted the Health Care Cost Reduction Act (HCCR Act), N.J.S.A. 26:2H-18.24 to N.J.S.A. 26:2H-18.50. The HCCR Act required all New Jersey acute care hospitals, including plaintiffs, to pay monthly installments of an assessment equalling .53 percent of their 1991 approved revenue bases into the HCCR Fund. The HCCR Act provided that each hospital:
Defendant Leonard Fishman was Commissioner of the New Jersey Department of Health, the State agency that was responsible for the assessment and collection of the .53 percent assessment imposed by N.J.S.A. 26:2H-18.47. The Commissioner calculated each hospital's monthly assessment by multiplying the approved revenue amount by .0053 and dividing the product by twelve. By letters dated August 14, 1991, the Commissioner notified each New Jersey acute care general hospital of its monthly obligation to make .53 percent assessments under N.J.S.A. 26:2H-18.47.
On September 24, 1991, sixteen hospitals (the Barnert appellants) filed an appeal with this court, challenging the constitutionality of the .53 percent assessment as well as the validity of the Commissioner's calculations of the .53 percent assessments. On April 30, 1993, in an unpublished opinion in Barnert Memorial Hospital v. Dunston, (Docket No. A-541-91T2, April 30, 1993), certif. denied, 134 N.J. 482 (1993), we upheld the constitutionality of N.J.S.A. 26:2H-18.47 and the Commissioner's interpretation of the statutory language pertaining to the revenue amount on which the .53 percent assessment was to be based, but reversed as to the Commissioner's extension of the .53 percent monthly assessment beyond one year. We held that by August 1992, the Commissioner had collected and deposited into the HCCR Fund the entire gross revenue assessment permitted to be collected from the Barnert appellants pursuant to the plain terms of N.J.S.A. 26:2H-18.47, and as a result, the Commissioner had overcollected the assessments from August 1992 through April 1993. In sum, we held that the Commissioner had collected the full .53 percent assessment within the first twelve months.
On April 30, 1993, following the Barnert decision, the Commissioner ceased further collection from all hospitals. Nevertheless, the Commissioner continued to accept payments from four hospitals through June 1993. Subsequently, in the spring of 1994, the Barnert appellants received refunds of the amounts mistakenly collected between August 1992 through April 1993.
The plaintiffs in this matter were not parties in the original Barnert appeal. They paid their .53 percent assessments from August 1991 through April 1993, and did not dispute the constitutionality or validity of the assessment nor defendant's collection of the assessments during that time. Plaintiffs now object, however, to the Commissioner's overcollection of the .53 percent assessment for the nine-month period (August 1992 through April 1993) determined to be excessive by the court in Barnert, and the Commissioner's refusal to refund the amounts overcollected.
On June 24, 1993, plaintiff Deborah Heart & Lung Center's attorneys, Messrs. Cohen, Shapiro, Polisher, Shiekman & Cohen, sent a letter to the Commissioner demanding a refund of the .53 percent assessments it paid for the nine-month period from August 1992 through April 1993. To date, the Commissioner has not responded to this letter.
On April 13, 1994, the Association's attorneys, also Messrs. Cohen, Shapiro, Polisher, Shiekman & Cohen, wrote to the Commissioner requesting a response as to the Department of Health's position on refunding the .53 percent assessments paid during the nine-month period from August 1992 through April 1993. The letter read:
On June 24, 1993, I sent a letter to then-Commissioner Bruce Siegel requesting a refund of .53% assessments paid by Deborah Heart & Lung Center from August of 1992 (the date after which the New Jersey Superior Court, Appellate Division, held the assessment to be illegal in Barnert Memorial Hospital et al. v. Dunston, A-541-91T1 (App. Div. April 30, 1993)) through April of 1993. (Copy enclosed.) Deborah was not an appellant in the Barnert case. I have not received a response to my June 24, 1993 letter.
In addition to representing Deborah, we represent a number of similarly situated hospitals that were not appellants in Barnert, but paid the illegal .53% amounts between August of 1992 and April of 1993. Like Deborah, these hospitals seek refunds of the illegally paid amounts.
Please advise as to the Department's position on refunding illegally assessed amounts to my clients. If I do not hear from you by Monday, April 18, 1994, I will assume the Department's decision is to deny the requested refunds to the non-appellant ...
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