NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A- 2767

- 21 ENGLEWOOD HOSPITAL & MEDICAL CENTER, HUDSON HOSPITAL OPCO, LLC, d/b/a CHRIST HOSPITAL, IJKG OPCO, LLC , d/b/a BAYONNE MEDICAL CENTER, HUMC OPCO, LLC , d/b/a HOBOKEN UNIVERSITY MEDICAL CENTER, CAPITAL HEALTH REGIONAL MEDICAL CENTER, CAPITAL HEALTH MEDICAL CENTER

– HOPEWELL , COOPER UNIVERSITY HOSPITAL, HACKENSACK MERIDIAN HEALTH PASCAK VALLEY MEDICAL CENTER, JFK MEDICAL CENTER , OU R LADY OF LOURDES MEDICAL CENTER, LOURDES MEDICAL CENTER OF BURLINGTON COUNTY, ST. FRANCIS MEDICAL CENTER , HACKENSACK MERIDIAN HEALTH

– MOUNTAINSIDE MEDICAL CENTER, and PRIME HEALTHCARE SERVICES

– ST. MARY’S PASSAIC, LLC , d/b/a ST. MARY’S GENERAL HOSPITAL, Plaintiffs-Appellants,

v. THE STATE OF NEW JERSEY, THE STATE OF NEW JERSEY APPROVED FOR PUBLICATION June 27 , 2024 APPELLATE DIVISIONA- 2767

- 21 2 DEPARTMENT OF HUMAN SERVICES, SARAH ADELMAN in her capacity as Commissioner of the DEPARTMENT OF HUMAN SERVICES, STATE OF NEW JERSEY DEPARTMENT OF HUMAN SERVICES, DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, MEGHAN DAVEY , in her cap acity as Director of the DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, STATE OF NEW JERSEY DEPARTMENT OF HEALTH, and DR. KAITLAN BASTON, in her capacity as Commissioner of the DEPARTMENT OF HEALTH, Defendants-Respondents.

________________________________

Argued October 31, 2023

– Decided Jun e 27, 2024 Before Judges Rose, Smith and Perez Friscia. On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No s . L- 1434

- 17 and L- 1397

- 18. John Z en Jackson argued the cause for appellants (Greenbaum, Rowe, Smith & Davis, LLP, attorneys; James A. Robertson IV , John Z en Jackson , Andrew F. McBride, Robert B. Hille, and Paul L. Croce , on the briefs). Jacqueline D'Alessandro, Deputy Attorney General, argued the cause for respondents (Matthew J. Platki n, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; JacquelineA- 2767

- 21 3 D'Alessandro and Elizabeth Tingley, Deputy Attorney General, on the brief). The opinion of the court was delivered by SMITH, J.A.D. After cross-motions for summary judgment, plaintiff s appeal from the trial court's order granting defendants' motion for summary judgment on certain taking claims and dismissing certain plaint iffs' remaining takings claims on ripeness grounds for failure to exhaust a dministrative remedies. Plaintiffs, a group of hospitals licensed to do bus iness in New Jersey and governed by the Health Care Cost Reduction Act, N.J .S.A. 26:2H-18.50 to -69, contend that N.J.S.A. 26:2H-18.64 (charity care), t he State's Medicaid Plan, and corresponding regulations compel plaintiffs to use medicine, equipment, and services they control to provide patient care r egardless of ability to pay, and without an adequate subsidy to make up the fina ncial shortfall. Plaintiffs argue that this scheme represents an unconstitution al taking. Plaintiffs also claim the trial court erred when it dismissed certa in plaintiffs' claims for a lack of ripeness due to their failure to exhaust adminis trative remedies. 1

1 See Do -Wop Corp. v. City of Rahway, 168 N.J. 191, 199 (20 01) (permitting an appellate court to affirm for other reasons beca use "appeals are taken from orders and judgments and not from opinions").A- 2767

- 21 4 Considering the arguments and governing legal princ iples, we affirm the trial court's order dismissing all of the constitut ional taking claims, but we do so for slightly different reasons

. I. A. A brief overview of Medicaid, the Health Care Cost Reduction Act, and related charity care provisions is warranted. The Medicaid program, established in 1965 by Title XIX of the Social Secu rity Act, is a joint federalstate program designed to provide medical care for indigent, disabled, and elderly persons. 42 U.S.C.A. § 1396; United Hosps. Med. Ctr. v. State, 349 N.J. Super. 1, 4 (App. Div. 2002). If a state choo ses to join the Medicaid program, it "must operate its program in compliance with the federal statute and regulations, " United Hosps., 349 N.J. Super. at 4 (citing Harris v. McCrae , 448 U.S. 297, 301 (1980)), and must submit a Medica id State Plan, describing the methods and standards for reimbursement to prov iders, for federal approval, 42 U.S.C.A. § 1396(a)(13); N.J.S.A. 30:4D -7. In 1968, our State Legislature elected to participa te in the Medicaid program when it passed the Medical Assistance and H ealth Services Act (N.J.S.A. 30:4D-1 to -19) for patients whose "resou rces are determined to be inadequate to secure necessary medical care at thei r own expense." BergenA- 2767

- 21 5 Pines County Hosp. v. N.J. Dep’t of Human Servs. , 96 N.J. 456, 465 (1984). As per the Act, the Medicaid program is administere d by the Division of Medical Assistance and Health Services (the Divisio n). See United Hosps. , 349 N.J. Super. at 5. 2 In 1992, as part of the Health Care Cost Reduction Act, N.J.S.A. 26:2H18.50 to -69, the Legislature enacted N.J.S.A. 26:2 H-18.64, which provides in part, "[n]o hospital shall deny any admission or ap propriate service to a patient on the basis of that patient’s ability to pay or so urce of payment." Such care is referred to as charity care. 3 To qualify for charity care, individuals must have no health coverage, private or government sponsored (including Medicaid), and meet the income and asset eligibility requireme nts. N.J.A.C. 10:52-11.8. A hospital which violates the statute is subject to a fine of $10,000 per
violation. 4 See N.J.S.A. 26:2H-18.64.

2 Providers are reimbursed for care of Medicaid-eligi ble patients through the N.J. Medicaid Program fund, and the State is permit ted to seek reimbursement for a portion of those costs. See SSI Med. Servcs v. State of New Jersey, 146 N.J. 614, 617-18 (1996).

3 Charity care is one aspect of New Jersey's Medicaid State Plan, which is approved by the Secretary of Health and Human Servi ces. See N.J.S.A. 30:4D

- 6.

4 The corresponding regulation is N.J.A.C. 10:52 -11.14, which prohibits hospitals from sending a bill for services to eligi ble persons or initiating collection actions against them.A- 2767

- 21 6 The Legislature recognized that disproportionate sh are hospitals (DSH) 5 bear a greater burden to sustain the interests of t he Health Care Cost Reduction Act and established a Health Care Subsidy Fund (HCS F), N.J.S.A. 26:2H18.58, to distribute subsidies to qualifying facili ties. Each year, the Legislature appropriates funds to the HCSF via the annual Appropriations Act. The State of New Jersey Department of Health (DOH) then allocates subsidies for the current state fiscal year according to the statutory formula contained in N.J.S.A. 26:2H-18.59i

— accounting for any instructions or modifications contained in the current year’s Appropriations Act. N.J.S.A. 26:2H -18.55. In Univ. of Med. & Dentistry v. Grant, we explained the subsidy program's operation in detail:

The statutory distribution formula requires a determination of how much charity care an eligible hospital has provided, valued not at its usual and customary charges but rather on the amount Medicaid would pay for such services ("documented charity care").

. . . . Therefore, the initial value must be converted or "priced" to the Medicaid value to determine ultimat ely

______________________ 5 A hospital qualifies as a DSH when it serves a disproportionate number of low -income patients with special needs.A- 2767

- 21 7 the "documented charity care" for each eligible hospital.

. . . . To this basic figure, other calculations are applied to determine eligibility for, and amount of , any subsidy. The "profitability factor" reduces th e hospital's "documented charity care" if the hospita l's operating margin is above the statewide median. Al so considered is the "payer mix factor," determined by how much of the hospital revenues come from private payers. A hospital with a factor equal to or less than the statewide target would not receive a charity ca re subsidy. [343 N.J Super. 162, 165-68 (App. Div. 2001) (internal citations omitted).] The Legislature's health care subsidy is not design ed to be a full "reimbursement" covering a hospital’s actual charit y care expenses, but instead to provide each hospital with its "proportionate sh are of the total subsidy funded by the Legislature for that year." Id. at 1 65. Hospitals may challenge their assigned share of the HCSF in two ways. They may challenge the amount of their designated HCSF subsidy by filing a n administrative appeal with the DOH. N.J.A.C. 10:52-13.4(f)(1)-(2). They may also seek an adjustment of the Medicaid rate issued each year by the Division. N.J.A.C. 10:52 -14.17(c)(1).
B.A- 2767

- 21 8 Against this backdrop, we review our unpublished op inions in In re Medicaid Inpatient Hosp. Reimbursement Rate Appeals (In re Medicaid) , No.
A- 3726

- 13 (App. Div. May 20, 2016) and IMO Englewood Med. Ct r.'s SFY 2014 Charity Care Subsidy Appeal (IMO Englewood ), No. A-1 55 5-13 (App. Div. May 20, 2016), which are directly related to t he matter before us. 6 In each case, the plaintiff hospitals raised taking cl aims as part of their rate challenges, and in each case final administrative d ecisions were issued dismissing the taking claims on jurisdictional grou nds. In In re Medicaid, plaintiff hospitals appealed to the Division disputing their assigned Medicaid rates pursuant to N.J.A.C. 10:52

– 14.17. (slip op. at 2- 3). After the Division denied the appeals, plainti ffs sought an administrative hearing to make an as-applied constitutional challe nge to each [h]ospital's 2009 Medicaid rates. Id. at 4. They argued the St ate failed to provide adequate compensation for its taking of [h]ospital property, "including . . . facilities, equipment, staff and services, for publ ic use." Ibid. In its final administrative decision, the Director of the Divisi on concluded that an

6 References and citations to these unpublished appel late opinions herein are provided for the purpose of explaining the history of the hospitals' efforts to bring constitutional takings claims, and as such ar e not provided for any precedential purpose. See Zahl v. Hiram Eastland, Jr. , 465 N.J. Super. 79, 86 n.1 (App. Div. 2020) ("Although citing an unpublished opinion is generally forbidden, [see R. 1:36-3], we do so here to provide a full understanding of the issues presented." ).A- 2767

- 21 9 administrative hearing was not the proper venue for the hospitals' "facial challenge to the charity care statute . . . adminis tered by the [DOH] not [the Division]." Ibid. We affirmed, concluding the hospitals' takings clai ms were not foreclosed, and could "be developed and . . . a djudicated in another forum." Id. at 17. In IMO Englewood, eight hospitals filed administrat ive appeals challenging the New Jersey Health Care Cost Reducti on Act, including N.J.S.A. 26:2H-18.64. (slip op. at 3). The plaint iffs projected losses for fiscal year 2015, alleging the losses were due to their st atutory obligation to provide low or no-cost care to eligible persons. Id. at 5- 6. The plaintiffs claimed this statutory obligation, combined with the alleged ina dequate subsidies, constituted unconstitutional takings of their prope rty without just compensation. Id . at 6. The Commissioner of the DOH concluded it l acked jurisdiction to consider the hospitals' constitutio nal claims. Ibid. We affirmed. Id. at 3. Noting the plaintiff hospital s received some subsidies in the disputed years, we declined to exercise origina l jurisdiction because of an insufficient factual record. Id. at 8-9, 14. Simi lar to In re Medicaid, we instructed the plaintiff hospitals to bring their c laims in the trial court, where aA- 2767

- 21 10 factual record appropriate to analyze their takings claims could be developed. Id. at 15. 7
II. We turn to the matter before us. Plaintiffs are fo urteen licensed forprofit and non-profit general acute care hospitals who all qualify as DSH. 8 Defendants include the State of New Jersey, the Sta te of New Jersey Department of Human Services (DHS), the Division, D OH, and several state officials. 9 Approximately six weeks after our decisions in In re Medicaid and IMO Englewood, plaintiffs filed suit against various state entities and individual

7 In both In re Medicaid and IMO Englewood , the plaintiff hospitals brought as -applied constitutional challenges, however, in both cases, the Director and Commissioner considered the challenges as facial. For example, the Commissioner in IMO Englewood noted the hospitals h ad not challenged the manner in which their charity care subsides had bee n calculated, but rather their statutory obligation to provided charity care in light of inadequate subsidies. Id. at 6.

8 After argument, JFK Medical Center was dismissed pursuant to stipulation on February 27, 2024.

9 Sarah Adelman is the current commissioner of DHS. Jennifer Langer Jacobs is the current Division Assistant Commissioner of t he Division. As the Division is part of the Department of Human Services, responden ts Commissioner Adelman, DHS, Assistant Commissioner J acobs, and the Division are referenced collectively in this memo as "the D ivision." In addition, the current commissioner of the DOH is Dr . Kaitlan Baston as of July 25, 2023. All defendants are collectively referenc ed to herein as "the State."A- 2767

- 21 11 officers, asserting constitutional takings claims d ating back to 2004

. Plaintiffs'
two -count complaint alleged that under the Fifth and Fourteenth Amendments of the United States Constitution as well as Article I, Paragraph 20 of the New Jersey Constitution of 1947: "The obligations imposed by the [charity care] [s]tatute result in a taking of the . . . [h]ospitals' real and personal property in
terms of space, supplies, and services"; and "[T]he mandate s imposed on the . . . [h]ospitals by

. . . [the charity care] [s]tatute along with the limited reimbursement provided by the Division and DOH for the . . . hospitals'
treatment of

Medicaid and charity care patients has resulted in an as -applied violation of the Takings Clauses of the United States and New Jersey Constitutions." After the close of discovery, both sides moved for summary judgment. Finding no disputed issues of material fact, the co urt granted defendants' motion for summary judgment on certain taking claim s, and dismissed in part plaintiffs' remaining takings claims on ripeness gr ounds for failure to exhaust administrative remedies. The court first considered the question of whether plaintiffs' claims constituted as-applied or facial constitutional cha llenges. The court found each plaintiff sought just compensation for their i ndividual alleged shortfalls and did not seek to advocate for the rights of hosp itals statewide. Hence, theA- 2767

- 21 12 court concluded plaintiffs' claims were as-applied constitutional takings claims. The court's comprehensive statement of reasons supp orting its order granting defendants summary judgment included findi ngs of fact and conclusions of law. First, the court concluded cer tain plaintiffs' claims were not ripe, finding they failed to exhaust administra tive remedies prior to filing suit. Next, the court analyzed the surviving plain tiffs' claims and concluded New Jersey's charity care statute and the Medicaid rates used for the HCSF distribution formula did not constitute a physical or regulatory taking. The court stated: [A]ny interference with [p]laintiffs' property righ ts

arises from two public programs enacted to adjust t he burdens and benefits of economic life for the commo n good. The charity care and Medicaid programs ensur e equal access to healthcare for indigent patients

— a public health and healthcare purpose squarely in li ne with the public health laws upheld in In re Health Care Admin. Bd., 83 N.J. 67, 73, 75-76 (1980), and Coope r Medical Center v. City of Camden, 214 N.J. Super. 493, 496-97 (App. Div. 1987). [(Citations reformatted).] Plaintiffs appealed.
III. Our review of a trial court's summary judgment orde r is de novo, applying the same legal standard, namely, the stand ard set forth in Rule 4:46

-A- 2767

- 21 13 2. Conley v. Guerrero, 228 N.J. 339, 346 (2017). We consider, as did the trial court, whether "the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, a re sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the nonmoving party." Town of Kearny v. Brandt, 214 N.J. 76, 91 (2013) (quoting
Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)). If there is no genuine issue of material fact, we m ust then "decide whether the trial court correctly interpreted the l aw." Dickson v. Cmty. Bus Lines, 458 N.J. Super. 522, 530 (App. Div. 2019) (c iting Prudential Prop. &
Cas. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div. 1998)) . "We accord no deference to the trial judge's conclusions of la w and review these issues de novo." Ibid. Both the Takings Clause of the Fifth Amendment and the New Jersey Constitution prohibit the taking of private propert y for public use "without just compensation." U.S. Const. amend. V; N.J. Const. a rt. I, ¶ 20. Our courts apply the same analysis for state and federal takin gs claims, viewing the constitutional provisions as "coextensive." Klumpp v. Borough of Avalon , 202 N.J. 390, 405 (2010). While "[t]he paradigmatic taking requiring just com pensation is a direct government appropriation or physical invasion of pr ivate property," theA- 2767

- 21 14 Constitution also guards against certain uncompensa ted regulatory interference with a property owner's interest in their property. Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 537-38 (2005); see also Cedar P oint Nursery v. Hassid, 594 U.S. 139, 147-48 (2021) (noting most obvious exampl es of physical takings include when government condemns property, takes po ssession without acquiring title, or physically occupies property

— such as "recurring flooding as a result of building a dam"). Regulations are cons idered per se takings where they "result[] in a physical appropriation of prope rty." Cedar Point , 594 U.S. at 149. Where the regulation does not occupy or appropriate property, but still influences it, we must engage in a fact-specific in quiry. See Ark. Game & Fish Comm'n v. United States, 568 U.S. 23, 32 (2012 ); Bernardsville Quarry, Inc. v. Borough of Bernardsville, 129 N.J. 221, 232 (1992). In Penn Central , 438 U.S. 104, 124 (1978), the Supreme Court identif ied certain factors to guide such a fact-sensitive analysis, observing the re is no "set formula" for deciding regulatory takings cases. The three Penn Central factors are: the economic impact of the regulation on plaintiff; the extent to which the regulation has interfered with plaintiff's investme nt-backed expectations; and the character of the governmental action being chal lenged. Ibid. ; see also Mansoldo v. State, 187 N.J. 50, 58-59 (2006) (expla ining "protection fromA- 2767

- 21 15 governmental takings under the New Jersey constitut ion is coextensive with protection under the federal constitution" and that the Penn Central factors serve to resolve regulatory takings claims that are not per se physical takings).
A. We first consider whether the trial court erred by dismissing some of plaintiffs' claims for failure to exhaust administr ative remedies. The court found plaintiffs' taking claims were as-a pplied claims. Having carefully reviewed the record, we reach a different conclusion. An as-applied constitutional challenge to a regulatory scheme nec essarily involves the proffer of evidence to support the challenge. The administ rative agency responsible for enforcement of the regulation must hear the cla im first. See Fred Depkin & Son, Inc. v. Dir., New Jersey Div. of Tax'n, 114 N.J. Super. 279, 284-86 (App. Div. 1971). This principle does not apply to facial claims, which are purely questions of law. Ibid. see also Matter of Comm'r of Ins.'s Issuance of Ords. A- 92 -189 & A- 92

- 212 , 274 N.J. Super. 385, 404 (App. Div. 1993). Here, plaintiff hospitals challenge the Legislature 's reimbursement system, including N.J.S.A. 26:2H-18.64, in its enti rety. If successful, plaintiffs would have us declare charity care uncon stitutional for failing to provide plaintiffs at-cost reimbursement. The char ity care subsidy reimburses no hospital in New Jersey at one hundred percent. It follows that plaintiffs'A- 2767

- 21 16 claim is one which, if successful, will affect all hospitals, even though the claim was not brought on behalf of all hospitals li censed to operate in the state. We conclude this represents a facial constitutional attack on the charity care statute, and that it would be futile to remand thos e claims to the agency. 10 We conclude that the trial court's order dismissing wi thout prejudice certain plaintiffs' takings complaints between 2004 and 201 5 for failure to first obtain individual decisions under the rate appeal process was issued in error. 11
B. Plaintiffs' primary argument on appeal is that the trial court erred by concluding no taking occurred. They propose altern ate theories. First, plaintiffs posit N.J.S.A. 26:2H-18.64's operation r esults in a per se taking of

10 Even if we accept that plaintiffs' constitutional c laims were as-applied and not facial claims, a ripeness analysis would requir e judicial review of all the takings claims now. See Platkin v. Smith & Wesson, 474 N.J. Super. 476, 496 (App. Div. 2023). Plaintiffs have spent years atte mpting to bring constitutional taking claims as part of their admin istrative challenge to Medicaid rates and charity care subsidies. It foll ows that remand for an administrative hearing on any aspect of these claim s after more than a decade of litigation would be fundamentally unfair.

11 The trial court dismissed without prejudice all t akings claims for lack of ripeness except the following: Englewood Hospital & Medical Center and JFK Medical Center for fiscal years 2009-12 and 2014-15 ; Hoboken University Medical Center, Capital Health Regional Medical Cen ter, and Capital Health Medical Center

– Hopewell for fiscal years 2014-15 only; and Hackens ack Meridian Health Pascack Valley Medical Center, Hack ensack Meridian Health Mountainside Medical Center, and St. Mary's General Hospital for fiscal years 2009 -12 only.A- 2767

- 21 17 hospital property due to the "inadequate" state sub sidies the statute generates. In the alternative, plaintiffs contend they met the ir burden to show a regulatory taking of the same property occurred when they pres ented to the trial court uncontroverted Penn Central evidence. A constitutional takings analysis must first addres s the nature of the property at issue. Property need not be physical, tangible property to trigger a takings analysis. The term property

is not used in the "vulgar and untechnical sense of the physical thing . . . . [Instead, it] [denotes] the group of rights inhering in the citizen's relation to the ph ysical thing, as the right to possess, use and dispose of it. . . . The constitutional provision is addressed to every sort of interest the citizen may possess." [Pruneyard Shopping Ctr. v. Robins, 447 U.S. 74, 82 n.6 (1980) (second, third, and fourth alterations i n original) (quoting United States v. General Motors Corp., 323 U.S. 373, 377-78 (1945)).] The United States Supreme Court has identified prop erty interests in both real property and in investment interests. See , e.g. , Horne v. Dep't of Agric., 576 U.S. 350 (2015) (finding property inter est in raisins confiscated by government officials); Duquesne Light Co. v. Barasc h, 488 U.S. 299, 309-12 (1989) (finding property interest in utility profit s where rates were so stringent that they became confiscatory in nature). Our Supr eme Court has also identified property interests in a landlord's expec tation of rental income andA- 2767

- 21 18 the rendering of professional services. See, e.g. , Prop. Owners Ass'n v. North Bergen, 74 N.J. 327, 336 (1977) (finding rental sub sidies confiscatory); Madden v. Delran, 126 N.J. 591, 602 (1992) (identif ying legal services as property). We now consider plaintiffs' contention that operat ion of N.J.S.A. 26:2H18.64 results in a physical appropriation of their property, which effects a per se taking. Plaintiffs argue government-authorized entry onto their property and compelled provision of medical supplies and sta ff labor goes further than just a "regulatory restriction on use." They rely primarily on the standard set forth in Loretto v. Teleprompter Manhattan CATV Cor p., 458 U.S. 419 (1982), which was further developed by Nollan v. California Coastal Com'n, 483 U.S. 825 (1987). In Loretto, New York passed a law requiring landlor ds to permit cable companies to install equipment on apartment buildin gs in exchange for a nominal fee. 458 U.S. at 421. The Supreme Court h eld that where a physical occupation is permanent

— no matter how small

— it is a taking that must be compensated. Id. at 435. In Nollan, the Supreme Court applied Loretto where a government land use entity conditioned a use permit upon the proper ty owner's grant of a public easement. 483 U.S. at 827. The Court concluded th e easement was aA- 2767

- 21 19 "permanent physical occupation" of the property, be cause the public was "given a permanent and continuous right to pass to and fro, so that the real property may continuously be traversed, even though no particular individual is permitted to station himself permanently upon th e premises." Id. at 832. In contrast to the plaintiffs in Loretto and Nollan , plaintiffs here operate hospitals within the complex and highly regulated h ealth care industry. Unlike the cable installation law in Loretto, N.J.S.A. 26: 2H-18.64 does not limit the right to exclude individuals from their premises. Rather, it prohibits hospitals from turning away patients "on the basis of [their] ability to pay" without being subject to civil penalty, and further prohibi ts billing only those patients who qualify under charity care. Similarly, the con tested scheme does not permit the public's unfettered access to plaintiffs ' premises like the easement condition in Nollan. Instead, the Legislature crafted the charity care s tatute with specificity, requiring plaintiffs provide care only to those the act aims to benefit. To further support their argument, plaintiffs conte nd their facts are analogous to the facts in Cedar Point, and distingu ishable from Pruneyard Shopping Ctr., 447 U.S. at 74 (holding that the tem porary occupation of a privately owned mall by pamphleteers was not a taki ng).A- 2767

- 21 20 In Cedar Point, the Supreme Court concluded a regul ation granting labor union organizers a three-hour right of access to ag ricultural employer's property 120 days a year, for the purpose of solici ting support for unionization was a per se physical taking. 549 U.S. at 143. Th e nature of the property at issue was a private agricultural business

— not open to the public. The disputed regulation required the plaintiff property owners t o open their property to third-party union organizers. The plaintiffs claim ed the imposition disturbed their operations. Ibid. The Court pointed out tha t Pruneyard was "readily distinguishable," as it involved a business generally open to the public unlike the farms at issue. Id. at 157. We conclude the charity care statute's operation do es not lead to physical invasion of the hospitals' property by the public b ecause, unlike Cedar Point , the public's presence in a hospital is a natural el ement of its business, making it more analogous to Pruneyard. Although plaintiff s contend that charity care as a whole has a negative economic impact on their investment interests, there is no evidence that the prohibition on turning away patients because of inability to pay unreasonably impairs the value of the premises. Charity care restricts how hospitals use their property to provi de medical services, not whether they do so. The property will be used as i t was intended

— to treat patients.A- 2767

- 21 21 Finally, the hospitals' argument that the charity c are provisions' requirements are an unconstitutional appropriation of their tangible personal property is without merit. To support their argume nt, plaintiffs cite the standard provided by Horne , 576 U.S. at 355 (holding a law requiring raisin growers "to give a percentage of their crop to the government, free of charge," was a per se taking). However, unlike Horne, the s tatute here does not require a transfer of ownership of medical supplies or equi pment into the government's or a third party's hands. The hospitals retain the majority of their agency as to their medical supplies and equipment. The record s hows no per se taking, as plaintiffs have failed to show evidence of physical appropriation of the hospital property, real or personal, consistent wit h our jurisprudence.
C. Having found no per se taking, we next balance "the private interests affected by the regulation against the public inter ests that are advanced." Matter of Plan for Orderly Withdrawal of Twin City Fire Ins. Co., 129 N.J. 389, 417 (1992). To accomplish this, we analyze th e relationships among the Penn Central factors. Where there is no per se tak ing, and

where the government merely regulates the use of property, compensation is required only if considerations such as the purpose of the regulatio n or the extent to which it deprives the owner of the economic use of the property suggest that the regulation has unfairly singled out the property ow nerA- 2767

- 21 22 to bear a burden that should be borne by the public as a whole. [Yee v. City of Escondido, 503 U.S. 519, 522-23 (1992).] Plaintiffs argue the uncontroverted record shows: adverse economic impact to the hospitals; undue infringement on thei r investment backed expectations; and per se confiscatory government ac tion. They contend that, on balance, N.J.S.A. 26:2H-18.64's regulatory burde n outweighs its public good. We discuss each factor in turn.
1. Economic Impact Plaintiffs argue the subsidy shortfall causes a con stitutionally burdensome economic impact. They offer expert test imony to show their hospitals fall below the national median in three m ain industry-wide criteria: profitability, liquidity, and debt- to -capitalization ratio. A regulation's economic impact must be examined in the context of the property as a whole rather than by its parts or seg mented uses. See Penn Central, 438 U.S. at 130-31. We look to the dispar ity between subsidies plaintiffs received and the cost they've incurred f or charity care medical services and determine the impact it has had on the ir property. Giving all favorable inferences to plaintiffs, Kearny, 214 N.J . at 91, the record shows they clearly established before the court evidence sufficient to support aA- 2767

- 21 23 finding that N.J.S.A. 26:2H-18.64 has had an advers e impact on their profitability. The record also shows that during t he years of plaintiffs' compliance with N.J.S.A. 26:2H-18.64, they fell sho rt of industry-wide profitability standards. Plaintiffs further conten d that shortfall is wholly due to the charity care provisions. While plaintiffs have shown sufficient material issues of fact demonstrating they are less profitab le than the average hospital nationally, they have not shown that N.J.S.A. 26:2H -18.64 deprives them of economic use of their properties as a whole, in eff ect, as hospitals. See Yee , 503 U.S. at 522-23. A takings claim cannot be sustained on the sole gro und that plaintiffs fail to financially perform on par with industry-wide norms. This framing fails to recognize other relevant regu latory factors at work which may be unique to a given hospital serving the commu nity where it is located. See Hutton Park Gardens v. Town Council of Town of W. Orange, 68 N.J. 543, 570 (1975) ("The rate of return permitted need not be as high as prevailed in the industry prior to regulation nor as much as an investor might obtain by placing his capital elsewhere."). Giving all favor able inferences that this factor should weigh moderately in favor of finding a taking of plaintiffs' property, but we caution that this one factor is no t dispositive.

2. Interference with Investment-Backed Expectation sA- 2767

- 21 24 Plaintiffs claim that the charity care statute undu ly interferes with their investment-backed expectations. Here, the pertinen t question is whether plaintiffs have a reasonable investment-backed expe ctation in receiving reimbursement at cost for their treatment of charit y care patients. "[D]istinct, investment-backed expectations are reasonable only if they take into account the power of the state to regulate in the public in terest." Nekrilov v. City of Jersey City, 45 F. 4th 662, 674-75 (3d Cir. 2022) ( alteration in original) (quoting Pace Resources, Inc. v. Shrewsbury Twp., 8 08 F. 2d 1023, 1033 (3d Cir. 1987)). Hospital investors in the highly regu lated health care industry should expect that use of their property, in all it s forms, is likely to be regulated by the state, and that such government re gulation may diminish investment-backed expectations without resulting in an unconstitutional taking. See also United Wire, Metal & Mach. Health & Welfare Fund v. Morristown Mem'l Hosp., 995 F. 2d 1179, 1191 (3d Ci r. 1993) (rejecting a takings challenge to state system of setting hospit al billing rates, in part, because plaintiffs' investment-backed expectations were reduced by "the historically heavy and constant regulation of healt h care" in the state). The New Jersey health care industry has been consis tently and comprehensively regulated within our state. Plaint iffs, as a condition of obtaining their hospital licenses, elected to provi de subsidized medicalA- 2767

- 21 25 services in the communities they serve. When a hos pital seeks a license to operate in our state, it must consider the laws in effect at that time as well as those which may be adopted by our Legislature. Giv en plaintiffs' choice to do business here, it is reasonable that they should ex pect such license conditions to affect business profits. In turn, we conclude i t is not reasonable for the hospitals to expect an at -cost reimbursement for the medical services the Legislature has required them to provide as a condi tion of doing business in our state. Plaintiffs have failed to satisfy this Penn Central factor.

3. Character of the Government Action Our courts have repeatedly stated that the characte r of public health and healthcare regulations typically weighs against the conclusion that a law acts as a taking. See JWC Fitness, LLC v. Murphy, 469 N .J. Super 414, 436 (2021) (recognizing the nature of the regulation weighed a gainst finding a taking as it was not specific to plaintiff and was a valid exerc ise of police power); In re Health Care Admin. Bd., 83 N.J. at 81 (finding no t aking where the "regulations in question are directed at an acute s ocial problem affecting the health and welfare of the needy aged and infirm, ar e well within the power and authority vested in the [DOH] by the Legislature"). The requirements of the charity care statute and it s subsidy scheme are specific to its aims

— to ensure equal access to healthcare for indigent p atients,A- 2767

- 21 26 and we conclude that such regulation fits squarely within the police power vested in our Legislature. The Legislature, in tur n, has delegated authority to the respective agencies to oversee the appeal proce sses for both Medicaid reimbursement rates and the charity care subsidy. To this end, the character of the government action reflects a reasonable adjustm ent to the benefits and burdens of economic life for the common good and we ighs strongly against finding a taking.
D. After a thorough review of all plaintiffs' constitu tional taking claims, we conclude that the record shows no per se taking, no r does a balancing of the Penn Central factors reveal a regulatory taking. W e affirm the trial court's order granting defendants' motion for summary judgm ent against all plaintiffs. Affirmed.