NOT FOR PUBLICATION WITHOUT THE 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, OUR 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 DIVISION 
A-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 capacity 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 June 27, 2024 

Before Judges Rose, Smith and Perez Friscia. 

On appeal from the Superior Court of New Jersey, 

Law Division, Mercer County, Docket Nos. 

L-1434-17 and L-1397-18.

John Zen Jackson argued the cause for appellants 

(Greenbaum, Rowe, Smith & Davis, LLP, attorneys; 

James A. Robertson IV, John Zen 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. Platkin, 

Attorney General, attorney; Melissa H. Raksa, 

Assistant Attorney General, of counsel; Jacqueline 
A-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, plaintiffs appeal from the 

trial court's order granting defendants' motion for summary judgment on 

certain taking claims and dismissing certain plaintiffs' remaining takings 

claims on ripeness grounds for failure to exhaust administrative remedies. 

Plaintiffs, a group of hospitals licensed to do business 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), the State's Medicaid Plan, 

and corresponding regulations compel plaintiffs to use medicine, equipment, 

and services they control to provide patient care regardless of ability to pay, 

and without an adequate subsidy to make up the financial shortfall. Plaintiffs 

argue that this scheme represents an unconstitutional taking. Plaintiffs also 

claim the trial court erred when it dismissed certain plaintiffs' claims for a lack 

of ripeness due to their failure to exhaust administrative remedies.1 

1

 See Do-Wop Corp. v. City of Rahway, 168 N.J. 191, 199 (2001) (permitting 

an appellate court to affirm for other reasons because "appeals are taken from 

orders and judgments and not from opinions"). 
A-2767-21 4 

Considering the arguments and governing legal principles, we affirm the 

trial court's order dismissing all of the constitutional 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 Security 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 chooses 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 Medicaid State Plan, describing 

the methods and standards for reimbursement to providers, 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 participate in the Medicaid 

program when it passed the Medical Assistance and Health Services Act 

(N.J.S.A. 30:4D-1 to -19) for patients whose "resources are determined to be 

inadequate to secure necessary medical care at their own expense." Bergen 
A-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 administered by the Division of 

Medical Assistance and Health Services (the Division). 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. 26:2H-18.64, which provides in 

part, "[n]o hospital shall deny any admission or appropriate service to a patient 

on the basis of that patient’s ability to pay or source 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 requirements. 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-eligible patients through the 

N.J. Medicaid Program fund, and the State is permitted 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 Services. 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 eligible persons or initiating 

collection actions against them. 
A-2767-21 6 

The Legislature recognized that disproportionate share hospitals (DSH) 5

bear a greater burden to sustain the interests of the Health Care Cost Reduction 

Act and established a Health Care Subsidy Fund (HCSF), N.J.S.A. 26:2H18.58, to distribute subsidies to qualifying facilities. 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 ultimately 

______________________

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 the 

hospital's "documented charity care" if the hospital's 

operating margin is above the statewide median. Also 

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 care 

subsidy.

[343 N.J Super. 162, 165-68 (App. Div. 2001) 

(internal citations omitted).] 

The Legislature's health care subsidy is not designed to be a full 

"reimbursement" covering a hospital’s actual charity care expenses, but instead 

to provide each hospital with its "proportionate share of the total subsidy 

funded by the Legislature for that year." Id. at 165. Hospitals may challenge 

their assigned share of the HCSF in two ways. They may challenge the 

amount of their designated HCSF subsidy by filing an 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 opinions 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. Ctr.'s SFY 

2014 Charity Care Subsidy Appeal (IMO Englewood), No. A-1555-13 (App. 

Div. May 20, 2016), which are directly related to the matter before us. 6 In

each case, the plaintiff hospitals raised taking claims as part of their rate 

challenges, and in each case final administrative decisions were issued 

dismissing the taking claims on jurisdictional grounds. 

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, plaintiffs sought an administrative 

hearing to make an as-applied constitutional challenge to each [h]ospital's 

2009 Medicaid rates. Id. at 4. They argued the State failed to provide 

adequate compensation for its taking of [h]ospital property, "including . . . 

facilities, equipment, staff and services, for public use." Ibid. In its final 

administrative decision, the Director of the Division concluded that an 

6

 References and citations to these unpublished appellate opinions herein are 

provided for the purpose of explaining the history of the hospitals' efforts to 

bring constitutional takings claims, and as such are 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 . . . administered by the [DOH] not [the 

Division]." Ibid. We affirmed, concluding the hospitals' takings claims were 

not foreclosed, and could "be developed and . . . adjudicated in another 

forum." Id. at 17. 

In IMO Englewood, eight hospitals filed administrative appeals 

challenging the New Jersey Health Care Cost Reduction Act, including 

N.J.S.A. 26:2H-18.64. (slip op. at 3). The plaintiffs projected losses for fiscal 

year 2015, alleging the losses were due to their statutory 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 inadequate subsidies, 

constituted unconstitutional takings of their property without just 

compensation. Id. at 6. The Commissioner of the DOH concluded it lacked 

jurisdiction to consider the hospitals' constitutional claims. Ibid. We 

affirmed. Id. at 3. Noting the plaintiff hospitals received some subsidies in 

the disputed years, we declined to exercise original jurisdiction because of an 

insufficient factual record. Id. at 8-9, 14. Similar to In re Medicaid, we 

instructed the plaintiff hospitals to bring their claims in the trial court, where a 
A-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 fourteen licensed forprofit and non-profit general acute care hospitals who all qualify as DSH.8

 

Defendants include the State of New Jersey, the State of New Jersey 

Department of Human Services (DHS), the Division, DOH, 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 had not challenged the 

manner in which their charity care subsides had been 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 the Division. As the 

Division is part of the Department of Human Services, respondents 

Commissioner Adelman, DHS, Assistant Commissioner Jacobs, and the 

Division are referenced collectively in this memo as "the Division." In 

addition, the current commissioner of the DOH is Dr. Kaitlan Baston as of July 

25, 2023. All defendants are collectively referenced to herein as "the State." 
A-2767-21 11

officers, asserting constitutional takings claims dating 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 mandates 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 court granted defendants' 

motion for summary judgment on certain taking claims, and dismissed in part 

plaintiffs' remaining takings claims on ripeness grounds for failure to exhaust 

administrative remedies. 

The court first considered the question of whether plaintiffs' claims 

constituted as-applied or facial constitutional challenges. The court found 

each plaintiff sought just compensation for their individual alleged shortfalls 

and did not seek to advocate for the rights of hospitals statewide. Hence, the 
A-2767-21 12

court concluded plaintiffs' claims were as-applied constitutional takings 

claims. 

The court's comprehensive statement of reasons supporting its order 

granting defendants summary judgment included findings of fact and 

conclusions of law. First, the court concluded certain plaintiffs' claims were 

not ripe, finding they failed to exhaust administrative remedies prior to filing 

suit. Next, the court analyzed the surviving plaintiffs' 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 rights 

arises from two public programs enacted to adjust the 

burdens and benefits of economic life for the common 

good. The charity care and Medicaid programs ensure 

equal access to healthcare for indigent patients—a 

public health and healthcare purpose squarely in line 

with the public health laws upheld in In re Health Care 

Admin. Bd., 83 N.J. 67, 73, 75-76 (1980), and Cooper 

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 order is de novo, 

applying the same legal standard, namely, the standard 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, are 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 must then "decide 

whether the trial court correctly interpreted the law." Dickson v. Cmty. Bus 

Lines, 458 N.J. Super. 522, 530 (App. Div. 2019) (citing 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 law 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 property for public use "without just 

compensation." U.S. Const. amend. V; N.J. Const. art. I, ¶ 20. Our courts 

apply the same analysis for state and federal takings 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 compensation is a direct 

government appropriation or physical invasion of private property," the 
A-2767-21 14

Constitution also guards against certain uncompensated 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 Point Nursery v. Hassid, 594 

U.S. 139, 147-48 (2021) (noting most obvious examples of physical takings 

include when government condemns property, takes possession without 

acquiring title, or physically occupies property—such as "recurring flooding as 

a result of building a dam"). Regulations are considered per se takings where 

they "result[] in a physical appropriation of property." 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 inquiry. 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 identified certain factors to 

guide such a fact-sensitive analysis, observing there 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 investment-backed expectations; and 

the character of the governmental action being challenged. Ibid.; see also 

Mansoldo v. State, 187 N.J. 50, 58-59 (2006) (explaining "protection from 
A-2767-21 15

governmental takings under the New Jersey constitution 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 administrative remedies. 

The court found plaintiffs' taking claims were as-applied claims. Having 

carefully reviewed the record, we reach a different conclusion. An as-applied 

constitutional challenge to a regulatory scheme necessarily involves the proffer 

of evidence to support the challenge. The administrative agency responsible 

for enforcement of the regulation must hear the claim 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 entirety. If successful, 

plaintiffs would have us declare charity care unconstitutional for failing to 

provide plaintiffs at-cost reimbursement. The charity 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 licensed 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 those claims to the agency. 10 We 

conclude that the trial court's order dismissing without prejudice certain 

plaintiffs' takings complaints between 2004 and 2015 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 alternate theories. First, 

plaintiffs posit N.J.S.A. 26:2H-18.64's operation results in a per se taking of 

10

 Even if we accept that plaintiffs' constitutional claims were as-applied and 

not facial claims, a ripeness analysis would require 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 attempting to bring 

constitutional taking claims as part of their administrative challenge to 

Medicaid rates and charity care subsidies. It follows that remand for an 

administrative hearing on any aspect of these claims after more than a decade 

of litigation would be fundamentally unfair. 

11 The trial court dismissed without prejudice all takings 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 Center, and Capital Health 

Medical Center–Hopewell for fiscal years 2014-15 only; and Hackensack 

Meridian Health Pascack Valley Medical Center, Hackensack 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 subsidies the statute generates. 

In the alternative, plaintiffs contend they met their burden to show a regulatory 

taking of the same property occurred when they presented to the trial court 

uncontroverted Penn Central evidence. 

A constitutional takings analysis must first address 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 physical 

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 in 

original) (quoting United States v. General Motors 

Corp., 323 U.S. 373, 377-78 (1945)).] 

The United States Supreme Court has identified property 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 interest in raisins confiscated by 

government officials); Duquesne Light Co. v. Barasch, 488 U.S. 299, 309-12 

(1989) (finding property interest in utility profits where rates were so stringent 

that they became confiscatory in nature). Our Supreme Court has also 

identified property interests in a landlord's expectation of rental income and 
A-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 subsidies confiscatory); 

Madden v. Delran, 126 N.J. 591, 602 (1992) (identifying legal services as 

property). 

 We now consider plaintiffs' contention that operation 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 staff labor goes further than 

just a "regulatory restriction on use." They rely primarily on the standard set 

forth in Loretto v. Teleprompter Manhattan CATV Corp., 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 landlords to permit cable 

companies to install equipment on apartment buildings in exchange for a 

nominal fee. 458 U.S. at 421. The Supreme Court held 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 property owner's grant of a public 

easement. 483 U.S. at 827. The Court concluded the easement was a 
A-2767-21 19

"permanent physical occupation" of the property, because 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 the premises." Id. at 832. 

In contrast to the plaintiffs in Loretto and Nollan, plaintiffs here operate 

hospitals within the complex and highly regulated health 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 prohibits billing only those patients 

who qualify under charity care. Similarly, the contested 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 statute 

with specificity, requiring plaintiffs provide care only to those the act aims to 

benefit. 

To further support their argument, plaintiffs contend their facts are 

analogous to the facts in Cedar Point, and distinguishable from Pruneyard 

Shopping Ctr., 447 U.S. at 74 (holding that the temporary occupation of a 

privately owned mall by pamphleteers was not a taking). 
A-2767-21 20

In Cedar Point, the Supreme Court concluded a regulation granting labor 

union organizers a three-hour right of access to agricultural employer's 

property 120 days a year, for the purpose of soliciting support for unionization 

was a per se physical taking. 549 U.S. at 143. The nature of the property at 

issue was a private agricultural business—not open to the public. The disputed 

regulation required the plaintiff property owners to open their property to 

third-party union organizers. The plaintiffs claimed the imposition disturbed 

their operations. Ibid. The Court pointed out that 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 does not lead to physical 

invasion of the hospitals' property by the public because, unlike Cedar Point, 

the public's presence in a hospital is a natural element of its business, making 

it more analogous to Pruneyard. Although plaintiffs 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 provide medical services, not 

whether they do so. The property will be used as it was intended—to treat 

patients. 
A-2767-21 21

Finally, the hospitals' argument that the charity care provisions' 

requirements are an unconstitutional appropriation of their tangible personal 

property is without merit. To support their argument, 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 statute here does not require 

a transfer of ownership of medical supplies or equipment 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 shows no per se taking, as 

plaintiffs have failed to show evidence of physical appropriation of the 

hospital property, real or personal, consistent with our jurisprudence. 

C.

Having found no per se taking, we next balance "the private interests 

affected by the regulation against the public interests 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 the relationships among the 

Penn Central factors. Where there is no per se taking, and 

where the government merely regulates the use of 

property, compensation is required only if 

considerations such as the purpose of the regulation 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 owner 
A-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 their investment backed 

expectations; and per se confiscatory government action. They contend that, 

on balance, N.J.S.A. 26:2H-18.64's regulatory burden outweighs its public 

good. We discuss each factor in turn. 

1. Economic Impact 

Plaintiffs argue the subsidy shortfall causes a constitutionally 

burdensome economic impact. They offer expert testimony to show their 

hospitals fall below the national median in three main 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 segmented uses. See Penn 

Central, 438 U.S. at 130-31. We look to the disparity between subsidies 

plaintiffs received and the cost they've incurred for charity care medical 

services and determine the impact it has had on their 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 a 
A-2767-21 23

finding that N.J.S.A. 26:2H-18.64 has had an adverse impact on their 

profitability. The record also shows that during the years of plaintiffs' 

compliance with N.J.S.A. 26:2H-18.64, they fell short of industry-wide 

profitability standards. Plaintiffs further contend that shortfall is wholly due to 

the charity care provisions. While plaintiffs have shown sufficient material 

issues of fact demonstrating they are less profitable 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 effect, as hospitals. See Yee, 

503 U.S. at 522-23. A takings claim cannot be sustained on the sole ground 

that plaintiffs fail to financially perform on par with industry-wide norms. 

This framing fails to recognize other relevant regulatory factors at work which 

may be unique to a given hospital serving the community 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 favorable inferences that this 

factor should weigh moderately in favor of finding a taking of plaintiffs' 

property, but we caution that this one factor is not dispositive. 

2. Interference with Investment-Backed Expectations 
A-2767-21 24

Plaintiffs claim that the charity care statute unduly interferes with their 

investment-backed expectations. Here, the pertinent question is whether 

plaintiffs have a reasonable investment-backed expectation in receiving 

reimbursement at cost for their treatment of charity 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 interest." 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., 808 F. 2d 1023, 1033 (3d 

Cir. 1987)). Hospital investors in the highly regulated health care industry 

should expect that use of their property, in all its forms, is likely to be 

regulated by the state, and that such government regulation 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 Cir. 1993) (rejecting a 

takings challenge to state system of setting hospital billing rates, in part, 

because plaintiffs' investment-backed expectations were reduced by "the 

historically heavy and constant regulation of health care" in the state). 

The New Jersey health care industry has been consistently and 

comprehensively regulated within our state. Plaintiffs, as a condition of 

obtaining their hospital licenses, elected to provide subsidized medical 
A-2767-21 25

services in the communities they serve. When a hospital 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. Given plaintiffs' choice to do 

business here, it is reasonable that they should expect such license conditions 

to affect business profits. In turn, we conclude it 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 condition 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 character 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 against finding a taking as it 

was not specific to plaintiff and was a valid exercise of police power); In re 

Health Care Admin. Bd., 83 N.J. at 81 (finding no taking where the

"regulations in question are directed at an acute social problem affecting the 

health and welfare of the needy aged and infirm, are well within the power and 

authority vested in the [DOH] by the Legislature").

The requirements of the charity care statute and its subsidy scheme are 

specific to its aims—to ensure equal access to healthcare for indigent patients, 
A-2767-21 26

and we conclude that such regulation fits squarely within the police power 

vested in our Legislature. The Legislature, in turn, has delegated authority to 

the respective agencies to oversee the appeal processes for both Medicaid 

reimbursement rates and the charity care subsidy. To this end, the character of 

the government action reflects a reasonable adjustment to the benefits and 

burdens of economic life for the common good and weighs strongly against 

finding a taking. 

D.

After a thorough review of all plaintiffs' constitutional taking claims, we 

conclude that the record shows no per se taking, nor does a balancing of the 

Penn Central factors reveal a regulatory taking. We affirm the trial court's 

order granting defendants' motion for summary judgment against all plaintiffs. 

Affirmed.