No, it does not negate the lease.1) The deceased person, however, is no longer liable under the lease, with one exception: if there was any rent or other costs/fees which had not been paid prior to his/her death, his or her estate could be held liable for his/her share of that amount. But his or her estate would not be responsible for rent going forward.2) However, the other two people, including the indefinitely hospitalized one, are still bound to the lease and still responsible for not just back rent, but also forward-looking or prospective rent. A lease is a contract, and the illness of a party to a contract does not change his or  her obligations under it.