In Englewood Hospital & Medical Center v. State (A-16-24/089696) (Decided July 16, 2025), the Supreme Court of New Jersey held that New Jersey’s charity care program, which prevents hospitals from turning away patients for inability to pay and from billing qualified patients, is not an unconstitutional “per se” physical taking of private property without just compensation.
The Court further held that charity care is not an unconstitutional “regulatory” taking of private property without just compensation due to the highly regulated nature of the hospital industry and the legislatively declared paramount public interest that the charity care program serves.
Facts of Englewood Hospital & Medical Center v. State
Under New Jersey’s charity care program, hospitals cannot turn away a patient for inability to pay and patients who qualify for charity care shall not be billed for services rendered. Instead, “disproportionate share hospitals” (DSHs), or hospitals that serve a disproportionate number of low-income patients receive annual subsidies from the Health Care Subsidy Fund (HCSF) in exchange for providing charity care.
Plaintiffs, a group of 15 hospitals that serve a disproportionate number of low-income patients, challenged the charity care program. Plaintiffs argued that the charity care program compels them to “provide charity care patients access to their facilities” and to utilize “hospital space, supplies, and services” for treatment, but that the subsidy amounts “fail[] to even cover the basic cost of the care.” Accordingly, they maintained it violates federal and state constitutional protections against unlawful takings by the government.
The trial judge dismissed some of plaintiffs’ takings claims for failure to exhaust administrative remedies and granted summary judgment to defendants on the remaining takings claims, finding that the claims satisfied “none of the criteria for a per se taking” and likewise did not constitute regulatory takings. The Appellate Division found that it would be futile to remand the dismissed claims to an agency but affirmed the grant of summary judgment in favor of defendants on the basis that charity care does not affect a taking.
NJ Supreme Court’s Decision in Englewood Hospital & Medical Center v. State
The New Jersey Supreme Court unanimously affirmed, holding that the charity care program does not violate the Constitution’s Takings Clause.
“[W]e hold that charity care is not an unconstitutional ‘per se’ physical taking of private property without just compensation. It does not grant an affirmative right of access to occupy hospitals; it does not give away or physically set aside hospital property for the government or a third party; and it does not deprive hospitals of all economically beneficial use of their property,” Justice Douglas Fasciale wrote.
“We also hold that charity care is not an unconstitutional ‘regulatory’ taking of private property without just compensation. That is due to the highly regulated nature of the hospital industry and the legislatively declared paramount public interest that the charity care program serves.”
The New Jersey Supreme Court first held that the use of medical supplies in the course of providing charity care is not tantamount to the government physically acquiring hospitals’ property for public use. The Court found the program distinguishable from Horne v. Department of Agriculture, 576 U.S. 351 (2015), in which the U.S. Supreme Court held that an order requiring a certain percentage of a raisin crop to be physically set aside for the government “free of charge” to dispose of at its discretion was an unconstitutional taking.
“If plaintiffs were required to hand over boxes of bandages or to surrender medical devices to the government or a third party, which could then sell or dispose of those bandages or devices at will, this case would fall neatly into Horne’s analysis,” Justice Fasciale explained. “Instead, the charity care program prevents hospitals from denying admission or appropriate services to patients because of their inability to pay and from billing patients eligible for charity care.”
The New Jersey Supreme Court reached a similar conclusion regarding the provision of care. “Given both the nature of the medical profession and its long tradition of providing care to those in need without regard to their ability to pay, we find unavailing the argument that charity care constitutes a taking as to services furnished by the hospitals. That said, we do not suggest it is fair for medical professionals and hospitals to bear, alone, the cost of providing services to those who cannot pay for them,” Justice Fasciale said.
Next, the New Jersey Supreme Court found that, with respect to the hospitals’ facilities, the charity program is not an unconstitutional physical taking of private property without just compensation. “Charity care only limits hospitals’ right to exclude and ability to bill patients who cannot pay for treatment; it does not involve an affirmative ‘right of access’ that would allow any individual to physically invade or occupy the hospital,” Justice Fasciale said.
The New Jersey Supreme Court further held that the charity care program is not an unconstitutional, regulatory taking of property without just compensation. Relying on the Penn Central test, the Court found that the first factor — the economic impact of the regulation — favored plaintiffs. However, it went on to find that the plaintiffs operate in a highly regulated industry that has a long practice of providing charitable care, and, thus, their “investment-backed expectations” are diminished, and the second Penn Central factor weighs against finding a taking. It also found that the third Penn Central factor — “the character of the governmental action” — strongly favored finding no unconstitutional “regulatory” taking in light of the “paramount public interest” it serves.
Finally, the New Jersey Supreme emphasized that hospitals are free to challenge their annual subsidy allocations through administrative channels and to lobby the legislature to make policy changes to address the concerns they raise. “Hospitals remain free to challenge their annual subsidy allocations through administrative channels and to lobby the Legislature to make policy changes that would address more broadly the concerns they raise,” Justice Fasciale wrote. “But the charity care program does not run afoul of the Takings Clause.”