LEGISLATIVE FISCAL ESTIMATE
[Third Reprint]
ASSEMBLY, No. 3974
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: MARCH 25, 2025
SUMMARY
|
Synopsis: |
Prohibits use of deceptive marketing practices by substance use disorder treatment providers. |
|
Type of Impact: |
Annual increase in State and local expenditures and revenues. |
|
Agencies Affected: |
Department of Health, Department of Community Affairs, the Judiciary, and certain municipalities. |
|
Office of Legislative Services Estimate |
||
|
Fiscal Impact |
Annual |
|
|
State Expenditure Increase |
Minimum $500,000 |
|
|
State Revenue Increase |
Indeterminate |
|
|
Local Expenditure Increase |
Indeterminate |
|
|
Local Revenue Increase |
Indeterminate |
|
|
|
|
|
· The Office of Legislative Services (OLS) concludes, based on information provided by the Office of Management and Budget as part of the FY 2025 Budget process, that Department of Health expenditures will increase by $500,000 annually for the Office of Facility Licensing to hire additional staff to investigate violations, suspend or revoke the licenses or certificates of substance use disorder treatment providers who violate the bill’s provisions, and impose civil penalties against such violators.
· The Department of Community Affairs will realize an indeterminate increase in annual costs to hire the additional staff necessary to investigate violations of the bill’s provisions by recovery residence owners and operators, suspend or revoke the licenses or certificates of any violators, and impose civil penalties against such violators. Because the State has an unknown number of unlicensed recovery residences, in addition to those recovery residences licensed by the department, the OLS cannot anticipate the additional staff that would be required.
· The bill could increase State costs to the Judiciary and to certain municipalities to hear additional cases related to violations of the bill’s provisions.
· The OLS cannot quantify the potential revenue increases under the bill because the annual number of treatment providers who will violate the bill’s provisions cannot be anticipated.
BILL DESCRIPTION
The bill prohibits the use of deceptive marketing practices by substance use disorder treatment providers who are licensed or certified by the Department of Health to provide inpatient or outpatient substance use disorder treatment, or by a recovery residence. A recovery residence is a boarding house licensed by the Department of Community Affairs that provides substance-free living accommodations for individuals with substance use disorders, or co-occurring mental health and substance use disorders, but does not provide clinical treatment services.
A treatment provider or a recovery residence that violates the bill’s provisions will be liable for a maximum civil penalty of $20,000 for each violation. A person who suffers any injury or damages as a result of the misleading or deceptive marketing or advertising methods or practices declared unlawful under the bill may bring an action or assert a counterclaim in a court of competent jurisdiction. In addition to appropriate legal or equitable relief, the court will award threefold the damages sustained by any person in interest and award reasonable attorney fees, filing fees, and reasonable costs of suit.
The Department of Health may investigate treatment providers, while the Department of Community Affairs may investigate recovery residences, for alleged violations of this bill. Upon finding a violation, the departments may suspend or revoke the license or certification of the treatment provider or recovery residence or may impose a civil penalty against the treatment provider or recovery residence. If the either department imposes a civil penalty, the civil penalty will be not more than $20,000 for each violation.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes, based on information provided by the Office of Management and Budget as part of the FY 2025 Budget process, that Department of Health expenditures will increase by $500,000 annually for the Office of Facility Licensing to hire additional staff to investigate violations, suspend or revoke the licenses or certificates of substance use disorder treatment providers who violate the bill’s provisions, and impose civil penalties against such violators.
The Department of Community Affairs would realize an indeterminate increase in annual costs to hire the additional staff necessary to investigate alleged violations of the bill’s provisions by recovery residence owners and operators, suspend or revoke the licenses or certificates of any violators, and impose civil penalties against such violators. The FY 2026 Governor’s Budget indicates that there are an estimated 4,441 permanent boarding home licenses in the State. According to a 2024 New Jersey State Commission of Investigation report, there are approximately 210 licensed cooperative sober living residences, which are also known as recovery residences, in the State. However, there is also an unknown number of unlicensed recovery residences in the State that would be subject to the requirements under the bill. As such, the OLS cannot anticipate the number of additional department staff that would be required.
Additionally, the Judiciary and municipal courts could incur indeterminate annual costs to hear additional cases brought for treatment providers or recovery residences that violate the provisions of the bill. Additional annual revenues could accrue to the State and municipalities from the collection of civil penalties and court fees. The OLS, however, cannot quantify the potential revenue increases under the bill because the number of providers and recovery residences that will violate the bill’s provisions each year cannot be anticipated.
Under current law, the Department of Health licenses substance use disorder treatment providers for a two year period, as long as the provider continues to meet the departmental standards concerning patient health and safety, accurate representation of the treatment services available to patients, and the payment of licensure fees. If a treatment provider fails to meet or maintain these standards, the Department of Health, after holding a hearing, may refuse to grant, restrict, suspend, or revoke the license of a treatment provider. Prior to issuing or renewing a treatment provider’s license, department staff are required to first inspect the provider’s facility, and may examine the providers’ financial accounts and records, as necessary.
The Department of Community Affairs is responsible for inspecting and licensing recovery residences, which licensures are valid for one year. Under current law, the department is required to inspect a recovery residence and the facility’s records at least once per year, and post the resultant inspection report to its website.
|
Section: |
Human Services |
|
Analyst: |
Senior Fiscal Analyst |
|
Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).