ASSEMBLY HEALTH INFRASTRUCTURE COMMITTEE

STATEMENT TO

ASSEMBLY, No. 5185

STATE OF NEW JERSEY

DATED:  JUNE 15, 2026

      The Assembly Health Infrastructure Committee reports favorably Assembly Bill No. 5185.

      This bill revises the regulation of health care facilities.

      The bill permits the Commissioner of Health (commissioner) to debar health care facilities or individuals from receiving a certificate of need.  Under the bill, the commissioner is to be permitted to debar a health care facility or any individual in the ownership structure of a health care facility that is licensed under the "Health Care Facilities Planning Act"(act) from eligibility for a certificate of need after a determination that the health care facility has substantial prior or continuing violations of the act or certificate of need requirements.    In each case, the decision to debar is to be made at the discretion of the commissioner of who may consider certain factors as material in each decision to debar as outlined under the bill.  Under the bill, if the commissioner debars a health care facility or individual, the health care facility or individual is to be furnished with a written notice stating that:  debarment has been imposed, the date on which debarment becomes effective, and the reasons therefor; and if the health care facility or individual chooses to appeal the debarment, the health care facility or individual is to submit the appeal to the Department of Health (department).  If the commissioner receives a request for appeal of debarment, the commissioner is to refer the matter to the Office of Administrative Law for adjudication.  If a hospital is debarred, the license of any other associated health care facility within the hospital’s health system would be made provisional, pending the competition of a financial audit and the implementation of a comprehensive improvement plan.

      This bill increases various penalties imposed by the department for certain health care facilities.  Under the bill, various penalties imposed by the department are to increase to $12,500 for the first offense and $25,000 for subsequent offenses.  The bill provides that the department is to by regulation increase the penalties as authorized by the bill.  However, an increase in such penalties is not to exceed the cumulative annual percentage increase in the Consumer Price Index for the five fiscal years prior to the date of the proposed penalty increase.

      Certain provisions of the bill are applicable to the regulation of hospitals.  The bill prohibits the department from issuing a certificate of need for the construction or expansion of a hospital if the proposed site of the hospital will be leased from a health care real estate investment trust (REIT).  The bill provides an exemption for existing facilities that lease property from a health care REIT, and allows the commissioner to waive the prohibition for satellite facilities that provide outpatient services.

      This bill provides for the receivership and imposition of enforcement remedies of hospitals under certain circumstances.

      The bill revises current law to provide that the commissioner may seek certain injunctive relief in order to compel compliance with certain provisions of current law.

      The bill establishes certain requirements for hospitals to complete a financial audit and implement a comprehensive improvement plan approved by the department if the hospital violates certain reporting requirements provided by current law.

      The bill provides that if a hospital that receives a subsidy payment closes before June 30 of a given calendar year, the hospital will be required to reimburse the State for a certain portion of the subsidy payment.  If the hospital fails to reimburse the State, the State may elect to apply an offset to Medicaid payments to other hospitals within the same hospital system as applicable.

      Under the bill, the department will identify hospitals that may: be in acute financial distress or at risk of filing for bankruptcy protection; have a condition or conditions in substantial violation of the standards of health, safety, or patient care established under federal or State law or regulations; or have a pattern and practice of habitual violations of the standards of health, safety, or patient care established under federal or State law or regulations.

      If the department identifies any of these conditions by filing a complaint pursuant to the bill, the department may:

      (1) provide, at the hospital’s expense, or direct such hospital to management support services and resources, as well as any other supports as may be necessary and appropriate to avoid bankruptcy proceedings or cessation of operations;

      (2) initiate proceedings in a court of competent jurisdiction for the appointment of a receiver for the hospital; and

      (3) take such other steps and actions as may be available to ensure continuity of care for, and the safety of, patients of the hospital.

      The bill outlines the powers and authorities provided to a receiver appointed pursuant to the bill.