New Jersey hospital's tax ruling could have ripple effect

The ruling that the Morristown (N.J.) Medical Center failed to operate as a nonprofit organization could have implications on other New Jersey hospitals, according to a report.

New Jersey Tax Court Judge Vito Bianco ruled June 26 that the medical center did not operate as a nonprofit for three years beginning in 2006. The ruling could cost the hospital between $2.5 million and $3 million per tax year.

Other nonprofit hospitals in the area are monitoring the situation as well. According to the president of the New Jersey Hospital Association, the Morristown decision "will have repercussions beyond one hospital. The implications of this decision will be the topic of much further discussion and perhaps will need a legislative solution."

Judge Bianco believes that solution is coming soon. He said it was time for the Legislature to set a new standard for exemption. "For the purposes of the property tax exemption, modern nonprofit hospitals are essentially legal fictions," he wrote. He believes the case will likely be appealed.

New Jersey State Senator Joseph Vitale, chairman of the Senate health committee, said he has already requested a bill to be drafted to clarify the tax-status of nonprofit hospitals.

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