Under a proposed state senate bill, hospitals wouldn’t be able to face eviction or lease termination without approval first from the New Jersey Department of Health (DOH). The bill was proposed by state Sen. Sandra Cunningham, who represents the 31st Legislative District that includes Bayonne and parts of Jersey City.
Cunningham first introduced the bill on Nov. 22. It has since cleared the Senate Health, Human Services, and Senior Citizens Committee on Dec. 6. The committee voted 5 to 3, along party lines, to advance the legislation.
Under the proposed legislation, the DOH would establish a process for landlords to submit requests to initiate adverse possessory actions, and will have the authority to approve requests upon finding that just cause exists.
The bill would prohibit landlords from initiating adverse possessory actions against an operator of a hospital, or a successor to the operator, without first obtaining written approval for the action from the DOH. Any eviction or lease termination initiated without the written approval of the DOH will be deemed invalid.
A landlord that initiates any such action against an operator or successor without DOH approval will be liable to a civil penalty of up to $1,000,000. The DOH will also suspend or revoke any license or permit granted by the DOH to the landlord due to violation of the act.
If action taken without DOH approval results in the loss of revenue to a hospital, the operator or successor would be entitled to financial recovery from the landlord to the extent necessary to place the hospital in as good a position, as determined by court-appointed arbitration.
A landlord that willfully violates the provisions of the bill that results in “the closure of a hospital or that interferes with the transition of the maintenance, supervision, or operation of a hospital from an operator to a successor as approved by the DOH” would be subject to criminal penalties imposed for disorderly persons offenses.
Battle over hospital operations
While not named in the proposed legislation, the bill intends to prevent CarePoint Health from being evicted from Bayonne Medical Center. The hospital sits within the 31st Legislative District and the landlord and property owner of the facility, Hudson Regional Hospital from Secaucus, is seeking to evict CarePoint for an alleged violation of its lease.
CarePoint Health has been selling its assets, including Bayonne Medical Center. In November of 2019, Avery Eisenreich, owner of nursing home operator Alaris Health, purchased the grounds and building of Bayonne Medical Center.
CarePoint has been searching for an operator for the hospital ever since, signing an agreement in 2020 with BMC Hospital LLC to operate Bayonne Medical Center. Meanwhile, Hudson Regional Hospital in Secaucus purchased the grounds and building of Bayonne Medical Center from Eisenreich for $76 million.
Since the sale has closed, Hudson Regional has made clear its intention to operate the hospital, not BMC Hospital LLC. This has sparked a war between the two entities over who will operate the hospital.
At this time in 2020, Hudson Regional told the DOH that CarePoint was in violation of its lease and issued them a termination letter. However, CarePoint is still operating the hospital.
Hudson Regional slams bill
In a statement, Hudson Regional slammed the proposed bill.
“Senate bill S4191 is nothing more than a government giveaway to CarePoint, which has pillaged the healthcare resources in the county; continually misrepresented itself; flip-flopped on its commitments; and is owned by a person who faces a 14-point Justice Department Investigation,” said spokesperson Ron Simoncini. “The bill offends all sense of equity and reason: in general terms, if this bill passes, no hospital tenant faces any consequence for a failure to pay rent under its lease; in specific terms, what is the benefit to the community from shifting to Hudson Regional Hospital, a private property owner, the costs of CarePoint’s failure to pay its rent all while CarePoint’s ownership continues to take out millions of dollars in management fees?”
According to Hudson Regional, this is another plot by CarePoint and BMC Hospital LLC to acquire the property of Bayonne Medical Center.
“In essence, CarePoint is once again attempting to use the authority of the government to forcefully take property that it doesn’t own,” Simoncini said. “The legislation is thus an end run around CarePoint’s failure to obtain the property through eminent domain and is subject to legal challenge. CarePoint has been nothing but trouble, its management has taken millions in management fees and now wants to abandon the hospital. What can CarePoint possibly have done for politicians to work so strenuously to bail it out of its lease defaults when its ownership is already making moves to walk away?”
CarePoint sings legislation’s praises
In response, CarePoint praised the legislation in a statement.
“We applaud the vision, leadership and deep understanding of healthcare issues that Sen. Sandra Cunningham has demonstrated by moving forward with this important bill,” said a spokesperson. “Community health care and the outcomes of our patients must always be the foremost priority, and it should never be compromised by outside real estate interests. Giving the Department of Health the responsibility to take this into consideration is in the best interest of our patients and the communities we serve.”
The bill is another new development in the hospital saga recently, after months of standstill at the Bayonne City Council regarding two ordinances that would condemn the Bayonne Medical Center property through eminent domain. Mayor James Davis supports the ordinances and thus CarePoint and BMC Hospital LLC.
However, the council has refused to vote on the ordinances, which appear doomed to fail due to City Council President Sharon Ashe-Nadrowski’s opposition and Second Ward City Councilman Sal Gullace’s abstention because he sits on the board at Bayonne Medical Center. On the other hand, the Local Finance Board is waiting for the city and county regarding moving forward the application.
Meanwhile, the DOH is holding a hearing on Dec. 14 at the Bayonne Public Library regarding a certificate of need application to transfer ownership of the operations of the hospital from CarePoint to BMC Hospital LLC. The next day, on Dec. 15, CarePoint is hosting a virtual town hall for Bayonne Medical Center.
CarePoint is transitioning from a for-profit system to a nonprofit, complicating the matter further. However, the increased involvement of state officials and entities may signal another turning point in the hospital saga.
For updates on this and other stories, check www.hudsonreporter.com and follow us on Twitter @hudson_reporter. Daniel Israel can be reached at firstname.lastname@example.org.