IN THE MATTER OF ST.MARY GENERAL HOSPITAL SFY 2016 CHARITY CARE SUBSIDY APPEAL(NEW JERSEY DEPARTMENT OF HEALTH)

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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1666-15T2
IN THE MATTER OF
ST. MARY'S GENERAL HOSPITAL
SFY 2016 CHARITY CARE SUBSIDY APPEAL.
Argued May 16, 2017 – Decided June 9, 2017
Before Judges Reisner and Mayer.
On appeal from the New Jersey Department of
Health.
Steven D. Gorelick argued the cause for
appellant St. Mary's General Hospital
(Garfunkel Wild, P.C., attorneys; Marc A.
Sittenrich and Mr. Gorelick, of counsel and
on the briefs).
Francesco Ferrantelli, Jr., Deputy Attorney
General, argued the cause for respondent
Department of Health (Christopher S. Porrino,
Attorney General, attorney; Melissa H. Raksa,
Assistant Attorney General, of counsel; Mr.
Ferrantelli, on the brief).
PER CURIAM
Appellant St. Mary's General Hospital (Hospital) appeals from
a final agency decision of the New Jersey Department of Health
(Department) denying the Hospital's administrative appeal of the
Department's State Fiscal Year (SFY) 2016 charity care subsidy
allocation. We affirm.
The Hospital alleged that the Department's determination of
its charity care subsidy for SFY 2016 failed to use "the most
recent census data" as required by statute. N.J.S.A. 26:2H-
18.59i(b)(3).1 Specifically, the Hospital challenged the
Department's use of the 2000 United States decennial census to
calculate the SFY 2016 charity care subsidy. According to the
Hospital, using the 2000 decennial census data rather than "the
most recent census data," deprived the Hospital of additional
1
This section provides:
b. Beginning July 1, 2004 and each year
thereafter, the charity care subsidy shall be
determined according to the following
methodology:
. . .
(3) Notwithstanding the provisions of
paragraph (2) of this subsection to the
contrary, each of the hospitals located in the
10 municipalities in the State with the lowest
median annual household income according to
the most recent census data, shall be ranked
from the hospital with the highest hospital-
specific reimbursed documented charity care to
the hospital with the lowest hospital-specific
reimbursed documented charity care. The
hospital in each of the 10 municipalities, if
any, with the highest documented hospital-
specific charity care shall receive a charity
care payment equal to 96% of its hospital-
specific reimbursed documented charity care.
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charity care subsidies accorded to the ten municipalities in New
Jersey with the lowest median annual household income. N.J.S.A.
26:2H-18.59i(b)(3).
The New Jersey Health Care Cost Reduction Act (Act), N.J.S.A.
26:2H-18.51 to -18.69, established a Health Care Subsidy Fund,
from which charity care subsidies are disbursed. N.J.S.A. 26:2H-
18.58. Each year, the Legislature appropriates an amount for
charity care subsidies. The Department then determines the subsidy
that each eligible hospital will receive, using a formula
prescribed by law. N.J.S.A. 26:2H-18.59i. However, in some fiscal
years, the Legislature issues the Department additional
instructions in the Appropriations Act.
In the 2016 Appropriations Act, the Legislature instructed
the Department to use the "source data for the most recent census
data as used in the State fiscal year 2015" to calculated the SFY
2016 charity care subsidy. See L. 2015, c. 63, p. 88, approved
June 26, 2015. Accordingly, in SFY 2016, the Department used the
same data used to calculate the SFY 2015 charity care subsidy
allocations. Applying the formula, the Department determined that
the City of Passaic, where the Hospital is located, was not among
the ten municipalities with the lowest incomes. The Department
allocated approximately $4.4 million to the Hospital for its SFY
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2016 charity care subsidy. The Hospital pursued an administrative
appeal, as permitted by N.J.A.C. 10:52-13.4(a).
In its administrative appeal, the Hospital asserted that the
Department failed to use "the most recent census data" in the form
of the 2010 five-year American Community Survey (ACS) census
report. The Hospital argued it was deprived its proper charity
care subsidy allocation for SFY 2016 as a result.
In its November 6, 2015 decision denying the appeal, the
Department reasoned that its use of the 2000 decennial census data
was proper because N.J.S.A. 26:2H-18.59i(b)(3) must be read
together with the Appropriations Act to effectuate legislative
intent in calculating the SFY 2016 charity care subsidies.
According to the Department, "the Appropriations Act modified the
provisions of N.J.S.A. 26:2H-18.59i(b)(3)" in defining the term
"most recent census data." The Appropriations Act provides:
Notwithstanding the provisions of section 3
of P.L. 2004, c. 113 (C.26:2H-18.59i) or any
law or regulation to the contrary, the
appropriation for Health Care Subsidy Fund
Payments is subject to the following
condition: the distribution of Charity Care
funding shall be calculated using source data
for the most recent census data as used in
State fiscal year 2015.
[L. 2015, c. 63, p. 88, approved June 26,
2015.]
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In accordance with the above provision, the Department used the
same data used in SFY 2015 to calculate the SFY 2016 charity care
allocations.2
On this appeal, the Hospital once again alleges that the
Department failed to use annual household income data collected
and reported by the United States Census Bureau (Bureau) through
the ACS. The Hospital contends that, by using the 2000 census
data, the Department deprived it of an enhanced charity care
subsidy for SFY 2016 resulting in a loss of $1.4 million.
A brief review of the Appropriations Act addressing the
calculation of charity care subsidies is instructive. For SFY
2015, the Legislature changed the formula for calculating charity
care subsidies. The changed formula eliminated enhanced charity
care subsidies for hospitals in the State's lowest income
municipalities but still relied on census data from calendar years
2010 through 2014. See L. 2014, c. 14.
In SFY 2016, the Legislature returned to the original formula
for calculating charity care subsidies. However, the Legislature
specified that the SFY 2016 calculation was subject to a specific
condition. That condition required "the distribution of Charity
2
While census data was not used to calculate charity care in SFY
2015, the Department used historical information from the 2000
census data to calculate charity care subsidies from SFY 2010
through SFY 2015.
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Care funding . . . be calculated using source data for the most
recent census data as used in State fiscal year 2015." L. 2015,
c. 63, p. 88, approved June 26, 2015.
The Hospital contends that the Department should have used
the ACS data as the "most recent census data" for calculating SFY
2016 charity care subsidies. According to the Hospital, if the
Department used the ACS five-year estimates for 2010 in allocating
the 2016 SFY charity care subsidies, Passaic would have ranked
seventh poorest in the State, based upon median annual household
income, and would have received an enhanced charity care subsidy.
Our review of appeals from administrative agency
determinations is limited to three inquires:
(1) whether the agency's action violates
express or implied legislative policies, that
is, did the agency follow the law; (2) whether
the record contains substantial evidence to
support the findings on which the agency based
its action; and (3) whether in applying the
legislative policies to the facts, the agency
clearly erred in reaching a conclusion that
could not reasonably have been made on a
showing of the relevant factors.
[In re Herrmann, 192 N.J. 19, 28 (2007)
(quoting Mazza v. Bd. of Trustees, 143 N.J.
22, 25 (1995)).]
If the three inquiries are met, the agency decision is not
arbitrary, capricious or unreasonable and we "owe substantial
deference to the agency's expertise and superior knowledge of a
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particular field." Ibid. (citations omitted). The strong
presumption accorded to an agency's action is "even greater" when
the challenged action involves "specialized and technical matters"
within an agency's expertise. Ibid. We also owe some deference
to an agency's reasonable interpretation of its enabling statues.
See New Jersey Tpk. Authority v. AFSCME Council 73, 150 N.J., 331,
351 (1997).
The Department correctly calculated the SFY 2016 charity care
subsidies using "the most recent census data as used in State
fiscal year 2015." Contrary to the Hospital's argument, while the
Department did not calculate an enhanced charity care subsidy in
SFY 2015, the charity care subsidies that it calculated for that
year incorporated the past years' charity care allocations (SFY
2010, SFY 2011, SFY 2012, SFY 2013, SFY 2014) which were based,
in part, on the 2000 decennial census data. The Department
complied with the language of the SFY 2016 Appropriations Act by
using the 2000 decennial census data as the most recent census
data. The Department historically relied upon the 2000 decennial
census data to calculate charity care subsidies and did so for SFY
2010 through SFY 2015. The Legislature intended that the
Department continue to use that data for calculating the SFY 2016
charity care subsidies according to the express language of the
statute. See Finkel v. Twp. Comm. of Twp. of Hopewell, 434 N.J.
7 A-1666-15T2
Super. 303, 319 (App. Div. 2013)(reviewing court should give effect
to every word of a statute rather than render a part of the statute
superfluous); see also In re Attorney General's "Directive on Exit
Polling: Media & Non-Partisan Public Interest Groups", 200 N.J.
283, 297-98 (2009)(citation omitted)(reviewing court "must presume
that every word in a statute has meaning and is not mere surplusage
and . . . must give those words effect and not render them a
nullity.").
The Hospital argues that the Department and the Legislature
now use the ACS five-year estimate as the "most recent census
data" for calculating charity care subsidies. However, that
argument is based on an Appropriations Act adopted in 2016, in
which the Legislature required use of the 2013 ACS five-year
estimate to calculate the SFY 2017 charity care subsidy. We agree
with the Department that the agency is not free to select any ACS
five-year estimate for its charity care subsidy calculation.
Rather, the Department must follow the Legislature's direction as
to the use of a specific ACS five-year estimate. In this case,
the Legislature instructed the Department to use the 2013 ACS
five-year estimate to calculate the SFY 2017 charity care
subsidies. See L. 2016, c. 10, p. 92. It did not issue a similar
instruction for the SFY 2016 subsidy.
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The Hospital presents a policy argument that the use of
outdated census data unfairly limits charity care subsidies to
hospitals in the municipalities with the lowest incomes,
precluding residents in those municipalities from receiving access
to free or discounted hospital care. However, the Legislature
implements policy through its passage of statutes. As a court,
we cannot make legislative policy. See Gately v. Hamilton Memorial
Home, Inc., 442 N.J. Super. 542, 559 (App. Div. 2015)("we defer
to the democratic authority of the Legislature, as well as the
administrative expertise of the [Department], to consider the
wisdom of amending the statutes and regulations . . . .") See
also Lourdes Medical Center of Burlington County v. Bd. of Review,
197 N.J. 339, 366 (2009)("We cannot interfere with the policy
choices made by the Legislature. If the Legislature wishes to
enact a different standard . . . it is free to do so.")(citation
omitted).
We are required to interpret legislative intent from the
unambiguous language of the statute. DiProspero v. Penn, 183 N.J.
477, 492 (2005). In 2016, the Department was required to apply
the most recent census data containing median annual household
income to calculate charity care subsidies as was used to calculate
the SFY 2015 charity care subsidies. Because the Department used
2000 decennial census data for calculating SFY 2010, SFY 2011, SFY
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2012, SFY 2013 and SFY 2014 charity care subsidies, the Department
used that historical data to calculate SFY 2015 charity care
subsidies. Since it used 2000 decennial census data historically
to calculate charity care for SFY 2010 through SFY 2015, the
Department properly used the 2000 census data to calculate the SFY
2016 charity care subsidies.
The Hospital contends it was "legislative oversight" to refer
to "the most recent census data as used in State fiscal year 2015"
for calculation of the SFY 2016 charity care subsidies. We cannot
agree. The Legislature clearly expressed its intent to return to
the previous formula for calculating charity care subsidies, and
specifically conditioned the return to that formula on "recent
census data as used in State fiscal year 2015."
In light of the foregoing, the Department's determination was
not arbitrary, capricious or unreasonable, because it was based
on a reasonable interpretation of its enabling legislation.
Affirmed.
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