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Four New Jersey municipalities, a deputy tax assessor and a handful of individual taxpayers have filed a lawsuit seeking to overturn a recently-enacted law. The law grants hospitals a tax exemption in exchange for a direct per-bed payment to the municipality. This exemption is in lieu of traditional property taxes.

The case was filed in Mercer County Superior Court. However, Mala Sundar, Presiding Judge of the Tax Court, was temporarily transferred to the Superior Court. Understandably, the court desires expertise in taxation in this case. Thus, it triggered the Tax Court’s limited jurisdiction. The parties have filed cross-motions for summary judgment, with a hearing scheduled for mid-November.

The Issue

The plaintiffs’ primary argument is that the

In a recent unpublished opinion, the Appellate Division of the New Jersey Superior Court affirmed the dismissal of a complaint seeking leave to impose omitted assessments on Riverview Medical Center, now owned by Meridian Health Corporation, in Red Bank, New Jersey. This unusual situation grows out of a 2015 Tax Court decision entitled AHS Hospital Corp v. Town of Morristown. In that case, an exempt hospital had its exemption revoked due to an alleged change in use and lost its challenge to the assessments imposed by the municipality thereafter. 

In this case, the municipality filed petitions at the county board of taxation, and later at the Tax Court, seeking to impose omitted assessments for 2014 and 2015. Notably, the petitions were filed after