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‘Nonprofit’ hospitals as ‘legal fictions’


New Jersey Tax Court Judge Vito Bianco’s 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.

Indeed, we at Cambridge Management Group guess  that it might have national implications.

Judge  Bianco ruled June 26 that the medical center didn’t run as nonprofit for three years beginning in 2006. The ruling could cost the hospital  $2.5 million to  $3 million per tax year. reported that the New Jersey Hospital Association said that 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.”

The news service said that Judge Bianco said it was time for the state 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. reported that state Sen. Joseph Vitale, chairman of the Senate Health Committee, said he has  requested a bill to be drafted to clarify the tax-status of “nonprofit” hospitals.

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