Terry Kuchera v. Jersey Shore Family Health Center
(A-60-13; 073483)
The site of plaintiff’s fall was part of a nonprofit
health care corporation organized exclusively for
hospital purposes. Defendants, therefore, are not
entitled to absolute immunity, but rather are entitled
to the limitation of damages afforded to nonprofit
institutions organized exclusively for hospital
purposes. 3-31-15
In this appeal concerning a premises liability action, the Court addresses whether a health care facility is entitled to charitable immunity pursuant to N.J.S.A. 2A:53A-7, or the limited liability afforded to nonprofit entities organized exclusively for hospital purposes pursuant to N.J.S.A. 2A:53A-8.
On Saturday, March 7, 2009, plaintiff attended a free eye screening conducted by the New Jersey Commission for the Blind and Visually Impaired (Commission) at the Jersey Shore Family Health Center (Family Health Center). After registering for her screening, plaintiff slipped and fell on the tile floor. As a result, plaintiff allegedly sustained injuries, including a torn ligament in her ankle, and herniated and bulging discs in her back.
The Family Health Center is a nonprofit charitable clinic in the Meridian Health hospitals system. It is located in Neptune in a separate building next to the Jersey Shore University Medical Center (Medical Center). The Family Health Center provides medical care for those “who are uninsured, underinsured, without a primary care physician and/or who lack access to regular medical care.” The Medical Center, a 600-bed hospital, is one of six hospitals that comprise the Meridian Health system. The Medical Center provides a spectrum of specialized care including cardiac, oncology, behavioral health, and pediatrics, and conducts several residency programs. Meridian Health and its constituent hospitals were organized as a nonprofit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code. Meridian Health was organized, generally, to operate hospitals and health care facilities, to promote or carry on educational and research activities, to render necessary health care regardless of the patient’s ability to pay, and to promote and protect the health and welfare of the general public.
Plaintiff filed a complaint against the Family Health Center, the Medical Center, Meridian Health, and Modern Health Realty, the record owner of the property (collectively the Meridian Health defendants), seeking compensatory damages for her injuries. An initial motion for summary judgment was denied, but, on the day of trial, the Meridian Health defendants renewed their motion, and the trial judge conducted a hearing focused on the Medical Center’s status. Noting that the central issue was whether the entity is organized exclusively for hospital purposes or for religious, educational, and/or hospital purposes, the court determined that the Medical Center has a hybrid purpose that includes educational and charitable services as well as the operation of a hospital. The court, therefore, concluded that the Meridian Health defendants are entitled to the absolute immunity conferred on certain charitable organizations by N.J.S.A. 2A:53A-7, and dismissed plaintiff’s complaint with prejudice.
The Appellate Division affirmed in an unpublished decision. The panel accepted the hybrid purpose analysis, concluding that “in addition to maintaining a hospital, defendants also provide the beneficial services listed in [N.J.S.A. 2A:53A-7] and are, therefore, not engaged solely in hospital functions to the exclusion of educational and charitable purposes.” The Court granted plaintiff’s petition for certification. 217 N.J. 287 (2014).
HELD: The site of plaintiff’s fall was part of a nonprofit health care corporation organized exclusively for hospital purposes. Defendants, therefore, are not entitled to absolute immunity, but rather are entitled to the limitation of damages afforded to nonprofit institutions organized exclusively for hospital purposes.
1. The Charitable Immunity Act, N.J.S.A. 2A:53A-7 to -11 (CIA or the Act), provides immunity for certain charitable institutions. However, the Legislature’s codification of charitable immunity was not universal: certain personnel were not immune from liability for negligence, and nonprofit hospitals were granted a cap on damages from liability for negligence rather than immunity. N.J.S.A. 2A:53A-7 to -13.1. (pp. 9-10).
2. To emphasize the distinction between certain entities, the CIA addressed nonprofits organized exclusively for charitable, religious, or educational purposes, and those organized for hospital purposes in separate sections. N.J.S.A. 2A:53A-7 and -8. The most prominent distinction between nonprofit entities organized exclusively for charitable, religious, or educational purposes and nonprofits organized exclusively for hospital purposes is that the former are immune from liability, N.J.S.A. 2A:53A-7(a), while the latter are subject to liability for negligence, albeit with a cap on its damages, N.J.S.A. 2A:53A-8. The immunity bestowed by the CIA extends to the buildings and other facilities actually used for the purposes of the qualifying organization, such as a hospital. N.J.S.A. 2A:53A-9. Further, N.J.S.A. 2A:53A-10 instructs that the CIA is remedial legislation and should be liberally construed so as to further the legislative purpose of immunity. (pp. 11-12)
3. By the plain language of N.J.S.A. 2A:53A-7 and -8, a hospital is subject to limited liability under section 8 if it is formed as a nonprofit corporation, society, or association, is organized exclusively for hospital purposes, was promoting those objectives and purposes at the time the plaintiff was injured, and the plaintiff was a beneficiary of the activities of the hospital. Thus, this appeal is confined to the issue of whether the free eye screening conducted at the Family Health Center can be considered a hospital purpose. (pp. 13-14)
4. Few cases have addressed the phrase “organized exclusively for hospital purposes” in the context of the CIA. To begin, the term “exclusively” used in sections 7 and 8 of the CIA has been interpreted as meaning single or sole. Recently, the Court discussed the meaning of the phrase “organized exclusively for hospital purposes” in the context of considering whether an offsite facility owned and operated by a nonprofit hospital was exempt from local property taxation. Hunterdon Med. Ctr. v. Twp. of Readington, 195 N.J. 549 (2008). There the Court stated that “the core aspects of a hospital’s purposes are to address the needs of all of the types of patients that a hospital is expected to serve,” and further held that the site of the delivery of the service does not detract from its inclusion as a hospital purpose. Id. at 572. Thus, as recognized by the courts of this State and courts around the country, the modern hospital is a place where members of the community not only seek emergency services but also preventative services, therapy, educational programs, and counseling, and the conception of “hospital purposes” must expand to reflect the many health-related pursuits of the modern hospital. Accordingly, to advance the legislative mandate that the CIA be liberally construed to effectuate its purpose, the Court focuses on the many medical pursuits of a modern New Jersey hospital. (pp. 14-18)
5. Whether a nonprofit entity, whose certificate of incorporation and by-laws provide that it is organized exclusively for charitable, religious, educational, or hospital purposes, actually conducts its affairs consistent with its stated purpose often requires a fact-sensitive inquiry. After reviewing the principles applicable to a modern hospital, the Court concludes that the Meridian Health defendants, and specifically the Medical Center and its Family Health Center, are governed by the more specific expressions of legislative intent regarding hospitals articulated in N.J.S.A. 2A:53A-8. Thus, the Meridian Health defendants are subject to liability for negligence applicable to nonprofit corporations, associations, and societies organized exclusively for hospital purposes with any damage award capped at $250,000. The Appellate Division’s judgment to the contrary – specifically that the Meridian Health defendants were immune from liability pursuant to N.J.S.A. 2A:53A-7 – utilized a restrictive concept of a hospital that did not account for the multi-function nature of the modern hospital and its role in the provision of health care in this society. (pp. 19-23)
The judgment of the Appellate Division is REVERSED, and the matter is REMANDED to the trial court for further proceedings consistent with this opinion.
CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON, FERNANDEZ-VINA and SOLOMON join in JUDGE CUFF’s opinion.
