The New Jersey Supreme Court both clarified and broadened the understanding of the term “hospital purposes” under the Charitable Immunity Act (CIA) in its recent decision in Smith v. Newark Community Health Center. In Smith, a nonprofit federally funded community health organization providing primary care services to the uninsured and underinsured claimed complete charitable immunity under the CIA in a civil action for negligence filed by a patient of the facility.
The Court announced that a nonprofit entity need not be owned, operated, or licensed like a traditional hospital to be treated like an entity “organized exclusively for hospital purposes” under the CIA. The question is whether a nonprofit entity provides healthcare-related services to its beneficiaries —not whether it is actually structured like a traditional hospital. The Court explained that nonprofit entities whose “core mission” or “dominant motive” is to provide healthcare services fall within the “hospital purposes” category under the CIA, and they are not entitled to the complete charitable immunity afforded to entities organized for religious, educational or charitable purposes. Instead, the liability for such entities is limited by the CIA’s damages cap of $250,000.
This decision follows after Kuchera v. Jersey Shore Family Health Center, the 2015 decision where the Court determined preventative screenings, community health educational and outreach programs, charity care for the underinsured and uninsured, rehabilitation programs, outpatient care, counseling, and medical education and residency trainings to be functional “hospital purposes” important to the mission of today’s modern hospitals. Smith expands on the analysis in Kuchera to assign nonprofit entities that are not actually hospitals but operate in the healthcare space to their proper category under the CIA.
For nonprofit healthcare providers, Smith instructs trial courts to look past corporate labels, certificates of incorporation, and even mission statements to focus on the entity’s core or dominant purpose. Nonprofit healthcare providers should expect closer scrutiny of whether an organization’s core purpose is cognizable as religious, charitable or educational, or whether it is better understood as an entity that provides services for “hospital purposes” under the Court’s interpretation of the CIA, thereby excluding it from full immunity under the Act.
The author thanks Bressler Summer Law Clerk, Seena Kesht, for her contributions to this article.
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