“No Taking in Treating the Indigent”: Englewood Hospital & Medical Center v. State Sets the Modern Boundary Between Public-Health Obligations and Property Rights

1. Introduction

On 16 July 2025 the Supreme Court of New Jersey handed down Englewood Hospital & Medical Center v. State, a unanimous opinion authored by Justice Fasciale that confronts a recurring friction point in American health-care finance: can a state require private and non-profit hospitals to medically treat indigent patients free of charge without triggering constitutional “takings” protections? Eight Disproportionate Share Hospitals (DSHs) argued that New Jersey’s charity-care framework—codified primarily in N.J.S.A. 26:2H-18.51 to ‑18.64 and companion regulations—commandeers their space, supplies and professional services, yet reimburses only pennies on the dollar. They sought “just compensation” under the Takings Clauses of both the Fifth Amendment and Article I, ¶20 of the New Jersey Constitution.

Rejecting those claims, the Court affirmed (with minor modification) the Appellate Division’s grant of summary judgment to the State. The justices hold that, under settled federal and state doctrine:

• Mandatory charity-care is neither a “per se” physical taking nor a compensable regulatory taking;
• The health-care industry’s pervasive regulation, the historic medical ethic of treating the poor, and a legislatively declared “paramount public interest” dilute any reasonable investment-backed expectations by hospital investors; and
• Hospitals’ remedy, if they believe subsidies are inadequate, lies in administrative appeals and the legislative process—not in the courts via the Takings Clause.

2. Summary of the Judgment

Applying the two-track takings taxonomy—(i) categorical “per se” takings and (ii) Penn Central regulatory takings—the Court systematically rejected each of the hospitals’ theories:

1. Supplies. Consumables (medications, bandages, implants) used while treating charity-care patients are not “physically appropriated” by the State; title never transfers, distinguishing Horne v. Department of Agriculture.
2. Services. Although professional services can constitute “property” (Madden v. Delran), the duty to serve indigent patients is a longstanding incident of the medical profession—akin to lawyers’ pro bono obligation upheld in State v. Rush.
3. Facilities. Charity-care does not confer a roaming public “right of access” akin to the easements condemned in Cedar Point Nursery or Nollan; hospitals are already open to the public, placing the case closer to PruneYard.
4. Regulatory-taking analysis. Under Penn Central:
   • Economic impact favors the hospitals;
   • Reasonable investment-backed expectations favor the State, given centuries-old charity tradition, pervasive regulation, EMTALA duties, IRS requirements and tax benefits;
   • The character of the action—promoting basic health care for the poor—“strongly” favors the State.
   The balance therefore tilts decisively against a taking.

3. Analysis

3.1 Precedents Cited and Their Influence

• Horne v. Department of Agriculture (2015) – illustrated true physical appropriation (raisin reserve) and provided the contrast for disposable medical supplies.
• Cedar Point Nursery v. Hassid (2021) – clarified that a state-created “right to take access” is a per se taking; distinguished because hospitals are already open to the public and no such easement is granted.
• Penn Central Transportation Co. v. New York City (1978) – the three-factor regulatory-taking test applied here.
• Lucas v. South Carolina Coastal Council (1992) – categorical regulatory takings that eliminate all economic use; clearly not implicated.
• State v. Rush (1966) & Madden v. Delran (1992) – New Jersey precedents on compelled professional services without compensation.
• PruneYard Shopping Ctr. v. Robins (1980) – government limitations on exclusionary rights of property open to the public.
• Lower-court and sister-circuit analogues: Franklin Memorial Hospital v. Harvey (1st Cir. 2009); United Wire v. Morristown Memorial Hospital (3d Cir. 1993).

Collectively, these cases show the Court’s method: locate the charity-care mandate along a spectrum from absolute confiscation (compensable) to ordinary social regulation (non-compensable).

3.2 The Court’s Legal Reasoning

a) Categorical (“per se”) takings rejected.

• Physical appropriation. No mandated transfer of title or segregated set-aside of property.
• Permanent physical occupation. No forced easement or right of public entry.

b) Regulatory-taking inquiry under Penn Central.

1. Economic impact. Evidence showed reimbursement sometimes as low as 1%, but economic harm alone is insufficient.
2. Reasonable investment-backed expectations. Expectations diminished by:
   • Longstanding medical ethic (AMA 1847 Code) of free care;
   • Existing federal EMTALA duties;
   • State CN requirements tying licensure to serving underserved populations;
   • Substantial tax exemptions/deductions for non-profit and for-profit hospitals.
3. Character of governmental action. Charity-care is an archetypal police-power measure directed at public health—“paramount public interest.”

Balancing the factors, the majority found that the societal benefits decisively outweigh private loss, and thus the regulation does not go “too far.”

3.3 Practical & Doctrinal Impact

• Takings jurisprudence. Reinforces the high threshold for characterizing social-welfare mandates as compensable takings, especially in heavily regulated sectors.
• Health-care finance. Shields state charity-care and similar uncompensated-care schemes from constitutional attack, at least where some subsidy mechanism exists.
• Hospital strategy. Redirects hospitals toward administrative appeals and political lobbying for higher subsidies rather than litigation.
• Cross-sector guidance. Offers a blueprint for other regulated professions (e.g., legal, energy, housing) on when compelled service obligations do not cross the takings line.

4. Complex Concepts Simplified

• Per se (Categorical) Taking. A governmental action so intrusive (e.g., confiscation of raisins, permanent easement) that compensation is automatically required.
• Regulatory Taking. A law that limits how you use your property. Compensable only when it either destroys all economic value or, under Penn Central, imposes an unfair burden considering economic impact, expectations, and public character.
• Penn Central Test. Three-factor balancing: (1) economic impact, (2) investment expectations, (3) character of action.
• DSH (Disproportionate Share Hospital). A hospital that treats an unusually high percentage of low-income patients, qualifying for dedicated subsidies.
• Charity-Care Program. NJ statutory system requiring hospitals to treat patients unable to pay and barring billing those who qualify; partial reimbursement flows from the Health Care Subsidy Fund.
• EMTALA. Federal law mandating emergency stabilization for anyone, regardless of ability to pay, as a condition of Medicare participation.

5. Conclusion

Englewood Hospital cements a clear principle: when a state requires hospitals to treat indigent patients and offers a—however imperfect—subsidy mechanism, it does not cross the constitutional line into an uncompensated taking. By anchoring its analysis in longstanding medical obligations, deep regulatory saturation, and the vital public interest in universal emergency care, the Court affirms the resilience of police-power health regulations against property-rights challenges.

For hospitals, the decision signals that relief from under-funded charity-care obligations is a matter of politics and administration, not the Takings Clause. For lawyers, it offers a contemporary roadmap for litigating (or defending) takings claims where mandated services intersect with heavily regulated industries. And for the public, it preserves a statutory safety net ensuring that inability to pay remains no bar to lifesaving treatment in New Jersey.