Off-campus healthcare services not tax exempt, court rules

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In a decision that could call into question the tax exempt status of some services offered by long-term care providers, a New Jersey appeals court ruled that a tax-exempt hospital must pay back taxes for services located at a remote facility.

Applying what some legal experts are calling a new standard, the New Jersey Superior Court, Appellate Division, said some of Hunterdon Medical Center's off-campus services are not property tax exempt because they do not "integrate medically" nor receive direct supervision from hospital staff. Specifically, the ruling applies to a physical therapy service, pediatric practice and wellness center located in a remote building.

In making its decision, the court examined what percentage of the facility hospital patients used compared to members of the general public. The court found that the general public, and not hospital patients, used most of the facility.