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January 08, 2015

N.J. Town's Case Targets Nonprofit Hospital's Tax Break

A long-running court case challenging a Morristown, N.J., hospital's property-tax exemption could have multimillion-dollar implications for nonprofit medical centers across the state, writes NJ Spotlight. Town officials argue that by relying on for-profit doctors' practices and charging steep fees for treatment, the Morristown Medical Center is no longer operating as a nonprofit.

The case stems from a 2008 decision by Morristown's assessor to deny the hospital's tax break on the grounds of high executive pay, but state Tax Court Judge Vito Bianco is being asked to rule on different issues. The medical center argues that it has little control over what it is paid for its services and that its business practices are common to the industry.

"If we lose, then all hospitals in the state lose, because we all operate in the same way," said Kenneth J. Norcross, the institution's lawyer. The judge is expected to rule after the two sides file a series of legal briefs and replies in late January and early February.