OCEAN MEDICAL IMAGING ASSOCIATES, et al. v. NEW JERSEY DEPARTMENT OF HEALTH AND SENIOR SERVICES

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5292-04T15292-04T1

OCEAN MEDICAL IMAGING ASSOCIATES

D/B/A OCEAN MEDICAL IMAGING CENTER,

ATLANTIC OPEN MRI, L.L.C. D/B/A

ATLANTIC DIAGNOSTICS, EAST BERGEN

IMAGING, L.L.C., PROGRESSIVE

MEDICAL IMAGING OF UNION CITY, L.L.C.,

PROGRESSIVE MEDICAL IMAGING OF

HACKENSACK, L.L.C., FOSTER & GROSS

RADIOLOGIC ASSOCIATES, P.A. and

MID-ATLANTIC STONE CENTER,

Plaintiffs-Appellants,

vs.

NEW JERSEY DEPARTMENT OF HEALTH

AND SENIOR SERVICES,

Defendant-Respondent.

__________________________________

 

Argued: May 1, 2006 - Decided July 19, 2006

Before Judges Cuff and Lintner.

On appeal from the New Jersey Department of Health and Senior Services.

Fredric L. Shenkman argued the cause for appellants (Cooper, Levenson, April, Niedelman & Wagenheim, attorneys; Mr. Shenkman and James L. Petsche, on the brief).

Michael J. Kennedy, Deputy Attorney General, argued the cause for respondent (Zulima V. Farber, Attorney General, attorney; Michael J. Haas, Assistant Attorney General, of counsel; Mr. Kennedy, on the brief).

PER CURIAM

In this appeal, plaintiffs Ocean Medical Imaging Associates d/b/a Ocean Medical Imaging Center, Atlantic Open MRI, L.L.C. d/b/a Atlantic Diagnostics, East Bergen Imaging, L.L.C., Progressive Medical Imaging of Union City, L.L.C., Progressive Medical Imaging of Hackensack, L.L.C., Foster & Gross Radiologic Associates, P.A. and Mid-Atlantic Stone Center (collectively referred to as Ocean Imaging) challenge a statute enacted in 2004 that imposes an assessment on the gross receipts of ambulatory care centers not annexed to hospitals that offer certain services. For the reasons expressed in this opinion, we dismiss the appeal.

On June 29, 2004, the legislature enacted a statute that subjects ambulatory care facilities (ACF) not annexed to a hospital that offer certain services, to an annual assessment based on gross receipts. N.J.S.A. 26:2H-18.57b provides in pertinent part:

Effective July 1, 2004, the department shall assess each licensed ambulatory care facility that is licensed to provide one or more of the following ambulatory care services: ambulatory surgery, computerized axial tomography, comprehensive outpatient rehabilitation, extracorporeal shock wave lithotripsy, magnetic resonance imaging, megavoltage radiation oncology, positron emission tomography, orthotripsy and sleep disorder services. The Commissioner of Health and Senior Services may, by regulation, add additional categories of ambulatory care services that shall be subject to the assessment if such services are added to the list of services provided in N.J.A.C. 8:43A-2.2(b) after the effective date of P.L.2004, c. 54.

The assessment established in this subsection shall not apply to an ambulatory care facility that is licensed to a hospital in this State as an off-site ambulatory care service facility.

(1) For Fiscal Year 2005, the assessment on an ambulatory care facility providing one or more of the services listed in this subsection shall be based on gross receipts for the 2003 tax year as follows:

(a) a facility with less than $300,000 in gross receipts shall not pay an assessment; and

(b) a facility with at least $300,000 in gross receipts shall pay an assessment equal to 3.5% of its gross receipts or $200,000, whichever amount is less.

The commissioner shall provide notice no later than August 15, 2004 to all facilities that are subject to the assessment that the first payment of the assessment is due October 1, 2004 and that proof of gross receipts for the facility's tax year ending in calendar year 2003 shall be provided by the facility to the commissioner no later than September 15, 2004. If a facility fails to provide proof of gross receipts by September 15, 2004, the facility shall be assessed the maximum rate of $200,000 for Fiscal Year 2005.

The Fiscal Year 2005 assessment shall be payable to the department in four installments, with payments due October 1, 2004, January 1, 2005, March 15, 2005 and June 15, 2005.

The statute was effective July 1, 2004 and applicable to calendar year 2003 operations.

As directed by the statute, on August 5, 2004, Ocean Imaging and other ACFs received a notice from defendant Department of Health and Senior Services (HSS) that they were subject to the statute and instructed them to submit proof of their calendar year 2003 gross receipts no later than September 15, 2004. An assessment worksheet was included with the notice.

On October 8, 2004, Ocean Imaging filed a complaint in the General Equity Division in which it sought a declaratory judgment that gross receipts as defined by the statute do not include receipts for services provided by ACFs that do not require a facility license issued by HSS or that gross receipts do not include pass through payments to providers. Ocean Imaging also alleged that the statute did not authorize imposition of the assessment on 2003 gross receipts. The State contended that Ocean Imaging sought review of a final agency action and sought transfer of the action to the Appellate Division. By order dated April 5, 2005, the matter was transferred to this court.

On appeal, Ocean Imaging argues that "pass through" payments should not be included in the gross receipts of an ACF subject to the statute. It characterizes "pass through" payments as revenue collected from insurers as an accommodation for independent contractors, such as radiologists. It contends that such revenue does not enhance the income of an ACF and "is otherwise irrelevant to the source of revenue that aggregately constitute 'gross receipts.'" It also argues that HSS is not authorized to impose an assessment upon revenues generated by services not identified in the statute. Finally, it urges that assessments should not be based on revenue generated in 2003.

Rule 2:2-3(a)(2) provides that this court has jurisdiction of appeals from final orders of the trial courts and final agency decisions. Here, the predicate for our jurisdiction is the August notice from HSS to ACFs that informed them of their obligation pursuant to the recently enacted statute imposing an assessment on gross receipts. This notice does no more than inform facilities subject to the assessment of their obligation under the law. It is not a final agency action that confers jurisdiction on this court.

Final agency action is action in which a State agency takes definitive action on a matter within its executive responsibilities. For example, when the newly-created Office of Administrative Law refused to hire as administrative law judges persons who had acted as hearing officers for the Division of Motor Vehicles, the Court held that the refusal to hire was a final agency action. N.J. Civil Serv. Ass'n v. State of N.J., 88 N.J. 605, 612 (1982). On the other hand, an advisory opinion rendered by the Attorney General to the agency on the subject of the eligibility of the hearing officers for appointment as administrative law judges is not a final agency action subject to review. Ibid. So, too, an advisory opinion issued by an agency concerning affordable housing compliance is not a final agency action subject to appeal as of right to this court. In re Application of Jackson Twp., 350 N.J. Super. 369, 372 (App. Div. 2002).

In re November 8, 1996 Determination of the State of New Jersey, Department of the Treasury, Unclaimed Property Office (Unclaimed Property), 309 N.J. Super. 272 (App. Div. 1998), aff'd, 156 N.J. 599 (1999). is instructive. Unclaimed Property concerned the Uniform Unclaimed Property Act, N.J.S.A. 46:30B-1 to -109, which established a procedure by which intangible property presumed abandoned may be transferred to the State. Id. at 274. A person holding property subject to the Act that is presumed abandoned is required to report that property to the State. Ibid. A hotel, which had issued gift certificates that had not been redeemed, inquired of the Department of the Treasury "whether unredeemed gift certificates were covered by the Act and had to be reported to the State." Id. at 274-75. The Department responded by letter and asserted its position that gift certificates are subject to the statute. Id. at 275. This court held that the letter from the Department to the hotel was a final agency action because "it declared Hilton's obligation to file a report pursuant to the [statute]." Ibid. We characterized the letter as a definitive ruling regarding the applicability of the statute to a particular circumstance, gift certificates. Ibid.

Unlike the circumstances in Unclaimed Property, the August 5, 2004 notice simply informed ACFs subject to the assessment of their obligation under the law. It bears none of the features of agency action that characterize matters properly before this court, such as an agency determination of an amount due, the creation of a record illuminating the factual and legal basis of the dispute, and a definitive decision by the agency head based on a complete record.

Moreover, we learned at oral argument that the alleged dispute regarding the inclusion of "pass through" payments as gross receipts is founded on conversations between agency staff and ACF representatives. These conversations bear none of the characteristics of the opinion rendered in Unclaimed Property in which a definitive question was posed in writing, legal advice was sought and obtained, and a definitive ruling issued. Unclaimed Property, supra, 309 N.J. Super. at 274-75. Nor does the conversation rise to rule-making. See N.J. Educ. Ass'n v. Librera, 366 N.J. Super. 9, 15-16 (App. Div. 2004).

We are aware that HSS has developed proposed regulations and that the proposed definition of gross receipts includes pass through revenue. 37 N.J.R. 2279(a). Prior to adoption, the affected ACFs have an opportunity to comment on the proposed rules. N.J.S.A. 52:14B-4. Only after adoption may an affected party seek review of the validity of a rule. R. 2:2-3(a)(2).

In short, the August 5, 2004 notice is neither a final agency action nor agency rule-making subject to review in this court. The appeal is dismissed.

 

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A-5292-04T1

July 19, 2006