New Jersey healthcare facilities and personnel are on the front lines of the State’s fight against the rapid spread of the COVID-19 pandemic.
On April 2, 2020, New Jersey Governor Phil Murphy signed Executive Order 113, which authorizes the Superintendent of State Police acting as State Director of Emergency Management to “take or use personal services and/or real or personal property, including medical resources, for the purpose of protecting or promoting the public health, safety, or welfare.” Due to the “critical shortage of medical resources in the State,” it is anticipated this order will be used primarily to commandeer personal property such as medical equipment and personal protective equipment (PPE) from businesses and institutions.
The intent of Executive Order 113 is to enable the State to reallocate medical resources such as PPE (e.g., face masks, face shields, gloves and gowns), ventilators, respirators and anesthesia machines during the COVID-19 public health crisis. However, the order also gives the state director, in consultation with the New Jersey Health Commissioner, the power to take real property to site temporary facilities. Hotels, stadiums, school facilities and convention centers are already being converted to provide additional bed capacity to treat COVID-19 patients across the country. Yet even with these voluntary efforts, New Jersey is facing an imminent shortage of necessary supplies, ICU beds and treatment facilities.
In what will likely prove the most controversial exercise of the governor’s emergency powers, the executive order also allows the State to commandeer the personal services of any business’ employees. For example, healthcare professionals could be moved from one facility or institution to serve elsewhere outside of their employer’s healthcare system if there is a medical need. Executive Order 113 is effective immediately.
Obligation to Inventory and Report PPE to the State
Executive Order 113 comes after Governor Murphy, through Executive Order 109, suspended all elective surgeries and invasive procedures and ordered all businesses and nonhospital healthcare facilities, including but not limited to dental facilities, construction facilities, research facilities, office-based healthcare or veterinary practices, and institutions of higher learning, in possession of PPE, ventilators, respirators or anesthesia machines to inventory their supplies and send that information to the State by March 27, 2020. The only noted limitation for registering PPE is that the PPE is “not required for the provision of critical health care services.”
Executive Order 113 also builds on Executive Order 111, which Governor Murphy signed on March 28, 2020, requiring healthcare facilities to report data concerning their capacity and medical resources to the State on a daily basis by 10:00 a.m., including data relating to bed capacity, ventilators and PPE. For the purposes of Executive Order 111, healthcare facilities include, but are not limited to, licensed acute care hospitals, long-term care facilities and healthcare systems including specialty hospitals. The scope of the reporting obligations also extends to any and all emergency modular field treatment and other facilities established during the state of emergency such as tents, temporary treatments facilities and other nonpermanent structures.
Businesses, nonhospital healthcare facilities and healthcare facilities can consult guidance on how to report this data.
The State’s Power to Seize Private Property and Obligation to Provide Just Compensation
On March 9, 2020, Governor Murphy, by way of Executive Order 103, declared a public health emergency and state of emergency in New Jersey in response to the rapid spread of COVID-19 within the state. With this declaration, the governor is empowered to exercise his emergency powers, which emanate from Article V of the New Jersey Constitution, and in this situation, from the New Jersey Civilian Defense and Disaster Control Act.
The Disaster Control Act authorizes the State to “commandeer and utilize any personal services and any privately owned property necessary to avoid or protect against any emergency.” N.J.S.A. § App. A:9-34. The Disaster Control Act also requires that each county of the state establish a compensation board to adjudicate claims for “just compensation” of any property that is taken pursuant to the Act. N.J.S.A. § App. A:9-51.
To seek compensation for property taken under the Act, an entity will need to file a petition with the compensation board in the county in which the property was used, within one year after the state of emergency is lifted. The compensation board will hold a hearing and render a decision regarding the compensation award. Appeals of these decisions are taken to the Superior Court, Law Division. Compensation awards are to be paid out within a year of the board’s decision. As such, entities should anticipate that absent a prior agreement with the state director as to compensation at the time the property or services are taken, receiving compensation will be a slow moving process.
Violators Can Be Subject to Criminal Penalties
Any individual or entity in violation of Executive Orders 109 or 111 can be charged with a disorderly persons offense and may be subjected to imprisonment for up to six months, a fine of $1,000 or both.
Executive Orders 113 Preempts Any County or Municipal Restriction That Conflicts with the Order
Pursuant to Executive Order 113, no municipality, county or subdivision of the state may enact or enforce any ordinances, rules or regulations that interfere with the order. As such, businesses, nonhospital healthcare facilities and healthcare facilities should defer to Executive Order 113 rather than regulations implemented by their local governments.
What This Means for New Jersey Businesses and Healthcare Facilities
New Jersey healthcare facilities and personnel are on the front lines of the State’s fight against the rapid spread of the COVID-19 pandemic. Despite their best efforts, New Jersey is currently experiencing the second highest rate of COVID-19 cases after New York. Health systems, hospitals and all other healthcare facilities and providers in the state are asking for desperately needed relief. In the midst of the daily battle to care for patients, it is important for businesses or nonhospital healthcare facilities that have not already inventoried and reported PPE and medical resources pursuant to Executive Order 109 do so as soon as possible. Likewise, if a healthcare facility has not been reporting data concerning its capacity and medical resources on a daily basis pursuant to Executive Order 111, it should begin to do so immediately and it should designate an individual or team to oversee these ongoing reporting obligations. Accurate inventories are critical to obtaining additional resources. Additionally, as mentioned above, violations of either executive order can result in criminal penalties, and thus the mandates of the orders should not be ignored.
If an entity is contacted by the New Jersey State Police concerning the commandeering and/or seizure of PPE, other medical resources, real property or personnel, the entity should contact counsel immediately, while making every effort to cooperate with the police. Counsel should seek to reach an agreement as to compensation (for example, fair market value for the use of premises, or hourly or per diem rates for the use of personnel) at the time of commandeering and make sure all necessary documentation is obtained.
To the extent the entity has not already done so, it should conduct an accounting of all PPE and medical resources and ensure that it has invoices and/or receipts relating to all property and services commandeered pursuant to Executive Order 113. Documentation of these items will be vital in receiving compensation from the State or other potential source of reimbursement at a later date. Entities should also not assume that the State or the police will maintain records of all seized property and services, and as such, entities should create and maintain thorough and accurate records of any property or services that are commandeered.
About Duane Morris
Duane Morris has created a COVID-19 Strategy Team to help companies plan, respond to and address this fast-moving situation. Our attorneys regularly work with the State to ensure fair compensation for the its use of private property and services. Prior Alerts on the topic are available on the team’s webpage.
For More Information
If you have any questions about this Alert, please contact Paul P. Josephson, Delphine O'Rourke, Danielle M. Dwyer, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.