A personal injury plaintiff who sued a senior-citizens’ facility is entitled to discovery on its finances in her effort to defeat its charitable-immunity defense, the Appellate Division ruled Wednesday, overturning summary judgment for the defendant on charitable-immunity grounds before discovery was complete.
The plaintiff requested documents showing the facility’s finances, including officers’ salaries, contending the facility is a money-making operation. The defendant called the request unduly burdensome and not designed to yield admissible evidence.
But without discovery of the financial information sought, “the court could not have been in a position to determine whether defendants’ dominant motive is charity [and not] some other form of enterprise,” the appeals court wrote in Klein v. Bristol Glen Inc., A-1382-08
Plaintiff Anita Klein fell in January 2006 on an icy parking lot while visiting a friend at Bristol Glen, run by co-defendant United Methodist Homes of New Jersey. The facility includes a 60-bed nursing home, a 58-bed independent living facility and 88 independent apartments.
Klein sued Bristol Glen and United Methodist in March 2007. On or about Feb. 28, 2008, the defendants moved for summary judgment. The deadline for discovery was set for April 7, 2008.
In a March 4, 2008, letter, Klein asked the defendants to produce “all records in regard to payments by patients; salaries of employees, including management employees; and salaries of the president and vice-president of Bristol Glen.”
During arguments on the summary judgment motion on April 11, Klein’s lawyer, William Vosper Jr., said Bristol Glen is not a charitable institution. “This is a money-making operation. And we’re entitled to find that out, and haven’t been able to do that,” he said.
Sussex County Superior Court Judge Thomas Critchley Jr. dismissed on summary judgment on May 2, without ruling on the discovery dispute. He found that Bristol Glen and United Methodist fell under the Charitable Immunity Act because they were nonprofit institutions whose mission is to “provide services to seniors in a Christian community” and that “in order to meet operating expenses, both UMH and Bristol Glen rely on substantial charitable donations to make up the shortfall of other income sources, e.g., patient payments.”
In Thursday’s opinion, Appellate Division Judges Rudy Coleman and Ronald Graves said that where a defendant seeks immunity based on its status as an entity organized exclusively for charitable purposes, as opposed to religious or educational ones, the court must conduct a “fact-sensitive analysis to determine the extent of its commitment to charity.”
The relevant inquiry is whether the nonprofit entity’s aims, origins, and method of operation demonstrate that its dominant motive is charity, Coleman wrote, citing Ryan v. Holy Trinity Evangelical Lutheran Church, 175 N.J. 331 (2003).
The panel found Klein’s case similar to Abdallah v. Occupational Center of Hudson County, Inc., 351 N.J. Super. 280 (2002). In that case, the appeals court said dismissal of a suit against a nonprofit group serving disabled people on charitable immunity grounds was improper. Charitable contributions amounted to roughly 1 percent of that group’s budget, which was found to be “too insignificant” to accord immunity.
“Like the court in Abdallah, we are constrained to reverse and remand because the court’s findings failed to address critical components of the charitable-status determination, which must be made on an adequate and proper record,” the appeals court said.
At Bristol Glen, residents who have been accepted to the facility are not asked to leave if they cannot make their monthly rent payments, its administrator, G. Scott Norton, certified to the trial court.
Charitable donations to a “fellowship fund” are used to subsidize shortfalls resulting from a resident who cannot pay. Norton said the amount of that subsidy in 2006 was $114,000 out of a total budget of $13 million for Bristol Glen that year — less than 1 percent, the appeals court noted. That fund, in turn, receives money from a foundation affiliated with United Methodist.
The only financial documentation provided by Bristol Glen and United Methodist to the trial court was a spreadsheet listing foundation grants for residential shortfall, foundation grants for capital improvements, and total operating expenses, all for 2004 to 2007. The plaintiffs were not told, though, whether the expenses included salaries of top managers, capital costs or board members’ pay, Coleman wrote.
“What is needed is an examination of the defendants’ revenue stream — that is, how much defendants generate renting housing and selling services to seniors — to gain an understanding of how that revenue is used to further defendants’ charitable mission,” Coleman wrote.
Klein’s lawyer, Stillwater solo Vosper, says he hopes the remand will shed light on the relationship among the foundations run by the defendants and that once discovery is complete, the trial court will allow a jury to decide whether charitable immunity applies.
The lawyer for Bristol Glen and United Methodist, William Bloom of Methfessel & Werbel in Edison, says no decision had been made on whether to appeal. He has no comment on the ruling.