The federal judge who dismantled New Jersey's hospital reimbursement system decided last week to give the state more time before letting his order take effect.

The ruling, which was to take effect Friday, says members of union and other self-funded health plans no longer have to pay surcharges to the state's uncompensated care trust fund.

But Judge Alfred M. Wolin of the U.S. District Court in Newark ruled Thursday that the surcharges affected by his ruling could still be collected until June 12.

If it does go into effect, the ruling would strip more than $1 billion from the state's hospital financing system. It also would mean another $320 million hole in the state budget, which has developed a shortfall of more than $1.7 billion in recent weeks. The new gap would result from the loss of federal matching funds, which are pegged to the surcharges involved.

Democratic Gov. Jim Florio, Assembly Speaker Chuck Haytaian, R-Warren, and Senate President Donald DiFrancesco, R-Union, should by that date agree to call a special summer session focusing on the issue of health-care reform, the judge said.

The special session would be used to devise a replacement for the current system, which Judge Wolin said violates federal union and pension laws.

Legislative leaders say it is not clear whether a special session would be needed. The crisis might be resolved before then, they say, through cooperation between the state Legislature and the governor's office.

Meetings between the various parties were held Friday and more are planned for today.

A key component of the system, ruled invalid last month, is a 19.1% surcharge the state attaches to each hospital patient's bill.

The money is put into a special fund to reimburse hospitals for providing treatment to uninsured and indigent patients.

But Judge Wolin said the surcharges are illegal for people who are covered by self-funded health insurance plans because they get no benefit in return.

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