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State v. Greco

Decided: February 2, 1959.


On certification by the court.

For reversal -- Chief Justice Weintraub, and Justices Wachenfeld, Burling, Jacobs, Francis and Proctor. For affirmance -- Justice Heher. The opinion of the court was delivered by Wachenfeld, J. Proctor, J., concurring in result.


The defendant, a licensed physician and surgeon of the State of New Jersey, was convicted in the Union County Court on 29 counts of an indictment charging him with obtaining money by false pretenses from the Medical-Surgical Plan of New Jersey, familiarly known as Blue Shield. He addressed an appeal to the Appellate Division which we certified on our own motion.

From about 1942 until 1957 defendant was employed by the County of Union at the John E. Runnells Hospital for Chest Diseases, a county institution. At all times herein relevant his position was classified as "Resident Surgeon." He specialized in the surgical treatment of chest ailments, although he was frequently required to perform medical and surgical services unrelated to his specialty. As part of his duties he resided on the hospital premises. He also maintained a private office in Newark.

In 1949 Dr. Greco became formally affiliated with the Medical-Surgical Plan of New Jersey as a participating physician. He signed a standard form contract which in part provided:

"I will perform the medical and surgical services specified in the subscription certificates issued or that may be issued by the Plan, in accordance with accepted practices in the community at the time the services are rendered and at such rates of compensation as shall be determined by the Board of Trustees of the Plan. I will abide by the By-Laws, Rules and Regulations of the Plan applicable to Participating Physicians, copy [ sic ] of which shall at all times be available in the office of the Plan." (Emphasis supplied)

The by-laws and regulations of the Plan in force at the time Dr. Greco became a participating physician were contained in a manual customarily issued by the Plan to each newly affiliated doctor. Article XI of the by-laws, entitled "Participating Physicians," specifies:

"Participating Physicians may be any physicians (other than hospital Resident Physicians and/or Internes) fully licensed to practice medicine and surgery in the State of New Jersey * * *." (Emphasis supplied)

This definition is substantially reiterated in the accompanying Code of Regulations, which in addition provides, under the heading "Services NOT Eligible":

"The Plan shall not be liable, nor shall services be deemed eligible for payment under the Contract:

4. If the services are those of a surgical assistant or of a hospital resident physician or intern, or are rendered by a physician practicing under a limited license, or by a dentist or other person who is not an Eligible Physician as defined in the Contract." (Emphasis supplied)

During the years 1953 through 1956 defendant submitted to the Plan 29 applications for payment for surgical services rendered to county patients in the county hospital. None of these persons were Dr. Greco's private patients. All of the applications were honored by the Plan, which paid the defendant at its stipulated rates. These applications and payments are the subjects of the present criminal proceeding.

Two indictments, 374 and 375, were returned against defendant by the Union County grand jury and tried jointly in the court below. Indictment No. 375 was dismissed at the close of the State's case in chief. It charged that Dr.

Greco had unlawfully used his appointive position with the county for the promotion and furtherance of a scheme to mulct the Medical-Surgical Plan, "contrary to the provisions of R.S. 30:9-66 and N.J.S. 2 A:111-14."

R.S. 30:9-66 is a non-criminal statute regulating the relationship between county hospitals and their patients. In part it provides that no officer or employee of such a hospital shall accept from a patient any fee or gratuity for services rendered. N.J.S. 2 A:111-14 makes it a misdemeanor to use a corporation for fraudulent purposes.

Indictment No. 375 was dismissed upon the grounds that R.S. 30:9-66 does not contain a penal sanction and that no evidence had been produced to show that defendant had violated N.J.S. 2 A:111-14 by using the county, a public corporate body, as a shield for his allegedly fraudulent activities. The trial court was also of the opinion that the latter statute did not apply in the situation sub judice but only to corporate officers who fraudulently abuse the corporate veil.

Defendant was convicted upon indictment No. 374. Each count of that indictment is identical save for the recitation of dates, monetary amounts, and the various patients' names. The gravamen of the offenses charged is that Dr. Greco, "intending to cheat and defraud the Medical-Surgical Plan of New Jersey * * * did then and there unlawfully, knowingly and designedly falsely represent and pretend * * * that he, the said Lionel A. Greco, was lawfully and properly an eligible and participating physician * * * and entitled to receive ...

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