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State v. Hilltop Private Nursing Home Inc.

Decided: February 4, 1981.

STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
HILLTOP PRIVATE NURSING HOME, INC., JOSEPH MEYER, AND GLORIA MEYER, DEFENDANTS-RESPONDENTS. STATE OF NEW JERSEY, PLAINTIFF-APPELLANT, V. HAROLD L. COHEN, BERNARD MANKOFF, C.P.A., AND GREEN GROVE NURSING AND CONVALESCENT CENTER, INC., DEFENDANTS-RESPONDENTS



On appeal from the Superior Court, Law Division, Monmouth County.

Matthews, Morgan and Morton I. Greenberg. The opinion of the court was delivered by Matthews, P.J.A.D.

Matthews

At issue on these consolidated appeals is the question, novel to this State, as to whether subpoenas duces tecum returnable before a grand jury need prior authorization by that body. In the cases before us, the attorney general issued the subpoenas without specific and prior grand jury authorization. The subpoenas and the documents produced pursuant thereto were accordingly ordered suppressed.

The State appeals in both Hilltop and Green Grove from almost identical orders suppressing evidence turned over by the

respective defendants pursuant to subpoenas duces tecum which on their face indicate that the receipt of the subpoena is commanded to appear before the State Grand Jury with the evidence. The State admits that it issued the subpoenas at a time when no grand jury was sitting but contends that on the return dates listed on the subpoenas a grand jury was in fact sitting. The trial judge in both cases premised his holding upon the State's failure to obtain authorization from the grand jury prior to issuance of the subpoenas, and upon the fact that in both cases the grand jury neither knew the subpoenas were issued nor had it been actively considering the case against defendants when the subpoenas were issued.

I

(Hilltop)

Defendant Hilltop Private Nursing Home, Inc. is a small, personally-held corporation owned and operated by defendants Joseph and Gloria Meyer. In October 1977 the public advocate instituted a civil action against Hilltop alleging violations of state and federal statutes in connection with the administration of the medicaid program.

At about the same time, the Division of Criminal Justice of the Attorney General's office began its own investigation to determine whether possible criminal charges might lie for medicaid fraud. On July 3, 1978 the corporation was served with a form of subpoena duces tecum demanding production of documents on an affixed itemized list which set forth virtually all of Hilltop's financial records for the years 1971 through 1977. The subpoena for the records was returnable July 10, 1978. That subpoena was issued at a time when no grand jury was sitting but was returnable when a grand jury was in session. The subpoena stated on its face that:

You are hereby commanded to appear at Division of Criminal Justice, 13 Roszel Road, in the City of Princeton, on July 10, 1978, at 10:00 a.m. to give evidence before the State Grand Jury and you are ordered to appear without prepayment of witness fees and bring with you the following records: Per attached Schedule "A".

The subpoena was issued not only by the clerk of the court but also by the deputy attorney general and listed his telephone number. Contrary to defendants' assertion, however, the subpoena indicates that the records were to be produced before the grand jury. Some confusion apparently resulted from the fact that the subpoena was returnable at "Division of Criminal Justice, 13 Roszel Road, in the City of Princeton." We take notice that the State Grand Jury is located in the same building as the attorney general and thus its address necessarily corresponds with that of the attorney general. The procedure regularly employed by the Division of Criminal Justice is such that the custodian of the records subpoenaed is entitled to bring them directly before the grand jury and deposit them there on the return date.

Following receipt of the subpoena, defendants immediately filed a motion to quash the subpoena on July 28, 1978 before Judge Jerome Moore. At the hearing before Judge Moore, defense counsel argued in support of the motion to quash that the State had failed to establish sufficiently the existence of a State Grand Jury investigation, as well as the jurisdiction, the nature of the investigation and the subject matter of the investigation. In response the State made the following representation:

In essence, the State neither confirmed nor denied that there was an ongoing grand jury investigation. Aside from the statement above, the State was silent on this issue. Given the State's statement, however, Judge Moore denied defendants' motion, holding that the State had made a sufficient showing regarding the validity of the subpoena. Defendants ultimately

complied with the subpoena, but thereafter appealed Judge Moore's order to this court and collaterally in the federal courts.*fn* We affirmed Judge Moore's order in In re Grand Jury Subpoena Duces Tecum , 167 N.J. Super. 471 (App.Div.1979) and held:

Where, as here, the validity of a grand jury subpoena duces tecum is challenged, the State need establish preliminarily merely (1) the existence of a grand jury investigation and (2) the nature and subject matter of that investigation, in order to overcome the challenge. See In re Grand Jury Subpoenas Duces Tecum, etc. , 391 F. Supp. 991, 995 (D.R.I.1975). Contrary to appellant's suggestion, these matters need not be established by affidavit or other formal proofs, but may be satisfied by simple representation by counsel to the court that a grand jury investigation has been commenced and a recitation of the nature of the investigation. [167 N.J. Super. at 472]

In its brief to this court the State had represented that:

On July 3, 1978, a state grand jury conducting an independent Medicaid fraud investigation of Hilltop Private Nursing Home, Inc., issued a subpoena duces tecum which was served on Hilltop.

Defendants were subsequently indicted. Thereafter, they sought for a second time to attack the validity of the subpoena with which they had already complied, this time by a motion to suppress evidence. At the hearing thereon on October 19, 1979 before another law division judge, the State appears to have revealed for the first time that there had been no State Grand

Jury investigation as such into the affairs of Hilltop on July 3, 1978, and that issuance of the subpoena thus could not have been specifically authorized by that body. At the October 19, 1979 hearing the State substantially revealed the procedures it had followed. In a colloquy between the trial judge and the State, the State continuously asserted that there was a grand jury sitting on each return date. However, it conceded that there was no particular grand jury looking into the problems at Hilltop:

The Court: Let me ask it differently. Had you begun presenting anything to any grand jury on Hilltop Private Nursing Home when the subpoena was issued?

[Counsel]: No. Because that's the beginning -- that is the inception of the investigation. Until we get the records, we have 260 cases also in our office. I'd say 30 per cent or less ultimately end up in the grand jury with an indictment.

For use to go in there, we would overload the grand jury.

The way the Medicaid office works, is that cases are referred to us mostly by the civil branch of Medicaid. They do an audit; they find something they don't like; it pops out of the computer the wrong way, and they send it over to us. We review the case. Until we get those records, we're not even -- we're not sure if these allegations are substantiated at all.

There are many times cases are referred to us for legal action, we get the records, we read them, and we say the allegations aren't borne out, and we return the records.

Argument then ensued. In opposition to defendants' contentions, the State maintained essentially that a grand jury investigation was deemed to exist when a subpoena was issued in the name of and returnable before the grand jury. Thus, there was no requirement that the State first go before a grand jury to seek permission to serve subpoenas as long as the return date indicated on the subpoena corresponded with a day on which a grand jury was sitting, albeit not a grand jury specifically impanelled to deal with that particular investigation. The State's position was that the marshaling of evidence and compulsion of witnesses before the grand jury was at least in the first instance a function for the prosecutor. Defendants contended, on the other hand, that the subpoena was invalid ...


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