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Feiler v. New Jersey Dental Association

Decided: July 5, 1983.

MELVIN FEILER, D.D.S., PLAINTIFF,
v.
NEW JERSEY DENTAL ASSOCIATION, DEFENDANT



Cohen, J.s.c.

Cohen

[191 NJSuper Page 429] This suit was brought by New Jersey Dental Association*fn1 (hereinafter NJDA) seeking a judgment enjoining certain billing practices of Dr. Melvin Feiler and the dental offices he controls (hereinafter, collectively, Feiler). NJDA accuses Feiler of billing insurance carriers and other third-party payers for dental services untruthfully and deceptively in such a way as to cause them to pay him greater amounts than they otherwise would. By defrauding the payers for dental services, according to NJDA, Feiler also enabled himself to promise and deliver to patients significant cost reductions that a competing practitioner can not match unless he adopts Feiler's dishonest means. Both the public and the profession are damaged, argues NJDA,

and will continue to be damaged unless Feiler is enjoined.*fn2 In addition, NJDA concludes, Feiler's activities constitute dishonest and unfair competition from which honest practitioners need and deserve protection.

Issues arising in the suit include (1) whether NJDA had a cause of action against Feiler, (2) whether NJDA has standing to complain of Feiler's conduct, (3) whether NJDA has failed to exhaust administrative remedies in that the New Jersey Board of Dentistry has primary jurisdiction of the matter, (4) whether Feiler has in fact billed insurance carriers and third-party payers deceptively, (5) whether the recipients of Feiler's bills have in fact been deceived and (6) what, if any, remedy is appropriate.

NJDA STATES A CAUSE OF ACTION WHICH IT HAS STANDING TO PURSUE.

NJDA asserts in its complaint that it is a nonprofit corporation whose members include about 90% of the dentists licensed to practice in New Jersey, that Feiler is a New Jersey dentist and that he regularly and continuously misrepresents his fees on statements submitted to insurors and other third-party payers by fraudulently listing a fee higher than the one he actually charges and by receiving payment on that basis. In the first count, NJDA asserts it

is capable and competent to protect the public interest and has filed . . . in an effort to protect that interest and to preserve public confidence in the integrity of the dental profession and insurance co-payment plans.

At an earlier stage of this case, I ruled that the quoted assertion of standing was insufficient. I held, in effect, that NJDA had no cause of action solely in behalf of the public interest. I believed that N.J. Bar Association v. Northern N.J. Mortgage Associates, 22 N.J. 184 (1956), was a different case.

There, the bar association's complaint was sustained in seeking to bar the unauthorized practice of law by the defendant. Chief Justice Vanderbilt saw the action as having been brought in the public interest by a plaintiff who was "capable and competent to protect the public interest" as opposed to a plaintiff who might seek standing "under the outward pretense of a public service, motivated in fact by selfish purposes." The case is unique because the bar association occupied an especially responsible status in 1956 in a profession with special responsibilities to the public. The holding cannot be applied to every profession in such a way as would give the various professional and trade associations some official responsibility to safeguard the public interest.

After my ruling, NJDA amended its pleadings to assert the private interest of its members in enjoining Feiler. It claimed standing "to protect the private rights of its members against fraudulent and dishonest competition" as well as to assert the public interest in preventing unlawful and deceptive practices.

If practicing dentists competing with Feiler have a cause of action, then NJDA does also. It represents its members' interests. It does not seek to collect damages on their behalf. Cf. N.J. Optometric Ass'n v. Hillman-Kohan, 160 N.J. Super. 81 (App.Div.1978). It seeks to bar conduct it says is improper and works to the disadvantage of its honest members and the public. Its concern with the subject matter evidences a sufficient stake and real adverseness. Crescent Park Tenants Ass'n v. Realty Equities Corp. of N.Y., 58 N.J. 98 (1971); Travel Agents Malpractice Action Corps. v. Regal Cultural Society, Inc., 118 N.J. Super. 184 (App.Div.1977).

NJDA has a cause of action because its individual members have. A practicing New Jersey dentist has standing to complain that another dentist gains an unfair competitive advantage over him by fraudulent billing practices that enable him to promise and deliver cost savings to patients that are unavailable to patients of an honest practitioner. And, if the

charge can be proved, the fraudulent billing practices should be enjoined. As Chief Justice Weintraub said in another context: "The reputable vendor . . . has a stake in the suppression of dishonest competition." Riley v. New Rapids Carpet Center, 61 N.J. 218 at 225 (1972).

In Travel Agents an association of 14 travel agents stated a cause of action when it charged the defendant with forming bogus affinity groups for the purpose of selling cut-rate charter travel tickets. The plaintiffs asserted that the defendants' conduct violated the IATA contract among travel agents and member airlines and also violated Civil Aeronautics Board regulations. Although Travel Agents involved a contract and a CAB regulation, it necessarily stands for the proposition that a businessman may seek to enjoin a competitor who seeks to attract customers by improperly offering inducements that a law-abiding businessman cannot offer.

United Stations of N.J. v. Kingsley, 99 N.J. Super. 574 (Ch.Div.1968), held that the operator of a filling station had a cause of action against oil companies and competing filling stations to bar unlawful competitive conduct designed to attract trade in an improper way. The offending conduct was holding give-aways in violation of N.J.S.A. 56:6-2(f). The statute authorized enforcement by the Director of the Division of Taxation but did not mention private lawsuits. United Stations differs from this case in that it involved a statutory prohibition designed to protect the class of which plaintiff was a member. Here, the primary alleged victims are insurance carriers who are not parties to the suit.

United Stations is very like this case, however, in another respect. It recognizes that the law-abiding business deserves protection from a competitor who seeks to attract trade by promising and delivering improper benefits the honest business cannot match. The court said:

If a nonparticipating retailer is not afforded injunctive relief, he is put to an unjustifiable choice as long as he can not persuade the law enforcing authorities to act promptly: he must either violate the law himself or see his business diverted. * * * The common law will, if possible, supply to any deserving

businessman relief from undesirable commercial behavior that is both 'injurious and transgressive of generally accepted standards of common morality or of law.' [99 N.J. Super. at 583; citation omitted]

It would ignore reality to say that a dentist has no real interest in preventing dishonest competition. Even though he may not be the primary victim of the conduct attributed to Feiler, the harm he suffers is an obvious and designed side effect. If the improper conduct of a competitor gives him an undeserved advantage over the ethical practitioner, a real harm is done which the law has no reason to protect or perpetuate. A court should not have to tell the ethical practitioner that his only effective remedy is to imitate the wrongdoer.*fn3

Feiler argues that NJDA has to prove more than the potential diversion of trade from NJDA members. Rather, it must show that NJDA members have actually lost income to Feiler's competition. He sought discovery of NJDA members' income tax returns and office records.

NJDA need not prove so much. Its cause of action does not require showing actual loss of particular patients to Feiler. It is enough to show the existence of deceptive and unlawful billing practices adopted for the purpose of diverting patients to Feiler by promising and delivering benefits unavailable to patients of honest practitioners. The intention and the adoption of means suitable to an evil end suffice. The degree of success is not material.

NJDA HAS NOT FAILED TO EXHAUST ADMINISTRATIVE REMEDIES NOR DOES THE BOARD OF DENTISTRY HAVE PRIMARY JURISDICTION OF THIS MATTER.

The New Jersey Board of Dentistry is the statutory administrative body entrusted with the supervision of the practice of

licensed dentists. It has adopted regulations and ethical standards and has the power to discipline dentists who commit infractions. There are general ethical standards that have been adopted by the board that might well prohibit fraudulent billing of insurance carriers. It is therefore possible that the board could entertain complaints against Feiler charging the substance of the conduct complained of here.

A suitor may not bring to a court matters entrusted by the Legislature to the expertise of an administrative agency created for the purpose. Deal Gardens, Inc. v. Board of Trustees of Loch Arbour, 48 N.J. 492 (1967). The Legislature has furnished a remedy in the agency and it must be exhausted before judicial relief can be sought. The same is not true where matters of law are in dispute or matters are raised ...


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