June 18, 2013
STATE OF NEW JERSEY, Plaintiff-Appellant,
ANNA PADVA-GERMAN, Defendant-Respondent.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 30, 2013
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Accusation No. 09-12-2386.
Brian J. Uzdavinis, Deputy Attorney General, argued the cause for appellant (Jeffrey S. Chiesa, Attorney General, attorney; Hillary Horton, Deputy Attorney General, of counsel and on the brief).
Miles Feinstein argued the cause for respondent.
Before Judges Sapp-Peterson and Haas.
The State appeals from an order granting defendant, Anna Padva-German, entry into the Monmouth County Pre-Trial Intervention Program (PTI) over its objection. We reverse.
Defendant was a licensed dentist employed by New Jersey Mobile Dental ("NJMD"), a practice comprised of a group of "mobile" dentists who provide on-site dental treatment at various nursing homes, assisted living facilities, and adult day care facilities throughout the State. In November 2008, during an investigation into the group's Medicaid billing practices, investigators discovered that several NJMD dentists, including defendant, charged Medicaid for services they did not render.
The investigation revealed that between September 2005 and March 2009, defendant overbilled Medicaid by approximately $65, 000. Defendant admitted her complicity in the fraudulent scheme and pled guilty to a third-degree charge of Medicaid fraud. Pursuant to the plea agreement, defendant agreed to pay restitution in the amount of $69, 365.80, a civil penalty in the amount of $69, 365.80, a five-year period of debarment from all Medicaid programs, and to "provide truthful testimony at all legal proceedings for the remainder of the defendants in this case."
Thereafter, defendant applied for participation in the PTI program. On March 9, 2010, a Monmouth County probation officer reviewed the application and recommended that defendant should be admitted into the program, reasoning that she is "a good candidate for PTI as this is her first Superior Court matter and [she] seems to have the motivation necessary to successfully complete the program." Nearly two years later, on March 22, 2012, the State objected to the enrollment of defendant into PTI.
The initial denial letter explained that upon consideration of the relevant factors enumerated in N.J.S.A. 2C:43-12e, in line with Rule 3:28, several factors militated against defendant's admission into PTI, namely: 1) the nature of the offense, 2) the facts of the case, 3) the motivation and age of the defendant, 7) the needs and interests of the victim and society, 14) whether or not the crime is of such a nature that the value of supervisory treatment would be outweighed by the public need for prosecution, and 16) whether PTI would adversely affect the prosecution of co-defendants. Each factor weighing against admission was followed by a short factual analysis.
Defendant filed a motion appealing the rejection. Following a hearing, the court determined that the State gave short shrift to the analysis contained in the probation officer's recommendation letter regarding defendant's motivation to succeed in PTI and instead focused solely on her motivation to commit the crime. The court opined that while the State is entitled to consider defendant's past conduct, it is likewise obligated to examine defendant's motivation to succeed in PTI in the light of her actions in the two years since the case was initiated. The court also believed the denial letter contained inadequate analysis to permit the court to "determine whether or not the State followed guidelines and case law to evaluate this particular application." The court therefore remanded the matter to the State with instructions to reconsider the factors.
Upon remand, the State once again issued another letter denying defendant's entry into PTI. The State acknowledged defendant's status as a first time offender who provided a voluntary sworn statement and guilty plea, testified before the grand jury, was willing to pay restitution and was motivated to complete PTI. Nonetheless, the State concluded these positive factors did not make defendant a candidate for PTI. The State outlined four reasons for withholding consent to defendant's enrollment in PTI: 1) the nature of the offense, 2) the motivation of the defendant, 3) the needs and interests of the victim and society, and 4) whether PTI would adversely affect the prosecution of co-defendants.
Specifically, the State expressed that defendant's crime fell within two enumerated circumstances: "continuing criminal business or enterprise" and "breach of the public trust, " under which a defendant's application "should generally be rejected." Additionally, the State noted that in recognition of defendant's pre-indictment willingness to plead guilty, she was permitted to plead guilty to a third-degree crime, although the nature of the fraud with which she was being charged could have subjected her to prosecution as a second-degree offender, for which PTI enrollment is presumptively barred.
The State additionally recognized that defendant was motivated to succeed in PTI, but emphasized that considering defendant's "secure financial status" at the time she committed the fraud, her motivation to commit the crime was pure greed. Turning to the needs and interests of society, the State commented that because Medicaid fraud is rampant in the New Jersey, "[t]he needs and interests of society to condemn such behavior through criminal prosecution far outweigh any benefits to society by allowing defendant into PTI." It also alluded to the Legislature's recognition of the need to deter economic crimes through vigorous prosecution, evidenced by the passage of legislation in 2010 enhancing the penalties for violating the Medicaid fraud statute.
Finally, the State urged that defendant's admission into PTI would adversely affect the prosecution of co-defendants. The State noted that five other NJMD dentists entered similar plea agreements with the State, under which they agreed to a period of Medicaid debarment, payment of restitution, and a civil penalty, as well as cooperation in the investigation and prosecution of remaining NJMD targets. These defendants were sentenced to probation. The State argued that defendant's admission into PTI would represent inconsistent prosecution and may cause a jury to speculate as to why defendant received preferential treatment.
On October 20, 2012, defendant renewed her appeal of her rejection from the PTI program. The court conducted a second hearing on October 12, 2012. In a written opinion subsequently issued, the court faulted the State for not providing a "more thorough analysis" of all the statutory factors. The court found that the State's characterization of defendant's crime as a breach of public trust was mistaken because defendant did not hold a public office. In the court's view, defendant's crime was no different than welfare fraud, which the court noted we determined, in State v. Mickens, 236 N.J.Super. 272 (App. Div. 1989), was not a breach of the public trust and would not automatically impede a defendant's admission into PTI. The court also disagreed with the State's contention that the fact that defendant's crime was part of a continuing criminal enterprise supported denial of her PTI application.
Additionally, the court rejected the State's reliance upon the adverse effect defendant's admission to PTI would have on the prosecution of co-defendants, stating that the record was devoid of any prosecutions that had been initiated or concluded as a result of defendant's grand jury testimony or cooperation. The court viewed the State's reliance upon this factor as arbitrary, given the length of time that had elapsed since defendant's testimony before the grand jury, as well as the lack of named co-defendants whose prosecution would be hampered by defendant's admission into PTI. The court also found unpersuasive the State's argument that defendant could have been charged with a second-degree crime but for her negotiations with the State. The court observed that there was no indication in the plea papers that defendant's charges had been downgraded.
Moreover, the court noted that in Mickens, supra, 236 N.J.Super. at 278, we acknowledged that "prosecutors are certainly privileged to assert that welfare fraud is a 'serious' problem which deserves prosecutorial effort by law enforcement." Nonetheless, the court found that the State's characterization of Medicaid fraud as a "rampant" problem in the state, such that the needs of society and for public prosecution outweighed the value of supervisory treatment, was arbitrary and capricious.
Finally, the court expressed the view that "[t]he real crux of the dispute in this case" is the appropriate analysis to be accorded to the factor regarding the defendant's motivation. In that regard, the court deemed arbitrary the State's assertion that because defendant is a financially secure individual, her crime was motivated purely by greed, which weighed in favor of excluding her from PTI. The court, once again relying upon Mickens, supra, 236 N.J.Super. at 278, for the proposition that all financial crimes are motivated by greed, reasoned that the appropriate emphasis should have been placed upon defendant's motivation to succeed in PTI. The court concluded it was an arbitrary, capricious and clear error in judgment for the State to ignore this factor as "[t]here is nothing in this record to dispute the accurate conclusion of the probation officer and program director that this defendant is motivated to succeed in the PTI program." The present appeal ensued.
On appeal, the State urges the trial court erred in admitting defendant into PTI over its objection. We agree.
We review a trial court's reversal of the denial of entry into PTI under an abuse of discretion standard. State v. Nwobu, 139 N.J. 236, 246-47 (1995). In so doing, we are mindful that the initial decision to accept or reject a defendant's PTI application lies with the prosecutor. State v. Leonardis (Leonardis II), 73 N.J. 360, 381 (1977). Once a prosecutor refuses to consent to the diversion of a particular defendant, the prosecutor's decision is to be afforded considerable deference. State v. DeMarco, 107 N.J. 562, 566 (1987). "In fact, the level of deference which is required is so high that it has been categorized as 'enhanced deference' or 'extra deference.'" State v. Kraft, 265 N.J.Super. 106, 111 (1993) (quoting DeMarco, supra, 107 N.J. at 566). As a result, the scope of a trial court's review of a prosecutor's decision to reject a defendant's application is severely limited. State v. Bender, 80 N.J. 84, 89 (1979).
The court's "scrutiny is limited to reviewing the reasons given by the prosecutor for his or her decision." DeMarco, supra, 107 N.J. at 567. "It is not sufficient to reverse that [the court] find[s] a decision to be harsh. For a court to reverse a prosecutor's decision, the defendant must 'clearly and convincingly establish that the prosecutor's refusal to sanction admission into the program was based on a patent and gross abuse of discretion.'" Ibid. (citing Leonardis II, supra, 73 N.J. at 382). Thus, "[j]udicial review is 'available to check only the most egregious examples of injustice and unfairness.'" DeMarco, supra, 107 N.J. at 566 (quoting Leonardis II, supra, 73 N.J. at 384).
A defendant may overcome a prosecutorial veto if it can be proved the rejection "(a) was not premised upon a consideration of all relevant factors, (b) was based upon a consideration of irrelevant or inappropriate factors, or (c) amounted to a clear error in judgment." Bender, supra, 80 N.J. at 93. In order for such an abuse of discretion to be deemed "patent and gross, " it must further be shown that the prosecutorial error complained of will "clearly subvert the goals underlying Pretrial Intervention." Ibid.
Guideline 3, promulgated under Rule 3:28, mandates that "consideration shall be given to the criteria set forth in N.J.S.A. 2C:43-12(e), " which include "the nature of the offense." Pressler & Verniero, Current N.J. Court Rules, Part III, Guideline 3. In addition, Guideline 3(i) makes clear that the nature of the offense may be relevant to determining eligibility for PTI. It provides in part:
Any defendant charged with crime is eligible for enrollment in a PTI program, but the nature of the offense is a factor to be considered in reviewing the application. If the crime was . . . (2) part of a continuing criminal business or enterprise; . . . or (4) a breach of the public trust where admission to a PTI program would deprecate the seriousness of defendant's crime, the defendant's application should generally be rejected. . . ."
Guided by these considerations, we are satisfied the trial court's conclusions related to the State's articulated reasons for rejecting defendant's admission into PTI are simply not supported by the record. Rather, the court's conclusions reflect the court's substitution of its own judgment over that of the prosecutor. For example, the court found the prosecutor's assertion that "defendant breached her 'entrusted' position as a dentist to seek Medicaid re-imbursement" to be clearly erroneous. The court reasoned that because defendant did not hold a public office, "Medicaid fraud is not a breach of public trust." Such a conclusion is not supported by precedent.
In Bender, supra, 80 N.J. at 84, defendant, a licensed pharmacist, stole his employer's drugs for personal use. In denying his PTI application, the prosecutor contended that defendant was ineligible for PTI because his crime constituted "a breach of the public trust." Id. at 96. While the Court recognized the relevance of defendant's employment under the particular circumstances, it ruled that the public trust was not implicated because the actual crime involved the private use of the drugs. The Court stated:
It is true that in issuing a license, the State entrusts a pharmacist with the dispensing of controlled dangerous substances in order that the health and welfare of the public not be undermined through indiscriminate and unsupervised consumption of drugs. See N.J.S.A. 24:21-1 et seq. Whether this "entrusting" is sufficient to make a pharmacist not employed by the State a "public trustee" under Guideline 3(i)(4) is a difficult question which we need not here address.
. . . .
The cocaine was personally consumed, not distributed to third parties. Only defendant, himself, and his immediate employer were victimized. Thus, although defendant's crimes were made possible by his status as a licensed pharmacist, those crimes did not breach the trust reposed in him to protect the citizenry at large.
[Id. at 96 (emphasis added).]
On the other hand, in State v. Mahoney, 376 N.J.Super. 63, 96-98 (App. Div. 2005), aff'd in part, rev'd in part on other grounds, 188 N.J. 359, 362 (2006), we found no error in the prosecutor's consideration that the defendant's misappropriation of his client's funds was a breach of the public trust under Guideline 3(i)(4) in rejecting the PTI application of the defendant, an attorney.
Here, defendant was neither a welfare beneficiary seeking to pad her low income with public assistance like the defendant in Mickens, supra, 236 N.J.Super. at 273, nor a licensed professional who pilfered prescription drugs for personal use as in Bender, supra, 80 N.J. at 84. Defendant was licensed to bill the State for dental services rendered to the poor and needy and she misused the public trust reposed in her to obtain public funds of more than $69, 000, to which she was not otherwise entitled. Therefore, considering her actions as a breach of the public trust under the particular facts here was not "clearly erroneous."
Secondly, the court ordered that defendant be admitted into PTI over the prosecutor's veto because it believed the State failed to acknowledge defendant's amenability to rehabilitation and motivation to succeed in PTI. The record, however, demonstrated otherwise. In the State's August 27, 2012 letter to the court explaining the reasons why defendant was rejected, it is noted:
The State recognizes that defendant has no prior criminal history and is eager to complete a diversionary program. The State has taken into consideration that defendant has continued to cooperate in its ongoing investigation against the remaining NJMD targets, providing a voluntary sworn statement and testifying before the State Grand Jury. The State has also considered that defendant, in pleading guilty, admitted her culpability and is willing to pay restitution. Despite these positive factors, the State does not agree that defendant is an appropriate candidate for PTI.
The trial court's insistence that the State ignored the defendant's rehabilitative actions seems to suggest that proper consideration of such actions must necessarily result in admitting defendant into PTI. Mickens does not draw such a stark line. Furthermore, the noted rehabilitative actions are all elements of the defendant's negotiated plea deal. While that does not diminish the importance of defendant's compliance, it is important to recognize that defendant is already obligated to take these actions. Furthermore, defendant's willingness to make amends is one of many factors to be considered but does not necessarily entitle her to PTI. See N.J.S.A. 2C:43-12(e); State v. Imbriani, 291 N.J.Super. 171, 182 (App. Div. 1996) (affirming rejection of the defendant's PTI application despite amenability to rehabilitation).
Next, contrary to defendant's argument, the State's desire for uniformity in the prosecution of similarly situated defendants does not signify an office-wide policy by the Attorney General to exclude all Medicaid fraud defendants from PTI. As the State explained in its letter, if disparate treatment is accorded to defendant over her counterparts, such preferential treatment may adversely affect the prosecution of other defendants. The State maintained that other NJMD targets were currently being investigated and defendant's testimony may be required in obtaining their convictions. That these prosecutions had not yet occurred did not mean the investigations were not ongoing. Moreover, the State's refusal to treat defendant differently from the other cooperating witnesses within her "criminal enterprise" does not constitute a patent and gross abuse of discretion. See Nwobu, supra, 139 N.J. at 255 (finding that rejection of the defendant's application for PTI as well as his co-defendants' applications "does not mean [the State] failed to consider the individual features of each defendant.").
Additionally, the court questioned the accuracy and truthfulness of the State's position that having been charged with Medicaid fraud, defendant could have faced prosecution as a second-degree offender, which generally would have disqualified defendant for admission into PTI. The court noted that the "plea agreement does not recite that defendant's charges were downgraded from a second[-]degree to a third[-]degree offense." What the record reveals, however, without dispute, is that defendant was charged under N.J.S.A. 30:4D-17(a), New Jersey Medical Assistance and Health Services Act ("Act"), N.J.S.A. 30:4D-1 to -19.5. Persons charged with violations of this Act are treated as third-degree offenders. The Act requires proof of the willful use of medical assistance payments to which the provider is not entitled. N.J.S.A. 30:4D-17. Willful action requires at the very least knowing behavior. See Dunlea v. Twp of Belleville, 349 N.J.Super. 506, 510 (2002) (stating that "'[w]illful misconduct' is the commission of a forbidden act with actual (not imputed) knowledge that the act is forbidden") (quoting Marley v. Palmyra, 193 N.J.Super. 271, 294-295 (Law Div. 1983)).
The investigation into defendant's conduct revealed she was a practitioner in NJMD and that she knowingly engaged in fraudulent billing practices. Consequently, the prosecutor could have exercised his discretion to charge defendant with a second-degree crime under Health Care Claims Fraud, N.J.S.A. 2C:21-4.3(a) (stating that "[a] practitioner is guilty of a crime of the second degree if that person knowingly commits health care claims fraud in the course of providing professional services."). Thus, consideration of the ultimate offense for which defendant could have been charged versus the actual offense for which she was charged was not arbitrary.
The court also characterized the State's position that Medicaid fraud was rampant as conclusory, while at the same time noting Judge Pressler's recognition in Mickens that prosecutors are privileged to assert that welfare fraud is a "'serious' problem which deserves prosecutorial effort by law enforcement." Mickens, supra, 236 N.J.Super. at 278. Our Legislature has implicitly recognized that Medicaid fraud, if not already rampant, as the State urges, is nonetheless on the rise, with the amendment to N.J.S.A. 30:4D-17, which became effective June 28, 2010, removing the presumption against imprisonment for first-time Medicaid fraud offenders. Thus, there was nothing conclusory about the State's consideration that Medicaid fraud is "rampant."
Finally, at oral argument before us, defense counsel represented that he had just learned, the previous day, that defendant had completed PTI, presumably because the State did not seek a stay of the trial court order. Even if true, this fact would not render the State's appeal moot. See Nwobu, supra, 139 N.J. at 258 (noting that the defendant, who had completed PTI by the time the matter was before the Court, "knew that his admission into PTI was provisional and contested"). Here, defendant was well aware that the trial court order admitting her into PTI was on appeal. Therefore, she "lacked a reasonable expectation of finality." Id. at 257.