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Pharmacy v. Division of Medical Assistance and Health Services

Superior Court of New Jersey, Appellate Division

August 22, 2013

TOWNSHIP PHARMACY, Petitioner-Appellant,
v.
DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, Respondent-Respondent.

Submitted December 14, 2011

On appeal from the Department of Human Services, Division of Medical Assistance and Health Services.

Mandel & Mandel attorneys for appellant (Matt D. Mandel, on the brief).

Paula T. Dow, Attorney General, attorney for respondent (Melissa H. Raksa, Assistant Attorney General, of counsel; Vicki A. Mangiaracina, Deputy Attorney General, on the brief).

Before Judges Fuentes, Graves, and Koblitz.

OPINION

FUENTES, P.J.A.D.

Township Pharmacy (Township) appeals from the decision of the director of the New Jersey Division of Medical Assistance and Health Services (Director) denying its application to participate in the State's Medicaid program (Program) as a pharmaceutical service provider. The Director's decision was based on plaintiff's failure to disclose the criminal record of one of its employees. After reviewing the record before us, we affirm.

We hold that the Director correctly construed the disclosure requirements to enroll in the Program as a provider of health care, in this case pharmaceutical services. Here, plaintiff failed to perform basic due diligence before answering a question intended to disclose information material to a proper determination of an applicant's eligibility to participate in the Program. Although plaintiff did not intend to deceive or conceal this information, public policy supports the Director's determination that, under these circumstances, failure to provide accurate, truthful, and complete information constituted good cause to deny the application.

I

John Sclafani, a registered pharmacist since 1996, purchased Township in 2009. On February 12, 2010, Sclafani applied to the New Jersey Department of Human Services, Division of Medical Assistance and Health Services (Division), to enroll Township in the Program as a pharmaceutical services provider. The record shows that when Sclafani submitted the application, he did not know or have reason to suspect that B.L.R., [1] a licensed pharmacy technician at Township, had a criminal record.

By letter dated August 12, 2010, the Medicaid Fraud Division informed Sclafani that Township's application was

being denied pursuant to N.J.A.C. 10:49-11.1(d)22 which states: "Any of the following, among other things, shall constitute good cause for suspension, debarment, or disqualification of a person engaged in State contracting, as defined herein, by the Medicaid Agent of Division of Medical Assistance and Health Services (DMAHS): Submission of a false or fraudulent application for the provider status to the program or its Fiscal Agent."

The disqualification letter explained that Sclafani did not disclose that B.L.R., an individual identified in the application as a "Pharmacy Technician, " had a criminal history. Specifically, B.L.R. was charged in 1998 with fourth-degree stalking; she was arrested and charged in April 2004 with possession of oxycodone and fourth-degree simulating a false insurance identification card; she pleaded guilty in September 2004 on the charge of third-degree possession of oxycodone and was sentenced to three years probation; in June 2008, B.L.R. was charged with the disorderly persons offense of possession of less than fifty grams of marijuana and was ordered by a municipal court to pay a $375 fine. Based on this evidence, the Division found that Sclafani had given a "false" response to question 37 in the application and was therefore barred from participating in the Program pursuant to N.J.A.C. 10:49-11.1(d)(22).

Question 37 of the pharmaceutical provider application required Sclafani to answer the following query:

Have any of the persons or entities named in response to any questions in this application, or their officers, directors, shareholders, members, owners, employees or partners, or any of the individuals named in response to any questions in this application ever been indicted, arrested, charged, convicted of, or pled guilty or no contest to any federal or State crime or offense in this State or any other jurisdiction, even if this resulted in pre-trial intervention?

Sclafani placed an "X" next to the answer indicating "no."

By letter dated August 18, 2010, Sclafani's attorney contested the Division's denial of Township's application. Counsel informed the Division that B.L.R. had been employed at the pharmacy in various capacities since at least 2002. She was employed by Sclafani's predecessor when he purchased the pharmacy in 2004; Sclafani kept her on as an employee when he purchased the pharmacy in 2009.

Plaintiff's counsel further noted that, unlike disciplinary records kept by the State Board of Pharmacy, an employee's criminal record is not readily discoverable to a pharmacy owner/employer. Most significantly, Sclafani's attorney emphasized that, on May 14, 2009, approximately four months before his client purchased Township, B.L.R. had been licensed by the Board of Pharmacy as a pharmacy technician. Thus, when Sclafani submitted the pharmacy's Medicaid provider application in February 12, 2010, he reasonably believed that B.L.R. did not have a criminal record or present any other legal impediment to Township's application. As further proof of his client's good faith, counsel concluded the letter by ...


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