ANTHONY Y. KITE, Plaintiff-Appellant,
DIRECTOR, DIVISION OF TAXATION, Defendant-Respondent.
Submitted December 19, 2017
appeal from the Tax Court of New Jersey, Docket No.
0190-2013, whose opinion is reported at 29 N.J.Tax 75 (Tax
D. Janel, attorney for appellant.
Christopher S. Porrino, Attorney General, attorney for
respondent (Jason W. Rockwell, Assistant Attorney General, of
counsel; Ramanjit K. Chawla, Deputy Attorney General, on the
Judges Yannotti, Carroll and Leone.
Anthony Y. Kite appeals from a judgment entered by the Tax
Court, granting summary judgment in favor of defendant
Director, Division of Taxation (Division), and denying
plaintiff's motion for summary judgment. The court upheld
the Division's assessment of additional taxes, penalties,
and interest pursuant to the New Jersey Gross Income Tax Act
(the Act), N.J.S.A. 54A:1-1 to 10-12. The court's opinion
is published at Kite v. Dir., Div. of Taxation, 29
N.J.Tax 75 (Tax 2016). We affirm.
relevant facts are undisputed. In 2 004, while performing
certain financial consulting services, plaintiff discovered
what he believed to be a pattern of fraudulent practices by
certain hospitals. According to plaintiff, these hospitals
were submitting false claims to the United States government
under the Medicare program by inflating charges for routine
procedures by as much as four hundred percent. After
conducting further research, plaintiff concluded that he had
sufficient evidence to substantiate his belief that the
hospitals were engaging in fraudulent billing practices,
which had resulted in millions of dollars of Medicare
retained a law firm to file a qui tarn action on
behalf of the United States, pursuant to a provision of the
False Claims Act (FCA), 31 U.S.C. § 3730(b). The FCA
requires a qui tarn plaintiff to file his or her
complaint in camera and serve the federal government with a
copy along with substantially all of the material evidence
and information that supports the claim. 31 U.S.C. §
3730(b)(2). A qui tarn plaintiff is generally
referred to as the "relator." See U.S. ex rel.
Hefner v. Hackensack Univ. Med. Ctr., 495 F.3d 103, 109
(3d Cir. 2007).
provides that the federal government has sixty days in which
to decide whether to proceed with the action. 31 U.S.C.
§ 3730(b)(4)(A). If the federal government chooses to do
so, it takes control of the lawsuit, but the person who
brought the action remains a party and is entitled to receive
a portion of the amount recovered. 31 U.S.C. §
3730(d)(1). Under the FCA, the person who brought the action
is entitled to receive at least fifteen percent, but not more
than twenty-five percent, of the proceeds of the action or
settlement of the claim, "depending upon the extent to
which the person substantially contributed to the prosecution
of the action." Ibid.
commenced his qui tarn action in June 2005, by
filing a complaint in the United States District Court for
the District of New Jersey. As required by the FCA, the
complaint was filed under seal and served upon the federal
government. Thereafter, the government elected to proceed
with the action. When the complaint was unsealed, plaintiff
learned that private parties had filed two other qui
tarn actions under the FCA, and the complaints in those
cases included claims against many of the same hospitals that
were defendants in plaintiff's action.
2006, plaintiff and the relators in the other actions entered
into a "Relators' Joint Prosecution and Sharing
Agreement." In that agreement, plaintiff and the other
relators agreed to work together to successfully prosecute
their respective actions against the hospitals. They also
agreed to share "all monies that [were] awarded as
relator's share awards as a result of [the] claims"
asserted in the complaints. The relators' agreement
provides in pertinent part that
[u]pon receipt by any one law firm of any or all settlement
proceeds from the United States, the proceeds shall be placed
in a trust escrow account maintained by the recipient law
firm for the benefit of its [r]elator or [r]elators pursuant
to the Rules of Professional Conduct in the state in which
the escrow account is located.
relators' agreement further provides for the allocation
of the settlement ...