White Collar Crime News

Major Victory in Medicaid Kickback Case October 21, 2009

While this case is not over yet, today was a major victory for me as the case would have been shut down forever if I lost this appeal.  Instead, I won it hands down.  Now, it looks like we will have to gear up for a trial in the Spring of next year.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2453-08T4

STATE OF NEW JERSEY,

Plaintiff-Appellant,

v.

EDWARD ACQUAYE,

Defendant-Respondent.

________________________________________

Argued October 5, 2009 

Before Judges Rodríguez and Yannotti.

On appeal from an interlocutory order of the

Superior Court of New Jersey, Law Division,

Middlesex County, Indictment No. 06-01-

00143.

Lisa Sarnoff Gochman, Deputy Attorney

General, argued the cause for appellant

(Anne Milgram, Attorney General, attorney;

Alvina Seto, Deputy Attorney General, of

counsel and on the brief).

Jef Henninger, argued the cause for

respondent (Mr. Henninger, on the brief).

PER CURIAM

We granted leave to the State to appeal from the

interlocutory order granting defendant Edward Acquaye’s petition

October 21, 2009

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for post-conviction relief (PCR), vacating defendant’s

conviction based on a guilty plea. We affirm.

These are the salient facts. In June 2006, defendant

pleaded guilty to third degree Medicaid fraud, N.J.S.A. 30:4D-

17(c). This charge stemmed from defendant’s acceptance of

kickbacks from Michael Stavitski, the owner of Belmar Pharmacy,

in return for defendant steering the prescriptions of all the

residents of his residential healthcare facility, Lincoln Rest

Center in Jamesburg, to Belmar Pharmacy. These prescriptions

were paid by Medicaid pursuant to the New Jersey Medical

Assistance and Health Services Act, N.J.S.A. 30:4D-1 to -19.5.

In exchange, the State agreed to recommend a non-custodial term

conditioned on the payment of $1500 in restitution and a $1000

fine and to recommend “that defendant does not lose [his]

license to provide [nursing/rest home] care.”

At the plea hearing, defendant acknowledged reviewing and

understanding the plea form, which he signed and initialed at

every page. Before accepting the plea, the judge informed

defendant that the State’s promise to recommend that he be able

to retain his New Jersey State license to operate Lincoln Rest

Center was not guaranteed because the licensing authorities were

independent agencies and not bound by the State’s

recommendation. The judge said, “I don’t think anyone can

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guarantee or promise you[] that you’re not going to lose your

license. You understand that[,] right?” Defendant replied,

“Yes.” Defendant then gave an adequate factual basis for his

guilty plea. The judge accepted the plea. Instead of imposing

a probationary term, the judge suspended imposition of the

sentence for five years with the condition that defendant pay

$1500 in restitution and a $1000 fine.

Three weeks after this disposition, the United States

Department of Health and Human Services, Office of Inspector

General (OIG), advised defendant that, as a result of this

conviction, he would be excluded from participation in all

federally-funded healthcare programs for a period of five years

pursuant to 42 U.S.C. § 1320a-7(a). The letter informed

defendant that he had thirty days from the date of the letter to

“submit any information and supporting documentation [he]

want[ed] the OIG to consider before it [made] a final

determination regarding [his] exclusion.” A subsequent letter

informed defendant that he was excluded from participating in

any healthcare programming which receives federal funding.

Defendant was advised of his right to a hearing to appeal his

exclusion. Defendant did not request a hearing.

The OIG also notified the New Jersey Division of Medical

Assistance and Health Services (Division) of this exclusion.

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The Division then notified defendant that, as a consequence of

OIG’s decision, he was excluded from participating in any

healthcare program receiving federal funding for five years.

Defendant and his wife, Freda Acquaye, a fifty percent owner and

Chief Operating Officer of Lincoln Rest Center, decided to

voluntarily close the facility and surrender its license.

Defendant filed this PCR petition, arguing that the State

and the court failed to inform him of his automatic exclusion

from participating in Medicaid programming and all federallyfunded

healthcare programs pursuant to 42 U.S.C. § 1320a-7(a).

Defendant asked the court to vacate his plea on the ground that

the plea was unknowing and involuntary as a result of the

State’s failure to inform him of the automatic exclusion.

The same judge who accepted the plea and sentenced

defendant heard oral arguments. The judge determined that there

was not a meeting of the minds between defendant and the State

regarding the terms of the plea agreement. The judge ruled

preliminarily that failure to inform defendant that he would not

be able to participate in federally-funded healthcare programs

would render defendant’s previous decision to enter the plea an

uninformed one. The judge gave the parties a September 19, 2008

deadline to resolve the matter or, in the alternative, to

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proceed with an evidentiary hearing to determine what the

understanding was between the parties.

On October 16, 2008, the judge held an evidentiary hearing.

At this hearing, both defendant and the Deputy Attorney General

who appeared at the plea hearing testified. In a supplemental

brief, another Deputy Attorney General certified that the State

contacted OIG and spoke to Joanne Francis, an OIG

representative, to inquire if defendant had requested any

appeals or hearings after receiving the letter of exclusion.

Francis replied that defendant filed a response to the OIG

letter, but made no request for a hearing.

The judge granted defendant’s PCR petition, finding that

defendant’s guilty plea was not entered knowingly, voluntarily,

or intelligently because the State’s promise to recommend that

defendant not lose his New Jersey license to operate a rest home

implied, according to the judge, that defendant had a chance of

continuing to operate Lincoln Rest Center. However, because

defendant’s debarment from federally-funded healthcare programs

was a mandatory result of the guilty plea, continued operation

of the business was “practically impossible.” Finally, the

judge reasoned that “the mandatory nature of said debarment is

inconsistent with the [plea recommendation.]“

On appeal, the State contends:

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THE TRIAL COURT ERRED IN FINDING THAT THE

STATE WAS REQUIRED TO INFORM DEFENDANT OF

THE COLLATERAL ISSUE OF HIS FEDERAL

EXCLUSION FROM PARTICIPATING IN FEDERALLY

FUNDED HEALTHCARE PROGRAMMING RENDERING HIS

PLEA INVOLVEMENT AND UNKNOWING.

In a supplemental letter brief, the State contends that:

THE TRIAL COURT ERRED IN GRANTING [PCR];

DEFENDANT’S GUILTY PLEA SHOULD STAND BECAUSE

HE RECEIVED EFFECTIVE ASSISTANCE OF COUNSEL

WHEN HIS ATTORNEY INFORMED HIM ABOUT THE

PENAL CONSEQUENCES OF HIS GUILTY PLEA AND

DEFENDANT WAS NOT MISINFORMED REGARDING ANY

PENAL CONSEQUENCE.

We disagree with the State’s arguments and affirm.

We begin our analysis with a restatement of governing

principles. A defendant seeking to withdraw a plea after

sentencing, pursuant to Rule 3:21-1, must show that he or she is

prejudiced by enforcement of the agreement, i.e., that knowledge

of the consequences would have made a difference in his or her

decision to plead. State v. Johnson, 182 N.J. 232, 241-42

(2005); State v. McQuaid, 147 N.J. 464, 495-96 (1997); State v.

Kiett, 121 N.J. 483, 490 (1990); State v. Howard, 110 N.J. 113,

123 (1988).

It is fundamental to the practice of plea bargaining that

the guilty plea must be made voluntarily, knowingly, and

intelligently. Id. at 122 (citing State v. Taylor, 80 N.J. 353,

362 (1979)). For that reason, in accepting a plea of guilty,

the trial court should question defendant under oath to

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determine that the plea is made with an understanding of “‘the

nature of the charge and the consequences of the plea.’” State

v. Kovack, 91 N.J. 476, 484 (1982) (quoting R. 3:9-2

awareness of penal consequences may result in the vacating of a

sentence imposed pursuant to a plea agreement. State v.

Johnson, supra, 182 N.J. at 236-37. “The right of the defendant

to be informed of the consequences of his plea, however, extends

only to those consequences that are ‘direct,’ or ‘penal,’ but

not to those that are ‘collateral.’” State v. Howard, supra,

110 N.J. at 122 (citing State v. Heitzman, 209 N.J. Super. 617,

622 (App. Div. 1986), aff’d o.b., 107 N.J. 603 (1987)).

However, these authorities apply to situations where the

defendant is not informed of a consequence.

A defendant also has the right not to be “misinformed . . .

as to a material element of a plea negotiation, which [he] has

relied thereon in entering his plea.” State v. Nichols, 71 N.J.

358, 361 (1976). Defendant’s “reasonable expectations,”

grounded in the terms of the plea agreement, must be fulfilled.

State v. Marzolf, 79 N.J. 167, 183 (1979) (citing State v.

Thomas, 61 N.J. 314, 322 (1972)). Thus, “misinformation about a

collateral consequence may vitiate a guilty plea if the

1). Lack of

1

was added, effective September 1, 2004.

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The requirement that defendant’s plea colloquy be under oathA-2453-08T4

consequence is a material element of the plea.” State v.

Jamgochian, 363 N.J. Super. 220, 225 (App. Div. 2003) (citing

State v. Howard, supra, 110 N.J. at 122).

Therefore, in the context of defendant’s misinformation,

the distinction between direct or collateral consequences is not

significant. Rather, the focus is on defendant’s expectation

and the inaccurate information conveyed by the plea agreement.

For that reason, this case does not turn on whether defendant’s

exclusion from participating in federally-funded healthcare

programs is a penal or collateral consequence of the plea.

Clearly, such exclusion is a collateral consequence. See

Manocchio v. Kusserow, 961 F.2d 1539, 1543 (11th Cir. 1992)

(holding that debarment pursuant to 42 U.S.C. § 1302a-7 is

remedial in nature and not punitive).

Here, the judge found that the State’s failure to

accurately inform defendant that his subsequent exclusion from

participation in federally-funded healthcare programs rendered

the guilty plea unknowing and involuntary. We agree.

We emphasize that neither the State nor the trial court

were required to alert defendant to the federal exclusion prior

to the entry of his guilty plea. The primary responsibility to

determine this consequence was on defendant, who anticipated the

possibility of losing his ability to operate Lincoln Rest

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Center. There would not be a reversal here if the State had

simply recommended a non-custodial sentence. However, the State

went further and promised to recommend that defendant’s license

to operate a rest home facility not be suspended. Clearly, the

State had no control over the New Jersey or federal licensing

bodies. But, by making the recommendation that it did, the

State conveyed erroneous information that federal exclusion was

not mandatory. The promise was illusory, and would never be

accepted by the licensing body. Moreover, the minsinformation

went to a consequence which was a material element of the plea

agreement from defendant’s perspective. Not losing the ability

to operate Lincoln Rest Center was defendant’s primary concern.

As stated above, the State’s recommendation had the capacity to

mislead defendant. The disclaimers at the plea hearing did not

resolve this misinformation.

Therefore, we agree with the judge that defendant’s plea

was not a knowing one. The order vacating the conviction is

affirmed and the matter is remanded for trial.

Affirmed.