Major Victory in Medicaid Kickback Case October 21, 2009Posted by jefhenninger in My Cases.
Tags: Medicaid fraud
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
DOCKET NO. A-2453-08T4
STATE OF NEW JERSEY,
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-
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).
We granted leave to the State to appeal from the
interlocutory order granting defendant Edward Acquaye’s petition
October 21, 2009
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
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.
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
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:
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
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,
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
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
was added, effective September 1, 2004.
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
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.