SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the 

convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the 

interest of brevity, portions of any opinion may not have been summarized.)

Allstate Insurance Company v. Northfield Medical Center, P.C. (A-27-15) (076069)

Argued January 4, 2017 -- Decided May 4, 2017

LaVecchia, J., writing for a unanimous Court.

In this appeal, the Court reviews the Appellate Division’s determination that the trial court erred in finding 

a knowing violation of the Insurance Fraud Prevention Act (IFPA), N.J.S.A. 17:33A-1 to -30. After a bench trial, 

Robert P. Borsody, Esq., a New York attorney, and Daniel H. Dahan, a California chiropractor, were found to have 

violated the IFPA to the extent they promoted and assisted in the creation of a practice structure designed to 

circumvent regulatory requirements with respect to the control, ownership, and direction of a medical practice.

N.J.A.C. 13:35-6.16(f), codified in 1992, explicitly provides that a medical doctor with a plenary scope of 

practice may not be employed by a licensee with a more limited scope of practice, such as a chiropractor. In 1995, 

the Executive Director of the State Board of Medical Examiners (Board), issued a letter-opinion in response to a 

hypothetical scenario in which a professional association was divided between a chiropractor holding a seventypercent interest and a doctor holding a thirty-percent interest. The director wrote that “[The Board] would find it 

inappropriate for a physician with a plenary scope of practice (M.D./D.O.) to be in a position where the practitioner 

with a limited scope of practice (here, a [chiropractor]) can compel—by the simple fact of majority voting rights—

the medical doctor to accept contracts for the provision of all manner of services.”

In the 1990s, Dahan began organizing a series of lectures throughout the country through his company, 

“Practice Perfect.” Practice Perfect lectures were marketed toward chiropractors and focused on the creation of 

multi-disciplinary practices in which chiropractors work with physicians and other medical professionals. Borsody 

made presentations at Practice Perfect lectures on the legal issues arising from such multi-disciplinary practices.

In late 1996, New Jersey-licensed chiropractor John Scott Neuner attended a two-day Practice Perfect 

seminar at which both Dahan and Borsody presented. The practice model, developed by Borsody and pitched at 

Dahan’s programs, included a number of safeguards to prevent the nominal doctor-owner of the medical corporation 

from seizing control of the practice from the real investor—the chiropractor. Prior to the seminar attended by 

Neuner, Borsody wrote at least one trade article that correctly stated that New Jersey requires a majority of the 

ownership interest in a medical corporation to be owned by medical doctors.

In March 1997, after attending the Practice Perfect seminar described above, Neuner signed a contract with 

Dahan to become a client of Practice Perfect. Neuner hired Dr. Robban A. Sica, M.D., as the initial doctor-owner of 

Northfield. Neuner also hired several doctors to work at Northfield who held no ownership interest in the practice.

In late 1998, Allstate, which had been receiving insurance claims for treatment provided at Northfield, 

began investigating the legality of Northfield’s practice structure. Neuner retained Borsody to represent him and, in 

January 1999, Borsody wrote that because the doctors hired to work at Northfield did not own stock in the medical 

practice, Neuner’s employment of those doctors likely violated existing guidance from the Board. As a result of its 

investigation, Allstate refused payment on approximately $330,000 in claims of patients treated by Northfield.

Allstate filed the instant action on October 19, 1999, against Neuner, Northfield, Dahan, Borsody, and a 

number of additional defendants. Neuner settled with Allstate early in the proceedings, in part in exchange for his 

agreement to testify against his co-defendants. For present purposes, the salient charges of the complaint allege that 

Borsody and Dahan (collectively, defendants) violated the IFPA by knowingly assisting Neuner in the creation and 

operation of a multi-disciplinary practice whose insurance claims were fraudulent under the IFPA. Allstate’s theory 

of the case relies on the practice’s failure to comply with governing standards on the corporate practice of medicine, 

a necessary precondition to a valid insurance claim.

The trial court found that Borsody and Dahan violated the IFPA when they “knowingly assisted, conspired 

with and urged Neuner to operate in a fashion that violated the law.” In an unpublished opinion, the Appellate 
2

Division reversed, concluding that the evidence did not support a finding that defendants knowingly violated the 

IFPA. The Court granted Allstate’s petition for certification. 223 N.J. 555 (2015).

HELD: Defendants extensively promoted a professional practice structure that a fact-finder could reasonably conclude 

was little more than a sham intended to evade well-established prohibitions and restrictions governing ownership and 

control of a medical practice by a non-doctor. In light of the broad anti-fraud liability imposed under the IFPA, holding 

defendants responsible for promoting and assisting in the formation of an ineligible medical practice was not a novel or 

unanticipated application of the statute. The trial court correctly applied a plain-language understanding of “knowing,” 

and its finding of a knowing violation of the IFPA is amply supported in this record.

1. N.J.S.A. 17:33A-4(b) instructs that “[a] person or practitioner violates [the IFPA] if he knowingly assists, 

conspires with, or urges any person or practitioner to violate any of the provisions of this act.” Defendants were 

found to have knowingly assisted or conspired with Neuner in violating the IFPA by promoting and helping Neuner 

with the construction of an impermissible professional practice structure that enabled the chiropractor to benefit 

from proceeds derived from his submission of medical claims for reimbursement, in violation of N.J.S.A. 17:33A4(a), (c). Proof of such violation need only be found to exist based on a preponderance of the evidence. (pp. 24-26)

2. This is not a criminal case. The trial court rightly did not import aspects of a “knowing” mens rea from the 

Criminal Code into the civil liability section of the IFPA at issue. Rather, the court correctly applied a plainlanguage understanding of “knowing,” which is well understood to be an awareness or knowledge of the illegality of 

one’s act. That knowledge need not come from a prior decision holding that the precise conduct at issue gives rise 

to a violation of a legal requirement. There is ample precedent supporting the proposition that a party’s knowledge 

as to the falsity or illegality of his conduct may be inferred from the surrounding factual circumstances. (pp. 26-35)

3. Defendants claim that they could not have knowingly violated the IFPA because it was not clear that compliance 

with practice-structure regulations was “material” to insurance submissions. The Court does not accept that a 

reasonable actor would not have known that compliance with the regulatory provisions governing the organization, 

supervision, and control of a medical practice was material to an insurance submission by that medical practice. 

Health care services are highly regulated. One cannot claim, or feign, ignorance of those regulatory requirements 

and restrictions until there is an express command applicable to a precise set of facts. (pp. 35-38)

4. The Court reviews the regulatory requirements in place governing the lawful structures for medical practices 

when Borsody and Dahan promoted their practice model and notes that the 1995 letter makes plain that the Board 

would allow no subterfuge to shield the existence of a real or potential corrupting influence that could be exercised 

by a management company or by a professional association where a licensee with a lesser scope of practice, like a 

chiropractor, could actually wield control over the practice of medicine by a plenary licensee. (pp. 38-40)

5. Based on the regulations in effect at the time and the testimony at trial, the trial court here could reasonably 

conclude that Borsody, as well as Dahan, knew of the regulatory requirements at issue, promoted a practice scheme 

specifically designed to circumvent those requirements while appearing compliant, and therefore knowingly assisted 

in the provision of services, the foreseeable result of which was the submission of invalid and misleading claims 

under the IFPA. The documents and structure promoted and designed by defendants accomplished what the 

regulations sought to avoid. They placed control over the medical practice in the hands of a chiropractor, subjecting 

plenary licensees to his effective control. The lengths that defendants went to in shielding the true controller of this 

practice from view undermine any basis for interfering with the trial court’s assessment of the mixed question of fact 

and law that was presented to the court. (pp. 40-44)

The judgment of the Appellate Division is REVERSED. The case is REMANDED to the Appellate 

Division for proceedings consistent with this opinion.

CHIEF JUSTICE RABNER and JUSTICES PATTERSON, FERNANDEZ-VINA, SOLOMON, and 

TIMPONE join in JUSTICE LaVECCHIA’s opinion. JUSTICE ALBIN did not participate.
1

SUPREME COURT OF NEW JERSEY

A-27 September Term 2015

076069

ALLSTATE INSURANCE COMPANY, 

ALLSTATE INDEMNITY COMPANY, 

ALLSTATE NEW JERSEY INSURANCE 

COMPANY,

Plaintiffs-Appellants,

v.

NORTHFIELD MEDICAL CENTER, 

P.C.; ROBBAN ARIEL SICA, M.D.; 

SCOTT DAVID, D.O.; J. SCOTT 

NEUNER, D.C.; JSM MANAGEMENT

COMPANY, INC.; TILTON 

CHIROPRACTIC CENTER, P.C.; 

TILTON CHIROPRACTIC CENTERS, 

SOUTH DIVISION, P.C.; ARNOLD 

BACARRO, M.D.; PANKAJ ANAND 

AGRAWAL, M.D. a/k/a “PANKAJ 

ANAND”; ALAN CARR, D.O.; 

VORRIE MACOM, M.D.; ALONSO V. 

CORREA, M.D.; ALONSO V. 

CORREA, M.D., P.C.; CORREA 

MEDICAL DIAGNOSTICS, P.C.; 

MEDICAL INNOVATIONS, INC.,

Defendants,

and

DANIEL H. DAHAN, D.C.; PRACTICE 

PERFECT; MEDICAL NEUROLOGICAL 

DIAGNOSTICS, INC., 

Defendants-Respondents,

and

ROBERT P. BORSODY, ESQ.,

Defendant-Respondent,

and
2

AMERICAN ARBITRATION 

ASSOCIATION,

Defendant in Interest.

Argued January 4, 2017 – Decided May 4, 2017

On certification to the Superior Court, 

Appellate Division.

Thomas J. Hall argued the cause for 

appellants (McGill & Hall and Pashman Stein, 

attorneys; Mr. Hall and Michael S. Stein, on 

the briefs).

Lawrence S. Lustberg argued the cause for 

respondent Robert P. Borsody, Esq. (Gibbons, 

attorneys; Mr. Lustberg and Amanda B. 

Protess, on the briefs).

Christopher B. Turcotte argued the cause for 

respondents Daniel H. Dahan, D.C., Practice 

Perfect and Medical Neurological 

Diagnostics, Inc.

John Zen Jackson argued the cause for amici

curiae Medical Society of New Jersey and the 

American Medical Association (McElroy, 

Deutsch, Mulvaney & Carpenter, attorneys).

Arthur Meisel submitted a brief on behalf of 

amicus curiae New Jersey Dental Association.

JUSTICE LaVECCHIA delivered the opinion of the Court.

Plaintiff Allstate Insurance Company (Allstate) filed a 

complaint alleging statutory claims of insurance fraud against

defendants Robert P. Borsody, Esq., a New York attorney, and 

Daniel H. Dahan, a California chiropractor (collectively, 

defendants). After a bench trial, defendants were found to have 

violated the Insurance Fraud Prevention Act (IFPA), N.J.S.A.
3

17:33A-1 to -30, by assisting a New Jersey chiropractor in the 

late 1990s in the creation of an unlawful multi-disciplinary 

practice, which submitted medical insurance claims to Allstate. 

The trial court determined that Borsody and Dahan violated the 

IFPA to the extent they promoted and assisted in the creation of 

a practice structure that was designed to circumvent regulatory 

requirements with respect to the control, ownership, and 

direction of a medical practice.

The Appellate Division reversed that judgment. In doing 

so, the panel relied on defendants’ arguments that Allstate had 

not established that defendants actually knew that their 

practice model violated regulatory requirements governing the 

lawful ownership and control of a medical practice, and that, 

even if evidence of such knowledge could be found in this 

record, Allstate had not established that defendants knew that a 

violation of those regulatory requirements could constitute 

insurance fraud under the provision of the IFPA that creates 

liability for one who “knowingly assists, conspires with, or 

urges any person or practitioner to violate any of the 

provisions of [the IFPA].” N.J.S.A. 17:33A-4(b). The Appellate 

Division concluded that the trial court erred in finding a 

knowing IFPA violation on the facts presented. 

Allstate sought our review of that determination, and we 

now reverse.
4

Defendants extensively promoted a professional practice 

structure that a fact-finder could reasonably conclude was 

little more than a sham intended to evade well-established 

prohibitions and restrictions governing ownership and control of 

a medical practice by a non-doctor. Further, in light of the 

broad anti-fraud liability imposed under the IFPA, holding 

defendants responsible for promoting and assisting in the 

formation of an ineligible medical practice -- created for the 

obvious purpose of seeking reimbursement for medical care

delivered by that practice -- was not a novel or unanticipated 

application of the statute. We conclude that the trial court’s

finding of a knowing violation of the IFPA is amply supported in

this record, which contains compelling evidence demonstrating

how the structure shielded from view its effective circumvention 

of regulatory rules.

For the reasons that follow, we reverse on the sole issue 

found to be determinative by the Appellate Division. Because 

there were other issues not reached by the panel, we remand to 

the Appellate Division to allow for their evaluation.

I.

Fair consideration of this matter necessitates, first and 

foremost, an understanding of the rules and requirements for 

ownership, control, and direction of a physician’s practice. 
5

Accordingly, before addressing the facts, we identify the 

requirements in place at the time relevant to this appeal.

A.

The State Board of Medical Examiners (Board) -- the entity 

responsible for establishing standards for professional practice 

by licensed physicians -- has addressed the permissible types of 

professional practice forms. A regulation, adopted by the Board 

in 1992 and codified at N.J.A.C. 13:35-6.16, figures prominently 

in this matter.

With the codification of N.J.A.C. 13:35-6.16, the Board 

established limits on the corporate practice of medicine. 

Section 6.16(f) lists the appropriate types of private practices 

-- for example, solo practice, partnership, and medical 

corporation -- and explicitly provides that a medical doctor 

with a plenary scope of practice may not be employed by a 

licensee with a more limited scope of practice, such as a 

chiropractor. In directing the proper structure of a medical 

practice, the regulation provides that

[a] practitioner may practice solo and/or may

employ or otherwise remunerate other licensed 

practitioners to render professional services 

within the scope of practice of each 

employee’s license, but which scope shall not 

exceed that of the employer’s license. The 

practitioner may employ ancillary nonlicensed staff in accordance with Board rules, 

if any, and accepted standards of practice.

[N.J.A.C. 13:35-6.16(f)(1).]
6

Subsection (f)(2) directs that 

[a] practitioner may practice in a 

partnership, professional association, or 

limited liability company, but such entity 

shall be composed solely of health care 

professionals, each of whom is duly licensed 

or otherwise authorized to render the same or 

closely allied professional service within 

this State.

[N.J.A.C. 13:35-6.16(f)(2).] 

Next, subsection (f)(3) defines employment as “an ongoing 

associational relationship between a licensee and professional 

practitioner(s) or entity on the professional practice premises 

for the provision of professional services, whether the licensee 

is denominated as an employee or independent contractor, for any 

form of remuneration.” N.J.A.C. 13:35-6.16(f)(3). Thereafter, 

subsection f(3)(i) provides that

[a] practitioner may be employed, as so 

defined, within the scope of the 

practitioner’s licensed practice and in 

circumstances where quality control of the 

employee’s professional practice can be and is 

lawfully supervised and evaluated by the 

employing practitioner. Thus, a practitioner 

with a plenary license shall not be employed 

by a practitioner with a limited scope of 

license, nor shall a practitioner with a 

limited license be employed by a practitioner 

with a more limited form of limited license. 

By way of example, a physician with a plenary 

license may be employed by another plenary 

licensed physician, but an M.D. or D.O. may 

not be employed by a podiatrist (D.P.M.) or 

chiropractor (D.C.) or midwife or certified 

nurse midwife (R.M., C.N.M.). A podiatrist 

may not employ a chiropractor. This section 

shall not preclude any licensee from employing 

licensed personnel such as nurses, x-ray 
7

technologists, physical therapists, 

ophthalmic dispensers and ophthalmic 

technicians, etc., as appropriate to the 

primary practice of the employer.

[N.J.A.C. 13:35-6.16(f)(3)(i).]

In addition to the above-mentioned parts of section 6.16, 

N.J.A.C. 13:35-6.17 bears noting, specifically subsections (h) 

and (i), which permit administrative contracts between a 

management company and a professional practice. The 

permissibility of a medical practice’s use of a management 

company was also addressed, to an extent, in a 1983 Appellate 

Division decision.

In Women’s Medical Center v. Finley, the Appellate Division 

considered whether three obstetrics and gynecological practices 

that were performing on-site abortions were subject to the 

Health Care Facilities Planning Act, N.J.S.A. 26:2H-1 to -26, or 

instead were exempt as a “private practice,” a term not defined 

under that Act. 192 N.J. Super. 44 (App. Div. 1983), certif. 

denied, 96 N.J. 279 (1984). The Appellate Division held that 

medical practices contracting with outside management companies 

“for the provision of a full range of non-professional office 

management services” were properly considered private medical 

practices under New Jersey regulatory law. Id. at 48. 

Anticipating the importance of physician control over the 

practice, the panel reasoned that 
8

[i]f the manner of [the services’] performance 

does not impinge upon the ordinary patientprivate physician relationship and does not 

impinge upon professional control by the 

physicians of the medical practice and does 

not affect the essential character and 

commonly understood attributes of private 

practice, then it is evident that the “inhouse” versus “out-of-house” business and 

administrative management of the practice has 

no fundamental impact on the . . . delivery of 

health care services.

[Id. at 58.]

B.

In addition to the administrative regulations governing the

subject of ownership and control of a physician’s medical 

practice, there are also other forms of guidance issued for the 

benefit of members of the public and regulated entities. 

Consistent with its administrative responsibility for licensure 

and oversight of the practice of medicine, the Board has on 

several occasions issued informal guidance in response to 

inquiries on the propriety of particular practice arrangements. 

The following informal opinions bear on the dispute at hand.

On November 16, 1995, the Board’s Executive Director, Kevin 

B. Earle, issued an extensive letter-opinion in response to a 

hypothetical scenario in which a professional association was 

divided between a chiropractor holding a seventy-percent 

interest and a doctor holding a thirty-percent interest. It is 

the most comprehensive letter-opinion issued on the subjects 

involved in this appeal. In that letter-opinion (hereinafter 
9

“Earle I”), the director noted that the Board had not “had 

occasion to consider a specific shareholder arrangement 

involving unequal ownership within a practice.” However, 

Director Earle wrote that, in the context suggested by the 

inquiry, the Board “would find that division especially 

questionable and inappropriate.” Because of its importance, we 

quote the explanation in full:

[The Board] would find it inappropriate for a 

physician with a plenary scope of practice 

(M.D./D.O.) to be in a position where the 

practitioner with a limited scope of practice 

(here, a [chiropractor]) can compel -- by the 

simple fact of majority voting rights -- the 

medical doctor to accept contracts for the 

provision of all manner of services to the 

Professional Association. The potential for 

override of the physician’s professional 

judgment, as well as the determination as to 

how the practice shall be conducted, is deemed 

to be even more inappropriate where the 

management company itself is wholly owned by 

the 70% shareholder of the Professional 

Association who is a limited licensee.

Further, your scenario appears to contemplate 

that other physicians shall be hired by the 

Professional Association. Current Board 

[R]ule N.J.A.C. 13:35-6.16(f)(3)(i) 

specifically prohibits the hiring of a plenary 

licensed physician by a limited licensed 

practitioner. While we recognize that it is 

nominally the Professional Association which 

is the “employer” rather than the 

chiropractor, for our purposes that would be 

a distinction without a difference. For that 

quality control reason, the Board has always 

held that a multi-disciplinary practice cannot 

employ physicians who are not themselves 

shareholders in the practice.
10

You have also indicated that the other 

licensed professionals who would be employed 

by this Professional Association would not 

necessarily be under the supervision of the 

medical doctor/Medical Director. We find this 

to be inappropriate. Employees of any form of 

professional practice, whether independently 

licensed or not, are expected to remain under 

the general supervision of the employer, 

including a Medical Director, if any. See

Board [R]ule N.J.A.C. 13:35-6.16(b), (d) and 

(e).

Earle I also touches on administrative contracts between 

the proposed practice and management company, noting that, 

although “N.J.A.C. 13:35-6.17(h) and (i) specifically permit[]” 

administrative contracts between a management company and a 

professional practice, the Board nevertheless “expects that a 

licensee shall retain the right to terminate any such contract 

for legally permissible reasons including for cause.” 

Summarizing the advice on such arrangements, Earle I states that 

the Board would find it “highly imprudent for a physician 

(through the Professional Association) to enter into a contract 

with the same management company which also leases space and 

equipment and provides administrative services” because (1) “the 

physician would be subject to coercive influences including 

foreseeable total disruption of an ongoing professional practice 

if the physician later sought to cease using the management 

company to provide any of those individual services”; and (2) 

“termination might well be impossible because of the 70% 

ownership in the Professional Association of the person who also 
11

owns the management company.” The Earle I advisory letter 

underscored the need to neuter any coercive influences by 

cautioning that, at a minimum, “each such contract should be 

separate and without any interlocking features.”

Finally, the Earle I letter addressed a proposal to allow 

the management company to make above-market-rate loans to the 

practice, calling that proposal particularly concerning to the 

Board because it created “a clear potential to adversely affect 

the professional judgment of the minority shareholder in 

numerous ways.” The Earle I document added that designating the 

minority shareholder physician as the Medical Director “cannot 

save the scenario from the potential abuse and coercion inherent 

in the various circumstances described.”

A few weeks before the incorporation of the disputed 

practice at issue here, Director Earle issued a second advisory 

letter (hereinafter “Earle II”) on April 28, 1997, confirming

the opinion-seeker’s interpretation “that a medical doctor and a 

chiropractor [may] form a professional corporation and both may 

own shares in such a corporation,” but that the medical doctor, 

as the licensee with a plenary scope of practice, must own a 

majority of the stock in the corporation.

After the incorporation of the practice involved in this 

appeal, another advisory letter touching on the topic at hand 

was written on June 11, 1997, by a Deputy Attorney General in 
12

her capacity as a counsel to the Board. That letter stated that 

a chiropractor and a medical doctor may join their practices in 

a professional corporation, but that “it is important to note 

that the licensees must maintain professional discretion of 

their judgment in the rendering of professional services.” The 

letter also noted that “[t]here is no statutory or regulatory 

provision requiring that the licensee with the greater scope of 

practice hold a majority of the stock in the professional 

corporation.”

With that state regulatory background in mind, we turn to 

the record in this matter.

II.

A.

Defendants’ appeal comes to us on the basis of a completed 

bench trial. The backdrop to this matter involves actions taken 

by a New Jersey-licensed chiropractor, John Scott Neuner. 

Neuner testified in the trial of the IFPA complaint filed by 

Allstate against the multi-disciplinary practice that he had

incorporated as Northfield Medical Center (Northfield), as well 

as the various other professional entities and persons named as 

defendants. To set the stage for the issue determined to be 

dispositive by the Appellate Division, we begin by summarizing 

how Neuner and the two defendants came into contact with one 

another, leading to the incorporation of Northfield and how it 
13

was structured and operated. We recite the facts giving due 

respect to the trial court’s findings of fact, which 

incorporated credibility determinations.

1.

In the 1990s, Dahan, a chiropractor licensed in California, 

began organizing a series of lectures throughout the country 

through his company, “Practice Perfect.” Practice Perfect 

lectures were marketed toward chiropractors and focused on the 

creation of multi-disciplinary practices in which chiropractors 

work with physicians and other medical professionals. Borsody, 

a New York-based healthcare attorney, made presentations at 

Practice Perfect lectures on the legal issues arising from such 

multi-disciplinary practices.

In late 1996, Neuner attended a two-day Practice Perfect 

seminar at which both Dahan and Borsody presented. According to 

Neuner, Borsody explained that a chiropractor may not own a 

majority interest in a medical practice, may not split fees with 

a doctor, and must refrain from self-referrals and kickbacks. 

Borsody proposed a model form of practice that he had developed 

for a multi-disciplinary center, which allowed an investing 

chiropractor to retain control of the finances of a medical 

practice. Borsody’s practice model relied on a series of 

contracts between a management company owned by the investing 

chiropractor and a separate medical corporation owned by a 
14

doctor. The stated goal of the interconnected contracts was to 

protect the chiropractor’s financial investment in the medical 

practice.

Borsody’s model included three key types of contracts: (1) 

space rental leases, (2) equipment leases, and (3) management 

contracts. The overarching purpose of each of those contracts 

was to allow the chiropractor-owned management company to 

extract profits from and maintain control over the affiliated 

medical corporation. Borsody explained that a majority of the 

stock in the medical corporation should be owned by a medical 

doctor, but he clarified that this doctor need not participate 

in the day-to-day treatment of patients. Separately, other 

doctors would be employed by the medical corporation to see and 

treat patients. All profits from the endeavor would be paid to 

the management company, which would be owned by the 

chiropractor, in exchange for the provision of management 

services, leased space, and leased equipment.

The practice model, developed by Borsody and pitched at 

Dahan’s programs, included a number of safeguards to ensure 

continued control of the practice by the chiropractor-manager. 

First, the doctor designated as the owner of the medical 

corporation would be asked to sign an undated resignation 

letter. Second, the doctor would be asked to sign an undated 

“AFFIDAVIT OF NON ISSUED OR LOST CERTIFICATE,” bearing an 
15

unexecuted notary attestation for the doctor’s signature and the 

date. Through those two documents, the chiropractor could, if 

necessary, remove the doctor from his or her position and have 

it appear that the controlling interest in stock certificates 

previously held by the doctor was being transferred from the 

departing physician to another physician.1 Third, Borsody told 

lecture participants that the leases between the management 

company and the medical corporation should include a “break fee” 

of $100,000 to penalize the medical practice’s doctor-owner for 

breaking the lease. That combination of measures was intended 

to prevent the nominal doctor-owner of the medical corporation 

from seizing control of the practice from the real investor --

the chiropractor.

In addition to hearing Neuner’s description of the 

information conveyed at the lecture on how the practice 

structure was designed to operate and hearing a tape from 

another Practice Perfect seminar -- described by Neuner as 

“substantially” the same in its content -- the trial court also 

admitted into the record a descriptive article authored by 

Borsody. Specifically, prior to the seminar attended by Neuner, 

Borsody wrote at least one trade article discussing the law of 

 

1 That “AFFIDAVIT OF NON ISSUED OR LOST CERTIFICATE” enabled the 

chiropractor to maintain control and never be forced to trust 

the removed doctor to actually transfer to another doctor stock 

that either was never issued or purportedly was lost.
16

multi-disciplinary practices, including the legal requirements 

for ownership. That article, which the trial court had before 

it, correctly stated that New Jersey requires a majority of the 

ownership interest in a medical corporation to be owned by 

medical doctors. Borsody stated in the article that this rule 

is in place because non-doctor ownership “would risk 

interference with clinical decisions of [doctors] employed in 

those practices.” Addressing the contractual relationships 

between practices and outside management companies, Borsody 

wrote that courts have “smile[d] upon contracts which make 

clearly nonprofessional services available on an arms-length 

basis” and “[f]rowned upon . . . contracts that show excessive 

control over the corporate activities of the [practice] (e.g., 

the right to replace the shareholder); that show control over 

hiring, firing and disciplining of employed [doctors]; and that 

have excessive control over financial affairs of the 

[practice].” Borsody’s article warned that concentration of 

nonprofessional services in a management company, and inclusion 

of those “frowned upon” contractual provisions, would be 

“fraught with peril.”

2.

On March 28, 1997, after attending the Practice Perfect 

seminar described above, Neuner signed a contract with Dahan to 

become a client of Practice Perfect. Neuner spoke with Borsody 
17

about establishing a medical corporation and management company 

as had been described. He learned that Borsody’s fee to set up 

a multi-disciplinary practice would be about $9000. When Neuner 

relayed that fee information to Dahan, the latter called the fee 

“outrageous” and provided Neuner with a phone number that he 

could call to obtain form documents for the creation of the 

necessary entities. Neuner ultimately paid $2600 for those form 

documents. Unbeknownst to Neuner, the source of those documents 

was a separate firm owned by Dahan that was reproducing and 

distributing contracts previously drafted by Borsody, without 

Borsody’s knowledge or permission. Neuner used the forms to 

incorporate JSM Management, a management company, and 

Northfield, a medical corporation. Neuner also consulted a New 

Jersey attorney but was advised by Dahan that it was not 

necessary to “reinvent the wheel” by having an attorney redraft 

legal documents already included in the forms provided by 

Dahan’s consulting firm.

Neuner hired Dr. Robban A. Sica, M.D., as the initial

doctor-owner of Northfield. Neuner had never met Dr. Sica

before Dahan referred Neuner to her. Neuner also hired several 

doctors to work at Northfield. Those doctors held no ownership 

interest in the practice. In April 1998, due to a disagreement 

between Dr. Sica and Neuner, Neuner replaced her with a new 

doctor-owner. According to the new owner, Dr. Scott David, 
18

D.O., he was told that he “could be like a hired CEO, [or] like 

a figure head on a board, and [he] would get compensation for 

that with limited time.” Dr. David also testified that Borsody 

told him that he did not need malpractice insurance because he 

would not be treating patients at Northfield.

In late 1998, Allstate, which had been receiving insurance 

claims for treatment provided at Northfield, began investigating 

the legality of Northfield’s practice structure and ceased

paying claims to the practice. Neuner retained Borsody to 

represent him with respect to the investigation. On January 28, 

1999, Borsody wrote to Neuner, informing him that because the 

doctors hired to work at Northfield did not own stock in the 

medical practice, Neuner’s employment of those doctors likely 

violated existing guidance from the Board. 

As a result of its investigation, Allstate refused payment 

on approximately $330,000 in claims of patients treated by 

Northfield. 

B.

1.

Allstate filed the instant action on October 19, 1999,

against Neuner, Northfield, JSM Management, Dahan, Borsody, and 

a number of additional defendants. The matter has a tortuous 

procedural history, and not all of its details are relevant to 

the issue in this appeal. However, we note that Neuner settled 
19

with Allstate early in the proceedings, in part in exchange for 

his agreement to testify against his co-defendants. For present 

purposes, the salient charges of the complaint allege that 

Borsody and Dahan violated the IFPA by knowingly assisting 

Neuner in the creation and operation of a multi-disciplinary 

practice whose insurance claims were fraudulent under the IFPA. 

Allstate’s theory of the case relies not on any false claim 

submitted by Neuner’s practice, but on the practice’s failure to

comply with governing standards on the corporate practice of 

medicine, a necessary precondition to a valid insurance claim.

2.

At the bench trial, Neuner and others testified to the 

facts already described about the lectures, the roles that 

Borsody and Dahan played in the establishment and structure of 

the Northfield practice, and the respective roles of the various 

parties. Borsody also testified about his knowledge of relevant 

legal restrictions concerning multi-disciplinary practices, 

which testimony deserves separate attention.

Borsody described the information he conveyed in his 

lectures at Practice Perfect seminars. He stated that he 

covered “the legal aspect of the multi-disciplinary structures,” 

including the decision in Finley and a case from Texas that he 

deemed relevant. Specifically, Borsody referenced Flynn Bros., 

Inc. v. First Medical Associates, 715 S.W.2d 782 (Tex. App. 
20

1986), which involved the issue of whether, as a result of a 

management company’s inappropriate influence over a medical 

practice, the management company effectively engaged in the 

unlicensed practice of medicine.2

Borsody acknowledged in his testimony that he was familiar 

with the Earle I letter and had considered it when developing 

the material covered in the lectures. He described the lectures 

as covering the corporate-practice-of-medicine doctrine, 

including its application in New Jersey, although he stated that 

he did not discuss N.J.A.C. 13:35-6.16 specifically. 

In his testimony, Borsody explained that he developed the

practice model after a previous experience in which chiropractor 

clients of his lost their investment in a multi-disciplinary 

practice because the doctor they were working with “walked off 

with the practice.” Accordingly, the model Borsody developed to 

prevent that from happening again relied on terms in the 

equipment lease, property lease, and management contract between 

the medical corporation and the management company, which

 

2 The opinion in Flynn Bros., supra, explains that under Texas

law, “when a corporation comprised of lay persons employs 

licensed physicians to treat patients and the corporation 

receives the fee, the corporation is unlawfully engaged in the 

practice of medicine.” 715 S.W.2d at 785. Although the doctor 

in that case was not an employee under the management agreement, 

the court found that “the practical effect was the same” because 

the contractual arrangements between the doctor’s practice and 

the management company “[were] developed to do indirectly that 

which [the company’s owners] freely concede[d] they could not do 

directly under the Medical Practices Act.” Ibid.
21

“[made] it look as tough as possible” for the designated medical 

director to take control of the practice. Those provisions, 

which were implemented in Northfield’s governing documents, 

included a security interest held by the management company in 

all of the medical corporation’s assets and a $100,000 

termination penalty should the medical corporation breach its 

lease.

Borsody asserted that he believed his model was lawful 

based on his reading of Finley and the laws of various states 

where he advocated that model. He testified that, during the 

period at issue, “most states” required “the medical practice 

[to be] under the supervision and control of a licensed medical 

doctor” and “every State, including New Jersey, prohibited 

chiropractors from employing medical doctors.” However, he

testified that he thought that vesting “bare legal title” of the 

medical practice in a medical doctor was sufficient to comply 

with those prohibitions. According to Borsody, it was not clear 

that medical practices using his model might violate New Jersey

law until the Law Division issued its decision in Allstate 

Insurance Co. v. Schick, 328 N.J. Super. 611 (Law Div. 1999).3 

Borsody also emphasized that he advised Practice Perfect 

 

3 Schick, supra, held that medical corporations violate the IFPA 

if they submit claims to insurers while under the “dominion and 

control” of non-physicians. 328 N.J. Super. at 628.
22

attendees to retain local counsel who could confirm that his 

model complied with local law.

In addition to hearing testimony from Borsody, as well as

Dahan, the court heard from a number of experts on the 

healthcare laws at issue.

C.

Based on the record presented, the trial court found that 

Borsody and Dahan violated the IFPA when they “knowingly 

assisted, conspired with and urged Neuner to operate in a 

fashion that violated the law.” The trial judge rejected 

defendants’ argument that, because the law was unclear prior to 

the Law Division’s decision in Schick, the evidence did not 

establish a knowing violation of the Act. In doing so, the 

court made combined conclusions of law and findings of fact that 

were, in part, credibility-based. 

The judge observed that both Flynn Bros. and the Earle I

letter, each of which Borsody was admittedly familiar with, 

established “the clear proposition that subterfuge in developing 

medical practices is untenable.” The court focused on the facts 

showing that a chiropractor was really in control of this 

medical practice, although on paper there was a trail suggesting 

otherwise. Despite Borsody’s claimed lack of knowledge of a 

violation of regulatory requirements, or that a regulatory 

misstep would provide a platform for a finding of an IFPA 
23

violation for assisting another to submit fraudulently

ineligible medical claims, the trial court found the evidence 

otherwise. In a Statement of Reasons, the trial court set forth 

the essence of its determination:

Borsody and Dahan promoted what they knew was 

essentially a lie. The business model they 

promoted was intended to appear to be one way 

and yet, in reality, be another way. They 

both were motivated to provide to the 

chiropractor the ability to manage a practice 

which included medical doctors. Dahan knew 

that a chiropractor could not own a majority 

interest of a multi-disciplinary practice 

since his California corporation was 

established so that he was a minority 

shareholder himself. Borsody knew that he was 

placing in the hands of the chiropractor the 

control that was lacking in his first 

experience in New York. The simple fact that 

the practice was intended to look as though a 

medical doctor was in control yet, with 

various side agreements, he was not, 

constitutes a sufficient basis for the Court 

to conclude that Borsody knew what he was 

doing was not proper. 

The trial judge rejected defendants’ claimed reliance on 

the Deputy Attorney General’s guidance letter, issued after 

Northfield was established, and found that, at best, defendants 

had exhibited “willful blindness” to the illegality of the model

at issue.

In an unpublished opinion, the Appellate Division reversed 

the trial court’s judgment based on the panel’s conclusion that 

the evidence did not support a finding that defendants knowingly 

violated the IFPA. The panel noted that in his lectures Borsody 
24

discussed the requirement that only a medical doctor was 

permitted to own the majority share of a medical corporation and 

that, in light of the existing case law and informal guidance, 

Borsody had a basis to believe his model was lawful.4 The 

Appellate Division found it relevant that the practice model 

“was similar to others used in business between corporations to 

enable the exercise of economic control.” Expanding its 

discussion to Dahan, and noting that the IFPA does not define 

“knowing,” the Appellate Division concluded that “[t]here is not 

sufficient evidence that New Jersey law at the time was settled 

enough to hold [him] responsible for knowing that the corporate 

structure he was advocating was illegal.”

We granted Allstate’s petition for certification. 223 N.J.

555 (2015). Amicus curiae status was granted to the Medical 

Society of New Jersey, the American Medical Association, and the 

New Jersey Dental Association.

III.

A.

In relevant part, the IFPA provides as follows:

a. A person or a practitioner violates this 

act if he:

(1) Presents or causes to be 

presented any written or oral 

 

4 Like the trial court, the Appellate Division correctly placed 

no stock in defendants’ arguments based on the letter-opinion 

issued by the Deputy Attorney General after the incorporation of 

Northfield.
25

statement as part of, or in support 

of or opposition to, a claim for 

payment or other benefit pursuant to 

an insurance policy or the 

“Unsatisfied Claim and Judgment 

Fund Law,” P.L.1952, c. 174 (C.39:6-

61 et seq.), knowing that the 

statement contains any false or 

misleading information concerning 

any fact or thing material to the 

claim; or

(2) Prepares or makes any written or 

oral statement that is intended to 

be presented to any insurance 

company, the Unsatisfied Claim and 

Judgment Fund or any claimant 

thereof in connection with, or in 

support of or opposition to any 

claim for payment or other benefit 

pursuant to an insurance policy or 

the “Unsatisfied Claim and Judgment 

Fund Law,” P.L.1952, c. 174 (C.39:6-

61 et seq.), knowing that the 

statement contains any false or 

misleading information concerning 

any fact or thing material to the 

claim; or

(3) Conceals or knowingly fails to 

disclose the occurrence of an event

which affects any person’s initial 

or continued right or entitlement to 

(a) any insurance benefit or payment

or (b) the amount of any benefit or 

payment to which the person is 

entitled.

[N.J.S.A. 17:33A-4(a)(1)-(3) (emphases

added).]

N.J.S.A. 17:33A-4(b) further instructs that “[a] person or 

practitioner violates this act if he knowingly assists, 

conspires with, or urges any person or practitioner to violate 

any of the provisions of this act.” Furthermore, N.J.S.A.
26

17:33A-4(c) provides that “[a] person or practitioner violates 

this act if, due to the assistance, conspiracy or urging of any 

person or practitioner, he knowingly benefits, directly or 

indirectly, from the proceeds derived from a violation of this 

act.”

In pertinent part, defendants were found to have knowingly 

assisted or conspired with Neuner in violating the IFPA under 

N.J.S.A. 17:33A-4(b) by promoting and helping Neuner with the

construction of an impermissible professional practice structure 

that enabled the chiropractor to benefit from proceeds derived

from his submission of medical claims for reimbursement, in

violation of the act, N.J.S.A. 17:33A-4(a), (c). Proof of such 

violation need only be found to exist based on a preponderance 

of the evidence. See Liberty Mut. Ins. Co. v. Land, 186 N.J.

163, 174-75 (2006) (holding that “the proper standard of proof 

is a preponderance of the evidence” as opposed to “clear and 

convincing evidence”).

B.

The parties’ disagreement before this Court centers on the 

standard for a knowing violation under the IFPA and its 

application in this instance.

1.

Allstate focuses on the error it perceives in the standard 

applied by the Appellate Division, which hinged on whether there 
27

was any dispositive case or interpretive guide to instruct 

defendants that (1) the practice structure involved here 

contravened medical practice requirements or restrictions, and 

(2) the regulatory failing would provide a basis to support a 

knowing IFPA violation for promoting and assisting in the 

construction of such an impermissible practice used to submit 

medical insurance claims.

Allstate maintains that the trial court had sufficient 

evidence to support the finding of a knowing violation of the 

IFPA. It urges application of a plain-meaning understanding of 

the term “knowing” using the concept of awareness of illegality,

taking into account the reasonableness of the basis for 

defendants’ claimed lack of knowledge of illegality. 

Allstate argues that the trial court had ample evidence 

from which to infer defendants’ knowledge that their practice

model, denoted by Allstate as the “Doc-in-the-Box” model,

violated the permissible medical practice requirements in New 

Jersey as those standards were stated in regulation and 

explained by regulatory agents, in particular through the Earle 

I letter-opinion. Moreover, Allstate points to the trial 

court’s reliance on defendants’ efforts to conceal the real 

impact of the chiropractor-owner’s control over the medical 

practice in theory and in reality through the interconnected 
28

management and other contracts and agreements, supporting a 

knowing violation of the IFPA.

In rebutting defendants’ arguments, Allstate argues that

although Schick “was the first case to hold expressly that 

[d]efendants’ sham Doc-in-the-Box scheme was illegal in New 

Jersey,” nothing in that opinion “suggest[ed] that the [issue] 

was a difficult or even a close call.”5 Schick involved many of 

the same players involved in this action, but Allstate claims 

that defendants do not get a free pass until the Schick court 

declared them to have engaged in an illegal practice scheme. In 

a similar vein, Allstate points to Varano, Damian & Finkel, 

L.L.C. v. Allstate Ins. Co., 366 N.J. Super. 1 (App. Div. 2004), 

as further demonstrating that the illegality of defendants’ 

“Doc-in-the-Box” scheme was not a close question. As in Schick, 

the Varano matter involved Dr. Sica as the “nominal” owner of a 

medical practice, Ramsey Medical, which, like Northfield, was 

 

5 Allstate would have us note that the Schick matter involved 

similar facts to the present case: (1) Dr. Sica was the nominal 

owner of five of the “sham medical centers”; (2) Dr. Sica signed 

“undated resignation letters and stock assignments”; and (3) the 

Schick “[d]efendants used management companies and service 

agreements similar to those used by Neuner . . . to control the 

hiring of physicians and to extract all of the profits from the 

medical centers.” As Allstate notes in its briefing to this 

Court, the Schick court concluded that “[i]t would be difficult 

to conceive of a network of healthcare and management facilities 

better designed to facilitate the funneling of PIP benefits into 

the hands of non-licensees than the complex enterprises devised 

and operated by the defendants herein” (quoting Schick, supra, 

328 N.J. Super. at 621).
29

controlled by a chiropractor through the use of a management 

company and service contract. Allstate contends that the 

Appellate Division readily found the practice structure in 

Varano illegal. Allstate relies on language in Varano that 

“[i]t [was] apparent from even a cursory review of Allstate’s 

allegations and the relevant case law that plaintiffs’ conduct, 

as portrayed by Allstate, constituted a serious breach of law 

and policy.” Varano, supra, 366 N.J. Super. at 8. According to 

Allstate, “[t]he fact that the Schick and Varano decisions were 

not handed down until after the Practice Perfect Seminar

[attended by Neuner] cannot override the obvious fact that the 

corporate structure advocated by Borsody and Dahan relied on 

subterfuge.”

2. 

As defendants see it, the Appellate Division rightfully 

expressed concern that an ordinary-meaning definition of 

“knowing” -- one that considers whether defendants were “aware 

of” or “had knowledge” of the illegality of their actions --

might not establish, through proof by a preponderance of the 

evidence, a knowing violation of the IFPA under N.J.S.A. 17:33A4(b) and (c), where the alleged violators made no direct 

submission to the insurer themselves. Defendants stress that 

violation of the IFPA would require their knowledge both of the 

illegality of the practice structure they are charged with 
30

promoting and assisting Neuner in establishing and that 

promotion and assistance with that non-compliant medical 

practice would lead to an IFPA violation based on the practice’s 

submission of insurance claims.

Although the panel stated that it did not adopt the 

Criminal Code definition of “knowing” found in N.J.S.A. 2C:2-

2(b)(2), which defendants had urged before the panel, 

defendants’ argument before us in essence continues to rely on

the meaning of “knowing” in the Criminal Code. Defendants argue 

that a demonstration of actual knowledge or awareness of 

illegality is the level of knowledge that should be necessary

under an ordinary-meaning application of “knowing” in this 

context. In the alternative, defendants contend that under the 

Criminal Code’s requirement in N.J.S.A. 2C:2-2(b)(2), a 

defendant must be shown to have (a) acted “knowingly with 

respect to the nature of his conduct or the attendant 

circumstances,” and (b) acted “knowingly with respect to a 

result of his conduct,” requiring proof that he was “aware that 

it is practically certain that his conduct will cause such a 

result.” Defendant Borsody, in particular, contends that 

Allstate could not show that his conduct was practically certain 

to cause Neuner and Northfield to file false or misleading 

claims, or that he was practically certain at the time of his 
31

conduct that the false or misleading information in those claims 

would be material to an insurer such as Allstate.

Defendants now ask this Court to endorse the standard that

the panel utilized, which would require Allstate’s proofs to 

establish that Borsody and Dahan had to know, from dispositive 

case law or other binding interpretive action, that the practice 

model defendants devised and promoted for use by Neuner violated 

New Jersey statute or regulation. According to the panel, that 

standard was not met in this matter. The panel also rejected 

willful blindness as an acceptable standard for a knowing 

violation when the violation involves the interpretation of a 

statutory or regulatory requirement.

In urging this Court to affirm the proof standard applied

by the Appellate Division, defendants assert that, until the

definitive 1999 decision in Schick declared the practice

structure at issue to be in violation of law, defendants could 

not, and should not, be held to have knowingly violated the 

IFPA. Further, defendants maintain that, until Allstate 

Insurance Co. v. Orthopedic Evaluations, Inc., 300 N.J. Super.

510 (App. Div. 1997), no defendant would have known that a mere 

violation of regulatory restrictions applicable to the business 

structure of a medical practice could render invalid and 

ineligible a medical-service insurance claim, and thus place at 
32

risk the third party who assisted in the promotion and 

construction of that form of medical practice.

Amicus New Jersey Dental Association urges the Court to 

import the Legislature’s definition of “knowing” from New 

Jersey’s False Claims Act, N.J.S.A. 2A:32C-1 to -15, -17 to -18, 

or, alternatively, to apply the Criminal Code definition. The 

remaining amici argue against application of the False Claims 

Act definition and emphasize that a plain-language understanding 

of “knowing” does not include concepts of recklessness or 

constructive knowledge.

IV.

A.

The standards we apply in reviewing the findings and 

conclusions of a trial court following a bench trial are wellestablished:

[W]e give deference to the trial court that 

heard the witnesses, sifted the competing 

evidence, and made reasoned conclusions. See

Rova Farms Resort v. Investors Ins. Co., 65 

N.J. 474, 483-84 (1974). Reviewing appellate 

courts should “not disturb the factual 

findings and legal conclusions of the trial 

judge” unless convinced that those findings 

and conclusions were “so manifestly 

unsupported by or inconsistent with the 

competent, relevant and reasonably credible 

evidence as to offend the interests of 

justice.” Id. at 484 (citation and internal 

quotation marks omitted); see, e.g., Seidman 

v. Clifton Sav. Bank, 205 N.J. 150, 169 (2011) 

(same).
33

[Griepenburg v. Township of Ocean, 220 N.J.

239, 254 (2015); see also H.S.P. v. J.K., 223 

N.J. 196, 215 (2015).]

Questions of law receive de novo review. Manalapan Realty, L.P. 

v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

B.

In this matter, we are called on to assess the trial 

court’s application of a “knowing” standard that is required for 

a violation of the IFPA, specifically N.J.S.A. 17:33A-4(b)

(instructing that “[a] person or practitioner violates this act 

if he knowingly assists, conspires with, or urges any person or 

practitioner to violate any of the provisions of this act”); see 

also N.J.S.A. 17:33A-4(a), (c).

This is not a criminal case. And, the Legislature did not 

incorporate the criminal definition of a “knowing” mens rea in 

its adoption of a knowing violation for IFPA civil liability, as 

is applicable in criminal insurance fraud prosecutions. See

N.J.S.A. 2C:21-4.6. The trial court rightly did not import 

aspects of a “knowing” mens rea from the Criminal Code into the 

civil liability section of the IFPA at issue. Rather, the court 

correctly applied a plain-language understanding of “knowing” as 

a term of normal language usage for the Legislature to have 

employed in the IFPA. There is no need for contortions in 

understanding the word. “Knowing” is well understood to be an 

awareness or knowledge of the illegality of one’s act. See
34

Knowing, Black’s Law Dictionary 950 (9th ed. 2009) (“[h]aving or 

showing awareness or understanding; well-informed”). That 

knowledge need not come from a prior decision holding that the 

precise conduct at issue gives rise to a violation of a legal 

requirement.

There is ample precedent supporting the proposition that a 

party’s knowledge as to the falsity or illegality of his conduct 

may be inferred from the surrounding factual circumstances. 

This Court has held, in a prosecution for false swearing, that 

proof that a defendant’s statement was knowingly false “need not 

be met by direct evidence. The intent may be inferred from the 

circumstances surrounding the occurrence, the defendant’s 

demeanor, his intellect, etc.” State v. Haines, 18 N.J. 550, 

562 (1955) (applying N.J.S.A. 2A:131-6 (repealed 1978) (current 

version at N.J.S.A. 2C:28-2)). “[A]s has oftentimes been 

stated, circumstantial evidence is not only sufficient but may 

also be ‘more certain, satisfying and persuasive than direct 

evidence.’” State v. Goodman, 9 N.J. 569, 581 (1952) (quoting 

State v. O’Connor, 134 N.J.L. 536, 539 (Sup. Ct. 1946)).

“Inferring mental state from circumstantial evidence is 

among the chief tasks of factfinders.” United States v. Wright, 

665 F.3d 560, 569 (3d Cir. 2012) (explaining that jury may 

permissibly rely on circumstantial evidence to reach verdict on 

federal conspiracy and fraud charges); see also United States v. 
35

Brodie, 403 F.3d 123, 147 (3d Cir. 2005) (“A jury may infer a 

willful violation of a known legal obligation from the facts and 

circumstances surrounding the case.”). In the criminal context, 

the prosecution “can prove the requisite mental state through 

either direct evidence or circumstantial evidence.” McFadden v. 

United States, 576 U.S. ___, 135 S. Ct. 2298, 2304 n.1, 192 L.

Ed. 2d 260, 269 n.1 (2015). In a civil action under the IFPA, 

no less than in a criminal trial, the defendant’s knowledge of a 

violation may be proven by circumstantial evidence. 

With that standard in mind, we turn to defendants’ argument 

that knowledge in this instance could come only from a prior 

decision that would have, or should have, informed defendants of 

the certainty of the illegality of their practice model. And, 

further, we address the argument that defendants similarly 

required a definitive holding that would have informed them that 

a regulatory business-practice requirement, relating to 

permissible practice models, could provide the platform from 

which a knowing violation of the IFPA could emanate. We address 

the latter first. 

V.

A.

Defendants claim that, even if their practice model 

violated the Board’s regulations governing the permissible 

business structures for the organization of a medical practice, 
36

defendants could not have knowingly violated the IFPA because it 

was not clear at the time that compliance with those practicestructure regulations was “material” to insurance claims 

submissions. See N.J.S.A. 17:33A-4. Defendants seemingly 

concede that the Appellate Division’s May 1997 decision in 

Orthopedic Evaluations, Inc., supra, 300 N.J. Super. at 516-17, 

at about the time that Northfield was being incorporated, was 

the earliest point at which practitioners could have known that 

the Board’s regulatory provisions are material for purposes of 

insurance coverage. 

We do not accept the proposition that, prior to Orthopedic 

Evaluations, Inc., a reasonable actor would not have known that 

compliance with the regulatory provisions governing the 

organization, supervision, and control of a medical practice was 

material to an insurance submission by that medical practice. 

Addressing coverage under the Automobile Reparation Reform Act, 

N.J.S.A. 39:6A-1 to -35, the appellate panel in Orthopedic 

Evaluations, Inc., supra, observed that “[a] fair reading of the 

Act . . . requires the conclusion that any healthcare service 

authorized by the Act, in order to be eligible for recognition, 

must also comply with any other significant qualifying 

requirements of law that bear upon rendition of the service.” 

300 N.J. Super. at 516. As a matter of public policy, “[t]he 

law should accord no recognition to such entities and operations 
37

which place the public at risk by failing to provide the 

professional supervision and control deemed essential by the 

Board.” Id. at 517. See also Varano, supra, 366 N.J. Super. at 

6 (same); Prudential Prop. & Cas. Ins. Co. v. Midlantic Motion 

X-Ray, Inc., 325 N.J. Super. 54, 60 (Law Div. 1999) (“The 

failure of a [healthcare] provider or service to adhere to 

[N.J.A.C. 13:35-2.5(b)], or any other significant state statute 

or agency regulation, renders that provider or service 

ineligible for reimbursement under [N.J.S.A. 39:6A-1 to -35].”). 

The theory of all those cases reflects that in New Jersey a 

practice entity must comply with all statutes and regulations 

governing the permissible structures for control, ownership, and 

direction of a medical practice, including the use of 

professional services interconnected with a medical practice.

Health care services are highly regulated, and 

professionals engaged in the provision of health care --

including persons such as defendants, who undertook to 

facilitate that activity -- are on notice of the legal 

requirements applicable to their practice and operations. 

Material Damage Adjustment Corp. v. Open MRI of Fairview, 352

N.J. Super. 216, 227 (Law Div. 2002). We do not deal here with 

an honest mistake made in the course of completing a 

reimbursement form submitted to an insurer. This case goes to 

the basic structure of a practice and how it is owned, 
38

controlled, and directed. Those concerns go to the core of who 

may practice medicine in this State. The practice of medicine 

is a privilege to be exercised in accordance with all licensing 

and practice requirements and restrictions. One cannot claim, 

or feign, ignorance of those regulatory requirements and 

restrictions until there is an express command applicable to a 

precise set of facts.

Accordingly, we turn next to the regulatory requirements in 

place governing the lawful structures for medical practices when 

Borsody and Dahan promoted their practice model and the manner 

in which their model was constructed to work on paper and in 

practice.

B. 

As previously discussed, N.J.A.C. 13:35-6.16 establishes 

the proper structure of a medical practice and incorporates the 

manner in which the corporate practice of medicine may be 

employed. See N.J.A.C. 13:35-6.16(f)(1)-(3). Subsection (f)(3) 

defines employment as “an ongoing associational relationship 

between a licensee and professional practitioner(s) or entity on 

the professional practice premises for the provision of 

professional services, whether the licensee is denominated as an 

employee or independent contractor, for any form of 

remuneration.” In adopting section 6.16 in 1992, the Board 

explained that subsection (f)(3) bars “a licensee with a more 
39

limited scope of practice -- however competent within the scope 

of license -- [from] professionally supervis[ing] the quality of 

work of a plenary licensee.” 24 N.J.R. 626, 630 (1992). 

N.J.A.C. 13:35-6.16(f)(3)(i) states simply and without ambiguity 

that a practitioner with a plenary license “shall not be 

employed by a practitioner with a limited scope of license.” 

Although N.J.A.C. 13:35-6.16 allows for a solo practice as 

well as a partnership or professional association, employment is 

broadly defined to include even an ongoing associational 

relationship between a licensee and a professional practitioner 

or entity on the professional practice premises for the 

provision of professional services, regardless of whether the 

plenary licensee is labelled an employee or independent 

contractor. Within the breadth of the concept of “employment,” 

the regulation reinforces the theme of maintaining professional 

discretion in form and substance, depriving anyone or any 

corporate entity of the opportunity to control or attempt to 

exert control over the exercise of professional discretion by a 

plenary licensee. See ibid. That protection against control 

over the plenary licensee is brought about through the clear 

prohibitions expressed through the concept of employment in the 

regulation. In addition, the Earle I opinion also clearly 

states the same.
40

In answering the question put to the Board, the Earle I

letter addresses many ways in which the formal design of a 

corporate medical practice would have an impermissible corrosive 

effect on the professional discretion expected to be exercised 

by the plenary licensee. The guidance informs that the formal 

design of the relationship is not dispositive of whether there 

is the risk of inappropriate encroachment on a plenary 

licensee’s discretion. The letter states expressly, “[w]hile we 

recognize that it is nominally the Professional Association 

which is the ‘employer’ rather than the chiropractor, for our 

purposes that would be a distinction without a difference.” The

thrust of the entire Earle I letter makes plain that the Board 

would allow no subterfuge to shield the existence of a real or 

potential corrupting influence that could be exercised by a 

management company or by a professional association where a 

licensee with a lesser scope of practice, like a chiropractor, 

could actually wield control over the practice of medicine by a 

plenary licensee.

C.

Based on the regulations in effect at the time and the

testimony at trial, the trial court here could reasonably

conclude that Borsody, as well as Dahan, knew of the regulatory

requirements at issue, promoted a practice scheme specifically

designed to circumvent those requirements while appearing
41

compliant, and therefore knowingly assisted in the provision of

services, the foreseeable result of which was the submission of

invalid and misleading claims under the IFPA.

Based on the plain language of the regulation and the 

clarity of expression in the guidance of Earle I, we find no 

basis for crediting the argument that defendants could not have 

known that their structure violated the Board’s regulatory 

requirements. The documents and structure promoted and designed 

by defendants accomplished what the regulations sought to avoid.

They placed control over the medical practice in the hands of a 

chiropractor, subjecting plenary licensees to his effective 

control through interconnected contracts and the imposition of 

the threat of substantial monetary penalties. Importantly, the 

plan sought to conceal those features to appear compliant. 

The scheme vested bare legal title in a physician. 

However, the physician, besides being subject to direction and 

financial control by a chiropractor-owner of a management 

company, in reality was a stranger to the medical practice and 

was not operationally in control, having been demonstrated to 

have “sold” her license to multiple practices utilizing the socalled “Doc-in-the-Box” structure in New Jersey and many other 

states. In fact, she was recommended to Neuner for use as the 

nominal medical owner of Northfield. And, when she and Neuner 

had a disagreement, the veneer of her “control” over the 
42

practice was shattered. The chiropractor exercised his ability 

to utilize her previously required, undated resignation form and 

affidavit of non-issued or lost certificate to make it appear 

that she voluntarily transferred her “ownership” in Northfield 

to the next medical doctor, who was selected by Neuner to own 

the medical practice.

That structure was found by the trial court to have 

violated the requirements governing ownership, control, and 

direction of a medical practice. The trial court reached its 

conclusions based on those harsh facts, having heard the 

witnesses and examined the structure of this practice design, 

formulated in such a way as to make it appear that a medical 

doctor was “in charge” of the Northfield practice.

Clearly, with the 1999 decision in Schick, supra, the 

practice structure at issue here was first held to constitute 

both a violation of N.J.A.C. 13:35-6.16’s form-of-practice 

requirements and a potential avenue for finding an IFPA

violation. 328 N.J. Super. at 621. As noted in the parties’ 

arguments, following that decision, other courts have reasoned 

similarly. See, e.g., Varano, supra, 366 N.J. Super. at 6 (“A 

provider in violation of N.J.A.C. 13:35-6.16 is not eligible to 

receive PIP benefits.”). That said, we reject the contention 

that the Schick decision was required to have been issued in 

order to render the practice structure here incompatible with 
43

regulatory requirements and to provide a platform for a

conclusion that a knowing IFPA violation could be proved under 

N.J.S.A. 17:33A-4(b).

Here, there was an abundance of proof that the contracts 

and penalties -- imposed on the doctor named as nominal owner in 

title of this practice -- placed control of the medical practice 

in the hands of a chiropractor. That clearly supported finding 

is not overcome by any form-over-substance argument based on the 

placement of bare legal title in the plenary licensee who 

participated in this scheme. The trial court demonstrated 

clarity of vision in recognizing that this medical practice 

structure violated both the letter and spirit of the Board’s 

rule.

Moreover, the lengths that defendants went to in shielding

the true controller of this practice from view undermine any 

basis for interfering with the trial court’s assessment of the 

mixed question of fact and law that was presented to the court. 

It is apparent to us, as a reviewing court, that the fact-finder 

was also incorporating credibility findings in assessing the 

reasonableness of the scheme defendants were seeking to defend 

in this IFPA matter. We extend a wide berth of deference to the 

fact-finder in such matters. Considering all of the 

circumstances involved in defendants’ interactions with Neuner, 

the trial court could reasonably conclude that defendants 
44

knowingly assisted Neuner in violating the Board’s rules and 

submitting ineligible and fraudulent medical claims for 

reimbursement through that practice structure, contrary to law. 

In conclusion, knowledge or a “knowing” state of mind for 

purposes of a statutory civil violation under the IFPA may be 

inferred here. We find ample evidence to support the trial 

court’s finding of the existence of an IFPA violation on this 

record. 

VI.

The judgment of the Appellate Division is reversed, and the 

case is remanded for proceedings consistent with this opinion.

CHIEF JUSTICE RABNER and JUSTICES PATTERSON, FERNANDEZ-VINA, 

SOLOMON, and TIMPONE join in JUSTICE LaVECCHIA’s opinion. JUSTICE 

ALBIN did not participate.