Title: Plaintiff v. Defendant
Citation: N/A
Docket Number: a-68-01
State: new-jersey
Issuer: new-jersey Supreme Court
Date: August 13, 2002

Dr. Fanelli was co-administrator of the pension fund for Regional Gastroenterological Associates, P.A. (RGA), a medical practice in which he was a partner. Dr. Fanelli was licensed in both New Jersey and Pennsylvania. The RGA pension fund was a fund within the meaning of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. 1001 to 1461. Dr. Fanelli s wife was RGA s bookkeeper and business manager. In order to meet a cash flow shortage, Mrs. Fanelli recommended borrowing from the pension fund, assuring Dr. Fanelli that it was legal to do so. Dr. Fanelli gave his consent. Without his knowledge, however, Mrs. Fanelli borrowed additional funds with the approval of Dr. Kravitz, Dr. Fanelli s partner. The borrowed amounts exceeded the legal limit and beneficiaries of the pension fund sued RGA s accountants for malpractice. In December 1997, the United States Attorney for the Eastern District of Pennsylvania indicted Dr. Fanelli and his wife for breach of their fiduciary duties in administering the pension fund. Although Dr. Fanelli claimed he had no knowledge of the improper actions, he was presumed to have at least constructive knowledge of the wrongdoing. In December 1998, Dr. Fanelli pled guilty to the indictment charging him with conspiracy to unlawfully abstract and convert funds of an employee benefit plan to his own use. Subsequently, the United States Attorney s Office informed the New Jersey State Board of Medical Examiners (Board) of the disposition. In October 2000, the Board issued a Provisional Order revoking Dr. Fanelli s license. Pursuant to the Board s Order, Dr. Fanelli requested modification or dismissal of the Board s Findings of Fact and, in addition, requested an evidentiary hearing permitting him to submit mitigating evidence on the issue of the appropriate sanction. Dr. Fanelli s request was denied. He was allowed, however, to submit forty-seven letters from family members, friends, physicians, and others attesting to his good character and medical competence. Noting that his plea of guilty to the conspiracy charge precluded him from arguing that he was not part of the conspiracy, the Board entered a Final Order of Discipline revoking Dr. Fanelli s license to practice medicine and surgery in the State of New Jersey. Dr. Fanelli appealed the Board s Order to the Appellate Division. He also petitioned the Board for a stay pending appeal. Both were denied. Subsequently, the Supreme Court granted Dr. Fanelli s motion for a stay pending appeal. The Appellate Division, in an unpublished per curiam opinion, affirmed the Board s Order. The court rejected Dr. Fanelli s arguments that his actions were at best negligent and that they did not constitute professional misconduct or involve moral turpitude. The Supreme Court granted Dr. Fanelli s petition for certification. HELD: Dr. Fanelli has the right to an evidentiary hearing to determine whether his criminal conviction relates adversely to the practice of medicine. 1. The Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to 15, does not create a substantive right to an administrative hearing, except where an agency revokes or refuses to renew a license in a contested case. The statute reflects our State s long-standing commitment to procedural fairness in administrative proceedings. (Pp. 10-12) 2. In accordance with the APA, a plenary hearing is required in the circumstances of this appeal. As there exist contested adjudicative facts, Dr. Fanelli may respond, appear and present evidence and argument on all issues involved. Under the circumstances of this case, the court is required to determine the extent of Dr. Fanelli s knowledge and, in addition, determine whether Dr. Fanelli pled guilty to a conspiracy to commit any offense against the United States or to defraud the United States. 18 U.S.C.A. 371. (P. 12-14) 3 The legislative history of N.J.S.A. 45:1-21 does not define moral turpitude and therefore courts and governmental agencies must look elsewhere for its definition. In State Board of Medical Examiners v. Weiner, 68 N.J. Super. 468, 483 (App. Div. 1961), the Appellate Division categorized moral turpitude as an act of baseness, vileness, or depravity in the private and social duties which a man owes to his fellow men, to society in general, contrary to the accepted and customary rule of right and duty between man and man . . . everything done contrary to justice, honesty, modesty, or good morals. Whether the Board in this appeal acted arbitrarily and capriciously in finding moral turpitude turns on a full understanding and interpretation of Dr. Fanelli s crime. In the absence of plea and sentencing transcripts and other evidence, we cannot decide on this record whether Dr. Fanelli s crime involved moral turpitude. The introduction of relevant evidence at a hearing before the Board will permit the Board to make an informed decision. (Pp. 14-20) 4 Whether Dr. Fanelli s conviction on criminal charges related adversely to the practice of medicine pursuant to N.J.S.A. 45:1-21(f) must be determined via an evidentiary hearing. Our remand on this issue is for the purpose of allowing Dr. Fanelli an opportunity to prove his contention and is not to be construed as a conclusion on our part that the underlying offense does or does not relate adversely to the practice of medicine. (Pp. 20-22) 5. At the remand hearing, Dr. Fanelli may not re-litigate his guilt or innocence, but he should be permitted to develop the core facts concerning the pension fund and his conduct. In addition, Dr. Fanelli may be heard on the question of moral turpitude, the relationship between his actions and his practice, and he may present evidence on mitigation and argue for a sanction less than a full revocation of his license. If character is a contested issue, character witnesses may be presented. If character is not an issue, the fact-finder may nevertheless allow such testimony at its discretion. The Board retains the discretion, subject to appellate review, whether discipline should be imposed and the quantum of that discipline. (Pp. 23-24) The judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Board of Medical Examiners for further proceedings consistent with this opinion. CHIEF JUSTICE PORITZ and JUSTICES STEIN, COLEMAN, LONG, VERNIERO, and LaVECCHIA join in Justice ZAZZALI s opinion. Argued March 26, 2002 Decided August 13, 2002 On certification to the Superior Court, Appellate Division. Jonathan L. Goldstein argued the cause for appellant, Andrew T. Fanelli, D.O. (Hellring Lindeman Goldstein &amp; Siegal, attorneys; Mr. Goldstein and Robert B. Rosen, on the briefs). Sandra Y. Dick, Senior Deputy Attorney General, argued the cause for respondent, New Jersey State Board of Medical Examiners (David N. Samson, Attorney General of New Jersey, attorney; Andrea M. Silkowitz, Assistant Attorney General, of counsel; Beatrice Michelle Albertson, Deputy Attorney General, on the brief). The opinion of the Court was delivered by ZAZZALI, J. Dr. Andrew T. Fanelli, D.O. (Fanelli) pled guilty to conspiracy to unlawfully abstract and convert funds of an employee benefit plan to his own use in violation of federal law. In a subsequent license revocation proceeding before the New Jersey State Board of Medical Examiners (Board), Fanelli s request for a full hearing on the issue of the appropriate sanction was rejected. The Board then revoked his license to practice medicine and surgery in this State. The Appellate Division affirmed. We find that Dr. Fanelli has a statutory right to a hearing. We therefore reverse the Appellate Division and remand the matter to the Board for further proceedings. If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor. [ 18 U.S.C.A. 371.] As part of his plea agreement, Fanelli acknowledged that [i]n conformity with the United States Attorney s Office for the Eastern District of Pennsylvania, the government will inform the appropriate professional licensing and disciplinary board in Pennsylvania and other jurisdictions of the disposition of the criminal charges filed against the defendant in this case. The United States Attorney s Office informed the Board that Fanelli s case does not involve the care or treatment of patients nor does it involve any improprieties in billing practices. The charges do not relate to Dr. Fanelli s ability to care for his patients. Further, the plea did not guarantee the status of his professional license because that determination was solely within the discretion of the appropriate licensing authority, here the Board. In October 2000, the Board issued a Provisional Order revoking Fanelli s license. The Order afforded Fanelli thirty business days to request a modification or dismissal of the Board s Findings of Fact and Conclusions of Law by (1) submitting a written request for modification or dismissal; (2) setting forth in writing any and all reasons why the findings should be modified or dismissed; and (3) submitting all documents or other written evidence supporting the request, as well as any other evidence Fanelli wished the Board to consider in mitigation of the penalty set forth in the Order. The Order further stated: Any submissions will be reviewed by the Board, and the Board will thereafter determine whether further proceedings are necessary. If no material discrepancies are raised through a supplemental submission . . . or if the Board is not persuaded that submitted materials merit further consideration, a Final Order of Discipline will be entered. Fanelli requested modification or dismissal of the Board s Findings of Fact contained in the Provisional Order and an evidentiary hearing permitting him to submit mitigating evidence on the issue whether his license should be revoked. Fanelli sought to introduce testimonial evidence from patients and medical colleagues supporting his high ethical and moral character. He also intended to explain that he had withdrawn his original guilty plea and entered a new plea whereby he agreed to plead guilty only to one count of conspiracy to unlawfully abstract and convert funds of an employee benefit plan to his own use. Finally, he requested oral argument before the Board. Fanelli s requests to present testimony and oral argument were denied. However, he was allowed to submit forty-seven letters from family members, friends, physicians, other licensed professionals, employees, and patients attesting to his good character and medical competence. In January 2000, the Board considered Fanelli s written submissions. The Board accepted his representation that he withdrew his original guilty plea and entered a subsequent plea, in which he pled guilty to only one count of conspiracy. Although Fanelli had attempted to shift blame from himself to his wife, the Board stated that as the co-administrator of his employees pension fund he was responsible for its safekeeping. Further, the Board found that his plea of guilty to the conspiracy charge prevented him from arguing that he was not part of the conspiracy. Thus, the Board issued a Final Order of Discipline revoking Fanelli s license to practice medicine and surgery in the State of New Jersey, citing N.J.S.A. 45:1-21(e) and (f). The statute relied on by the Board provides: A board may refuse to admit a person to an examination or may refuse to issue or may suspend or revoke any certificate, registration or license issued by the board upon proof that the applicant or holder of such certificate, registration or license: . . . . e. Has engaged in professional or occupational misconduct as may be determined by the board; f. Has been convicted of, or engaged in acts constituting, any crime or offense involving moral turpitude or relating adversely to the activity regulated by the board. For the purpose of this subsection a judgment of conviction or a plea of guilty, non vult, nolo contendere or any other such disposition of alleged criminal activity shall be deemed a conviction[.] [N.J.S.A. 45:1-21(e) and (f).] The Board reasoned that Fanelli s conviction on criminal charges that the Board found to involve moral turpitude and to relate adversely to the practice of medicine provided grounds for the revocation of his license. After the Board issued its Final Order, the Pennsylvania State Board of Osteopathic Medicine filed disciplinary charges against Fanelli based on the action taken by the Board in this State. The record does not inform us of the results of those proceedings. Fanelli appealed the Board s Order to the Appellate Division. He also petitioned the Board for a stay pending appeal. The Board, and later the Appellate Division, denied Fanelli s motion. We subsequently granted Fanelli s motion for a stay pending appeal. The Appellate Division, in an unpublished per curiam opinion, affirmed the Board s Order. In its opinion, the court set forth the reasons why Fanelli had desired a hearing: Because of this statutory provision, the doctor believes he was entitled to an evidentiary hearing, with an opportunity to cross-examine witnesses and present witnesses on his own behalf. The doctor wanted to present evidence in an evidentiary hearing to demonstrate that his unlawful actions were unrelated to the practice of medicine. He wanted also to testify regarding the circumstances leading to his guilty plea. According to the doctor, if given the chance, he would have shown that he, not the public, was the only victim of the wrongful acts of which the Board cites. The court denied Fanelli a hearing and rejected his argument that N.J.S.A. 45:1-21(e) and (f) are inapplicable because his crime did not involve professional misconduct or moral turpitude. Fanelli had alleged that because his crime did not involve the treatment or care of patients, he could not be said to have committed professional misconduct. Rejecting that interpretation, the court observed that [t]oday, the practice of medicine includes more than patient care, and the Board can rightfully be concerned with how doctors run their offices, keep their records, treat their employees[,] and deal with any funds generated through their medical practice. The court also dismissed Fanelli s argument that his actions were at best negligent and did not constitute professional misconduct or involve moral turpitude. The court concluded that the Board properly rejected Fanelli s arguments because his explanation of his guilty plea to conspiracy conflicted with his plea in federal court. In addition, it noted that although the Board allowed Fanelli to submit documentation to raise material discrepancies, he failed to provide the transcript of his guilty plea proceeding. Thus, based on the record, Fanelli failed to raise any material discrepancies relating to his plea. In the absence of such documentation, the panel found that the Board acted appropriately based solely on the guilty plea. Accordingly, the court found that the Board s decision was not unconstitutional, arbitrary, or contrary to legislative policies. We granted Fanelli s petition for certification. 171 N.J. 336 (2002). [(Emphasis added).] A contested case is defined as [a] proceeding including any licensing proceeding, in which the legal rights and duties, obligation, privileges, benefits or other legal relations of specific parties are required by constitutional right or by statute to be determined by agency decisions . . . addressed to them . . . after opportunity for an agency hearing[.] [N.J.S.A. 52:14B-2(b) (emphasis added).] The statute thus reflects our State s long-standing commitment to procedural fairness in administrative proceedings. The right to a hearing before a governmental agency, whose proposed action will affect the rights, duties, powers or privileges of, and is directed at, a specific person, has long been imbedded in our jurisprudence. Limongelli v. New Jersey State Bd. of Dentistry, 137 N.J. 317, 328 (1993) (determining that even if APA does not apply, fundamental fairness required Board to provide dentist adequate notice and opportunity to respond to charges before denying relicensure) (quoting Cunningham v. New Jersey Dep t of Civil Serv., 69 N.J. 13, 19 (1975). Similarly, in In re Revocation of the License of Polk, 90 N.J. 550, 579-80 (1982), we found that the Board could not summarily impose a revocation sanction without allowing the physician a hearing. N.J.S.A. 52:14B-11 provides that in a license revocation matter the licensee has the right to a hearing and that the hearing must follow the procedures used in contested cases. The statute establishing procedures in contested cases states that all parties shall be afforded an opportunity for [a] hearing after reasonable notice . . . [and an] opportunity shall be afforded . . . to respond, appear and present evidence and argument on all issues involved. N.J.S.A. 52:14B-9 (emphasis added). As noted, N.J.S.A. 52:14B-11 represents the one instance in which the APA itself provides parties the right to a hearing. See 37 New Jersey Practice, Administrative Law and Practice, 4.6, at 183-84 (Lefelt, et al.) (2000). Once the right to a hearing is established, as it is in these circumstances, the issue becomes what type of hearing is required under the law. f. Has been convicted of . . . any crime or offense involving moral turpitude or relating adversely to the activity regulated by the board[.] [(Emphasis added.)] Fanelli maintains that the Board=s revocation of his license was arbitrary and capricious because his guilty plea to conspiracy did not involve moral turpitude and did not relate adversely to the practice of medicine. Because this matter will be remanded to the Board, we provide the following guidance to the parties. [(Emphasis added) (citations omitted).] The Weiner court cited several out-of-state cases that found certain offenses warranted suspension of a medical license. See DuVall v. Board of Med. Exam rs of Arizona, 66 P.2d 1026 (Ariz. 1937) (dispensing and prescribing narcotics for non-medical use); Bancroft v. Board of Governors, 210 P.2d 666 (Okla. 1949) (issuing check with insufficient funds with intent to defraud); State Med. Bd. v. Rodgers, 79 S.W.2d 83 (Ark. 1935); (possession of counterfeit money with intent to circulate); State Bd. of Med. Exam rs v. Harrison, 159 P.2d 769 (Wash. 1916) (sending notices and information advertising performance of criminal abortions); Brun, supra, 191 A. at 240 (repeated acts of indecent exposure); Craft v. Balderston, 78 P.2d 122 (Idaho 1938) (fraudulent claims of treatment of disabled veterans); In re Kindschi, 319 P.2d 824 (Wash. 1959) (willful attempt to evade federal income taxes). New Jersey courts also have held that certain crimes involve moral turpitude. See, e.g., In re Schmidt and Sons, 79 N.J. 344, 352 (1979) (crimes of fraud, dishonesty, and attempting to obstruct justice); Berardi v. Rutter, 23 N.J. 485, 485 (1957) (falsification of tax return); DeMoura v. Newark, 90 N.J. Super. 225, 229 (App. Div. 1966) (filing false and fraudulent tax returns); Fromm v. Bd. of Dirs. of Police and Firemen=s Ret. Sys., 81 N.J. Super. 138, 144-45 (App. Div. 1963) (fixing parking tickets); Raphalides v. New Jersey Dep t Civil Serv., 80 N.J. Super. 407, 409 (App. Div. 1963), certif. denied, 41 N.J. 597 (1963) (larceny); O Halloran v. DeCarlo, 156 N.J. Super. 249, 254 (Law Div.), aff d, 162 N.J. Super. 174 (App. Div.), certif. denied, 79 N.J. 469 (1978), cert. denied, 442 U.S. 917, 99 S. Ct. 2837, 61 L. Ed. 2d 284 (1979) (conspiring to prevent administration of state laws pertaining to public advertisement for bids and public bidding in public contracts). However, in Matter of Meisnere, 471 A.2d 269, 270 (D.C. 1984), the Court of Appeals for the District of Columbia considered whether an attorney s guilty plea pursuant to 18 U.S.C.A. 371, the same crime at issue in this appeal, involved a crime of moral turpitude that would subject the attorney to disbarment pursuant to D.C. Code 11-2503(a). There, the attorney pled guilty to conspiracy to defraud the Internal Revenue Service, contrary to 18 U.S.C.A. 371, and perjury, contrary to 18 U.S.C.A. 1623. Id. at 269-70. The District of Columbia Board on Professional Responsibility found that the attorney was convicted of crimes involving moral turpitude, and therefore was subject to discipline. Id. at 270. Although the appeals court affirmed the attorney s disbarment, it noted that [a] violation of 18 U.S.C. [ ] 371, the conspiracy statute[,] does not necessarily constitute moral turpitude per se since the statute prohibits both conspiracy to commit an offense against the United States and conspiracy to defraud the United States. In this case, however, the information to which Respondent pleaded guilty, specifically charged conspiracy knowingly to defraud the United States by obstructing the Treasury Department in its attempt to ascertain the assets of and the taxes due from one Leon Durwood Harvey. Thus[,] the information to which [Meisnere] pleaded guilty necessarily required proof of intent to defraud. Intent to defraud inherently involves moral turpitude. [Id. at 270-71 (emphasis added).] Whether the Board in this appeal acted arbitrarily and capriciously in finding that Fanelli s crime involved moral turpitude turns on a full understanding and interpretation of Fanelli s crime. The record reflects that Fanelli pled guilty to conspiracy to unlawfully abstract and convert funds of an employee benefit plan to his own use, in violation of 18 U.S.C.A. 371. Although Fanelli pled guilty to 18 U.S.C.A. 371, unlike the attorney in Meisnere, it is unclear whether he pled guilty to conspiracy to knowingly defraud the United States. Fanelli pled guilty to conspiracy to unlawfully abstract and convert to his own use, funds of an employee benefit plan[.] 18 U.S.C.A. 371. As in Meisnere, we note the distinction in 18 U.S.C.A. 371 between conspiracy to commit an offense against the United States and conspiracy to defraud the United States. In the absence of plea and sentencing transcripts and other evidence, we cannot decide on this record whether Fanelli s crime involved moral turpitude. The introduction of relevant evidence at a hearing before the Board will permit the Board to make an informed decision. We expect that the parties will offer all available transcripts of his plea and sentencing hearings as well as any other relevant evidence on various issues, including whether he had actual or constructive knowledge of his wife s misappropriation. However, we emphasize that the Board has the burden of proving the elements of moral turpitude. In so holding, the court noted that a medical disciplinary proceeding serves two purposes: (1) to protect the public; and (2) to protect the standing of the medical profession in the eyes of the public. Ibid. Here, the Appellate Division stated: Today, the practice of medicine includes more than patient care, and the Board can rightly be concerned with how doctors run their officers, keep their records, treat their employees and deal with any funds generated through the medical practice. The Appellate Division also noted that Fanelli wanted to present evidence in an evidentiary hearing to demonstrate that his unlawful actions were unrelated to the practice of medicine. Fanelli should have that opportunity. We emphasize that our remand on this issue is for the purpose of allowing Fanelli to prove his contention and is not to be construed as a conclusion on our part that the underlying offense does or does not relate adversely to the practice of medicine. SUPREME COURT OF NEW JERSEY NO. A-68 SEPTEMBER TERM 2001 ON CERTIFICATION TO Appellate Division, Superior Court IN THE MATTER OF THE LICENSE OF ANDREW T. FANELLI, D.O., TO PRACTICE MEDICINE AND SURGERY IN THE STATE OF NEW JERSEY. DECIDED August 13, 2002 Chief Justice Poritz PRESIDING OPINION BY Justice Zazzali CONCURRING OPINION BY DISSENTING OPINION BY