Limongelli v. New Jersey State Bd. of Dentistry

• Decision Date: 16 December 1993
• Citation: 645 A.2d 677,137 N.J. 317
• Parties: In the Matter of William LIMONGELLI, D.D.S., Petitioner-Respondent, v. NEW JERSEY STATE BOARD OF DENTISTRY, Respondent-Appellant. Supreme Court of New Jersey
• Court: New Jersey Supreme Court

Page 317

137 N.J. 317

645 A.2d 677

In the Matter of William LIMONGELLI, D.D.S., Petitioner-Respondent, v. NEW JERSEY STATE BOARD OF DENTISTRY, Respondent-Appellant.

Supreme Court of New Jersey

Supreme Court of New Jersey.

Argued Sept. 13, 1993.

Decided Dec. 16, 1993.

Anne Marie Kelly, Deputy Atty. Gen., for appellant (Fred DeVesa, Acting Atty. Gen. of New Jersey, attorney; Andrea M. Silkowitz, Asst. Atty. Gen., of counsel).

Patrick T. Collins, Roseland, for respondent (Franzblau & Dratch, attorneys; Stephen N. Dratch, of counsel; Patrice M. Renner, on the brief).

The opinion of the Court was delivered by

O'HERN, J.

This case poses two questions. First, must the New Jersey Board of Dentistry (Board) provide to a dentist who is applying to have a license reinstated notice of and an opportunity to meet charges of misconduct that occurred during the period of revocation before the Board imposes an additional period of disqualification from practice? Second, does the New Jersey Professional Service Corporation Act, N.J.S.A. 14A:17-1 to -18, require a dentist whose license to practice has been revoked to surrender ownership of all shares in any professional corporation engaged in the practice of dentistry? We answer both questions affirmatively and direct that the Board reconsider Dr. Limongelli's application in accordance with this opinion.

I

On January 9, 1986, Dr. William Limongelli signed a consent order revoking his license to practice dentistry. The order provided that Limongelli would be prohibited from applying for reinstatement for five years. The revocation resulted from Dr. Limongelli's plea of guilty to several counts of theft by deception through the submission of fraudulent insurance claims.

In 1989, informed that the consent order might have been violated, the Board conducted an investigation to determine whether Dr. Limongelli was practicing dentistry without a license. In the course of that investigation, Dr. Anthony Vitale, an associate of Dr. Limongelli, testified before the Board on February 15, 1989. Limongelli was not present at that hearing because the Board did not then notify him either of its investigation or that Vitale would testify. Later, on March 29, 1989, the Board questioned Limongelli in three areas. At that time, the Board informed Limongelli that it would advise him of its findings. Not until Dr. Limongelli applied for reinstatement in 1991, however, did the Board take action. In connection with that application, the Board found that Limongelli had practiced while his license was revoked by failing to divest himself of financial interests in professional dental services corporations. The Board denied Limongelli's application for relicensure and prohibited him from reapplying for an additional ten years.

Prior to the revocation of his dental license in 1986, Dr. Limongelli had been the sole shareholder in two professional corporations, the Dental Parkway Clinic, Inc. and the Orange Dental Center, P.C. Those corporations operated Medicaid practices in Newark and Orange, respectively. The clinics occupied office space in buildings personally owned by Limongelli. Limongelli also shared a practice with Vitale; although that practice was the subject of investigation, it did not form a basis for the Board's discipline of Limongelli.

The Board found that Dr. Limongelli had violated the 1986 revocation of his dental license by retaining interests in his two clinics in Newark and Orange. During the Board's investigation, Limongelli's testimony conflicted with that of Dr. Vitale. According to Limongelli, he began negotiations with Vitale concerning transfer of the two practices in October 1985, prior to the signing of the consent order. However, Vitale told the Board that he did not even know that Limongelli's license to practice had been revoked until August 1986, much less that he had acquired Limongelli's two practices at an earlier date. Certificates changing the registered agent for the two corporations from Limongelli to Vitale were filed on October 7, 1985. Although he admitted that no money had changed hands, Limongelli claimed that his attorney had informed him that the filing of the certificates was sufficient to transfer ownership of the two clinics. As far as Limongelli was concerned, Vitale agreed to run the clinics until an actual buy-out was executed. No such buy-out ever occurred.

However, not only did Dr. Vitale fail to purchase the two clinics, he did not even participate in their management in any significant manner. The most significant administrative task that he performed was the signing of checks for the clinics. Dr. Vitale did not draw any salary or receive any other compensation from the clinics in exchange for his minimal services. In contrast, Dr. Limongelli admitted that even though his license to practice dentistry had been revoked on January 9, 1986, he had continued to participate in the administration and management of the clinics. For example, he hired a dentist for one of the clinics in April 1986, remained involved in the payroll administration of both clinics as late as September 1987, and continued to do all of the administrative work for the Orange Dental Center well into 1987.

Because Dr. Vitale never followed through in purchasing the two clinics and terminated all association with those practices in 1988, Dr. Limongelli leased the clinics to Dr. Joseph Prasad beginning on January 1, 1989. Limongelli claimed that Dr. Prasad owned the buildings and the dental equipment under the leases. The Board concluded, however, that Dr. Limongelli had retained a beneficial interest in the office equipment and the practices themselves, merely permitting Dr. Prasad to operate the practices during the period of Limongelli's disqualification. For example, the leases for the two clinics, which were written by Limongelli, included provisions giving Prasad ownership of the equipment, instruments, supplies, and patient records only for the term of the lease and requiring Prasad to return all property to Limongelli undamaged at the termination of the lease. Furthermore, the leases gave Dr. Prasad the option to purchase a one-half interest in the clinics. From whom Dr. Prasad would have purchased that one-half interest is not clear because Dr. Limongelli claimed that Prasad already owned the clinics outright under the leases.

Finally, Dr. Limongelli listed all shares of both dental clinics, inclusive of equipment, as personal assets in a petition filed in a February 1989 Chapter 13 bankruptcy proceeding captioned "In re William Alfonso Limongelli d/b/a Orange Dental Center."

In short, the Board found that both Limongelli's proposed sale of his clinics to Vitale and his lease of the clinics to Prasad were mere paper transactions rather than divestitures.

II

The foregoing facts led the Board to conclude that Limongelli had practiced dentistry after his license had been revoked. The Board's response to those violations was to extend by ten years the period during which Dr. Limongelli could not apply for reinstatement. Dr. Limongelli appealed the Board's action to the Appellate Division.

The Appellate Division held that the Board had denied Limongelli due process because it had not given him notice of and an opportunity to respond to the Board's charge that he had violated the consent order by maintaining financial interests in professional corporations engaged in the practice of dentistry. 260 N.J.Super. 346, 616 A.2d 945 (1992). The court found that Limongelli's license had been suspended rather than revoked because Limongelli could apply for relicensure after five years. Id. at 355, 616 A.2d 945. As a result, the court held that Limongelli had a constitutionally-protected property right in his "suspended" license. Ibid. Because that constitutionally-protected property interest could not be abrogated except by due process of law, Limongelli's application for relicensure had to be deemed a "contested case" under the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -21. Thus, Limongelli would be entitled to the procedures that the APA requires in contested cases. 260 N.J.Super. at 356, 616 A.2d 945. The Appellate Division also held that Dr. Limongelli had not violated the Professional Service Corporation Act by maintaining sole ownership of the Newark and Orange clinics. Id. at 357-58, 616 A.2d 945. We granted the Board's petition for certification, 133 N.J. 434, 627 A.2d 1140 (1993).

Although we agree that fundamental fairness requires the Board to provide Dr. Limongelli with adequate notice of the charges against him and an opportunity to respond to those charges, we disagree with the Appellate Division's holding that this was a "contested case" within the meaning of the APA. Because administrative due process requires agencies at a minimum to provide parties with adequate notice, a chance to examine opposing evidence, and the opportunity to present evidence and argument in response before imposing substantial sanctions, we agree with the Appellate Division that a remand is required.

We also find that the Professional Service Corporation Act, when read in conjunction with the statutes governing the practice of dentistry, N.J.S.A. 45:6-1 to -69, bars a dentist who has been disqualified from practice from owning shares in any professional corporation that engages in the practice of dentistry or owning any dental equipment employed in the performance of dental procedures.

III

A.

The APA requires that all parties to "contested cases" be provided with notice and a hearing, at which they may present evidence and argument prior to resolution of such cases. N.J.S.A. 52:14B-9. With limited exceptions, those hearings must be conducted before an Administrative Law Judge (ALJ). See N.J.S.A. 52:14F-8. N.J.S.A. 52:14B-2(b) defines a "contested case" as

a proceeding, including any licensing proceeding, in which the legal rights, duties, obligations,...