State v. Greco

• Citation: 148 A.2d 164,29 N.J. 94
• Decision Date: 02 February 1959
• Docket Number: No. A--46,A--46
• Parties: STATE of New Jersey, Plaintiff-Respondent, v. Lionel A. GRECO, Defendant-Appellant.
• Court: United States State Supreme Court (New Jersey)

Page 94

29 N.J. 94

148 A.2d 164

STATE of New Jersey, Plaintiff-Respondent, v. Lionel A. GRECO, Defendant-Appellant.

No. A--46.

Supreme Court of New Jersey.

Argued Nov. 18, 1958.

Decided Feb. 2, 1959.

Maurice C. Brigadier, Jersey City, argued the cause for appellant.

Leo Kaplowitz, Asst. Prosecutor, Linden, argued the cause for the State (H. Douglas Stine, Union County Prosecutor, Plainfield, attorney).

The opinion of the court was delivered by

WACHENFELD, J.

The defendant, a licensed physician and surgeon of the State of New Jersey, was convicted in the Union County Court on 29 counts of an indictment charging him with obtaining money by false pretenses from the Medical-Surgical Plan of New Jersey, familiarly known as Blue Shield. He addressed an appeal to the Appellate Division which we certified on our own motion.

From about 1942 until 1957 defendant was employed by the County of Union at the John E. Runnells Hospital for Chest Diseases, a county institution. At all times herein relevant his position was classified as 'Resident Surgeon.' He specialized in the surgical treatment of chest ailments, although he was frequently required to perform medical and surgical services unrelated to his specialty. As part of his duties he resided on the hospital premises. He also maintained a private office in Newark.

In 1949 Dr. Greco became formally affiliated with the Medical-Surgical Plan of New Jersey as a participating physician. He signed a standard form contract which in part provided 'I will perform the medical and surgical services specified in the subscription certificates issued or that may be issued by the Plan, in accordance with accepted practices in the community at the time the services are rendered and at such rates of compensation as shall be determined by the Board of Trustees of the Plan. I will abide by the By-Laws, Rules and Regulations of the Plan applicable to Participating Physicians, copy (sic) of which shall at all times be available in the office of the Plan.' (Emphasis supplied.)

The by-laws and regulations of the Plan in force at the time Dr. Greco became a participating physician were contained in a manual customarily issued by the Plan to each newly affiliated doctor. Article XI of the by-laws, entitled 'Participating Physicians,' specifies:

'Participating Physicians may be any physicians (other than hospital Resident Physicians and/or Internes) fully licensed to practice medicine and surgery in the State of New Jersey * * *.' (Emphasis supplied.)

This definition is substantially reiterated in the accompanying Code of Regulations, which in addition provides, under the heading 'Services NOT Eligible':

'The Plan shall not be liable, nor shall services be deemed eligible for payment under the Contract:

'4. If the services are those of a Surgical assistant or of a hospital resident physician or intern, or are rendered by a physician practicing under a limited license, or by a dentist or other person who is not an Eligible Physician as defined in the Contract.' (Emphasis supplied.)

During the years 1953 through 1956 defendant submitted to the Plan 29 applications for payment for surgical services rendered to county patients in the county hospital. None of these persons were Dr. Greco's private patients. All of the applications were honored by the Plan, which paid the defendant at its stipulated rates. These applications and payments are the subjects of the present criminal proceeding.

Two indictments, 374 and 375, were returned against defendant by the Union County grand jury and tried jointly in the court below. Indictment No. 375 was dismissed at the close of the State's case in chief. It charged that Dr Greco had unlawfully used his appointive position with the county for the promotion and furtherance of a scheme to mulct the Medical-Surgical Plan, 'contrary to the provisions of R.S. 30:9--66 (N.J.S.A.) and N.J.S. 2A:111--14 (N.J.S.A.).'

R.S. 30:9--66, N.J.S.A., is a non-criminal statute regulating the relationship between county hospitals and their patients. In part it provides that no officer or employee of such a hospital shall accept from a patient any fee or gratuity for services rendered. N.J.S. 2A:111--14, N.J.S.A., makes it a misdemeanor to use a corporation for fraudulent purposes.

Indictment No. 375 was dismissed upon the grounds that R.S. 30:9--66, N.J.S.A., does not contain a penal sanction and that no evidence had been produced to show that defendant had violated N.J.S. 2A:111--14, N.J.S.A., by using the county, a public corporate body, as a shield for his allegedly fraudulent activities. The trial court was also of the opinion that the latter statute did not apply in the situation Sub judice but only to corporate officers who fraudulently abuse the corporate veil.

Defendant was convicted upon indictment No. 374. Each count of that indictment is identical save for the recitation of dates, monetary amounts, and the various patients' names. The gravamen of the offenses charged is that Dr. Greco, 'intending to cheat and defraud the Medical-Surgical Plan of New Jersey * * * did then and there unlawfully, knowingly and designedly falsely represent and pretend * * * that he, the said Lionel A. Greco, was lawfully and properly an eligible and participating physician * * * and entitled to receive payments from the said Medical-Surgical Plan of New Jersey for professional services allegedly rendered * * *' to the 29 county patients named.

N.J.S. 2A:111--1, N.J.S.A., demands that the false pretense which criminally procures the payment of moneys be made 'knowingly or designedly, with intent to cheat or defraud.' Under the statute a fraudulent intent is necessary to ripen a mere misrepresentation into a criminal act. Sharp v. State, 53 N.J.L. 511, 21 A. 1026 (Sup.Ct.1891); 35 C.J.S. False Pretenses § 23; 22 Am.Jur., False Pretenses, § 23.

Recognizing the burden of its obligation to prove the existence of a Mens rea, the prosecution proceeded upon the theory that the defendant had applied for payments for services rendered to Plan subscribers, in his capacity as a regular member of the county hospital staff, while full well knowing that such services were ineligible under the Plan's rules and regulations. It contended that because Dr. Greco was employed by the county on a salary basis he was a 'resident physician' of the John E. Runnells Hospital and thus had no right to claim or accept moneys from the Plan as he did. The State's brief declares: '* * * The serious wrongdoing was not the entering into of a contract with the Plan as a participating physician, but rather to then surreptitiously exploit his official position thereby illicitly gaining compensation for which there was no legal justification to receive the same.'

It is not disputed that as chief surgeon of the hospital defendant performed all of the medical services referred to in the various counts of the indictment, and that after operating upon each patient he submitted to the Plan a document entitled 'Medical-Surgical Plan Service Report,' signed by the patient-subscriber and himself and describing the services performed and the amount due defendant for their rendition.

These documents were received in the mail at the Plan's office in Newark and listed Dr. Greco's address as 296 Roseville Avenue, Newark. This was the location of his private office which he had maintained since 1942. The Plan's checks for the amounts claimed were sent to the same address and received there by Dr. Greco.

The principal grounds for reversal asserted by the defendant are that the State utterly failed in its attempt to show Scienter and that venue was improperly placed in Union County instead of Essex County. Other reasons are urged which need not be dealt with specifically in view of the disposition we make.

In denying defendant's motions for judgment of acquittal on the ground of insufficient proof of criminal intent, the trial judge acknowledged that Dr. Greco had not been personally notified of the Plan's definition of 'resident physician,' but concluded that defendant might be presumed to have been cognizant of it because the record would indicate such definition was generally accepted by the medical profession. In the trial court's opinion, there was a genuine conflict of testimony concerning the proper interpretation of the phrase, which 'raises an issue of fact for the jury.' We think, however, that the evidence presented by the State was wholly inadequate to create a jury question as to the existence or absence of a criminal intent.

Principally through the testimony of Dr. Nicholas F. Alfano, executive vice-president and medical director of the Medical-Surgical Plan, the State attempted to prove defendant had performed the 29 operations in issue as a 'hospital resident physician' and that by virtue of his position at the hospital and his familiarity with the rules of the Plan he knew that this status invalidated his claims for payment.

On direct examination, Dr. Alfano testified the phrase "resident physician' means a physician under contract with, or employed by a hospital for salary provided by that hospital.' He was thereupon asked whether the definition he had given was in accordance with an 'accepted practice or plan in the community.' After several exchanges, the witness admitted the Plan's definition of 'resident physician' differed from the definition common in the practice of medicine throughout the State of New Jersey, although he subsequently retreated from this position.

An extensive cross-examination further impaired the weight and significance of Dr. Alfano's testimony as it reflected upon the issue of Scienter. He conceded the medical profession as a whole did not 'have a clear cut definition of the term 'resident' * * * (i)t differs in so many situations.' Defense counsel produced several authoritative medical treatises and a publication by the American Medical Association which...