Preview:

a2174-05.opn.html
N.J.S.A. 17:33A-1 to -30. The actions, which were consolidated in the Law Division, involve the same
parties and allegations of violations of N.J.S.A. 17:33A-4. The plaintiffs are Liberty Mutual Insurance Co.
(Liberty Mutual) and the State of New Jersey. Healthcare Integrated Services, Inc. (HIS), is one of several
defendants in the actions. Liberty Mutual alleged violations of the IFPA and sought compensatory damages,
including reasonable costs of investigation and costs of suit and counsel fees, and treble damages, based
on a pattern of violation. N.J.S.A. 17:33A-7a, b. The State also alleged violations of the IFPA but sought
civil penalties pursuant to N.J.S.A. 17:33A-5. "> Original Wordprocessor Version
(NOTE: The status of this decision is Unpublished.) Original Wordprocessor Version
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5599-04T3
A-2174-05T3
LIBERTY MUTUAL INSURANCE COMPANY,
Plaintiff-Respondent/Cross-Appellant,
v.
HEALTHCARE INTEGRATED SERVICES, INC.,
Defendant-Appellant/Cross-Respondent,
and
EDGEWATER DIAGNOSTIC IMAGING, P.A.,
HEALTHCARE IMAGING SERVICES OF EDGEWATER,
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
INC., EDGEWATER IMAGING ASSOCIATES, L.P.,
MONMOUTH DIAGNOSTIC IMAGING, P.A., HEALTHCARE
IMAGING SERVICES OF MONMOUTH, INC., MONMOUTH
IMAGING ASSOCIATES, L.P., WAYNE MRI, P.A.,
HEALTHCARE IMAGING SERVICES OF WAYNE, INC.,
WAYNE IMAGING ASSOCIATES, L.P.,
HEALTHCARE IMAGING SERVICES OF RITTENHOUSE
SQUARE, INC., RITTENHOUSE SQUARE
IMAGING, P.C., RITTENHOUSE SQUARE IMAGING
ASSOCIATES, L.P., KINGS MEDICAL DIAGNOSTIC
IMAGING, P.C., M.R. RADIOLOGY IMAGING
OF LOWER MANHATTAN, P.C., HIS IMAGING,
L.L.C., MEADOWLANDS DIAGNOSTIC IMAGING, P.A.,
RIVER IMAGING, P.A., STEPHEN ZINN, M.D., P.A.,
OMNI MEDICAL IMAGING, INC., SJG MEDICAL, INC.,
STEPHEN A. ZINN, M.D., PRACTICE MANAGEMENT
CORPORATION, ELLIOT H. VERNON, JERALD L.
FISHER, SHAWN A. FRIEDKIN, MITCHELL
HYMOWITZ, MUNR KAZMIR, M.D., DOMINICK A.
POLIMENI, JOSEPH J. RAYMOND, MANMOHAN A.
PATEL, MICHAEL WEISS, MICHAEL LICAMELE,
LYNN FOX, ROBERT BACA, SCOTT MCGRORY,
MARK VERNON, DENISE KANZE, JANET ROMANIELLO,
CHRISTINA ORBAN, DENISE KALLAS, DENISE LOTITO,
KEVIN ANDERSON, MARTHA MINEHAN, CHRIS
SCHEMENSKI, PAULETTE D'AURIA, ROBERT
MASKULYAK, COLEEN GAVIN, DON DEMARTINO,
MICHAEL RUTKIN, WILLIAM CRESCENZI, CALVIN
SPRUNG, A.M. CARRICK, MELANIE BUCKHOLZ,
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
R. TIGHE, PETER LIETO, C. STOUT, M. SARGENT,
ABE GROSSMAN, JATIN GAJARAWALA, M.D., ARNOLD
OLEFSON, M.D., THURAIASAH VIJAYANATHAN, M.D.,
JAY GARSMAN, M.D., GEORGE BRAFF, M.D., ARTHUR
GREENE, M.D., DILIP KAPADIA, M.D., ROBERT
WALLNER, M.D., ALLEN CUMMINGS, M.D., ZELIG
WEINSTEIN, M.D. and STANLEY SPRECHER, M.D.,
Defendants.
STATE OF NEW JERSEY,
Intervenor-Respondent.
STATE OF NEW JERSEY,
Plaintiff-Respondent,
v.
HEALTHCARE INTEGRATED SERVICES, INC.,
Defendant-Appellant,
and
EDGEWATER DIAGNOSTIC IMAGING, P.A.,
HEALTHCARE IMAGING SERVICES OF EDGEWATER,
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
INC., EDGEWATER IMAGING ASSOCIATES, L.P.,
MONMOUTH DIAGNOSTIC IMAGING, P.A., HEALTHCARE
IMAGING SERVICES OF MONMOUTH, INC., MONMOUTH
IMAGING ASSOCIATES, L.P., WAYNE MRI, P.A.,
HEALTHCARE IMAGING SERVICES OF WAYNE, INC.,
WAYNE IMAGING ASSOCIATES, L.P.,
HEALTHCARE IMAGING SERVICES OF RITTENHOUSE
SQUARE, INC., RITTENHOUSE SQUARE
IMAGING, P.C., RITTENHOUSE SQUARE IMAGING
ASSOCIATES, L.P., KINGS MEDICAL DIAGNOSTIC
IMAGING, P.C., M.R. RADIOLOGY IMAGING
OF LOWER MANHATTAN, P.C., HIS IMAGING,
L.L.C., MEADOWLANDS DIAGNOSTIC IMAGING, P.A.,
RIVER IMAGING, P.A., STEPHEN ZINN, M.D., P.A.,
OMNI MEDICAL IMAGING, INC., SJG MEDICAL, INC.,
STEPHEN A. ZINN, M.D., PRACTICE MANAGEMENT
CORPORATION, ELLIOT H. VERNON, JERALD L.
FISHER, SHAWN A. FRIEDKIN, MITCHELL
HYMOWITZ, MUNR KAZMIR, M.D., DOMINICK A.
POLIMENI, JOSEPH J. RAYMOND, MANMOHAN A.
PATEL, MICHAEL WEISS, MICHAEL LICAMELE,
LYNN FOX, ROBERT BACA, SCOTT MCGRORY,
MARK VERNON, DENISE KANZE, JANET ROMANIELLO,
CHRISTINA ORBAN, DENISE KALLAS, DENISE LOTITO,
KEVIN ANDERSON, MARTHA MINEHAN, CHRIS
SCHEMENSKI, PAULETTE D'AURIA, ROBERT
MASKULYAK, COLEEN GAVIN, DON DEMARTINO,
MICHAEL RUTKIN, WILLIAM CRESCENZI, CALVIN
SPRUNG, A.M. CARRICK, MELANIE BUCKHOLZ,
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
R. TIGHE, PETER LIETO, C. STOUT, M. SARGENT,
ABE GROSSMAN, JATIN GAJARAWALA, M.D., ARNOLD
OLEFSON, M.D., THURAIASAH VIJAYANATHAN, M.D.,
JAY GARSMAN, M.D., GEORGE BRAFF, M.D., ARTHUR
GREENE, M.D., DILIP KAPADIA, M.D., ROBERT
WALLNER, M.D., ALLEN CUMMINGS, M.D., ZELIG
WEINSTEIN, M.D. and STANLEY SPRECHER, M.D.,
Defendants.
July 2, 2008
Argued May 6, 2008 - Decided
Before Judges Coburn, Fuentes & Grall.
On appeal from Superior Court of New
Jersey, Law Division, Morris County,
Docket Nos. L-2189-01 and L-149-01.
Michael D. Schottland argued the cause for appellant/cross-respondent in A-
5599-04T3 and appellant in A-2174-05T3 (Lomurro, Davison, Eastman & Munoz,
attorneys; Mr. Schottland, of counsel; Peter V. Koenig, on the briefs).
Clifford J. Giantonio argued the cause for respondent/cross-appellant in A-5599-
04T3 and respondent Liberty Mutual Insurance Co. in A-2174-05T3 (Law Offices
of Linda S. Baumann, attorneys; Mr. Giantonio, on the briefs).
John C. Grady, Deputy Attorney General, argued the cause for intervenor-
respondent in A-5599-04T3 and respondent State of New Jersey in A-2174-05T3
(Anne Milgram, Attorney General, attorney; Patrick DeAlmeida, Assistant
Attorney General, of counsel; Mr. Grady and Steven Smith, Deputy Attorneys
General, on the brief).
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
PER CURIAM
We consolidate these appeals from orders entered in civil actions filed under the New Jersey
Insurance Fraud Prevention Act (IFPA), N.J.S.A. 17:33A-1 to -30. The actions, which were consolidated in
the Law Division, involve the same parties and allegations of violations of N.J.S.A. 17:33A-4. The plaintiffs
are Liberty Mutual Insurance Co. (Liberty Mutual) and the State of New Jersey. Healthcare Integrated
Services, Inc. (HIS), is one of several defendants in the actions. Liberty Mutual alleged violations of the
IFPA and sought compensatory damages, including reasonable costs of investigation and costs of suit and
counsel fees, and treble damages, based on a pattern of violation. N.J.S.A. 17:33A-7a, b. The State also
alleged violations of the IFPA but sought civil penalties pursuant to N.J.S.A. 17:33A-5.1
HIS appeals from orders granting summary judgment on liability in favor of Liberty Mutual, striking
its affirmative defenses, and awarding compensatory damages, including fees and costs, in a total amount
of $1,848,139.38.2 Liberty Mutual cross appeals from an order denying a portion of the counsel fees it
incurred in pursuing its claim. HIS also appeals from orders granting partial summary judgment on liability
in favor of the State, striking HIS's affirmative defenses against the State, and assessing a civil penalty
against HIS in the amount of $1,005,000 plus counsel fees of $4920. The orders have been certified as final
pursuant to Rule 4:42-2. Other than HIS, none of the defendants in these civil actions are presently
participating in either appeal.3
We begin by addressing Liberty Mutual's application to dismiss HIS's appeal as moot. This court
previously denied Liberty Mutual's motion but authorized the parties to argue the issue on appeal. Liberty
Mutual contends that HIS's appeal is moot because the United States Bankruptcy Court for the District of
New Jersey has entered an order which states that "Liberty Mutual Insurance Company's claim be and is
hereby allowed in the amount of $2,048,251.50."
The order upon which Liberty Mutual relies does not moot HIS's appeal. Federal law permits the
Bankruptcy Court to reconsider an order allowing or disallowing a claim for cause. 11 U.S.C.A. § 502(j).
Despite the pendency of HIS's bankruptcy petition, the validity of Liberty Mutual's claims against HIS were
litigated in state court pursuant to a grant of relief from the automatic stay. See 11 U.S.C.A. § 362. We
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
have no doubt that the Bankruptcy Court would find cause for reconsideration of its order if this court were
to reverse the award in Liberty Mutual's favor, and we see no basis for assuming that the Bankruptcy
Court's order reflects an adjudication of the merits of the claim, which were properly determined in state
court. See Rooker v. Fid. Trust Co., 263 U.S. 413, 415-16, 44 S. Ct. 149, 150, 68 L. Ed. 362, 365 (1923);
D.C. Ct. of App. v. Feldman, 460 U.S. 462, 476, 103 S. Ct. 1303, 1311, 75 L. Ed.2d 206, 218 (1983).
The violations of the IFPA at issue on HIS's appeal involve claims for personal injury protection (PIP)
benefits for diagnostic tests paid by Liberty Mutual during a period beginning in 1995 and ending in 2003.
N.J.S.A. 39:6A-4. This court has held that a provider of such services is not entitled to reimbursement for
services covered by PIP unless the provider and the services are in compliance with relevant laws and
regulations. Allstate Ins. Co. v. Orthopedic Evaluations, Inc., 300 N.J. Super. 510, 516 (App. Div.), certif.
granted and cause remanded on other grounds, 151 N.J. 67 (1997). Our courts have also recognized that a
violation of the IFPA can be based on a submission of a claim for PIP benefits for medical services rendered
by or through an entity that is not in compliance with laws and regulations. Varano, Damian & Finkel, L.L.C.
v. Allstate Ins. Co., 366 N.J. Super. 1, 5-7 (App. Div. 2004); Allstate Ins. Co. v. Schick, 328 N.J. Super. 611,
627-29 (Law Div. 1999). HIS does not challenge that proposition.
HIS contends that its violations were not established. On plaintiffs' motions for summary judgment,
Judge Villanueva4 found that HIS violated the IFPA because claims for diagnostic tests billed to Liberty
Mutual were performed by entities that HIS owned and operated in violation of N.J.A.C. 13:35-2.5 and
N.J.A.C. 13:35-2.6. The complex business relationships between HIS and the facilities and medical
professionals involved in delivering the services billed, as well as the undisputed facts that led the judge to
conclude that HIS was aware of and acted to circumvent regulations prohibiting these arrangements, are
fully detailed in Judge Villanueva's written opinion of March 18, 2005. The amount of damages assessed
was based on a summary of services billed and paid. HIS did not submit evidence disputing the information
contained in the summary.
On May 10, 2005, Judge Villanueva awarded Liberty Mutual treble damages, including reasonable
counsel fees and costs. That order was based on the pattern of illegal activity set forth in his March 18
opinion.
On June 27, 2005, the judge granted the State's motion to strike HIS's affirmative defenses; his
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
reasons for that order are set forth in a written opinion issued on the same day. On June 28, 2005, Judge
Villanueva awarded partial summary judgment to the State for reasons stated in the March 18 opinion. In
accordance with N.J.S.A. 17:33A-5, he imposed civil penalties based on the number of violations.
With respect to HIS's appeals, we affirm the orders substantially for the reasons stated in Judge
Villanueva's opinions of March 18 and June 27, 2005. The claims of error raised by HIS on appeal lack
sufficient merit to warrant discussion in a written opinion beyond the brief comments that follow. R. 2:11-
3(e)(1)(E).
HIS claims error based on the judge's decision to proceed with Liberty Mutual's motion for summary
judgment even though Liberty Mutual had filed a second amended complaint while the motion was pending.
The second amended complaint alleged a violation of N.J.A.C. 13:35-2.6, a regulation that was not cited in
the first amended complaint. HIS also contends that the first amended complaint did not seek a
"declaration" that HIS's "owned and operated" diagnostic testing facilities.
HIS misreads the first amended complaint and overstates the significance of the inclusion of a
reference to N.J.A.C. 13:35-2.6 in the second amended complaint. Paragraphs 118 through 156 of the first
amended complaint include facts that, if established, would demonstrate HIS's ownership and control of
operations in the testing facilities. And, the reference to a violation of N.J.A.C. 13:35-2.5 was, in effect, a
reference to N.J.A.C. 13:35-2.6. The regulation pertinent to the illegality of HIS's ownership and operation
of the facilities, which was formerly set forth in N.J.A.C. 13:35-2.5 and effective until February 20, 2001,
was incorporated in N.J.A.C. 13:35-2.6 without any relevant revision when N.J.A.C. 13:35-2.5 was repealed
effective February 20, 2001. See 33 N.J.R. 670(a). The conduct at issue here took place on dates before
and after February 20, 2001.
Under these circumstances, the judge did not abuse his discretion by proceeding with the motion for
summary judgment less than thirty-five days after the second amended complaint was filed. See R. 4:46-1.
The judge concluded, as we do, that the filing of the second amended complaint had no impact on the
adequacy of the notice or HIS's opportunity or ability to prepare a response to the motion. Because the
purpose of the thirty-five-day period specified in Rule 4:46-1 was not thwarted, it was not improper to
proceed. See Ziegelheim v. Appollo, 128 N.J. 250, 264 (1992); R. 1:1-2.
HIS also claims that this court cannot affirm the grant of summary judgment because, in considering
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
whether Liberty Mutual was entitled to summary judgment, the judge applied the preponderance of the
evidence standard. See R. 4:46-2(c). In Liberty Mut. Ins. Co. v. Land, 186 N.J. 163, 174-81 (2006), decided
after the summary judgment motions at issue here, the Court approved that standard of proof. Land
overruled Harleysville Insurance Co. v. Diamond, 359 N.J. Super. 34, 38 (Law Div. 2002), which holds that
proof by clear and convincing evidence is required to establish a violation of the IFPA. 186 N.J. at 174-81.
The judge in this case was not bound by the Law Division's decision in Harleysville, and he provided a
cogent explanation of his reasons for concluding that the standard of proof announced in Harleysville was
incorrect. See Ferraro v. Ferro Trucking Co., 72 N.J. Super. 519, 523 (Law Div. 1962).
Alleging that it conducted discovery in reliance on the standard of proof established in Harleysville,
HIS claims a denial of due process based on the judge's disagreement with Harleysville. HIS does not
support its claim of prejudice by identifying an avenue of discovery it did not pursue because of its reliance
on a decision the judge was not bound to follow. We see no basis for concluding that application of a
standard of proof, which was later deemed appropriate by the Supreme Court, violated HIS's right to due
process on this motion for summary judgment. Cf. Green v. Auerbach Chevrolet Corp., 127 N.J. 591, 601
(1992) (noting that "reasonable surprise and prejudice" are relevant to questions of prospective and
retrospective application of judicial decisions).
We reject HIS's claim that the judge resolved disputed facts contrary to the principles established in
Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Questions of a litigant's knowledge may be
resolved on summary judgment when "there is a 'single, unavoidable resolution of the alleged disputed
issue of fact . . .                                                                                              .'" Liebling v. Garden State Indem., 337 N.J. Super. 447, 463 (App. Div.) (quoting Brill,
supra, 142 N.J. at 540), certif. denied, 169 N.J. 606 (2001); see id. at 463-65 (so holding). The record,
including the legal advice of counsel that HIS offered to establish a defense of good faith reliance which the
legal advice did not demonstrate, is more than adequate to support the judge's finding.
HIS contends that the IFPA is unconstitutional because the Office of the Insurance Fraud Prosecutor
is funded by insurers and because the IFPA permits a practice that "conceals the exchange of information
between covert investigators and the insurance industry." HIS provides no legal authority in support of
either assertion.
Statutes are entitled to a presumption of validity. State Farm Mut. Auto. Ins. Co. v. State, 124 N.J.
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
32, 45-46 (1991). Given that presumption, HIS's sweeping and generalized claims, unsupported by legal
authority, do not require any discussion beyond that provided in Judge Villanueva's opinion of June 27,
2005.
We turn to consider Liberty Mutual's cross-appeal from the denial of an award for counsel fees
Liberty Mutual had paid to the law firm of Pringle Quinn and Anzano (PQA). An insurer that establishes a
violation of the IFPA is entitled to counsel fees. N.J.S.A. 17:33A-7. Although the judge concluded that the
fees charged by PQA and paid by Liberty Mutual were reasonable, he denied an award on the ground that
PQA had a conflict of interest that it should have discovered before HIS moved for an order disqualifying
the firm on that basis.
The following facts are pertinent to the conflict HIS alleged. Anzano, a partner in PQA, previously
worked for a law firm that represented HIS. His former firm had given HIS advice related to at least one of
the diagnostic testing facilities involved in this case. Anzano submitted a certification in response to HIS's
claim of conflict. He asserted the following: his involvement with representation of HIS during his prior
employment "was limited to an administrative function, acting as client contact and monitoring billing"; he
"did not take any portion of the HIS file with [him]" when he left his former firm; and, since joining PQA, he
had not had any "relevant discussions regarding HIS with the exception of those necessitated for
[preparation of the] certification" submitted on the motion and was not aware of PQA's involvement in this
case.
The questions of conflict of interest presented are whether Anzano has a conflict based on his former
firm's representation of HIS, and, if so, whether that conflict is imputed to the members of PQA.
The question of Anzano's conflict is governed by RPC 1.9. Paragraph (a) of the Rule provides for
disqualification of a lawyer based on his or her former representation of a client, and paragraph (b)
provides for disqualification based on the lawyer's former association with a firm that previously
represented a client. The Rule states:
(a) A lawyer who has represented a client in a matter shall not thereafter
represent another client in the same or a substantially related matter in which
that client's interests are materially adverse to the interests of the former client
unless the former client gives informed consent confirmed in writing.
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
b) A lawyer shall not knowingly represent a person in the same or a substantially
related matter in which a firm with which the lawyer formerly was associated had
previously represented a client,
(1) whose interests are materially adverse to that person; and
(2) about whom the lawyer, while at the former firm, had personally acquired
information protected by RPC 1.6 and RPC 1.9(c) that is material to the matter
unless the former client gives informed consent, confirmed in writing.
Notwithstanding the other provisions of this paragraph, neither consent shall be
sought from the client nor screening pursuant to RPC 1.10 permitted in any
matter in which the attorney had sole or primary responsibility for the matter in
the previous firm.
[Ibid. (emphasis added).]
If Anzano is not disqualified under RPC 1.9, then there is no conflict to impute to PQA pursuant to
RPC 1.10. See RPC 1.10(a), (c).
There is a question of fact that precludes a finding of disqualification pursuant to paragraph (a) of
RPC 1.9. HIS contends that Anzano "personally represented" HIS in a matter substantially related to the
matters at issue in these proceedings while associated with his former firm. See RPC 1.9(a). Anzano claims
that he did not. Thus, on the record that has been developed at this point, a disqualification on that basis
is not warranted.
Facts relevant to a violation of paragraph (b) are also disputed. That question is whether Anzano,
while associated with his former firm, acquired "information protected by RPC 1.6 and RPC 1.9(c) that is
material" to the matters at issue in this case. The record is inadequate to permit a determination of that
question.
Because the relevant facts are disputed, we remand for further proceedings to determine whether
there is a conflict that warrants exclusion of the fees that Liberty Mutual paid to PQA from the award
required by N.J.S.A. 17:33A-7 and, if not, to include appropriate fees in the award.
Affirmed in part; reversed in part, and remanded for further proceedings.
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]




a2174-05.opn.html
1 None of the parties have included a copy of the State's complaint in an
appendix filed with this court on either appeal. See R. 2:6-1(a)1(A).
2 The amount included compensatory damages of $594,468 and fees and
costs in the amount of $21,578.46, a total of $616,046.46. Because treble damages were available, the final
award was $1,848,139.38 in favor of Liberty Mutual. Separate awards were entered against defendants
other than HIS.
3 HIS is bankrupt and its appeal is prosecuted by defendants Patel and Vernon pursuant to an
assignment of HIS's rights approved by the Bankruptcy Court.
4 Judge Villanueva, J.A.D., is retired. He presided over this case while on recall and temporarily
assigned to the Law Division.
This archive is a service of Rutgers School of Law - Camden.
This archive is a service of Rutgers School of Law - Camden.
file:///C|/Users/Peter/Desktop/Opinions/a2174-05.opn.html[4/20/2013 3:08:36 PM]

Download a2174-05.opn.pdf

New Jersey Law