Sendar v. State, Dept. of Human Services, Div. of Medical Assistance and Health Services

Sendar v. State, Dept. of Human Services, Div. of Medical Assistance and Health Services

Opinion

 [*539]  [**1373]   Plaintiffs ¹ appeal from a Law Division order upholding but limiting the effect of a certificate of debt filed by the Director  [*540]  of the Division of Medical Assistance and Health Services. The certificate was entered as a judgment by the Clerk of the Superior Court against plaintiffs Irving Sendar and Aileen Marmon, Executrix of the estate of her late husband, Dr. Martin G. Marmon. The certificate was filed pursuant to N.J.S.A. 30:4D-17(h), a section of the New Jersey Medical Assistance and Health Services Act. Plaintiffs argue that this section of the Act is unconstitutional in its application [***2]  to them, since a judgment should not be entered prior to their having an opportunity to be heard on the merits of the State's claim. Furthermore, plaintiffs claim that the filing of the certificate against them as stockholders of a former corporate recipient of payments from the Medicaid program also failed to accord them due process. They contend that their claim under 42 U.S.C.A. § 1983 should not have been dismissed.

The trial judge refused to vacate the certificates, but construed them as merely inchoate liens against plaintiffs' property, incapable of supporting an execution proceeding unless or until there is a final adjudication of plaintiffs' responsibility. We agree with the [***3]  trial judge's limitation on the effect of the certificate. However, we do not agree that the certificates could be filed against the individuals without a threshold showing of either their responsibility based upon mistaken or improper receipt of Medicaid payments made to the corporation or as active managers of the corporation.

Plaintiffs Irving Sendar and the Estate of Martin G. Marmon each own 50% of the stock in Twin Oaks Nursing Home Inc., the former owner of a Morristown, New Jersey nursing home which participated in the Medicaid program. The nursing home was established in 1972, and in 1984 the corporation assigned its lease and the physical assets to a new nursing home operator. Marmon was the company's president; Sendar was never an officer or director of the nursing home corporation, but he apparently did take some "active role" in the company. In 1985, the defendant Division of Medical Assistance and Health Services began a field audit of Twin Oaks. The preliminary  [*541]  field audit concluded that Sendar (not the company or Marmon), owed the defendant $ 646,639.37 for Medicaid overpayments made to the company over a ten-year period. A supplemental determination [***4]  added Marmon and the corporation. All of the years of operation have not been finally audited, even at this point.

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