Appendix — Medical Society v. Robins

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SUPREME COURT OF NEW JERSEY

C-169 September Term 1999

48,119

Filed October 7, 1999

MEDICAL SOCIETY OF NEW JERSEY, et al.,

Plaintiffs-Petitioners,

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BERNARD ROBINS, M.D., et al.,

Defendants-Respondents.

ON PETITION FOR CERTIFICATION

To the Appellate Division, Superior Court:

A petition for certification of the judgment in A-2917-97

having been submitted to this Court, and the Court having

considered the same;

It is ORDERED that the petition for certification is denied,

with costs.

WITNESS, the Honorable Deborah T. Poritz, Chief Justice,

at Trenton, this 6th day of October, 1999.

STEPHEN W. TOWNSEND

CLERK OF THE SUPREME COURT

24

I hereby certify that the foregoing

is a true copy of the original on file

in my Office.

STEPHEN W. TOWNSEND

CLERK OF THE SUPREME COURT

OF NEW JERSEY

3a

SUPREME COURT OF NEW JERSEY

C-170 September Term 1999

48,119

Filed October 7, 1999

MEDICAL SOCIETY OF NEW JERSEY, et al.,

Plaintiffs-Cross-Respondents,

—

BERNARD ROBINS, M.D., et al.,

Defendants,

—and—

NEW JERSEY BOARD OF MEDICAL EXAMINERS, et al.,

Defendants-Cross-Petitioners.

ON CROSS-PETITION FOR CERTIFICATION

To the Appellate Division, Superior Court:

A cross-petition for certification of the judgment in A-

2917-97 having been submitted to this Court, and the Court

having considered the same;

It is ORDERED that the cross-petition for certification is

denied.

WITNESS, the Honorable Deborah T. Poritz, Chief Justice,

at Trenton, this 6th day of October, 1999.

W Ww N

CLERK OF THE SUPREME COURT

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I hereby certify that the foregoing

is a true copy of the original on file

in my Office.

STEPHEN W. TOWNSEND

CLERK OF THE SUPREME COURT

OF NEW JERSEY

Sa

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

A-2917-97TS5

Filed June 1, 1999

THE MEDICAL SOCIETY OF NEW JERSEY,

and W.C., M.D.,

Plaintiffs-Appellants,

— |

BERNARD ROBINS, M.D., individually and in his official

capacity as President of the New Jersey State Board of

Medical Examiners; ELEANOR BERNSTEIN, individually

and in her official capacity as a Deputy Attorney General

of the State of New Jersey; THE NEW JERSEY STATE

BOARD OF MEDICAL EXAMINERS; THE DIVISION OF

CONSUMER AFFAIRS OF THE NEW JERSEY DEPARTMENT

OF LAW AND PUBLIC SAFETY; THE DIVISION OF LAW OF

THE NEW JERSEY DEPARTMENT OF LAW AND PUBLIC

SAFETY; THE NEW JERSEY DEPARTMENT OF LAW AND

PUBLIC SAFETY; THE STATE OF NEW JERSEY; and “JOHN

AND JANE DOEs 1-20” whose real identities are at this

time unknown to the plaintiffs,

Defendants-Respondents.

Argued February 24, 1999 — Decided June 1, 1999.

Before Judges Stern, Landau and Braithwaite.

On appeal from the Superior Court of New Jersey,

Chancery Division, Essex County.

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Steven I. Kern argued the cause for appellants (Kern

Augustine Conroy & Schoppmann, attorneys; Mr. Kern,

of counsel; Mr. Kern, P.W. Armstrong and Bonnie M.

Weir, on the briefs).

Douglas J. Harper, Deputy Attorney General, argued the

cause for respondents (Peter Verniero, Attorney General,

attorney; Jeffrey Burstein, Senior Deputy Attorney Gen-

eral, of counsel; Mr. Harper and Eleanor G. Bernstein,

Deputy Attorney General, on the brief).

The opinion of the court was delivered by

STERN, P.J.A.D.

This case questions the constitutionality of an administra-

tive “demand” to “inspect” the office of W.C., a medical doc-

tor, as a result of information received by the Board of

Medical Examiners (Board) that the doctor was distributing

outdated medication. The written “Demand for Inspection of

Professional Premises” was issued by the Attorney General on

September 27, 1997 after the Board requested that the inspec-

tion be conducted. It authorized an inspection of W.C.’s offtce

and records by the Enforcement Bureau of the Division of

Consumer Affairs “during business hours.” W.C. did not

honor the demand, however, and plaintiffs’ efforts to chal-

lenge it before the Board were unsuccessful. The Board’s final

decision and order, filed December 26, 1997, imposed sanc-

tions for violation of its duty to cooperate regulation. The

sanctions were “stayed” to permit compliance;' plaintiffs’

! In its “final decision and order” of December 25, 1997 the Board

ordered that:

Dr. W.C. shall pay a monetary penalty of $1,000 for her viola-

tion of the Duty to Cooperate regulation. This penalty will be

stayed in its entirety if access to the premises, licenses. job

descriptions, record, books, appointment books, documents,

billing records and equipment as required by the Demand [for

Inspection of Professional Premises issued by the Attorney Gen-

eral on September 25,1997] and by this Order is afforded within

30 days of the date of the oral announcement of this order on the

record [which was on December 10, 1997].

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efforts to obtain a judicial stay were denied, and on January

28, 1998, the Board amended its order to require that W.C.

“shall fully cooperate with” the inspection “[n]o later than

February 6, 1998.”

We dismiss this appeal as moot. We were advised at oral

argument that the Board of Medical Examiners vacated the

$1,000 penalty imposed because Dr. W.C. complied with the

administrative demand on February 6, 1998. The defendants

have also indicated to us that no sanctions would be imposed.

That being so and there being no potential evidence to sup-

press, we see no justiciable controversy for resolution in this

matter transferred to us prior to plaintiffs’ compliance with

the demand. See Oxfeld v. New Jersey Bd. of Educ., 68 N.J.

301, 303-04 (1975); Cinque v. New Jersey Dept. of Correc-

tions, 261 N.J. Super. 242, 243 (App. Div. 1993).?

In light of the arguments of the parties and the general

“public importance” of the subject matter, Oxfeld, supra,

68 N.J. at 303, however, we have no hesitation in adding the

foliowing.

The constitutional issue posed by this case has, in our view,

been substantially resolved for future similar circumstances

by the adoption of N.J.A.C. 13:35-7.5(b) after the adminis-

trative demand was initially made.* That regulation specifi-

‘ The Chancery Division properly transferred the case challeng-

ing the Board’s action to this court, see, e.g., In re Valley Road Sewerage

Co., 295 N.J. Super. 278 (App. Div. 1996), aff’d, 154 N.J. 224 (1998),

prior to the February 6, 1998 administrative inspection. This is a different

case than /n re Vornado, Inc., 159 N.J. Super. 32 (App. Div.), certif.

denied, 77 N.J. 489 (1978), relied upon by plaintiffs, which involved an

enforcement proceeding. See also Pascucci v. Vaggot, 71 N.J. 40, 52-53

(1976); In Re A-1 Jersey Moving & Storage, Inc., 309 N.J. Super. 33, 42

(App. Div. 1988); R. 2:2-3(a)(2); R. 1:13-4(a). In light of our disposition,

we have no need to consider any issue of the Medical Society’s standing

to proceed as a plaintiff. Jn re Martin, 90 N.J. 295, 308-10 (1982).

3

The parties agree that the regulation was not in effect at the time

the demand issued and the 1997 searches were attempted. The regulation

was apparently adopted effective November 3, 1997. In any event, it was

not referred to in the demand or in the Board’s opinion as a basis for

upholding the demand.

| eee

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cally provides that “[a] practitioner shall not maintain” out-

dated medication, and N.J.S.A. 45:1-18 expressly authorizes

an administrative search based on finding a violation of a spe-

cific regulation. See also N.J.S.A. 45:1-14, -15, -17 (placing

the Board of Medical Examiners within the Division of Con-

sumer Affairs and giving the Attorney General enforcement

powers).

There can be no doubt that the medical profession is highly

regulated. See, e.g., In re Polk, 90 N.J. 550, 566 (1982);

N.J.S.A. 45:9-1 et seq.; N.J.A.C. 13:35-1 et seq. Licensure to

practice medicine is required, follows extensive education,

and is subject to the rules and regulations of the Board of

Medical Examiners. /d. Thus, an administrative search as part

of a comprehensive statutory scheme to assure compliance

with specific regulations governing the profession is autho-

rized by New York v. Burger, 482 U.S. 691, 107 S. Ct. 2636,

96 L. Ed.2d 601 (1987).

An expectation of privacy in commercial premises. .

is different from, and indeed less than, a similar expec-

tation in an individual’s home. See Donovan v. Dewey,

452 U.S. 594, 598-99, 101 S. Ct. 2534, 2537-38, 69 L.

Ed.2d 262, 268-69 (1981). This expectation is particu-

larly attenuated in commercial property employed in

“closely regulated” industries. The Court observed in

Marshall v. Barlow’s, Inc.: “Certain industries have such

a history of government oversight that no reasonable

expectation of privacy, see Katz v. United States, 389

U.S. 347, 351-52, [88 S. Cr. 507, 511-12, 19 L. Ed.2d

576] (1967), could exist for a proprietor over the stock

of such an enterprise.” 436 U.S. 307, 313, 98 S. Ct. 1816,

1821, 56 L. Ed.2d 305, 312 (1978).

[New York v. Burger, supra, 482 U.S. at 700, 107 S. Ct. at

2642, 96 L. Ed.2d at 612.] |

Hence, there is a “reduced expectation of privacy by the

owner of commercial premises in a ‘closely regulated’ indus-

try.” Id. at 701, 107 S. Ct. at 2643, 96 L. Ed.2d at 613; see

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also Donovan v. Dewey, 452 U.S. 594, 598-600, 101 S. Ct.

2534, 69 L. Ed.2d 262, 268-270 (1981); United States v.

Biswell, 406 U.S. 311, 316, 92 S. Ct. 1593, 1596, 32 L.Ed.2d

87, 92 (1972); Colonnade Corp. v. United States, 397 U.S. 72,

76-77, 90 S. Ct. 774, 776-77, 25 L.Ed.2d 60, 64 (1970).

Because the owner or operator of commercial premises

in a “closely regulated” industry has a reduced expec-

tation of privacy, the warrant and probable-cause

requirements, which fulfill the traditional Fourth Amend-

ment standard of reasonableness for a government search

. . have lessened application in this context. Rather,

we conclude that, as in other situations of “special

need,” . . . where the privacy interests of the owner are

weakened and the government interests in regulating par-

ticular businesses are concomitantly heightened, a war-

rantless inspection of commercial premises may well be

reasonable within the meaning of the Fourth Amend-

ment.

This warrantless inspection, however, even in the con-

text of a pervasively regulated business, will be deemed

to be reasonable only so long as three criteria are met.

First, there must be a “substantial” government interest

that informs the regulatory scheme pursuant to which the

inspection is made. . . .

Second, the warrantless inspections must be “neces-

sary to further [the] regulatory scheme.”. . .

Finally, “the statute’s inspection program, in terms of

the certainty and regularity of its application [must]

provid[e] a constitutionally adequate substitute for

a warrant.” [Donovan v. Dewey, 452 U.S. at 603, 101

S. Ct. at 2534, 69 L. Ed.2d 272]. In other words, the reg-

ulatory statute must perform the two basic functions of

a warrant: it must advise the owner of the commercial

premises that the search is being made pursuant to the

law and has a properly defined scope, and it must limit

the discretion of the inspecting officers. . . . To perform

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this first function, the statute must be “sufficiently com-

prehensive and defined that the owner of Commercial

property cannot help but be aware that his property will

be subject to periodic inspections undertaken for specific

purposes.” Donovan v. Dewey, [452 U.S. at 600, 101 S.

Cr. at 2539, 69 L. Ed.2d at 270]. In addition, in defining

how a Statute limits the discretion of the inspectors. . .

it must be “carefully limited in time, place, and scope.”

United States v. Biswell, [406 U.S. at 315, 92 S. Ct. at

1596, 32 L. Ed.2d at 92).

[New York v. Burger, supra, 482 U.S. at 702-703, 107

S. Ct. at 2643-44, 96 L. Ed.2d at 613-14.]*

Under Burger, police officers can conduct a warrantless

search of a junkyard to look for stolen vehicles and parts after

the owner indicates he has no license or records which are

required by statute. Similarly, the search of a doctor’s office

“during business hours” (as here limited by the September 25,

1997 demaid) for professional records needs no warrant

under the test announced by the Burger majority. Inspections

by the Division of Consumer Affairs for outdated medication

or records relating to dispensing of same following receipt by

the Board of Medical Examiners of evidence of such dis-

pensing and the Board’s specific authorization of a search to

ascertain if the doctor was dispensing such medication (as

was ordered in this case) cannot be deemed per se unlawful.

Whether there is sufficient evidence before the Board,

whether its findings are sufficiently made of record and

whether the administrative demand is sufficiently tailored in

terms of time, place and scope, see Burger, supra, 482 U.S. at

703, 107 S. Cr. at 2644, 96 L. Ed.2d at 614; United States v.

Biswell, 406 U.S. 311, 315-16, 92 S. Cr. 1593, 1596, 32 L.

Ed.2d 87, 92 (1972), depends upon the facts of the particular

. There is no claim that the New Jersey Constitution gives greater

protection than the federal constitution or that there is some independent

state law governing administrative searches. See, e.g., In re Martin, 90

N.J. 295, 310-14 (1982).

lla

case. As this case is moot, we need not address whether the

demand in this case was too broad.

We read nothing in Burger or the other United States

Supreme Court cases which prohibit the legislature from del-

egating to an administrative agency the authority to adopt reg-

ulations which satisfy the constitutional three prong test

announced in Burger. See, e.g., State v. Turcotte, 239 N.J.

Super. 285, 294 (App. Div. 1990); State v. Dolce, 178 N.J.

Super. 275, 284-85 (App. Div. 1981) (finding that the admin-

istrative regulations do not violate Fourth Amendment stan-

dards). See also In re Martin, 90 N.J. 295, 310-14 (1982).

The Board of Medical Examiners has now adopted regulations

which make clear that maintenance and dispensing of out-

dated drugs is prohibited, and the Legislature has expressly

authorized “inspect[{ion of] any premises” of a licensed pro-

fessional for “any act or practice declared unlawful by a

statute or regulation administered by such board.” N.J.S.A.

45:1-18(c) alteration added).° Hence, where the Board finds

a specific violation of a regulation by a provider of health

care services under its jurisdiction has occurred, or that there

is a factual basis “in the public interest to inquire whether any

such violation may exist,” a sufficiently detailed adminis-

trative demand (or warrant) specifying the legal authority for

the demand and its limitations as to time, place and scope

would pass constitutional muster.’ See, e.g., Greenblatt v. New

5 We find nothing in Burger or any other case which requires the

statute to be profession-specific or which requires that a statute must

relate specifically to a single profession, provided that the Legislature has

delegated regulatory power to the agency which conducts an adminis-

trative search. We do not herein address the power of any other agency

affected by N.J.S.A. 45:1-18 to conduct an administrative search.

, Thus, the statute puts the regulated industry on notice of the

ability to conduct an administrative search. See Donovan v. Dewey, supra,

452 U.S. at 605-06, 101 S. Cr. at 2541-42, 69 L. Ed.2d at 273. See also,

e.g., State v. Stroger, 97 N.J. 391, 403 (1984), cert. denied, 469 U.S.

1193, 105 S. Cr. 971, 83 L. Ed.2d 974 (1985).

.

The statute would have to be honored; only the Board can autho-

rize the search and only Division of Consumer Affairs or Attorney Gen-

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Jersey Bd. of Pharmacy, 214 N.J. Super. 269, 276-77 (App.

Div. 1986) (rejecting a claim that “warrantless search and

seizures permitted by N.J.S.A. 45:14-15 and N.J.S.A. 45:1-

18c, d and e are violative of the Fourth, Fifth and Fourteenth

Amendments to the federal constitution”).

As the matter before us is moot by virtue of both the lack

of sanctions in this case and adoption of a new regulation

governing the conduct in question, we do not address the

propriety of the September 30, 1997 and October 30, 1997

visits to Dr. W.C.’s office and the events surrounding them.

We recognize that plaintiff’s complaint seeks relief under 42

U.S.C. § 1983, that such claims may be cognizable in the Law

Division, and that the parties have not addressed the impact

of our conclusion on that aspect of the case. We, therefore,

remand the matter to the Law Division, Essex County, for any

further proceedings plaintiff W.C. may endeavor to pursue on

the § 1983 claim which technically remains pending. See

Maisonet v. Department of Human Serv., 140 N.J. 214, 226-

28 (1995). In so doing, we recognize the limited ability to

proceed against State officials under § 1983, see, e.g., Hafer

v. Melo, 502 U.S. 21, 25-31, 112 § .Ct. 358, 116 L. Ed.2d 301,

309-13 (1991), and do not intimate any view on the ability to

proceed or on the merits of any claim.

So ordered.

I hereby certify that the

foregoing is a true copy of the

original on file in my office.

EMU S. COx

Clerk

eral enforcement officers could conduct it. The warrantless search would

be conducted to assure compliance with the provisions of Title 45 and its

implementing regulations, not to gather evidence of crime, State v.

Williams, 84 N.J. 217, 222-27 (1980), even though the discovery of evi-

dence of crime during an otherwise valid administrative inspection need

not necessarily be suppressed. State v. Rednor, 203 N.J. Super. 503, 507-

09 (App. Div. 1985). See also State v. Stroger, supra, 97 N.J. at 403-04,

410-13