                                NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.




                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-5419-17T4

MARLENE CARIDE, COMMISSIONER
NEW JERSEY DEPARTMENT OF
BANKING AND INSURANCE,

          Petitioner-Respondent,

v.

CATARINA YOUNG,

          Respondent-Appellant,

and

ELITE BENEFITS CORPORATION,

     Respondent.
_________________________________

                    Submitted September 25, 2019 – Decided October 25, 2019

                    Before Judges Koblitz, Gooden Brown and Mawla.

                    On appeal from the New Jersey Department of Banking
                    and Insurance, Agency Docket Nos. E15-44.

                    Law Office of Jarred S. Freeman, LLC, attorneys for
                    appellant (Hamill R. Patel, on the brief).
               Gurbir S. Grewal, Attorney General, attorney for
               respondent (Melissa H. Raksa, Assistant Attorney
               General, of counsel; Ryan Shawn Schaffer, Deputy
               Attorney General, on the brief).

PER CURIAM

        Respondent Catarina Young appeals from a June 11, 2018 order of the

Commissioner of the New Jersey Department of Banking and Insurance (the

Department), affirming with modifications the decision of the Administrative

Law Judge (ALJ) and assessing penalties of $299,8651 for defrauding an

employee health care plan. We affirm in part and reverse in part, vacating the

penalties imposed for fraudulent activity that occurred outside the ten-year

statute of limitations.

        Respondent was a designated responsible license producer and part owner

of Elite Benefits Corp. (Elite),2 which managed and brokered health care plans

for the Multi-Skilled Employees and Employers Welfare Trust Fund (Fund).

Horizon Blue Cross and Blue Shield (Horizon) provided health insurance.

Under the policy, only employees and their dependents were eligible for

coverage. From 2006 through 2008, respondent enrolled her parents, who were



1
    We round all monetary amounts to the nearest dollar.
2
    Elite is not a party to this appeal.
                                                                        A-5419-17T4
                                           2
neither employees nor dependents of employees. As a result, the Fund paid

premiums and Horizon honored claims on behalf of respondent's parents. In

addition, from 2003 through 2006, respondent stole almost one-half million

dollars from the Fund.

      In 2014, respondent was convicted after a jury trial of theft of $462,342

from the Fund. The following year, the Department filed an order to show cause

alleging that respondent and Elite violated the New Jersey Insurance Producer

Licensing Act of 2001, N.J.S.A. 17:22A-26 to -57 (Producer Act) and the New

Jersey Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -34 (Fraud Act).

The Department alleged that respondent and Elite illegally enrolled respondent's

parents in the health insurance policy, and respondent misappropriated $462,342

from the Fund by 102 separate transactions. The ALJ granted summary decision

in favor of the Department and imposed a total civil penalty of $39,865. The

Commissioner adopted the ALJ's decision, with modifications, increasing the

civil monetary penalty to $299,865.

      On appeal, respondent argues that the Department's claims were barred by

the statute of limitations; the Commissioner erred in granting summary decision

because respondent presented an issue of fact; and also erred in imposing

excessive fines.


                                                                        A-5419-17T4
                                       3
      The Commissioner determined that under the Producer Act, a $2500

penalty was appropriate for each of respondent's 102 misappropriations of Fund

money, even though forty-one of these checks fell outside the ten-year statute

of limitations period. In addition to ordering respondent to pay the penalty of

$255,000, the Commissioner adopted the ALJ's recommendation and imposed

$22,865 in attorney fees. The Commissioner modified the $2000 Fraud Act

surcharge to impose $1000 against respondent, and $1000 against Elite,

individually. The Commissioner also adopted the ALJ's recommendation to

revoke respondent's and Elite's producer licenses.

                            I. Factual background.

      During 2006, 2007, and 2008, Horizon provided health insurance to the

Fund's members and their dependents. In June 2006, respondent improperly

enrolled her father in the policy as an employee and her mother as her father's

dependent.

      Respondent admitted that she enrolled her parents in the Fund's health

insurance program, but claimed it was with the permission of the trustees and

attorney of the fund.   She maintained that "many" who were not eligible

employees or dependents of employees were enrolled in the fund. Respondent




                                                                       A-5419-17T4
                                       4
did not contest the revocation of her license. As for the misappropriation of

$462,342, respondent admitted the convictions and stated:

             I was incarcerated for [thirteen] months; [four] months
             at Middlesex County Jail and [nine] months at Edna
             Mahan Correctional Facility. I am currently home on
             ISP.[3]

                    ....

             I am opposing the fines because all the transactions that
             took place were done with the approval of at least one
             of the trustees. [The criminal court] requested an
             affidavit from the employer trustees stating how much
             money was missing from the fund and never received
             anything. That was the basis of [the criminal court] not
             ordering restitution.

                                II. ALJ findings.

       The ALJ found that respondent and Elite violated the Fraud Act when

respondent enrolled her parents in the Fund's health insurance plan. As a result

of respondent's misconduct, the Fund paid $12,197 in health care premiums, and

Horizon paid $13,893 in claims, on behalf of her parents.

       The ALJ also found that both respondent's and Elite's conduct violated the

Producer Act because it "violated their fiduciary duty to the Fund," and for the




3
    ISP refers to the Intensive Supervision Program. R. 3:21-10(b).
                                                                         A-5419-17T4
                                        5
Fund to pay "insurance premiums for [respondent's] parents was tantamount to

fraud in the conduct of insurance business . . . ."

      The ALJ determined there was no factual dispute that respondent took

money from the Fund because she was convicted of second-degree theft by

unlawful   taking    of   $462,342,    N.J.S.A.   2C:20-3,   and   second-degree

misapplication of entrusted property, N.J.S.A. 2C:21-15.       Respondent also

violated the Producer Act by being convicted of serious crimes.         N.J.S.A.

17:22A-40(a)(6), (8) and (16).

      The ALJ then considered what civil penalties would be appropriate under

Kimmelman v. Henkels & McCoy, Inc., 108 N.J. 123 (1987). In Kimmelman,

our Supreme Court established seven factors for courts to consider when

imposing civil penalties: (1) "[t]he good or bad faith of respondent";

(2)"[d]efendant's ability to pay"; (3) the "[a]mount of profits obtained from

illegal activity"; (4) any "[i]njury to the public"; (5) the "[d]uration of the

conspiracy"; (6) the "[e]xistence of criminal or treble damages actions"; and (7)

any "[p]ast violations." 108 N.J. at 137–39.

      The ALJ found the following aggravating Kimmelman factors: respondent

took $462,342 from the Fund in bad faith and the lengthy duration of

respondent's conduct.


                                                                         A-5419-17T4
                                         6
With regard to mitigating factors, the ALJ found that respondent did not have

sufficient assets to pay the more than one million dollars sought by the

Department. The ALJ also found insufficient proof that respondent profited by

stealing from the Fund or that respondent's misappropriation injured the public.

The ALJ found respondent had been punished by being criminally convicted,

incarcerated, and fined for her actions; and she had no prior violations. The ALJ

determined that the Department was entitled to $39,865: $10,000 for two

violations of both the Producer Act and the Fraud Act (the illegal enrollment);

$5000 for respondent's misappropriation of money for her personal benefit (the

misappropriation); a $2000 Fraud Act surcharge; and $22,865 in attorney fees.

                         III. Commissioner's findings.

      The Commissioner adopted the findings of the ALJ, with modifications.

The maximum fines that may be imposed under the Fraud Act are $5000 for the

first violation, $10,000 for the second violation, and $15,000 for each

subsequent violation. N.J.S.A. 17:33A-5(a) and (b). The Commissioner may

also order restitution, costs, and attorney fees. Under the Producer Act, the

Commissioner may impose maximum penalties of $5000 for the first offense

and $10,000 for each subsequent offense. N.J.S.A. 17:22A-45(c).




                                                                         A-5419-17T4
                                       7
      The Commissioner concurred with the ALJ's findings that summary

decision was appropriate against both respondent and Elite for the illegal

enrollment, and against respondent alone for misappropriation.                  The

Commissioner modified the ALJ's findings to specify that respondent violated

N.J.S.A. 17:22A-40(a)(2) ("violating any insurance laws"); N.J.S.A. 17:22A-

40(a)(4) ("improperly withholding, misappropriating or converting any monies

or properties received in the course of doing insurance business"); and N.J.A.C.

11:17A-4.10 ("an insurance producer acts in a fiduciary capacity in the conduct

of his or her insurance business").

      The Commissioner found that the record was "more than sufficient to

support the ALJ's recommendation" that respondent's and Elite's licenses be

revoked.    The Commissioner determined that it was appropriate to impose

penalties under both the Fraud Act and Producer Act because both had been

violated.    As for respondent's misappropriation of Fund money, the

Commissioner found that each of the 102 thefts was "a separate

misappropriation; and thus, a separate violation of the Producer Act." She found

that "[s]eparate civil penalties should be assessed for each act . . . ."

      Proceeding to the Kimmelman factors, the Commissioner noted that the

ALJ found respondent lacked the ability to pay based on a single tax return,


                                                                            A-5419-17T4
                                          8
stating that respondent did "clerical work as an independent contractor," earning

approximately $10,000 per year. The Commissioner attributed the low income

on respondent's 2015 tax return to her incarceration. The record did not contain

any other information regarding respondent's ability to pay. The Commissioner

found that ability to pay provided only "limited mitigation."

      The Commissioner disagreed with the ALJ, finding respondent profited

and injured the public when she took $462,342 from the Fund.                    The

Commissioner determined that just because the criminal court did not order

restitution did not mean the Fund did not suffer a loss. Respondent's claims that

she made loans to the Fund in 2002 did not explain why she misappropriated

$462,342 between November 2003 and December 2006, given that she provided

no loan or other accounting documentation to support her claim.

      The Commissioner determined that respondent "caused actual harm" to

the Fund and "the unions and members who comprised the Fund" when she took

the money. The Commissioner also considered "less tangible forms of harm"

such as the costs of the insurance companies' investigations being passed to "the

insurance buying public," and the "erosion of the continued confidence of the

public in the integrity of insurance producers . . . ." The Commissioner found

that the duration of illegal activity, "weigh[ed] strongly in favor of a significant


                                                                            A-5419-17T4
                                         9
penalty."   Respondent's conduct "demonstrated a pattern and practice of

misconduct."

      As for whether imposing a civil penalty for respondent's criminal actions

would be unduly punitive in light of other punishments imposed by the criminal

process, the Commissioner reasoned that the lack of criminal punishment for

fraudulently enrolling respondent's parents in the policy "weigh[ed] in favor of

a more significant civil penalty because the respondent cannot argue that . . . she

has already paid a price for . . . her unlawful conduct." The Commissioner did

find, however, that respondent's criminal sanctions for the misappropriation of

the Fund's money "weigh[ed] in favor of mitigating the severity of the sanctions

imposed in this matter."

      Finally, the Commissioner found that respondent had no prior criminal

history, and there was no evidence that respondent or Elite previously violated

the Fraud Act or Producer Act.

      Based on her analysis of the seven Kimmelman factors, the Commissioner

imposed $10,000 for the Producer Act violations and $10,000 for the Fraud Act

violations, for the illegal enrollment of respondent's parents in the health

insurance policy. The Commissioner then imposed a $255,000 penalty against




                                                                           A-5419-17T4
                                       10
respondent, $2500 "for each of the 102 thefts from the Fund . . . ."         The

Commissioner explained:

            These penalties are fully warranted, not excessive or
            unduly punitive as the criminal matter imposed no
            monetary sanctions and did not order restitution, and
            are necessary to demonstrate the appropriate level of
            opprobrium for such egregious and extended
            misconduct by a licensed producer in this State.
            Moreover, these penalties take into consideration the
            limited proofs of an inability to pay and [respondent's]
            criminal conviction for 102 misappropriations. Here,
            [respondent's] misconduct was egregious because it
            involved 102 separate invasions of the Fund's monies
            and therefore warrants imposition of a significant fine.
            This is significantly less than the maximum fine of
            $1,0[20],000 [that the Department had requested] for
            these 102 misappropriations under N.J.S.A. 17:22A-
            45(c).

      The Commissioner also awarded the Department $22,865 in attorney fees,

shared jointly and severally between respondent and Elite. The Commissioner

agreed with the ALJ that the $2000 Fraud Act surcharge under N.J.S.A. 17:33A-

5.1 was appropriate, but modified the ALJ's decision so that $1000 was imposed

against respondent, and $1000 was imposed against Elite, individually.

                             IV. Legal discussion.

      Our review of an administrative agency's decision is limited.       Circus

Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 9 (2009).

This court "does not substitute its judgment of the facts for that of an

                                                                         A-5419-17T4
                                      11
administrative agency." Campbell v. N.J. Racing Comm'n, 169 N.J. 579, 587

(2001). Rather, we "defer to matters that lie within the special competence" of

the administrative agency. Balagun v. Dep't of Corr., 361 N.J. Super. 199, 202

(App. Div. 2003). "However, a reviewing court is 'in no way bound by [an]

agency's interpretation of a statute or its determination of a strictly legal issue.'"

Allstars Auto Grp., Inc. v. N.J. Motor Vehicle Comm'n, 234 N.J. 150, 158 (2018)

(alteration in original) (quoting Dep't of Children & Families, DYFS v. T.B.,

207 N.J. 294, 302 (2011)).

      "Ordinarily, an appellate court will reverse the decision of the

administrative agency only if it is arbitrary, capricious or unreasonable or it is

not supported by substantial credible evidence in the record as a whole." Mejia

v. Dep't of Corr., 446 N.J. Super. 369, 376 (App. Div. 2016) (quoting Henry v.

Rahway State Prison, 81 N.J. 571, 579–80 (1980)).

                             A. Statute of limitations.

      Respondent argues that the decisions of the ALJ and Commissioner should

be reversed because the Department's claims were barred by the statute of

limitations. Pointing to N.J.S.A. 2A:14-1.2, which sets a ten-year statute of

limitations, respondent argues that any check or wire transfer she may have

made to herself from the Fund between November 17, 2003 and April 25, 2005


                                                                              A-5419-17T4
                                         12
may not be considered because the Department did not file its first order to show

cause until April 28, 2015. 4

      A ten-year statute of limitations governs this action. N.J.S.A. 2A:14-

1.2(a) (stating that unless otherwise provided by statute, "any civil action

commenced by the State shall be commenced within ten years next after the

cause of action shall have accrued"); Cumberland Cty. Bd. of Chosen

Freeholders v. Vitetta Grp., P.C., 431 N.J. Super. 596, 603 (App. Div. 2013)

(stating that N.J.S.A. 2A:14-1.2 "is a statute of limitations governing civil

actions commenced by the State or its political subdivisions").

      In the criminal context, "when a respondent engages in a course of conduct

or single scheme to obtain property of another by deception from one or several

persons, that conduct is a continuous offense for purposes of the statute of

limitations." State v. Diorio, 216 N.J. 598, 619 (2014). A course of conduct or

"continuing offense" is one that "involves conduct spanning an extended period

of time and generates harm that continues uninterrupted until the course of

conduct ceases." State v. Twiggs, 233 N.J. 513, 528 (2018) (quoting State v.

Jones, 445 N.J. Super. 555, 568 (App. Div. 2016)).        When the jury found


4
  The Department concedes that respondent raised the statute of limitations issue
administratively, but posits that it was not addressed in either decision because
"it apparently did not merit discussion by either the ALJ or the Commissioner."
                                                                         A-5419-17T4
                                      13
respondent guilty of these crimes, it aggregated the amount of money involved,

finding that she unlawfully stole $462,342.          As a result of this finding,

respondent was sentenced for second-degree crimes. N.J.S.A. 2C:20-2(b)(1)(a);

N.J.S.A. 2C:21-27(a).

      Reviewing the facts in the civil context, both the ALJ and Commissioner

viewed respondent's thefts as 102 "separate conversion[s] of monies" or

"separate violations of the Producer Act."           In imposing a penalty, the

Commissioner stated numerous times that each of the 102 thefts from the Fund

was a separate offense.       Because the Commissioner treated respondent's

behavior as 102 separate thefts, the Department is barred from seeking civil

monetary penalties for forty-one of the thefts, which occurred outside of the

statute of limitations window.

      The Department argues it should receive the benefit of the "discovery

rule." The discovery rule, "provides that in an appropriate case a cause of action

will be held not to accrue until the injured party discovers, or by an exercise of

reasonable diligence and intelligence should have discovered that he may have

a basis for an actionable claim." Lopez v. Swyer, 62 N.J. 267, 272 (1973). "The

discovery rule is essentially a rule of equity" that allows a plaintiff relief from a

statute of limitations bar. Id. at 272–73. The Department failed to demonstrate


                                                                             A-5419-17T4
                                        14
"harsh results" if respondent is not penalized for the forty-one thefts that fall

outside the limitations period. See Vispisiano v. Ashland Chem. Co., 107 N.J.

416, 426 (1987) ("The essential purpose of the [discovery] rule is to avoid harsh

results that otherwise would flow from mechanical application of a statute of

limitations.").

                       B. Summary decision appropriate.

      Respondent argues that the Fraud Act and Producer Act were not at issue

during her criminal proceedings because she was charged with theft by unlawful

taking and misapplication of entrusted property. Respondent maintains that a

hearing should therefore have been held.            But respondent's underlying

admissions and convictions constitute violations of those two acts.

      A summary decision "may be rendered if the papers and discovery which

have been filed, together with the affidavits, if any, show that there is no genuine

issue as to any material fact challenged and that the moving party is entitled to

prevail as a matter of law." N.J.A.C. 1:1-12.5(b). This standard is similar to

the rule governing a motion for summary judgment. R. 4:46-2(c).

      Respondent admitted in her answer that she enrolled her parents, who

were not eligible employees, in the policy, and her defense that others were

doing the same was rejected. As for the misappropriation of Fund money,


                                                                            A-5419-17T4
                                        15
respondent also admitted in her answer that she was criminally convicted of

second-degree theft by unlawful taking or disposition and second-degree

misapplication of entrusted property.

      The jury verdict sheet states:

            [B]etween on or about November 17, 2003 and on or
            about December 26, 2006 . . . [respondent] knowingly
            and unlawfully [took] or exercise[ed] unlawful control
            over the movable property of another in an amount of
            $75,000 or more . . . in an amount of approximately
            $462,34[2]belonging to [the Fund], with the purpose to
            deprive [the Fund].

      The rule against hearsay includes the following exception for judgments

of a previous conviction of a crime: "[i]n a civil proceeding, except as otherwise

provided by court order on acceptance of a plea, evidence of a final judgment

against a party adjudging the party guilty of an indictable offense in New Jersey

[is admissible] . . . against that party, to prove any fact essential to sustain the

judgment." N.J.R.E. 803(c)(22).

                              C. Fines appropriate.

      Respondent argues the monetary sanctions were overly harsh.               She

contests the Commissioner's findings concerning the Kimmelman factors.

Respondent asserts that she did not act in bad faith because "[s]he received

permission from the two [F]und trustees and the [F]und attorney to enroll her


                                                                            A-5419-17T4
                                        16
parents in the [F]und." The Commissioner rejected this explanation. With

regard to stealing from the Fund, she claims she was reimbursing herself for

money she had lent the Fund. The criminal jury, however, found to the contrary.

The Commissioner had substantial credible evidence in the record as a whole to

make her Kimmelman factor determinations.

      Respondent also argues that the Commissioner's penalties violated

N.J.S.A. 17:33A-5(b) and (c) which set the maximum penalties of "not more

than $5,000 for the first violation, $10,000 for the second violation and $15,000

for each subsequent violation." The Commissioner assessed $2500 for each

violation, consistent with this statute. Respondent points to the criminal statute,

N.J.S.A. 2C:20-2(b)(4), which allows for the consolidation of theft offenses, to

argue that her misconduct should only constitute one act instead of 102 acts.

Respondent maintains that her "offense involved adding her parents to Horizon's

health plan and every event that followed was part of one plan or scheme." We

do not accept this argument for civil sanctioning purposes. It conflicts with the

determination that forty-one of the acts were outside the statute of limitations.

The Commissioner had the authority to view each transaction as a separate

violation.




                                                                           A-5419-17T4
                                       17
      This court's review of an agency's sanction decision is limited. In re

License Issued to Zahl, 186 N.J. 341, 353 (2006). "Courts generally afford

substantial deference to the actions of administrative agencies . . . ." Ibid. This

is because agencies have "expertise and superior knowledge" of their specialized

fields, and because they are "executive actors." Ibid. (quoting Greenwood v.

State Police Training Ctr., 127 N.J. 500, 513 (1992)). Courts "ha[ve] no power

to act independently as an administrative tribunal or to substitute its judgment

for that of the agency" unless they are "satisfied that the agency has mistakenly

exercised its discretion or misperceived its own statutory authority." In re Polk,

90 N.J. 550, 578 (1982). "[T]he test in reviewing administrative sanctions is

'whether such punishment is "so disproportionate to the offense, in the light of

all the circumstances, as to be shocking to one's sense of fairness."'" Ibid.

(quoting Pell v. Board of Educ., 34 N.Y.2d 222, 233 (1974)).

      The Commissioner imposed a total penalty of $299,865, 5 less than the

$462,342 respondent illegally took from the Fund. The Department sought

$1,020,000 for the 102 misappropriations. The Commissioner's total penalty

was not "so disproportionate to the offense, in the light of all the circumstances,



5
   On remand the penalty will be decreased by the $102,500 imposed for the
forty-one incidents that fell outside the statute of limitations.
                                                                           A-5419-17T4
                                       18
as to be shocking to one's sense of fairness." Ibid. (quoting Pell, 34 N.Y.2d at

233).

        Affirmed in part, reversed in part, and remanded to the Commissioner to

vacate the penalties imposed for the forty-one transactions that occurred prior

to the statute of limitations window. We do not retain jurisdiction.




                                                                        A-5419-17T4
                                      19
