Opinion
DOCKET NO. A-1656-14T4
09-01-2016
JOEL JACOWITZ, M.D., Plaintiff-Respondent, v. JOSEPH LOZITO, DIAGNOSTIC UNLIMITED, and LOZITO MEDICAL ASSOCIATES, Defendants-Appellants.
Jeffrey B. Randolph, attorney for appellants. Fischer Porter & Thomas, P.C., attorneys for respondent (Arthur "Scott" L. Porter, Jr., of counsel; James N. Faller, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Messano and Sumners. On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5610-13. Jeffrey B. Randolph, attorney for appellants. Fischer Porter & Thomas, P.C., attorneys for respondent (Arthur "Scott" L. Porter, Jr., of counsel; James N. Faller, on the brief). PER CURIAM
Following a bench trial, defendants Joseph Lozito, Diagnostic Unlimited, and Lozito Medical Associates, appeal from the Law Division's final judgment in the amount of $73,298, plus interest and costs, in favor of plaintiff Joel Jacowitz. For the reasons that follow, we affirm.
Although the brief submitted in support of the appeal suggests that only Lozito is appealing the trial court's decision, we view the appeal as being on behalf of all defendants as set forth in the notice of appeal.
I.
Lozito is a chiropractor, who owns and operates Diagnostic Unlimited and Lozito Medical Associates (collectively referred to as defendants, with Lozito being referred to as defendant). In October 2011, the parties entered into a verbal agreement whereby plaintiff, a cardiologist, would conduct studies of imaging scans, mostly echocardiograms and carotid artery ultrasounds, for defendants' patients. In addition to referring their patients to plaintiff, defendants would handle billing and pay the technician. Plaintiff's services were to be provided for defendants' out-of-network patients only, since doing so generated more money than billing patients with in-network providers or with Medicare insurance. There was no agreed upon compensation structure.
Approximately three months later, the parties met to discuss the lack of payment for plaintiff's services. Apparently, defendants had been using the wrong medical billing codes on the claim forms they submitted to insurance companies. Thinking the problem had been resolved, plaintiff continued to provide services to defendants' patients. However, difficulties continued. Plaintiff eventually learned that defendants were having problems billing Medicare — a surprise to plaintiff given that the arrangement was that he would only provide services for defendants' out-of-network patients. Nonetheless, plaintiff continued to perform services for defendants' patients because he "still believed that they were going to do the right thing" and pay him.
Payment problems continued, and, after unsuccessful attempts, the parties finally met in October 2012. Plaintiff again discovered that defendants were not properly billing patients' insurance companies, were receiving a low amount of reimbursement for Medicare patients, and failed to bill patients for fees not covered by their insurance carriers. Plaintiff received a $1700 check as partial payment, along with the promise that the mistakes would be corrected and a reconciliation for fees owed would be done at the end of the year. Although defendant alleged that reconciliation was performed, it was never provided to plaintiff. According to defendant, there was no money remaining to pay plaintiff.
While defendant testified that the $1700 check fully covered the amount plaintiff was owed, the trial judge determined that this statement was "not truthful as the check in the lower left hand corner clearly state[d] 'for partial payment.'"
Thereafter, sometime in October 2012, the parties entered into a written contract, prepared by plaintiff, that provided a prospective only fee structure for plaintiff's services. Unlike their verbal agreement, plaintiff would now be responsible for covering the costs for the technician. Plaintiff explained that the agreement was "a compromised solution so that we could continue to do this until [defendants] fixed their systems which they never did, and/or paid me the substantial amount of money for the work I had already done as part of a reconciliation that never happened."
Despite being fully paid during the first four months under the written contract, plaintiff did not receive any payments for his prior services and decided to stop servicing defendants' patients and filed suit alleging breach of contract, fraud, tortious interference, violation of the covenant of good faith and fair dealing, and sought an accounting.
At trial, plaintiff testified that prior to the October 2012 written contract, he performed approximately 235 imaging studies consisting of 157 or 158 echocardiograms, 78 carotid ultrasounds, and 2 abdominal ultrasounds for aortic aneurisms. The Medicare rates for an echocardiogram and carotid ultrasound were $273.62 and $224.34, respectively, and, the out-of-network rates were $950 and $546, respectively. Plaintiff calculated that defendants should have billed a total of $63,313.94, if the studies were all billed at Medicare rates, and $188,000, if they were billed at out-of-network rates. Plaintiff testified that he was entitled to fifty percent of the "properly" billed amounts for the tests he administered, equaling $94,000, minus $7,100 ($3,200 paid to plaintiff and $3,900 paid to the technician), for a total of $86,900. However, relying on defendants' billing records, plaintiff's counsel contended that defendants billed $41,210.30 for plaintiff's services and did not collect $51,582.52. Defendant contested this amount asserting that he did not recall being paid more than $20,000 for plaintiff's services. Plaintiff also testified that the studies with missing explanation of benefits (EOBs) for patients totaled $131,000 using out-of-network rates.
The record indicates $86,840.
Defendant testified there was no agreement that plaintiff would be compensated based on billed amounts because it would be more accurate to base plaintiff's compensation on collected amounts. Defendant also asserted that there was no agreement to pay plaintiff fifty percent of the amounts collected. Plaintiff testified that defendants presented him with a one-third compensation arrangement for bills actually collected.
Approximately a month after the two-day trial, the judge rendered his oral decision. The judge found that the parties had a "meeting of the minds" that plaintiff would do carotid ultrasounds, echocardiograms, as well as abdominal and aortal screenings, for out-of-network patients because they generated much more compensation than for in-network patients. The judge found that defendants intentionally misled plaintiff by sending him in-network and Medicare patients as well as claiming they were familiar with the out-of-network billing. The judge also determined that defendants agreed to, but failed to, collect the difference between the amount insurance carriers paid for in-network patients and the balance owed by the patient, as well as failed to collect deductibles for both in-network and Medicare patients.
In finding that defendants breached the agreement and plaintiff was entitled to compensation, the court stated:
Defendants have seriously breached the agreement with . . . plaintiff. That he had information such as they would not attempt to collect the money the patients would owe after under in[-]network billing. The plaintiff was misle[]d on this.
More serious is the fact that the defendant misrepresented the type of cases that . . . were to be sent to plaintiff.
. . . [D]efendants knew that the purpose of this agreement was to get higher billing and payments for services rendered. Instead, defendants sent in[-]network patients, where the fees are controlled and limited.
The court also found defendants to be "incredibly incompetent in billing":
The[re] were 230 patients that defendant[s] billed. However, [there were] 164 patients [] defendant[s] failed to bill at all. That is 42 percent of the cases referred were not billed. . . . [B]illing was proven by the fact that there was no explanation of benefits for the 164 patients. Defendant[s] didn't even offer an explanation or excuse for this failure to bill. And they did not deny that the services were rendered.
It's incomprehensible to me how someone could run an office and not bill 42 percent of the people.
The court acknowledged that it was "not a simple task" to determine plaintiff's damages because "[t]he vast majority of the problems ar[ose] through the defendant[s'] failure to keep billing records" and "its failure to even bill for services rendered." Nonetheless, the court found plaintiff's testimony to be more credible as to what percentage was going to be paid:
[Plaintiff keeping] 33 percent for someone who does the testing, reads the results, and gives it — seems [] exceedingly low. And [defendants] keeping 66 percent seems exceedingly high[] for . . . basically [] not render[ing] any services at all.
[Defendants] did refer the patients. And [] let them use the office for . . . administering tests, which the [c]ourt considers of minimal value . . . .
[Plaintiff] provided the equipment as well as the technician. He read the reports, read the results, and rendered the reports.
Two thirds of the billing does not seem appropriate for the referring [defendants] to be paid.Accordingly, the court found that fifty percent of the amount billed was a "fair and reasonable amount" for plaintiff's compensation.
The court awarded damages to plaintiff based on the billings by explaining:
The next issue is caused by the defendant[s'] conduct[] as to what are the billings and what they should have been. Defendants, on 230 matters[,] billed $103,814.70. You look at exhibit P-23 for that.
Of that bill, $51,582.52 was left unpaid. Attempts to collect these sums should have been made by the defendants. They knowingly and willingly did not make any attempt to collect these.
As to the 164 cases with no billing — no billing was done by [] defendants, the [c]ourt would extrapolate that out using percentages and would determine that to be $59,182.60.
So, the total amount of the two items, the 230 cases, $103,814, [plus] 164 that were never billed, which I still find incredible[,] $59,182[,] brings the total amount billed by the defendant[s], or should have been billed by the defendant[s,] [ ] [to] [$]162,996.
Now, the plaintiff alleges, under exhibit P-19, that the total amount of the billing should be $319,700. Here, the plaintiff was aware that there would be at least some in[-]network billing, which [] . . . would be lower than what the plaintiff's bill would be.
. . . .
So, in regard thereto for calculating damage[s], I'm going to use the $162,996. Now, that seems to me to be the fairest number to use. . . . [T]he [c]ourt's aware that defendant[s] created this difficult situation by their wrongdoing, in their failure to bill properly or at all.
While recognizing that the percentages due from patients' deductibles were not collected, the trial judge made no further deductions to account for this fact, explaining that his calculations are not based on the higher bills purported by plaintiff — almost a $200,000 increase. The court further explained:
I think that using the number for what was billed is more reasonable than using [plaintiff's] numbers . . . . Because, then, I'd have to get involved as to how much he would [be] allocating [and there are] to[o] many speculative things as to how many in[-]network billing he should have expected. And, so, I permit it under the agreement.The court then calculated fifty percent of $162,996, equaling $81,498, and deducted $8,200 for the fees to plaintiff and his technician, resulting in a judgment of $73,298, plus interest and costs. The court entered an order memorializing the judgment on December 9, 2014. This appeal followed.
The record reflects that they were paid $7,100 and in other instances, $8,200. --------
II.
Before us, defendants challenge the trial court's findings on liability and damages. Our standard of review of the trial court's determinations following a non-jury trial is a limited one. Petrozzi v. City of Ocean City, 433 N.J. Super. 290, 316 (App. Div. 2013), certif. denied, 217 N.J. 623 (2014). Accordingly, an appellate court must "give deference to the trial court that heard the witnesses, sifted the competing evidence, and made reasoned conclusions." Griepenburg v. Twp. of Ocean, 220 N.J. 239, 254 (2015) (citing Rova Farms Resort, Inc. v. Inv'rs Ins. Co., 65 N.J. 474, 483-84 (1974)). Reviewing courts "should 'not disturb the factual findings and legal conclusions of the trial judge' unless convinced that those findings and conclusions were 'so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Ibid. (quoting Rova Farms Resort, Inc., supra, 65 N.J. at 484). Review on appeal "does not consist of weighing evidence anew and making independent factual findings; rather, our function is to determine whether there is adequate evidence to support the judgment rendered at trial." Cannuscio v. Claridge Hotel & Casino, 319 N.J. Super. 342, 347 (App. Div. 1999) (citing State v. Johnson, 42 N.J. 146, 161 (1964)).
However, we owe no deference to the trial court's "interpretation of the law and the legal consequences that flow from established facts." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) (citations omitted). We review such decisions de novo. 30 River Court E. Urban Renewal Co. v. Capograsso, 383 N.J. Super. 470, 476 (App. Div. 2006) (citing Rova Farms, supra, 65 N.J. at 483-84; Manalapan Realty, supra, 140 N.J. at 378).
Applying these principles, we conclude there is no reason to disturb the trial court's judgment, which is supported by substantial credible evidence in the record. We therefore affirm substantially for the reasons the judge expressed in his oral opinion. We add the following comments.
A.
Defendants contend that there was no enforceable contract as the parties never had a "meeting of the minds," but rather an "agreement to agree" to specific terms in the future. This contention is without merit.
"A contract arises from offer and acceptance, and must be sufficiently definite 'that the performance to be rendered by each party can be ascertained with reasonable certainty.'" Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (citations omitted). "Thus, if parties agree on essential terms and manifest an intention to be bound by those terms, they have created an enforceable contract." Ibid. "'[I]t is requisite that there be an unqualified acceptance to conclude the manifestation of assent.'" Ibid. (citation omitted). "An offeree may manifest assent to the terms of an offer through words, creating an express contract, or by conduct, creating a contract implied-in-fact." Id. at 436. "As a basic premise, it is true that 'no contract is enforceable . . . without the flow of consideration--both sides must "get something" out of the exchange.'" Oscar v. Simeonidis, 352 N.J. Super. 476, 484 (App. Div. 2002) (quoting Cont'l Bank of Pa. v. Barclay Riding Acad., Inc., 93 N.J. 153, 170, cert. denied, 464 U.S. 994, 104 S. Ct. 488, 78 L. Ed. 2d 684 (1983)).
"A contracting party is bound by the apparent intention he or she outwardly manifests to the other party. It is immaterial that he or she has a different, secret intention from that outwardly manifested." Hagrish v. Olson, 254 N.J. Super. 133, 138 (App. Div. 1992) (citing Looman Realty Corp. v. Broad St. Nat. Bank of Trenton, 74 N.J. Super. 71, 82 (App. Div.), certif. denied, 37 N.J. 520 (1962)). Where the "parties agree on essential terms and manifest an intention to be bound by those terms, they have created an enforceable contract." Weichert Co. Realtors, supra, 128 N.J. at 435.
However, courts generally find that an agreement is unenforceable when the parties do not agree to one or more essential terms. Ibid. Nonetheless, the contract is not necessarily void even where contract terms are "ambiguous or doubtful." See Hall v. Bd. of Educ., 125 N.J. 299, 305-06 (1991) (noting that if contract terms are unspecific, extrinsic evidence may be used to "shed light" on the parties' mutual understanding). Vagueness is only lethal where "the contract [is] so vague or indefinite that it [can]not realistically be enforced." Satellite Entm't Ctr., Inc. v. Keaton, 347 N.J. Super. 268, 277 (App. Div. 2002). Importantly, courts frequently find and enforce promises by interpretation of a promisor's word and conduct in light of the surrounding circumstances. Wanaque Borough Sewerage Auth. v. Twp. of W. Milford, 144 N.J. 564, 574 (1996).
While it is undisputed that the parties had no written agreement prior to October 2012, and never agreed to a specific compensation structure under the oral agreement, the evidence supports the trial judge's finding that the parties entered into an agreement whereby plaintiff would perform certain services for defendants' patients for compensation that would be determined at a later time. Plaintiff's performance under the parties' oral agreement was evidenced by defendant's testimony that plaintiff provided the requested services to defendants' patients pursuant to their agreement. In fact, when asked if there was a specific agreement for plaintiff's compensation, defendant stated, "[i]t was specific for [plaintiff to be] compensated. It was specific for his tech[nician] to be compensated."
Moreover, defendants' conduct in tendering two checks to plaintiff in the sum of $3,200 for services performed prior to entering into a written contract in October 2012, belies defendants' contention that there was only an "agreement to agree." Defendants' "partial payment" notation on a check payable to plaintiff further underscores defendants' acknowledgment that plaintiff was entitled to compensation. Therefore, we conclude there was no error in the trial judge's finding that there was a "meeting of the minds," or an outward manifestation of intent through words and conduct to pay plaintiff for services performed, despite not specifying the parties' failure to discuss the compensation rate.
B.
Defendants contend that plaintiff failed to adequately prove the judgment amount awarded him by the trial court. Specifically, he argues that because there was no agreement between the parties specifying the cost for the tests performed on patients throughout September 2011 to October 2012, the plaintiff was required pursuant to N.J.R.E. 702 to prove through expert testimony, the "usual and customary value" of his services. Citing Daubert v. Merrell Dow Pharms., 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993) (Daubert I), and Daubert v. Merrell Dow Pharms., 43 F. 3d 1311 (9th Cir.), cert. denied, 516 U.S. 869, 116 S. Ct. 189, 133 L. Ed. 2d 126 (1995) (Daubert II), defendants assert that the trial judge erred in denying their in limine motion to bar plaintiff's testimony regarding the value of his services.
As for plaintiff's factual allegations, defendants argue that the trial judge incorrectly determined that defendants made material misrepresentations to plaintiff. Defendants contend that the record does not support plaintiff's allegations that: 1) defendants misrepresented their ability to competently bill for plaintiff's services; 2) defendants failed to provide plaintiff with a billing reconciliation; 3) defendants failed to disclose that Medicare had paid for testing services after the parties agreed to bill through a separate entity; and 4) defendants failed to bill patients for amounts not reimbursed by insurance carriers, against plaintiff's expectations. Lastly, defendants assert that the trial court's calculation of damages is speculative and must be reversed.
First, we do not find fault with the trial court's decision to consider plaintiff's testimony on the issue of damages. Under our standard of review, we defer to a trial court's evidentiary ruling and will not reverse unless it was "so wide off the mark that a manifest denial of justice resulted[.]" Brenman v. Demello, 191 N.J. 18, 31 (2007).
Defendants' reliance on N.J.R.E. 702 to preclude plaintiff's testimony is misplaced. N.J.R.E. 702 provides that a party's expert witness "may" offer testimony to assist the fact-finder in understanding scientific, technical, or specialized knowledge, not that a party must appoint such an expert. See State v. Odom, 116 N.J. 65, 71 (1989) (providing that expert testimony is presented when an issue pertains to a subject that is "beyond the understanding of the average person of ordinary experience, education, and knowledge").
The trial court did not abuse its discretion by finding that as the finder of fact it did not need the assistance of an expert providing "scientific, technical, or specialized knowledge" under N.J.R.E. 702 to determine the compensation structure between the parties. Plaintiff did not offer expert testimony; rather, his testimony was based on his knowledge as a cardiologist of Medicare and insurance carrier's reimbursement rates regarding the usual and customary value of echocardiograms or carotid ultrasounds in his geographic area.
Likewise, defendants' reliance on the Daubert decisions is misplaced. Those decisions involve the admissibility of expert testimony concerning the validity of scientific knowledge used to establish the cause of birth defects. See Daubert I, supra, 509 U.S. at 582-85, 592-95, 113 S. Ct. at 2791-92, 2796-98, 125 L. Ed. 2d at 476-78, 482-84; Daubert II, 43 F. 3d at 1313-22. Here, plaintiff's testimony, which was based upon his personal knowledge, related to the reasonable amount of compensation owed to him for the services he provided to defendants' patients. Moreover, defendants did not present any expert testimony to refute plaintiff's testimony but instead relied on defendant's testimony concerning his compensation structure with another cardiologist to prove the value of the plaintiff's services, thereby, undermining his argument that expert testimony was necessary.
Finally, we address defendants' contention that the trial judge's damages award was speculative, without any factual basis, and must be reversed. Defendants argue that the trial court's finding that plaintiff was entitled to fifty percent of the billing for plaintiff's services is not supported by the record given that both parties denied agreeing to a fifty percent compensation structure. Defendants further argue that plaintiff failed to prove damages with specificity, instead relying on various figures he arrived at based on numerous calculation methods, most of which were inapplicable to the out-of-network billing agreed to by the parties.
In general, the purpose of compensatory damages is to compensate a plaintiff for his or her actual loss. Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 48 (1984). In a contract case, "[c]ompensatory damages are designed 'to put the injured party in as good a position as he would have had if performance had been rendered as promised.'" 525 Main Street Corp. v. Eagle Roofing Co., 34 N.J. 251, 254 (1961) (quoting 5 Corbin, Contracts § 992, p.5 (1951); 1 Restatement, Contracts § 329, comment a (1932)).
A plaintiff has the burden of proving his or her damages. Caldwell v. Haynes, 136 N.J. 422, 436 (1994). In doing so, "[i]t is well-settled that the 'law abhors damages based on mere speculation.'" Mosley v. Femina Fashions, Inc., 356 N.J. Super. 118, 128 (App. Div. 2002) (quoting Caldwell, supra, 136 N.J. at 422), certif. denied, 176 N.J. 279 (2003). Nevertheless, the absence of evidence as to one measure of damages should not preclude an award based on an alternative and reliable measure of damages. Cf. St. Louis, LLC v. Final Touch Glass & Mirror, Inc., 386 N.J. Super. 177, 188 (App. Div. 2006) (considering alternative forms of calculating damages in construction cases). "Proof of damages need not be done with exactitude . . . . It is . . . sufficient that the plaintiff prove damages with such certainty as the nature of the case may permit, laying a foundation which will enable the trier of the facts to make a fair and reasonable estimate." Lane v. Oil Delivery, 216 N.J. Super. 413, 420 (App. Div. 1987); see also Totaro, Duffy, Cannova and Co., L.L.C. v. Lane, Middleton & Co., L.L.C., 191 N.J. 1, 14 (2007). In fact, "courts will fashion a remedy even though the proof on damages is inexact." Kozlowski v. Kozlowski, 80 N.J. 378, 388 (1979) (citations omitted).
Applying these standards, we defer to the trial court's determinations, which are supported by substantial credible evidence in the record. As a cardiologist, plaintiff was familiar with the going rates for imaging scans that he rendered for defendants' in-network, out-of-network, and Medicare patients. His testimony therefore provided the requisite foundation for a lay opinion regarding the value of his services sufficient to enable the trial judge to make a fair and reasonable estimate of the damages. In assessing the parties' testimony regarding damages, the court found plaintiff credible and that defendant made misrepresentations.
The trial judge further rejected plaintiff's various calculations to support his compensation demand. Instead, he determined that, largely due to defendants' failure to maintain and produce complete and accurate billing records, it was fair to award plaintiff fifty percent of the amount defendants billed for plaintiff's services, plus the amount owed for the 164 missing studies, minus prior payments made to plaintiff and his technician by defendants. As noted, damages need not be exact. Lane, supra, 216 N.J. Super. at 420. Thus, we conclude that the trial court's alternative approach was a fair and reasonable estimate of damages given defendants' failure to properly bill for plaintiff's services.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION