In re Zahl

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interests of brevity, portions of any opinion may not have been summarized).

SYLLABUS

IMO Suspension or Revocation of the License Issued to Kenneth Zahl, M.D. (A-54-05)

Argued March 6, 2006 — Decided April 26, 2006

ZAZZALI, J., writing for a unanimous Court.

Kenneth Zahl is a board-certified anesthesiologist. Over a number of years and under varying
circumstances Zahl over-billed Medicare, retained duplicate payments from his patient’s insurance company, made
misrepresentations to is own disability carrier, and inserted his colleagues’ names into patient records for patients
they did not treat. In the summer of 1999, the Attorney General filed an eight-count complaint against Zahl with the
New Jersey State Board of Medical Examiners. The Board transferred the case to the Office of Administrative Law.
An Administrative Law Judge (ALJ) ordered the revocation of Zahl’s medical license, fined him $35,000 in civil
penalties, required Zahl to reimburse an insurance carrier for $1,700 and assessed the State’s litigation costs against
Zahl. The Board affirmed, finding that Zahl had willfully engaged in numerous dishonest acts over the course of
years, including Medicare and insurance fraud and maintaining improper patient records. The Board also ordered
Zahl to pay costs totaling $232,694.36, which includes investigative costs, expert witness fees, transcript fees, and
attorneys’ fees.

On Zahl’s appeal, the Appellate Division affirmed the Board’s factual findings but remanded the matter for
reconsideration of the license revocation penalty. This Court granted the Board’s petition for certification.

HELD: The Board was within the bounds of its statutory authority and discretion in concluding that the panoply of
dishonest acts committed by Zahl warrants the revocation of his license.

1.
The Medical Practices Act (MPA) vests the Board with broad authority to regulate the practice of medicine
in the State. The Uniform Enforcement Act (UEA) was enacted to create uniform standards for disciplinary
proceedings by professional and occupational licensing boards. The UEA, which works in tandem with the MPA,
also grants the Board disciplinary powers over medical licensees which include the power to revoke the medical
license of a physician on proof that the physician committed certain acts of misconduct. (pp. 15-16)

2. Our appellate review of an agency’s choice of sanction is limited. The Court will modify a sanction only
when necessary to bring the agency’s action into conformity with its delegated authority. It can interpose its views
only where it is satisfied that the agency has mistakenly exercised its discretion or misperceived its own statutory
authority. The test in reviewing administrative sanctions is whether such punishment is so disproportionate to the
offense, in light of all the circumstances, as to be shocking to one’s sense of fairness. (pp. 17-18)

3.
Applying those principles of deference to the facts of this appeal, we hold that the Board was within the
bounds of its discretion in concluding that the panoply of dishonest acts committed by Zahl warrants the revocation
of his license. Under N.J.S.A. 45:1-21(b), dishonesty is a sufficient basis to justify license revocation. (pp. 18-19)

4. Because an occupational license is a property right, albeit one that is subject to substantial government
regulation, the Board, when exercising its disciplinary authority, must consider mitigating factors. The Board
afforded Zahl a hearing at which numerous witnesses offered mitigating testimony on Zahl’s behalf. The Board
considered the evidence and found that evidence did not alter the fact that Zahl’s misconduct shows him to be a
fundamentally corrupt and dishonest licensee, that Zahl’s dishonest and deceptive conduct was so extreme as to be
inimical to the practice of medicine, necessitating the revocation of his license. (pp. 20-22)
5. Zahl argues that because the Board did not adequately consider the lack of patient harm, the penalty of
revocation is disproportionate to his misconduct. The Board did not rest its penalty determination on Zahl’s
fraudulent conduct in a vacuum. The Board stated that it was affording particular deference to the ALJ’s credibility
judgment in respect of Zahl’s shifting and inconsistent testimony. Observing Zahl over the course of a seven-day

hearing, the ALJ found that he lacked remorse and continued to exhibit a sense of entitlement to the fraudulently
obtained funds. As an appellate tribunal, we, too defer to those credibility and character judgments. (p.23)

The judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Board for

revocation of Zahl’s license.
.
CHIEF JUSTICE PORITZ and JUSTICES LONG, LaVECCHIA, ALBIN, WALLACE, and

RIVERA-SOTO join in JUSTICE ZAZZALI’s opinion.

IN THE MATTER OF THE
SUSPENSION OR REVOCATION
OF THE LICENSE ISSUED TO

KENNETH ZAHL, M.D.
LICENSE NO. MA56413

TO PRACTICE MEDICINE AND
SURGERY IN THE STATE OF NEW
JERSEY

Argued March 6, 2006 – Decided April 26, 2006

On certification to the Superior Court,
Appellate Division.

Douglas J. Harper, Special Counsel, argued
the cause for appellant, State Board of
Medical Examiners (Zulima V. Farber,
Attorney General of New Jersey, attorney;
Jeffrey C. Burstein, Assistant Attorney
General, of counsel).

John Zen Jackson argued the cause for
respondent, Kenneth Zahl, M.D. (Kalison,
McBride, Jackson & Murphy, attorneys; Mr.
Jackson and Leonardo M. Tamburello, on the
brief).

Robert J. Conroy submitted a letter in lieu
of brief on behalf of amicus curiae, Medical
Society of New Jersey (Kern Augustine Conroy
& Schoppmann, attorneys).

JUSTICE ZAZZALI delivered the opinion of the Court.

SUPREME COURT OF NEW JERSEY
A-54 September Term 2005

In this matter, the New Jersey State Board of Medical
Examiners (Board) petitions the Court to restore the Board’s
order revoking the medical license of Kenneth Zahl. The Board
found that Zahl, a physician specializing in anesthesiology,
willfully engaged in numerous dishonest acts over a course of
years, including Medicare and insurance fraud and maintaining
improper patient records. The Appellate Division reversed the
Board’s penalty, concluding that license revocation is unduly
harsh in view of the absence of patient harm. We hold that the
Board was within the bounds of its statutory authority and
discretion in revoking Zahl’s license after the Board found Zahl
to be a “fundamentally corrupt licensee.” We therefore reverse
the Appellate Division decision and reinstate the Board’s order.
I.

Kenneth Zahl obtained his medical degree from Columbia
University Medical School in 1981. He then completed his
residency in anesthesiology at the University of Pennsylvania
and became a board-certified anesthesiologist in 1986, receiving
additional qualifications in the specialty of pain medicine soon
thereafter. In 1993, Zahl founded Ambulatory Anesthesia of New
Jersey (AANJ), a pain management and anesthesiology practice of
which he was the sole shareholder and officer. From 1993 to
1998, AANJ had a contract with the Ridgedale Surgical Center to

provide basic anesthesia services, primarily assisting the
Center with cataract removals and interlocular lens implants.
During that time period, Zahl hired a series of
anesthesiologists to assist him.
In the summer of 1999, the Attorney General filed a
complaint against Zahl with the Board, seeking revocation of his
license. The eight-count complaint alleges that Zahl committed
various acts of misconduct, including “dishonesty, fraud,
deception, misrepresentation, false promise or false pretense,”
in violation of N.J.S.A. 45:1-21(b); gross and repeated acts of
negligence and malpractice, in violation of N.J.S.A. 45:1-21(c)
and (d); “professional or occupational misconduct,” in violation
of N.J.S.A. 45:1-21(e); the creation of false patient records,
in violation of N.J.S.A. 45:1-21(h) and N.J.A.C. 13:35-6.5(b);
and failure to maintain good moral character, in violation of
N.J.S.A. 45:9-6. None of the allegations in the complaint,
however, relate to the safety or quality of patient care
rendered by Zahl.
The Attorney General petitioned the Board for summary
decision on all counts of the complaint, but the Board denied
that motion and transferred the case to the Office of
Administrative Law. An Administrative Law Judge (ALJ)
ultimately ordered revocation of Zahl’s medical license, which
the Board affirmed. To aid us in the review of the propriety of

the Board’s penalty, we now set forth the details surrounding
Zahl’s misconduct, as alleged in the complaint and found by the
ALJ and the Board.
The eight counts in the complaint relate to five general
areas of wrongdoing. First, the complaint alleges that Zahl
submitted eighty-eight claims with overlapping time periods to
the federal Medicare program for payment of medical services he
rendered in violation of federal Medicare billing guidelines.
The complaint states that by committing federal Medicare fraud,
Zahl breached his professional obligations under state law.
Questions concerning Zahl’s Medicare billing practices
first arose in spring of 1998 when Xact Medicare Services
(Xact), the then federal Medicare contractor responsible for
processing claims submitted by physicians within the State of
New Jersey, initiated an investigation. Xact evaluated a sample
of 104 of Zahl’s Medicare patients between 1995 and 1997. After
comparing Zahl’s medical records and operating room schedules to
the Medicare claims that he electronically submitted, Xact’s
fraud auditor concluded that Zahl’s billing practices were
“clearly improper.” The auditor found that “virtually every
beneficiary’s anesthesia service overlapped with a subsequent
patient’s anesthesia service,” indicating that Zahl had
furnished services to two separate patients at the same time.
The auditor stated that such practices are “neither authorized

nor permitted under Medicare billing guidelines and the Medicare
Carriers Manual.” Subsequent to that investigation, Xact
suspended Zahl’s Medicare payments. Empire Medicare Services
(Empire) succeeded Xact as New Jersey’s Medicare contractor in
1999. At that time, Empire performed an additional audit of 105
of AANJ’s federal Medicare claims and found that ninety-seven of
those claims contained overlapping time periods.
After counsel for AANJ requested a Fair Hearing from the
federal Medicare Hearing Office, the Hearing Officer ruled that
Zahl was liable to Medicare for $2,071.34 in overpayment. The
Hearing Officer determined that Zahl could not be found
“‘without fault’ . . . based on the provisions in § 1870 of the
[federal] Social Security Act.” She reasoned that AANJ and Zahl
“had been previously notified in numerous Medicare publications
and correspondence with Xact Medicare Services and Empire
Medicare Services of . . . how to properly bill for blocks of
time.” AANJ pursued an administrative appeal from the Hearing
Officer’s decision. A federal administrative judge upheld the
Hearing Officer’s ruling and found that “the regulations do not
permit the billing of overlapping/concurrent anesthesia times.”
In the matter before us, the ALJ adopted the federal Hearing
Officer’s findings that Zahl had overbilled Medicare and
concluded that he breached his professional obligations under
state law.

Second, relying on essentially the same fact pattern
described above, the complaint alleges that Zahl created false
patient records in violation of state regulations by inserting
overlapping time entries into the records of 102 patients. In
support of that allegation, the complaint refers to an
investigation performed by the Board into Zahl’s record-keeping.
During the investigation, the Board reviewed 102 of Zahl’s
patient records from late 1995 to late 1997 and, as had the
federal investigations conducted by Xact and Empire, found
substantial improprieties in Zahl’s billing practices. The
Board noted that in each record “there is a period of time
common to both that patient and either the preceding or
succeeding patient, or both,” with the overlapping time
frequently ranging from twenty-five to thirty-five minutes. At
a hearing before the ALJ, Zahl also acknowledged engaging in
over 800 anesthesia procedures where overlapping time periods
were inserted into patient records, ninety percent of which were
Medicare cases. The ALJ found that Zahl’s insertion of
overlapping time periods created false and inaccurate patient
records.
Third, the complaint alleges that Zahl created false
patient records by inserting the name of another doctor into
records when that doctor had not performed the indicated
functions. The allegation is substantiated by four doctors who

certified or testified before the ALJ concerning the
unauthorized insertion of their names into patient records. One
doctor testified that Zahl had inserted her name into forty
patient records although she had not been present during the
patients’ surgical procedures and did not provide them with
anesthesia services other than limited pre-operative care.
Another doctor certified that her name had been inserted into
eight patient records although she had performed none of the
functions indicated. Yet another doctor testified that her name
was inserted into a patient record for a patient treated on a
day when she was not in the office and into a record for a
patient that she did not treat. A final doctor, who was not
even employed by AANJ but who had visited the office on two
occasions to discuss employment possibilities, testified that
her name had been inserted into three patient charts.
In assessing Zahl’s motivation for inserting those doctors’
names, an expert witness for the Attorney General testified that
a dual doctor entry in patient records would make scrutiny of
the records by an auditor more difficult. He also testified
that dual entries potentially could serve as a defense to
liability claims, because “if anything went wrong the
anesthesiologist could say there were two anesthesiologists with
the patient and therefore the patient had not been abandoned.”
The ALJ found that Zahl’s insertion of the doctors’ names

falsely represented that the doctors had provided services to
the patients.
Fourth, the complaint alleges that Zahl misrepresented his
disability status to his disability insurer, thereby
fraudulently collecting $118,000 in disability claims over the
course of a nine-month period from 1998 to 1999. Zahl had been
the holder of two disability insurance policies issued by
Equitable Life Insurance Society (Equitable). In December 1997,
Zahl sent a claim to Equitable informing them that he was
“totally disabled” on and after December 8, 1997 as a result of
cutting his left thumb while slicing cheese. Zahl described his
job to Equitable as involving two functions: anesthesiology,
rendering patients insensible to surgical pain; and pain
management, treating chronic and acute pain conditions. Zahl
informed Equitable that he “virtually [could not] do anything”
and in the following months sent Equitable progress reports
indicating that he could “only do some pain management” and did
“not ever expect to return to anesthesia.” However, medical
records and testimony from another AANJ doctor revealed that
Zahl was performing anesthesia services during that time period
pursuant to the definition of anesthesia that he provided to
Equitable. Equitable terminated Zahl’s disability payments in
1999.

In an unrelated matrimonial matter involving a claim by
Zahl’s former wife for equitable distribution and child support,
a New York trial court found Zahl’s claim of disability not
credible. Kosovsky v. Zahl, No. 310418/93, slip op. at 15 (Sup.
Ct. Mar. 11, 1998), aff’d, 684 N.Y.S.2d 524 (App. Div. 1999).
The ALJ in the present matter also determined that Zahl had
knowingly made untruthful statements to Equitable to induce
payments. She reasoned that Zahl had done so with an intent to
use his claim of disability to defend against his former wife’s
property claims.
Finally, the complaint alleges that Zahl retained duplicate
payments from different insurance companies for the same medical
services. In 1996, Zahl treated a patient for spinal injuries.
He again provided treatment to that patient in 1997. After each
visit, Zahl submitted identical claims for the same services to
two different insurance carriers, receiving and retaining
payment from each. Zahl’s billing clerk testified before the
ALJ that she had informed Zahl that a second payment was
received for the same service in 1996, and he told her to leave
the check for him. She claimed that, after that conversation,
relations deteriorated between her and Zahl and that Zahl
terminated her shortly thereafter. The ALJ found that Zahl
himself had filed the duplicate claims and had knowingly
accepted and retained the claim benefits.

After granting summary judgment on three of the counts in
the Attorney General’s complaint and conducting a seven-day
hearing on the remaining five counts, the ALJ found Zahl guilty
of all counts. She ordered the revocation of Zahl’s license,
fined him $35,000 in civil penalties, and required him to
reimburse one of his patient’s insurance carriers for its
duplicate payment in the amount of $1700. She also found Zahl
liable to the State for its litigation costs in an amount to be
determined by the Board.
The ALJ stated that Zahl’s testimony was “evasive,
convoluted and contradictory” and that “[a]t no time did the
fact that he committed these acts have meaning for him.” She
found that “[i]t was clear from Zahl’s testimony and demeanor
that he felt entitled to larger remuneration for his services
and took advantage of available opportunities to obtain it.”
The ALJ emphasized that it was precisely “the quantity of deceit
[that Zahl] was willing to practice for modest rewards” that she
found troubling and warned that “[o]ne can only speculate on the
possibilities if the stakes had been higher.” The ALJ noted
Zahl’s willingness to put his colleagues in harm’s way by
inserting their names into medical records and exposing them to
potential liability. She concluded that license revocation was
appropriate because of the “sheer number of repeated instances

of misrepresentation, fraud, and deceit present in this case,
including respondent’s shifting and inconsistent testimony.”
The ALJ added that Zahl’s readiness to practice insurance fraud
has “ramifications for the public at large in the form of
increased insurance costs.”
The Board subsequently conducted its own hearing to review
the ALJ’s decision. The Board heard mitigating testimony from
four of Zahl’s patients, who were complimentary of the treatment
they received, Zahl’s counsel in his suit against Equitable, who
spoke of Zahl’s veracity, and Zahl’s present wife, who asked for
leniency. Zahl also testified on his own behalf. He admitted
that he had made some mistakes but maintained that he had done
nothing wrong with regard to billing Medicare and that the
statements he made to his disability insurer were taken out of
context. Zahl submitted into evidence letters from patients and
medical colleagues, his resumé, and a survey of the Board’s
prior determinations to demonstrate the disproportionate nature
of the ALJ’s penalty.
Despite Zahl’s attempts at mitigation, the Board adopted
substantially all of the ALJ’s findings of fact and conclusions
of law and affirmed the ALJ’s order to revoke Zahl’s license.1

1 The Board reversed the ALJ’s conclusion that, in respect of
Zahl’s misrepresentations to his insurance carrier Equitable,
Zahl had committed fraud, false promise, and false pretense,
instead issuing only a finding of dishonesty, deception,

It noted that it was affording “particular deference to the
decision-making of the ALJ” because the ALJ’s conclusions in
this matter rested more on credibility determinations than on
particularized medical knowledge. The Board emphasized that
although it would have “unquestionably” reached the same
determinations based on its review of the transcripts alone,
such credibility judgments “necessarily are best made by the
trier of fact.” It further justified license revocation by
stating:

We note that there is a striking irony
in this case. While the letters submitted
and testimony offered suggest that Dr. Zahl
may be a particularly revered and respected
physician, Dr. Zahl’s own misdeeds paint an
entirely different picture of a
fundamentally corrupt and dishonest
licensee. We are constrained to point out
that the fundamental issue we have
considered in determining [the] penalty to
be meted out is not whether Dr. Zahl is a
competent practitioner (indeed, it was
stipulated that the safety or the quality of
care provided by respondent to his patients
was never an issue in this case), but rather
what sanction is necessary to redress Dr.
Zahl’s many misdeeds.

We have concluded, as did ALJ Klinger,
that the panoply of dishonest acts committed
by Dr. Zahl support, if not dictate,
imposition of the severe penalty of license
revocation. The acts bespeak a fundamental
disregard for truth which is ultimately
inimical to the practice of medicine.

misrepresentation, and professional misconduct concerning that
behavior. The Board also decreased the civil penalties imposed
by the ALJ from $35,000 to $30,000.

Nothing presented in mitigation suggests
that Dr. Zahl even today understands the
moral repugnancy of his multiple acts of
dishonesty and deception.

The Board also ordered Zahl to pay costs totaling $232,694.36,
which includes investigative costs, expert witness fees,
transcript fees, and attorneys’ fees.

Zahl appealed the Board’s order, and the Appellate Division
granted Zahl’s motion for a stay of his license revocation
pending outcome of the appeal. The panel subjected the stay to
the condition that Zahl comply with reporting requirements
imposed by the Board. Upon review of the record, the Appellate
Division issued an opinion affirming the Board’s factual
findings. However, the panel remanded the matter for
reconsideration of the license revocation penalty because it
found revocation to be “unnecessarily harsh.” The panel
reasoned that although Zahl’s behavior “demonstrates a wide
pattern of dishonesty,” “there is no evidence that any patient’s
health or safety was even minimally compromised.” The panel
concluded that in light of the lack of patient harm, lesser
penalties, such as controls over Zahl’s billing and record-
keeping practices, could adequately remedy Zahl’s misconduct.

The Board appealed the Appellate Division’s decision
reversing Zahl’s license revocation, and we granted
certification. 185 N.J. 297 (2005). We denied certification of

Zahl’s cross-petition seeking review of the Board’s findings of
fact, conclusions of law, and imposition of litigation costs.
Ibid.

II.

On appeal, the Board argues that by reversing the
revocation of Zahl’s license, the Appellate Division improperly
substituted its judgment for that of the Board in violation of
the deferential standard of appellate review of agency action
set forth in In re Polk License Revocation, 90 N.J. 550 (1982).
The Board also claims that by affording critical weight to the
absence of patient harm, the Appellate Division improperly
created a new precondition to license revocation that is not
required by N.J.S.A. 45:1-21. Finally, the Board states that
although Zahl’s misconduct did not cause “direct physical harm”
to any patient, the appellate panel erred in finding that “there
is no evidence that any patient’s health or safety was even
minimally compromised.” Rather, the Board emphasizes the
critical importance of accurate medical records to both patients
and the medical community.

Zahl responds that the Appellate Division properly
exercised its powers of review to strike down a penalty that is
unduly harsh and disproportionate. He argues that the Board did
not sufficiently balance mitigating factors, such as the
public’s need for qualified practitioners and the fact that no

patient harm occurred as a result of his misconduct. He states
that by considering the lack of patient harm, the Appellate
Division did not create a new precondition to license revocation
but merely weighed that factor in determining that license
revocation was disproportionate to the offense. Zahl notes that
other cases involving license revocation for improper record-
keeping are distinguishable from his situation because those
cases involved patient harm. Finally, he claims that the
“astronomical” monetary penalties imposed on him by the Board in
addition to other, lesser sanctions will adequately deter future
misconduct.

III.
A.

The Medical Practices Act (MPA) vests the Board with broad
authority to regulate the practice of medicine in the State of
New Jersey. N.J.S.A. 45:9-1 to -27. The Board has the power to
promulgate rules and regulations to protect patients and
licensees. N.J.S.A. 45:9-2. The Board’s supervision of the
medical field is critical to the State’s fulfillment of its
“paramount obligation to protect the general health of the
public.” Polk, supra, 90 N.J. at 565; see also Brodie v. State
Bd. of Med. Exam’rs, 177 N.J. Super. 523, 529 (App. Div.),
certif. denied, 87 N.J. 386 (1981) (“Unquestionably, the Board
has broad authority to adopt rules designed to protect the

health, safety and welfare of patients of its licensees.”)
(citations omitted). Under the MPA, a physician’s licensure is
contingent upon a physician maintaining good moral character.
N.J.S.A. 45:9-6 (requiring that applicant for medical license
make showing of good moral character); Polk, supra, 90 N.J. at
576 (stating that N.J.S.A. 45:9-6’s requirement of good moral
character is continuing).
The Uniform Enforcement Act (UEA), N.J.S.A. 45:1-14 to -27,
was enacted to create uniform standards for “license revocation,
suspension and other disciplinary proceedings” by professional
and occupational licensing boards, N.J.S.A. 45:1-14. The UEA,
which works in tandem with the MPA, also grants the Board
disciplinary powers over medical licensees. Del Tufo v. J.N.,
268 N.J. Super. 291, 296 (App. Div. 1993). Those powers include
the right to suspend or revoke the medical license of a physician
on proof that the physician committed certain acts of misconduct.
N.J.S.A. 45:1-21. For example, the Board may revoke a
physician’s license if the physician
b. Has engaged in the use or employment of
dishonesty, fraud, deception,
misrepresentation, false promise or false
pretense;

c. Has engaged in gross negligence, gross
malpractice or gross incompetence which
damaged or endangered the life, health,
welfare, safety or property of any person;

d. Has engaged in repeated acts of
negligence, malpractice or incompetence;

e. Has engaged in professional or
occupational misconduct as may be determined
by the board; [or]

. . . .

h. Has violated or failed to comply with the
provisions of any act or regulation
administered by the board.
[Ibid.]

B.
Our appellate review of an agency’s choice of sanction is
limited. Courts generally afford substantial deference to the
actions of administrative agencies such as the Board. Matturri
v. Bd. of Trs. of the Judicial Ret. Sys., 173 N.J. 368, 381
(2002). Deference is appropriate because of the “expertise and
superior knowledge” of agencies in their specialized fields,
Greenwood v. State Police Training Center, 127 N.J. 500, 513
(1992), and because agencies are executive actors, Matturri,
supra, 173 N.J. at 381 (stating that “[c]ourts have only a
limited role to play in reviewing the actions of other branches
of government”) (alteration in original) (citation omitted);
Public Service Electric & Gas Co. v. New Jersey Department of
Environmental Protection, 101 N.J. 95, 103 (1985) (“In light of
the executive function of administrative agencies, the judicial

capacity to review administrative actions is limited.”)
(citation omitted). As such, the Court will modify a sanction
only when necessary to bring the agency’s
action into conformity with its delegated
authority. The Court has no power to act
independently as an administrative tribunal
or to substitute its judgment for that of the
agency. It can interpose its views only
where it is satisfied that the agency has
mistakenly exercised its discretion or
misperceived its own statutory authority.

[Polk, supra, 90 N.J. at 578.]

This Court also has noted: “It has been stated that the test in
reviewing administrative sanctions is ‘whether such punishment is
so disproportionate to the offense, in light of all the
circumstances, as to be shocking to one’s sense of fairness.’”
Ibid. (quoting Pell v. Bd. of Educ., 34 N.Y.2d 222, 233 (1974)
(internal quotation marks and citation omitted)); see also In re
Markoff License Revocation, 299 N.J. Super. 607, 613 (App. Div.
1997) (affirming Board’s decision not to reinstate physician’s
license because sanction did not “shock one’s sense of fairness”)
(citing Polk, supra, 90 N.J. at 578).
IV.

Applying those principles of deference to the facts of this
appeal, we hold that the Board was within the bounds of its
statutory authority and discretion in concluding that the
“panoply of dishonest acts committed by” Zahl warrants the
revocation of his license. Under N.J.S.A. 45:1-21(b) dishonesty

is a sufficient basis to justify license revocation. Doctors
today interact with a broad array of actors beyond their
patients, including the federal and state governments, private
insurance companies, and medical colleagues. See Windham v. Bd.
of Med. Quality Assurance, 104 Cal. App. 3d 461, 470 (Ct. App.
1980). Engaging in dishonest behavior with those non-patient
actors has ramifications for the public at large in the form of
increased taxes to fund public healthcare programs, higher
insurance premiums, added litigation, and the like. Moreover,
patients rightfully may fear entrusting a deceitful physician
with their lives and the lives of their loved ones for it is
“difficult to compartmentalize dishonesty in such a way that a
person who is willing to cheat his government . . . may yet be
considered honest in his dealings with his patients.” Ibid.; see
also Haley v. Med. Disciplinary Bd., 818 P.2d 1062, 1069 (Wash.
1991) (“[C]onduct may indicate unfitness to practice medicine if
it . . . lowers the standing of the medical profession in the
public’s eyes.”); In re Kindschi License Revocation, 319 P.2d
824, 826 (Wash. 1958) (stating that because of life and death
consequences of practicing medicine, public has “right to expect
the highest degree of trustworthiness of the members of the
medical profession”).
The Board’s decision is ressed by the fact that the
Legislature did not require a finding of patient harm before

authorizing license revocation, N.J.S.A. 45:1-21, but instead
enacted a requirement that medical licensees maintain good moral
character, N.J.S.A. 45:9-6; Polk, supra, 90 N.J. at 576 (stating
that N.J.S.A. 45:9-6’s requirement of good moral character is
continuing). Further, our sister state of New York has found
that dishonesty can render a physician unfit to practice
medicine. See, e.g., In re Dahl v. New York State Dep’t of
Health, 710 N.Y.S.2d 193, 194 (App. Div. 2000) (affirming license
revocation of physician who kept improper records and submitted
fraudulent claims to Medicaid).
Here, over a course of years and under varying
circumstances, Zahl repeatedly engaged in deceitful and
fraudulent conduct. He overbilled Medicare, retained duplicate
payments from his patient’s insurance company, made
misrepresentations to his own disability carrier, and inserted
his colleagues’ names into patient records for patients they did
not treat. His actions demonstrate disregard for the public, by
potentially increasing taxes and insurance premiums, and for his
colleagues, by exposing them to potential claims of liability.

Despite his egregious misconduct, Zahl cites our decision in
Polk to argue that the Board did not sufficiently weigh
mitigating factors in deciding to revoke his license. We agree
with Zahl that because an occupational license is a property
right, albeit one that is subject to substantial government

regulation, the Board, when exercising its disciplinary
authority, must consider mitigating factors. Polk, supra, 90
N.J. at 562-63, 579. In so doing, it must “scrupulously consider
all factors relevant to continued licensure . . . [and]
meticulously weigh the public interest and the need for the
continued services of qualified medical doctors against the
countervailing concern that society be protected from
professional ineptitude.” Id. at 579. However, in Polk we
required the Board to reconsider its order of revocation because
it had adopted the ALJ’s recommended penalty of license
revocation before hearing argument from the licensee’s counsel
concerning mitigating circumstances. Id. at 580 n.3; see also In
re Fanelli License Revocation, 174 N.J. 165, 166-67 (2002)
(remanding matter to Board for reconsideration of penalty when
Board ordered license revocation without holding hearing on
appropriateness of sanction).
The facts underlying the present appeal are a far cry from
those in Polk. The Board afforded Zahl a hearing at which
numerous witnesses offered mitigating testimony on Zahl’s behalf.
Zahl also submitted various documents into evidence, such as
letters from medical colleagues and patients. The Board
considered the mitigating evidence and found that that evidence,
which primarily spoke to the level of patient care provided by
Zahl, did not alter the fact that Zahl’s misconduct shows him to

be a “fundamentally corrupt and dishonest licensee.” To be sure,
Zahl’s level of patient care was never an issue in this matter
because the Attorney General stipulated that Zahl’s misconduct
did not result in patient harm before disciplinary proceedings
began. Nonetheless, the Board found that regardless of the level
of patient care that Zahl provided, Zahl’s dishonest and
deceptive conduct was so extreme as to be “inimical to the
practice of medicine,” necessitating the revocation of his
license to protect the public.
Zahl also argues that because the Board did not adequately
consider the lack of patient harm, the penalty of revocation is
disproportionate to his misconduct. Relying on In re
Jascalevich License Revocation, 182 N.J. Super. 455 (App. Div.
1982), he claims that other physicians whose licenses were
revoked by the Board for committing fraud caused patient harm in
addition to that fraud. Although Jascalevich involved both
fraud and patient harm, id. at 458, it does not follow that
under the facts in this matter it was inappropriate for the
Board to revoke Zahl’s license. Cf. Fanelli, supra, 174 N.J.
165 (reviewing Board’s decision to revoke license because
physician illegally withdrew funds from employee benefit plan
and remanding on separate ground that Board failed to afford
physician hearing); In re Wolfe License Revocation, 160 N.J.
Super. 114 (App. Div.), certif. denied, 78 N.J. 406 (1978)

(revoking license because physician illegally permitted wife to
practice medicine without license).
The Board did not rest its penalty determination on Zahl’s
fraudulent conduct in a vacuum, divorced from the individual
circumstances of his case. Rather, the Board stated that it was
affording particular deference to the ALJ’s credibility judgment
in respect of Zahl’s shifting and inconsistent testimony.
Moreover, observing Zahl over the course of a seven-day hearing,
the ALJ found that he lacked remorse and continued to exhibit a
sense of entitlement to the fraudulently obtained funds. As an
appellate tribunal, we too defer to those credibility and
character judgments.

V.
The judgment of the Appellate Division is reversed. We
remand this matter to the Board for revocation of Zahl’s
license.
CHIEF JUSTICE PORITZ and JUSTICES LONG, LaVECCHIA, ALBIN,
WALLACE, and RIVERA-SOTO join in JUSTICE ZAZZALI’s opinion.

NO. A-54

SUPREME COURT OF NEW JERSEY

SEPTEMBER TERM 2005

ON CERTIFICATION TO Appellate Division, Superior Court

IN THE MATTER OF THE
SUSPENSION OR REVOCATION
OF THE LICENSE ISSUED TO

KENNETH ZAHL, M.D.
LICENSE NO. MA56413

TO PRACTICE MEDICINE AND
SURGERY IN THE STATE OF NEW
JERSEY

DECIDED April 26, 2006

Chief Justice Poritz

OPINION BY Justice Zazzali

CONCURRING/DISSENTING OPINIONS BY

DISSENTING OPINION BY

PRESIDING

CHECKLIST

CHIEF JUSTICE PORITZ

JUSTICE LONG

JUSTICE LaVECCHIA

JUSTICE ZAZZALI

JUSTICE ALBIN

JUSTICE WALLACE

JUSTICE RIVERA-SOTO

TOTALS

REVERSE
AND
REMAND
X