Dr. John Costino at a July court hearing on fraud charges. Dale Gerhard

Former North Wildwood physician John Costino Jr. lost his challenge Tuesday to reinstate his suspended medical license for prescribing painkillers to police officers undercover as exotic dancers.

A state appeals court Tuesday sided with the New Jersey Board of Medical Examiners, which last year revoked the longtime doctor's license for at least five years.

Costino and his lawyer, Glenn Zeitz, said Tuesday that they will appeal to the state Supreme Court.

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Costino, who was arrested in 2007 after an investigation into alleged insurance fraud and illegal distribution of pain medication, has pleaded not guilty in the ongoing criminal cases against him.

The appellate court decision, which does not address the more extensive criminal cases against Costino, centered on an undercover investigation by two women seeking Percocet but saying the pills were not for pain.

The women - a Little Egg Harbor Township officer and a Drug Enforcement Administration special agent - pretended to be exotic dancers during meetings from April to August of 2007.

That investigation shuttered the medical practice of Costino, a physician in Cape May County for more than 30 years.

"While it is unfortunate that some of Costino's patients may now have to travel a further distance to obtain care, this does not lessen the importance of sanctioning a physician who put patients at risk by prescribing medication for which they had no need," the court said.

Costino on Tuesday defended his practice.

"I treated all three undercover officers perfectly normal as if they were normal human beings telling me the truth. Instead they were undercover officers who did nothing but lie to me," Costino said.

Authorities had eyed Costino's practice years before sending two undercover exotic dancers to his office in 2007, according to court records.

The DEA had noticed Costino was prescribing a large amount of pain pills, prompting a detective from the Cape May County Prosecutor's Office to go undercover in December 2005 as a heroin addict, court records show. Costino did not prescribe him pain medication.

Before April 2007, the DEA, county Prosecutor's Office, and the Insurance Fraud section of the Department of Law and Public Safety started a joint investigation to determine whether the doctor was giving Percocet without medical reasons and whether he was billing insurance carriers for services he did not perform.

On April 12, 2007, Little Egg Harbor Township officer Tonya Anderson went undercover in Costino's North Wildwood office, asking for Percocet to help her "relax and unwind," according to court records.

Costino listened to her heart and lungs with a stethoscope. He did not examine her neck or back, and Anderson never said she had pain or soreness, according to court records.

Costino diagnosed her with acute lumbar and thoracic strain and sprain, gave her 30 pills of Percocet and billed the insurance company under a code that requires physicians to complete a comprehensive history and examination, the court said.

The medical board would later say it was "Costino's utter failure ... to perform any examination for such a condition, such as range of motion tests, palpitation for tenderness or neurological examination."

Through a series of visits, the undercover exotic dancer at one point received pain medications 20 days apart although Costino told her the 30 pills should last her five to six weeks, according to court records.

The officer came back several times later asking for and receiving stronger prescriptions.

On Aug. 3, 2007, the officer brought a DEA special agent, who also posed as a stripper. The woman received a similar diagnosis with a stethoscope, and both women got Percocet.

On the pair's last meeting with Costino on Aug. 23, 2007, they said they were going to Florida for a while. Although they did not request it, Costino offered to "double the amount" and gave each a prescription for 60 pills, the court said.

The Board of Medical Examiners temporarily suspended Costino's license in December 2007 when the results of the investigation came to light. There was a hearing later, before an administrative law judge.

Costino said Tuesday that the appellate court did not properly consider Anderson's statement, which indicated she was never treated for back problems although her medical history said she consulted a chiropractor in July 2007 - three months after her first visit to Costino.

The Board of Medical Examiners reopened its record to include the new evidence, but found it of little importance because Anderson, like an actress, was presented to him as someone with no pain, according to court records.

The visit was also months after Costino gave her prescriptions.

Costino said the issue should have gone back to an administrative law judge.

"They say it doesn't matter, but the fact of the matter is it's all perjury and it has to do with the administrative law issue," Costino said.

Saying Costino displayed "remarkably poor medical judgment," the medical board last year suspended Costino's license for an indefinite period of at least five years.

Costino was also fined $10,000 and required to reimburse the Attorney General's Office $77,809, including $70,733 for attorney's fees at a rate of $175 per hour.

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