In the Matter of the Complaint Against                              )
                                                                                          )
NELDIE E. NELSON                                                            )
2306 Golfview No. 205                                                     )
                                                                                          )
at                                                                                       )
                                                                                          )
Troy, MI 48084-3852                                                         )  P.S. Docket No. PF-3

APPEARANCES FOR THE POSTAL:                                 Stephen E. Alpern, Esq.
                                                                                          Janet E. Noble, Esq.
                                                                                          Office of Labor Law
                                                                                          United States Postal Service
                                                                                          Washington, DC 20260-1130

APPEARANCE FOR RESPONDENT:                                   Michael J. Rex, Esq.
                                                                                          6735 Telegraph Road, Ste. 350
                                                                                          Birmingham, MI 48010-2125

INITIAL DECISION

This proceeding arises out of a Complaint issued on October 13, 1989 by the Reviewing Official of the United States Postal Service under the Program Fraud Civil Remedies Act of 1986, Pub. L. 99-509, 31 U.S.C. §3801-3812, and 39 CFR Parts 273 and 962. In the Complaint, as amended at the hearing, the Reviewing Official ('Complainant') alleges that Neldie E. Nelson ('Respondent') violated 31 U.S.C. §3802(a)(1) by making three false claims for disability compensation. Complainant contends that Respondent is liable for an assessment of $58,654.86 (twice the amount of the alleged false claims of $29,327.43 made after October 21, 1986, the effective date of the Act (Tr. 141), plus civil penalties of $15,000 ($5,000 for each false claim), for a total liability of $73,654.86.

On November 14, 1989 Respondent timely filed a Petition for Hearing in which she denied the allegations of the Complaint.

A hearing was held by the Administrative Law Judge on March 13-14, 1990, in Detroit, MI. Both parties were represented by counsel. Complainant presented the testimony of Cynthia Bujakowski, Gwendolyn Johnson, and Greg Hannah. Respondent testified for herself, and presented the testimony of Leonard Rosen, M.D., and Gerald Keller, Esq. Both parties presented documentary evidence.

At the hearing, Respondent moved to dismiss the Complaint on the ground that the Program Fraud Civil administrative proceeding after the conducted a criminal prosecution in obtained. This motion is denied for the Conclusions of Law.

After the hearing both parties filed briefs which have been duly considered. Complainant filed a reply brief, but Respondent chose not to do so. The due date for reply briefs was June 1, 1990. To the extent indicated below, proposed findings and conclusions have been adopted; otherwise, they have been rejected as irrelevant or contrary to the evidence. The findings of fact and conclusions of law set forth below are based on the entire record herein, including observation by the Administrative Law Judge of the witnesses and their demeanor, the briefs, stipulations, exhibits, and other relevant evidence adduced at the hearing:

FINDINGS OF FACT

1. On March 11, 1986 Respondent Neldie E. Nelson filed a Form CA-1 Notice of Traumatic Injury and Claim for Continuation of Pay/Compensation alleging that she had been assaulted by a stranger in the parking lot as she arrived at work on February 18, 1986 (P-1). Respondent was employed as a supervisor for mail and delivery (Tr. 355).

2. Respondent was paid continuation of pay from February 19, 1986 through April 4, 1986. On April 7 Respondent filed a Form CA-7 Claim for Compensation on Account of Traumatic Injury with the United States Department of Labor ("DOL"), Office of Workers Compensation Programs ("OWCP"), for the period beginning April 5, 1986 (P-2).

Medical Care

3. Beginning on March 6, 1986, George Dean, M.D., filed a series of reports indicating that the injury had resulted in a cerebral contusion, cervical spasm, and cervical disc syndrome, and that Respondent was unable to perform light duty work (P-10). It is noted that USPS would have provided Respondent with work such as sorting mail, sorting rubber bands, or answering the telephone (Tr. 147-148A, 156). On October 20, 1986 he reported that she complained of headaches, neck pain and lower back pain and that she was emotionally upset. In March of 1987 he reported that she had post traumatic anxiety depressive reaction (P-10 i).

4. Respondent was also treated by Leonard J. Rosen, M.D., a psychiatrist, who diagnosed her as having post traumatic stress disorder with anxiety, depression, difficulty sleeping, nightmares about the attack, and other memories about work in general (P-10, j-s; Tr. 410). In April 1986 he reported that she "fears resuming work" and is "fearful of driving". In September 1986 he reported forgetfulness, depression, and inability to concentrate (P-10n). He later noted that Respondent was a good student and that she attended two years of college (P-10r). Since 1983 Respondent reported constant disagreement with her supervisors. Dr. Rosen found her to be an angry, depressed woman who blames her boss for the assault since he requested that she work an early morning shift. In December 1986 Dr. Rosen thought Respondent could return to work in the near future if she were working with another supervisor at another location.

5. Dr. Rosen knew that Respondent had a janitorial business after the injury, but it did not change his opinion that she was not able to work in her position at the Postal Service (Tr. 416). He noted that each time she discussed her former job she would get very angry and upset (Tr. 414).

Claim Forms Filed Before Effective Date of the Act

6. On July 29, 1986, Respondent filed a Claim for Continuing Compensation on Account of Disability, OWCP Form CA-8. Respondent claimed compensation from February 18, 1986 through July 29, 1986 (P-5). CA-8 forms are filed periodically by claimants to obtain benefits until they are placed on the longterm disability roll (Tr. 105).

7. The CA-8 form provided space for Respondent to fill in the dates of the "Period Compensation is Claimed as a result of Pay Loss (Mo., day, year)" in item 6. Thereafter, item 9 states: Complete this item if you worked during the period shown in item 6" [ Emphasis added]. Under the heading "a. SALARIED EMPLOYMENT" the form provides boxes for Dates & Hours Worked, Pay Rate, Total Amount Earned, Type Work Performed, and Name & Address of Employer. Under the heading "b. COMMISSION AND SELF-EMPLOYMENT," the form states: "SHOW ALL ACTIVITIES, WHETHER OR NOT INCOME RESULTED FROM YOUR EFFORTS,"⁽¹⁾ and provides boxes for Dates & Hours Worked, Name and Address of Business, Self-Employed or Commission, Type of Activity Performed, and Income Derived.

8. On her July 29, 1986 CA-8 form, Respondent answered "NONE" for both item 9a (salaried employment) and 9b (self-employment) (P-5).

9. Previously, on April 1, 1986, a blank CA-8 Form was given to Respondent by Gwendolyn Johnson, an Injury Compensation Specialist for the Postal Service, who instructed Respondent to complete the form and return it. Ms. Johnson knew from previous conversations with Respondent that Respondent had a janitorial business wherein she engaged persons to clean buildings for her, and told her to include that business on the form. Although Respondent stated that she did not make any money from the business, Ms. Johnson still said "you should put it down" (Tr. 153, 164, 167-168). (Respondent's testimony that she told Ms. Johnson that Harvey was conducting the business is not credible and is rejected (Tr. 382)).

10. Respondent did not submit the CA-8 Form until July 29, 1986. When the form was received without any reference to Respondent's business, Ms. Johnson referred the claim to the Postal Inspection Service (Tr. 154). In a later conversation with Ms. Johnson, Respondent admitted that she intentionally omitted any reference to the business when she filled in the CA-8 form, although she claimed she had done so on the advice of counsel (Tr. 165, 385). In fact, her attorney had not discussed that form with her, but he later got a copy from OWCP of the form that Respondent had previously filed on her own (Tr. 436-437, 441-442).

11. On August 4, 1986 she retained the above-mentioned attorney, Gerald Keller, Esq., to represent her in her worker's compensation claim (Tr. 432-433). Respondent filed a statement dated August 4, 1986 which reported information on her employment status between February 19 and April 4, 1986. The form stated:

Self-Employment. Self Employment (such as farming, sales, service, operating a store, business, etc.) must be reported. Report any such enterprise in which you worked, and from which you received revenue, even if operated at a loss or if profits were re-invested. You must show as 'rate of pay' what it would have cost you to have hired someone to perform the work you performed.

Respondent answered as follows (see underscored language):

Were you self-employed during any time you received COP? Yes
If Yes, provide the following:
Dates of self-employment: 2/1/81 - present
Description of work performed: Janitorial Service
Number of hours worked per week: -O-
Rate of Pay: $ None
Name of Firm or Business: Nelson Janitorial

(R-4)

12. Respondent completed the form as above in her own handwriting (R-3) and took it to Mr. Keller, who then had it typed on the form in the first week of August, 1986 (Tr. 390, 439-440). She told her attorney that she was not getting any money from the business (Tr. 386, 388, 393). The form was received by OWCP on August 12, 1986.

The CA-8 Form Dated November 18, 1986

13. Respondent filed another OWCP Form CA-8 on November 18, 1986 (P-6). Respondent left item 6 blank (period compensation is claimed as a result of pay loss). OWCP considers such forms as covering the period from the last compensation payment to the date of the new CA-8 (Tr. 44-45, 108). As before, she answered "NONE" under item 9a (salaried employment). For item 9b (commission and self-employment), she answered "N/A" (P-6).

14. As in the case of the first CA-8 form, Respondent also testified that her attorney gave her the form and told her to put "none" under item 9(b) since she was not getting any money (Tr. 399). Mr. Keller denies that he ever saw the form and his records clearly substantiate that on December 5, 1986 he told her that she had not submitted a CA-8 form since July 29, 1986, so he was obviously unaware that she had just filed a CA-8 form dated November 18 without consulting him (Tr. 437). Respondent's testimony is not credible and is rejected.⁽²⁾

15. Each CA-8 form contains the following language immediately above the Respondent's signature:

"Any person who knowingly makes any false statement,
misrepresentation, concealment of fact or any
other act of fraud to obtain compensation as provided
by the FECA or who knowingly accepts compensation to
which that person is not entitled is subject to felony
criminal prosecution and may under appropriate criminal
provisions be punished by a fine or imprisonment or both."

The CA-8 Form dated February 23, 1987

16. After meeting with Mr. Keller in February, 1987, Respondent filed another OWCP Form CA-8 dated February 23, 1987 covering the period November 19, 1986 through "Continuing". Mr. Keller reviewed that form and consulted with Respondent before it was filed. On this form she left items 9a and 9b blank (P-7). OWCP interprets a blank in these boxes as representing that there was no employment or self-employment (Tr. 112).

17. Respondent's attorney had previously written a letter to Respondent on February 20, 1987 in which he took the position that the Respondent should leave item 9 blank since she had no income "from the Post Office" at that time (R-8). However, that statement did not relate to the form which was actually filed by Respondent dated February 23, 1987. It referred to another form which he had given Respondent which did not request any information about self employment (Tr. 463). Since she later signed the new edition of the form which does require self employment information, which she dated February 23, 1987, and which her attorney completed on her behalf, the February 20 letter does not excuse her false statement on the February 23 form.

The CA-1032 Form Dated March 25, 1987

18. On January 12, 1987 OWCP sent Respondent a Form CA-1032 for completion. The form is an employment status report which is considered part of the claim (Tr. 54-55). Form CA-1032 is usually sent out on an annual basis, and sometimes more frequently (Tr. 47). This form was sent at the request of Postal Inspector Carl Pellow (Tr. 120). The information requested is required in connection with the payment of past and future benefits and the failure to complete and file this form may result in the suspension or forfeiture of benefits (Tr. 56; P-8, p. 2). As such, the CA-1032 is a claim (Tr. 54). Respondent failed to complete and return the form at that time.

19. On March 18, 1987 OWCP sent Respondent a second Form CA-1032 to complete, and stated that the right to compensation would be forfeited if a response was not received within 30 days. A copy of the second form and cover letter was sent to Respondent's attorney, Gerald D. Keller.

20. The CA-1032 covered the entire period from the date of alleged injury, February 18, 1986, to the date of signing, March 25, 1987. It stated that the requested information would be used to determine whether an adjustment in benefits may be warranted. The form warned that a false or evasive answer to any question may be grounds for suspending compensation benefits and subject the claimant to civil liability or criminal prosecution.

21. Under Part A, EMPLOYMENT HISTORY, section 2, "Self-Employment", Respondent answered that she was self-employed operating as "Neldie's Personal Touch". The form stated that the applicant must report any enterprise in which she worked, even if operated at a loss, and must show as "rate of pay" what it would have cost her to have hired someone to perform the work she performed.

22. On the Form CA-1032 Respondent stated that she was self-employed, but under "Description of work performed" she answered: "Own janitorial service, do not work at same". Under "Number of hours worked per week", she answered "None". Under "Rate of pay", she answered "Reimbursement of expenses only" (P-8).

23. Respondent signed the CA-1032 on March 25, 1987, and it was then sent to the Postal Service together with the above-mentioned February 23, 1987 Form CA-8 (P-6; R-9). In the Form 1032 she certified that she knew that the failure to report information which would have an effect on benefits, or the making of a false statement in claiming a payment, may subject her to criminal prosecution (Id.).

24. The above Form CA-1032 was typed by her lawyer (Tr. 438-439) after she had told him that she worked zero hours a week and received no money from the business except reimbursement for expenses such as telephone, gas, insurance, and rent (Tr. 401-402; Tr. 379). she claims that he had her sign the form, and that he filled it out for her after she left his office (Tr. 379, 403). In fact, he filled it out in her presence after discussing the answers with her (Tr. 458).

25. This CA-1032 prompted Ms. Toy, the claims examiner, to request additional detailed information about Respondent's involvement with the business (R-5). By letter dated April 8, 1987, Ms. Nelson's attorney, Gerald D. Keller, Esq., responded to the request. Based on what Respondent told him, he stated that Respondent "never really actively worked for 'Neldie's Personal Touch', but that before the injury she made sure doors were locked at night, purchased supplies and hired workers, which took her about 7-10 hours a week. After the injury, he stated that her work "solely consisted of taking telephone calls from customers and employees for which she works approximately one or two hours per week." (Respondent's testimony that this was an "average" number of hours worked is not credible - as discussed below, she actually worked a substantial number of hours each week (Tr. 406)). He stated that the business is actively run by her daughter and Respondent's boyfriend, Harvey James, out of Respondent's home. He also stated:

"Finally, Mrs. Nelson never received any
remuneration other than reimbursement for
expenses, such as supplies, her telephone bill,
a portion of the auto insurance, and a portion
of the rent on her apartment." [P-15]

26. As a result of the above claims, after receiving continuation of pay from USPS, Petitioner was paid disability compensation as follows (P-14; Tr. 57):

27. The total amount of compensation paid to Respondent for the period after the effective date of the Program Fraud Civil Remedies Act (October 21, 1986) is $29,327.43 (Stip., Tr. 141).

Respondent's Post-Injury Work Activities

28. Respondent's own admissions support the conclusion that she worked hard during all time periods in question. First, at least with respect to the limited period between December 1986 and March 1987, Respondent admits that that she had "nine people come and go" and that she frequently was not able to find a replacement and had to do the actual cleaning work on those occasions (Tr. 407, 377). Second, she told her psychiatrist, Dr. Rosen, that she generally had to fill in for her workers when they were unable to work (Tr. 427). Also, she admits that every time she hired someone they worked about three weeks and "then when they get their money...they don't come back" (Tr. 467; Tr. 370). She states that if she did not fill in for those people and do the cleaning work herself, she would lose the account, and she was afraid that if she lost one account, she would lose them all (Tr. 377; P-21, 404). She also admits that she was responsible for obtaining the cleaning supplies (Tr. 376-377).

29. On her income tax return for 1987, Respondent stated that she "materially participated" in the operation of her business (P-27). Respondents statement that she does not remember any of her activities during 1987 is not credible (Tr. 475).

A. The Surveillance

30. In December 1986 Postal Inspector Greg Hannah received information that Respondent was engaged in a janitorial business (Tr. 179). On December 30, 1986 he and Inpector Carl Pellow began a surveillance of the Respondent's activities (Tr. 180). On that date and on six other days the Inspectors either made a videotape (P-16) or took photographs (P-17:1-48) of Respondent's work activities. On each occasion, Respondent was observed actively performing various cleaning duties for commercial establishments:

A. On Tuesday, December 30, 1986 she was seen dusting and moving trash bags at 300 Park Building from about 5:00 PM to 8:30 PM (Tr. 182-183).

B. On Tuesday, January 6, 1987, beginning at about 5:00 PM she was observed at the same location vacuuming, emptying trash cans, moving trash bags, and loading her vacuum cleaner into the trunk of her car (Tr. 185). She then drove to Bob Borst Lincoln Mercury and later to Mike Savoy Dealership in Troy, Michigan, where she worked until 10:15 PM (Tr. 184). At each dealership she vacuumed an entire showroom floor and appeared to have no trouble doing so. She was seen bending, stooping, and lifting with apparent ease and was in complete control. She worked quickly for the entire time.

C. On Wednesday, January 7, 1987, beginning at 5:17 PM, she again worked at 300 Park (Tr. 191) and Bob Borst. Here she mopped floors, dusted, lifted trash cans, put liners in the cans, carried trash bags. Later, at Mike Savoy Chevrolet, she performed similar work and vacuumed until about 11:00 PM.

D. On Tuesday, January 27, 1987, beginning at 5:00 PM she worked at Mike Savoy Chevrolet. Again, she performed the above duties. Thereafter, she again drove to Bob Borst dealership to perform the same duties. She also was seen carrying her vacuum cleaner to the car, and cleaning the snow off of her car with a broom.

E. On Thursday, January 29, 1987 she performed the above routine at all three locations (Tr. 197-198; P-16))

F. On Monday, February 2, 1987, she cleaned at 300 Park from 5:30 PM to 8:30 PM, and carried her vacuum to and from the car (P-17, 33-36). She was not observed the remainder of the evening (Tr. 201).

G. Finally, on Monday, February 9, 1987, she again performed the same routine (Tr. 203).

31. Although the Inspectors did not know Respondent's work schedule, on each occasion that surveillance was conducted by the Inspectors, Respondent was observed working in the same manner (Tr. 203). Also, it is noted that she worked on various different nights of the week.

B. Business Activity - 2/18/86 to 3/25/87

32. During this time period, Respondent had many people working for her at many different locations (Tr. 370, 376).

33. Respondent became responsible for cleaning the above dealerships in the Summer of 1986 (Tr. 363). The dealerships and offices (with exception of Doeren Mayhew) all had to be cleaned five days a week (Tr. 371). She had previously cleaned them working under other cleaning companies (Tr. 364). Her workers would frequently call her or come to the house looking for work (Tr. 365).

34. At the Bob Borst dealership and Mike Savoy dealership, she would pay two people a total of $19 a night to split between them. She received $400 a month to clean the dealerships 21-23 days (Tr. 366).

35. During 1986 Respondent was also responsible for the Dean Sellers dealership, which also brought in $400 a month (Tr. 367).

36. She also became responsible for four floors of an office building at 300 Park in about September 1986. It entailed vacuuming, emptying waste baskets, dusting, and cleaning bathrooms (Tr. 372-373). This building required four workers (Tr. 373). She received $400 a month for each of the top two floors, and about $180 a month for each of the bottom two floors (Tr. 375).

37. She also was responsible for cleaning 6905 Telegraph for five days a week. This was one floor of an office building (Tr. 369).

38. She was paid $600 for cleaning services performed between January and March of 1986 for Payne's Custodial Service (P-22).

39. Beginning in May of 1986, she contracted to do another car dealership building. She also did the Birmingham Office Complex on Telegraph and the Bunter Building (P-24, p. 431). Respondent was paid up to March 23, 1987. She would supply trash can liners and some other materials if necessary, but would be reimbursed for them. She received about $600-$1,700 every two weeks on this contract. During that time she had many employees cleaning several buildings (P-24).

40. Also, From February of 1986 to March of 1987 she was paid about $575 a month for cleaning a floor of the Top of Troy Building, working as Nelson Janitorial Service (P-25). Valena Perry and Harvey James (Tr. 358) worked there about three or four days a week. Respondent sometimes helped with the cleaning; at other times she would only supervise (P-25). Respondent's testimony that she never worked there (Tr. 359) is not credible and is rejected. On one monthly statement she submitted, she stated "I have mopped kitchen every week since I work there." (P-26, Ex. 19).

41. On her 1987 Federal income tax return, Respondent reported that her cleaning service was in business 12 months out of the year with gross receipts of $54,877, and a net income to her of $9,335 (P-27). On her amended return for 1987, she reported $44,392 in gross revenues and expenses of $45,542 (including 41,465 for "subcontractors"), for a loss of $1,150 (P-28).

C. Ultimate Finding on Respondent's Work Activity

42. At all times covered by the CA-8 claim forms dated November 18, 1986, February 23, 1987, and the CA-1032 dated March 25, 1987, Respondent was actively engaged in conducting her janitorial business. She was responsible for the entire operation, including the hiring of employees, obtaining and delivering supplies, delivering vacuum cleaners to job sites, repairs, billing and payroll, and supervising the employees at the various locations each night. Employees would routinely become unavailable on particular nights, and Respondent would have to fill in for them and actually perform their cleaning duties. Accordingly, Respondent's statements on the above CA-8 forms indicating that she was not self-employed during the relevant periods were clearly false.

43. In addition, her statement on the CA-1032 dated March 25, 1987 that she owns a janitorial service but "do not work at same" and that she works zero hours per week are also false. Also, her statement that she only gets reimbursed for expenses is false. In fact she received substantial money which she simply used to pay her rent, utilities, and other personal expenses. Her attempt to attribute all of the money to her boyfriend, Harvey, and her daughter, Rochelle, is rejected. She worked extremely hard and it is concluded that she was compensated for that work. Also, Respondent is fully responsible for the wording on the CA-1032 which her lawyer filled out. She misled him by stating that she received no income and did no work for the business, and she discussed the answers with him.

44. The above false statements are clearly material. Even if her duties had been only supervisory, OWCP would have considered it important information and reported her activities to the doctors if it had known that she was working even a few hours a week. 'In this regard, benefits could have been either reduced or terminated since Respondent's postal job was supervisory and she was claiming to have been too emotionally unstable to perform those duties (Tr. 135).⁽⁴⁾ In fact, since Respondent actually worked a substantial number of hours each week performing both supervisory and physical cleaning duties, this information was patently material insofar as the determination of disability compensation was concerned (Tr. 51-52, 72; P-12).

Prior Criminal Proceeding

45. In 1988 Respondent was indicted for violating the False Claims Act, 18 USC §287, by making false claims for disability compensation indicating that she had no employment or self-employment on the three CA-8 forms, discussed above, July 29, 1986, November 18, 1986, and February 23, 1987, respectively (R-2). The indictment further found her to have violated 18 USC §1001 for making false statements on the CA-1032 form she filed on March 25, 1987 in which she stated that she owned a janitorial service but did not work at same and received only reimbursement of expenses (R-2). At the criminal trial in February of 1989, Respondent was acquitted on these counts (Tr. 216).

CONCLUSIONS OF LAW
Respondent's Motion to Dismiss

1. Respondent argues that the instant administrative proceeding should be dismissed since the Department of Justice brought criminal charges in Federal District Court on the same false claims and statements, which resulted in her acquittal. Respondent contends that the instant proceeding is precluded by, and is contrary to, the legislative intent of the Program Fraud Civil Remedies Act ("PFCRA").

2. However, Respondent fails to point to any language in the PFCRA which supports her position. On the contrary, the statute supports the Complainant's position. It clearly provides that the penalties imposed by 38 U.S.C. §3802(a)(1) are "in addition to any other remedy that may be prescribed by law." The Department of Justice brought a criminal action against Respondent under 18 U.S.C. §287 (false claims) and 18 U.S.C. §1001 (false statements), but did not institute a civil action to recompense Postal Service losses in the Federal District Court under the civil False Claims Act, 31 U.S.C. §3729. See 38 U.S.C. §3803 (b). One of the purposes of the PFCRA is to provide federal agencies with "an administrative remedy to recompense such agencies for losses resulting from such [false] claims." Pub. L. 99-509, §6102 (b)(1). In the instant case, the Postal Service is merely utilizing the administrative proceeding provided by PFCRA since Justice has not brought a civil action under the False Claims Act. Finally, there is no language in the legislative history which indicates that the government must make an election between criminal remedies and an administrative action under PFCRA.

3. Moreover, Section 3803(b)(3) provides for a stay of the administrative hearing if the Attorney General decides that continuation of the hearing would adversely affect any pending or potential criminal action related to the false claim in issue. However, the administrative action may later be resumed upon written authorization of the Attorney General. Therefore, it appears that Congress did not intend to preclude an administrative action where Justice had also brought a criminal action with respect to the same false claims. See also, 39 CFR §273.7(b).

4. Finally, the PFCRA is modeled after the Civil Monetary Penalties Law, which is used to recover money paid on false claims for Medicare and Medicaid. See 42 U.S.C. §1320a-7a (1989 Supp.). In Chapman v. United States Dept. of Health & Human Services, 821 F.2d 523 (10th Cir. 1987), an administrative proceeding to recompense losses of the agency was upheld even though the respondent had been previously found guilty under the False Statements Act following criminal proceedings.

5. Accordingly, the Motion to Dismiss is denied.

Civil Penalties

6. The next issue is whether Respondent is subject to civil penalties in the total amount of $15,000 under 31 U.S.C. §3802(a)(1)⁽⁵⁾ for making three false claims for disability compensation. Complainant seeks a $5,000 penalty for each of the CA-8 claims dated November 18, 1986 and February 23, 1987, and for the CA-1032 dated March 25, 1987.

7. Each of these three claim forms constitutes a separate claim. 31 U.S.C. §3801(b)(1). A "claim" is "any request, demand, or submission made to an Authority for...money." 31 U.S.C. §3801(a)(3). Since an individual's disability status may change over a period of time, it is necessary to require a claimant to file a series of separate claims covering different periods. The CA-8 forms are entitled "Claim for Continuing Compensation" and specifically request money to compensate for the alleged loss of pay during a stated time period due to disability. Although the CA-8 dated November 18, 1986 did not specify a particular "period compensation is claimed," it implicitly claimed money from the date of the last CA-8, July 29, 1986, to November 18, 1986, the date of signature. The CA-8 dated February 23, 1987 claimed compensation from November 19, 1986 through "continuing."

8. The CA-1032 dated March 25, 1987 is also a separate claim for money. In Filomena P.Winslow, P. S. Docket No. PF-5 (P.S.D. September 13, 1990), the only claim form filed was a CA-1032, and it was held to be a "claim" for the purpose of the statute. In part, the CA-1032 form in issue herein is a submission made for the payment of money in the future. The form states that the information requested is required in connection with the receipt of benefits and will be used to determine whether an adjustment in past or future benefits may be warranted (Exh. P-8). Future payments would not have been made if it had not been filed (Id). Payments were later made to Respondent Nelson based upon this CA-1032 form (Tr. 57).

9. It is concluded that Respondent's statements or omissions on the above forms indicating that she was not self-employed during the periods for which she claimed disability compensation are materially false. On the CA-8 forms, Respondent answered "N/A", "NONE", or left blank the questions concerning her self-employment. In common usage, "N/A" means "not applicable." Since Respondent was self-employed, the questions were applicable to her. Cf. United States v. Mattox, 689 F2d 531 (5th Cir. 1982); United States v. Austin, 817 F2d 1352 (9th Cir. 1987). Similarly, leaving a blank is equivalent to an answer "none" or a statement that there are no facts required to be reported. Cf. United States v. Mattox, supra at 533.

10. Also, her statements on the CA-1032 dated March 25, 1987, that she worked zero hours a week and received no income other than reimbursement for expenses were materially false.

All of the above false information, on all three forms, required to be provided was material and pertinent to the issue of whether Respondent was totally or partially disabled. 20 CFR §10.303 and §10.125(a).

11. Finally, with respect to the CA-8 dated February 23, 1987, on which she left blank the question about self-employment, Respondent argues that there was no requirement to complete the form since the instructions state that the form "should" be completed rather than "must" be completed. First, the word "should" in this context connotes an obligation to complete. Second, the instruction was merely referring to the individual who should complete the form - either the employee or his representative. Also, later reference to "failure to submit this form properly completed...will delay payment of compensation" makes it clear that the form must be completed. Thus it is clear that the claim form must be completed if benefits are to be received, and that all of the questions need to be answered. This interpretation is consistent with the regulations. Id.

12. Accordingly, by omitting (leaving blank) the material fact of her self-employment, which she had a duty to include on the CA-8 dated February 23, 1987, the claim is supported by a false statement within the meaning of §3802(a)(1)(C). Moreover, since leaving a blank is equivalent to making the statement "NONE" with respect to her self-employment, this is a statement which asserts a material fact which is false under §3802(a)(1)(B). Likewise, her assertion on the CA-8 dated November 18, 1986 that she was not self-employed constitutes a written statement which asserts a material fact which is false under §3802(a)(1)(B). Similarly, the materially false statements on the CA-1032 form dated March 25, 1987, violate §3802(a)(1)(B).

13. She submitted those statements in support of her claims knowing, or having reason to know, that they were false.

14. Under these circumstances, Respondent is subject to, in addition to any other remedy that may be prescribed by law, a civil penalty of not more than $5,000 for each of the three false claims. Complainant requests the maximum penalty of $15,000. It is clear that the amount of the penalty must be determined by examining all of the circumstances surrounding the false claims, including all aggravating and mitigating factors. See, S. Rep. No. 99-212, 99th Cong., 1st Sess. 18 (1985). Many government agencies have adopted a set of model regulations proposed by the President's Council on Integrity and Efficiency, which contains a list of factors which may be considered as guidance. E.g., 45 CFR §79.31 (1988); 52 Fed. Reg. 27423, 27432. The Administrative Law Judge is not bound by the regulations of other agencies, but has discussed some of those factors below.

15. There is a considerable degree of culpability. Respondent clearly knew that she was deceiving the government. She told the government, and her lawyer, that she was not receiving income and that she was not self-employed when, in fact, she was receiving significant amounts of money and performing substantial work activities. She did this even though the claim forms made it clear in bold print that she should report all work activities, even those for which she made no income. In addition, she was specifically informed by the USPS Injury Compensation Specialist that she should include her janitorial business on the CA-8 claim form. She later told the specialist that her lawyer had advised her that the business need not be listed, when in fact she had not spoken with the lawyer about that CA-8 form, and had filed the form on her own. Also, although her lawyer assisted her in the preparation of the February 23, 1987 CA-8 claim form and the March 25, 1987 CA-1032 form, she cannot use this assistance as a defense since she falsely led her attorney to believe that she was only answering the telephone about one or two hours a week and received no income except reimbursement for a few expenses. Finally, although confronted with the false statements in issue, she has failed to be forthcoming, and continues to deny any wrongdoing.

16. The amount of money falsely claimed is also an important factor to consider. The statute provides for a maximum penalty of $5,000 where a single false claim is filed, even if that claim were, for example, $70,000. In the instant case, a total of $29,327.43 was falsely claimed after the effective date of the Act. The amount paid for the CA-8 dated November 18, 1986, for the period 10/21/86-11/22/86 after the effective date of the PFCRA, is $1,816.94. Respondent was paid $15,211.92 due to the CA-8 dated February 23, 1987 (this covered November 23, 1986 to August 29, 1987)(P-4), and $12,298.57 due to the CA-1032 filed March 25, 1987.

17. An aggravating circumstance exists where the false claims occur over a lengthy period of time or are large in number. Here, Respondent filed a total of three false claims over a four month period, which presents a slightly aggravating circumstance. (The claims filed before the effective date of the PFCRA - the July 29, 1986 CA-8 form and the August 4, 1986 CA-1032 form - would have been aggravating but have not been considered in calculating the penalty or assessments herein). On the other hand, although each form herein was a separate claim, each claim was a part of, and helped to perpetuate, a single scheme with common falsehoods. The fact that the claims were similar is a mitigating factor.

18. Finally, in determining the amount of a penalty or assessment, the Administrative Law Judge must consider that the purposes of the statute are to recompense the government for losses resulting from false claims, to deter the making of such claims in the future, and protect the integrity of the government program in question. S. Rep. No. 99-212, 99th Cong., 1st Sess. 2 (1985).

19. After considering all of the circumstances of these claims, it is concluded that Respondent is liable for civil penalties in the aggregate amount of $10,000.

Assessment

20. The next issue is the amount of the assessment to be imposed upon Respondent under §3802(a)(1). The statute provides, in pertinent part, that a person making such a false claim shall be subject to an assessment, in lieu of damages sustained by the United States because of such claim, of not more than twice the amount of such claim. Since Respondent made false claims for a total of $29,327.43, she is liable for an assessment of no more than $58,654.86. Since it is not unreasonable to assume that the damages of the Postal Service, including the cost of investigation and litigation, have exceeded this amount, and considering the aggravating and mitigating circumstances discussed above, it is concluded that Respondent is liable for the maximum assessment of $58,654.86.⁽⁶⁾ No assessment or penalties have been provided herein with respect to the $10,750.26 falsely claimed and paid to Respondent which is attributable to the period prior to the effective date of the PFCRA.

Conclusion

21. The findings and conclusions herein are based upon the preponderance of the evidence. 31 U.S.C. §3803(f). In summary, Respondent is liable to the Postal Service under 31 U.S.C. §3802(a)(1) for a civil penalty of $10,000 plus an assessment of $58,654.86, for a total liability of $68,654.86.

Randolph D. Mason
Administrative Law Judge

¹ OWCP requires this information (Tr. 43) because the nature and regularity of the work, or a level of activity inconsistent with total disability, may be sufficient to demonstrate an earning capacity warranting adjustment of the compensation even if it did not result in earnings (FECA Procedure Manual, Part 2, lla) (P-11, p. 15). According to the FECA Procedure Manual, Chapter 2-402, Section 5, a claimant is not required to report investment income or ownership of a business in which they take no active part (P-9, p. 3); (Tr. 106).

² Similarly, at other times herein, in view of her demeanor, her ability to recall many details about some things and her feigned forgetfulness about other basic matters, Respondent's testimony has been rejected as incredible.

³ Effective August 30, 1987, Respondent was placed on the longterm disability roll and began receiving $1,525 per month (less $37.98 health benefits) on an automatic basis (P-4; Tr. 42-43).

⁴ On the other hand, the statement by Respondent's counsel that she only answered the phone 1 or 2 hours a week did not suggest a sufficient amount of work to warrant a complete investigation (Tr. 139).

⁵ Section 3802(a)(1) provides as follows:

3802. False Claims and statements; liability

(a)(1) Any person who makes, presents, or submits, or causes to be made, presented, or submitted, a claim that the person knows or has reason to know--

(A) is false, fictitious, or fraudulent;

(B) includes or is supported by any written statement which asserts a material fact which is false, fictitious, or fraudulent;

(C) includes or is supported by any written statement that--

(i) omits a material fact;

(ii) is false, fictitious, or fraudulent as a result of such omission; and

(iii) is a statement in which the person making, presenting, or submitting such statement has a duty to include such material fact; or

(D) is for payment for the provision of property or services which the person has not provided as claimed, shall be subject to, in addition to any other remedy that may be prescribed by law, a civil penalty of not more than $5,000 for each such claim. [Unless payment has not been made by the Government on the claim, as provided by §3802(a)(3)] ..., such person shall also be subject to an assessment, in lieu of damages sustained by the United States because of such claim, of not more than twice the amount of such claim, or the portion of such claim, which is determined under this chapter to be in violation of the preceding sentence.

⁶ Although not binding herein, it is noted that the model regulations state that "[b]ecause of the intangible costs of fraud, the expense of investigating such conduct, and the need to deter others who might be similarly tempted, ordinarily double damages and a significant civil penalty should be imposed." E.g., 45 CFR §79.31 (1988).