P. S. Docket No. PF-3
August 19, 1992
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 POSTAL SERVICE: Stephen E. Alpern, Esq.
Janet E. Noble, Esq.
Nan K. McKenzie, Esq.
Law Department
United States Postal Service
Washington, DC 20260-1130
APPEARANCE FOR RESPONDENT: Michael J. Rex, Esq.
6735 Telegraph Road, Ste. 350
Birmingham, MI 48010-2125
POSTAL SERVICE DECISION
Neldie E. Nelson (Respondent) has filed an appeal from an Initial Decision in which an Administrative Law Judge concluded that Respondent is liable to the United States Postal Service under the Program Fraud Civil Remedies Act (PFCRA), 31 U.S.C. § § 3801-3812, for a civil penalty of $10,000 and an assessment of $58,654.86. The Administrative Law Judge's conclusion was based on his finding that Respondent had submitted three false claims for disability compensation to the Department of Labor, Office of Workers' Compensation Programs (OWCP), for injuries sustained while an employee of the United States Postal Service. On appeal Respondent contends the Administrative Law Judge's decision should be reversed or at least modified to reduce the assessment imposed.
Background
The Office of Labor Law, Law Department, United States Postal Service (Postal Service), initiated this proceeding by filing a Complaint alleging that Respondent was liable to the Postal Service under the PFCRA for an assessment of $67,788.18 plus a civil penalty of $15,000 for her failure to disclose self-employment information on three disability compensation claim forms submitted to OWCP.1/ Respondent timely filed a Petition for Hearing admitting she was self-employed as alleged, but denying she actively participated in or received income from such employment, made any false claim or statement, or should be held liable for any assessments or penalties under the PFCRA.
At a hearing before the Administrative Law Judge, both parties called witnesses and introduced documentary evidence. Following the submission of briefs containing proposed findings of fact and conclusions of law, the Administrative
Law Judge issued an Initial Decision in which he concluded that Respondent was liable to the Postal Service under the PFCRA for an assessment of $58,654.86, representing twice the amount of compensation paid to Respondent, $29,327.43,2/ plus a civil penalty of $10,000,3/ for a total liability of $68,654.86 (I.D., Conclusion of Law (COL) ¶ 21). Respondent has filed a timely appeal from the findings and conclusions of the Initial Decision. The Postal Service opposes the appeal arguing the Initial Decision should be affirmed.
The claims for disability compensation which are the subject of this proceeding were submitted by Respondent to OWCP as the result of injuries she sustained when assaulted in the parking lot of the post office where she was employed (I.D., Finding of Fact (FOF) ¶ 1). Following the assault, Respondent submitted to OWCP two Claims For Continuing Compensation on Account of Disability on Forms CA-8 dated November 18, 1986, and February 23, 1987 (Exhibits (Exhs.) P-6 & 7), and one informational statement, Form EN-1032 dated March 25, 1987 (Exh. P-8). The two Forms CA-8 failed to show that Respondent was self-employed during the period she was seeking disability compensation. The Form EN-1032, although stating that Respondent was self-employed during this period, stated she worked no hours and only received reimbursement of expenses. The Postal Service alleged and the Administrative Law Judge found that all three forms were claims for disability compensation containing false self-employment information for which Respondent was liable under the PFCRA (I.D., FOF ¶ ¶ 42-44). The Administrative Law Judge also found that during the period Respondent sought disability compensation, she was in fact self-employed, performed work in connection with her business venture, and received compensation for the work performed (Id.).
Exceptions and Discussion
On appeal Respondent does not seriously contest the Administrative Law Judge's findings that the three forms contained false information. However, Respondent does contend that the Form EN-1032 is a "statement" and not a "claim" for which an assessment may be made under the PFCRA; the Administrative Law Judge incorrectly calculated the amount of compensation paid Respondent; the assessment imposed is arbitrary and unwarranted; and the initiation of a PFCRA claim against Respondent is contrary to law. Respondent also contends this matter should be remanded to the Administrative Law Judge for further consideration in light of a decision issued by OWCP concerning Respondent's entitlement to compensation under the Federal Employees' Compensation Act (FECA). Each of these contentions is hereafter addressed.
I. Form EN-1032
Respondent first contends that the record does not support the Administrative Law Judge's conclusion that the Form EN-1032 constitutes a "claim" for which an assessment may be made under the PFCRA. Respondent points out that a OWCP claims examiner testified that the Form EN-1032 was a "statement" used for the purpose of verifying Respondent's self-employment status and that both the Form itself and accompanying transmittal letter expressly identify the Form as a "statement." As a result Respondent contends that although she may be subject to a penalty for submitting a false statement based on the representations made on the Form EN-1032, no assessment may be imposed. The Postal Service contends that while the Form itself does not contain the word "claim," it constitutes a "claim" as that word is defined in the PFCRA since it induced or caused OWCP to make payments to Respondent.
As Respondent contends, a claims examiner for OWCP who testified on behalf of the Postal Service referred to the Form EN-1032 as a "statement," used to verify dependency and employment status (Tr. 46, 54-55 & 112-114). The Form EN-1032 and accompanying transmittal letter specifically identify the Form as a statement seeking information in connection with a claim.
When contrasted with the Form CA-8, which specifically identifies itself as a claim for compensation, it is clear that under the circumstances presented in this case and as the terms are defined in the Act,4/ the Form EN-1032 submitted by Respondent on March 25, 1987, is a statement containing representations verifying the information furnished on the Form CA-8, dated February 23, 1987 (Tr. 112-114). Since the Form EN-1032 is a statement,5/ Respondent's contention that no assessment may be made on the basis of that Form is correct. See 31 U.S.C. § 3802(a)(2).
Nevertheless, as the Administrative Law Judge correctly concluded, the Form EN-1032 contains false information concerning Respondent's self-employment status. Therefore, the Form EN-1032 is a false statement within the meaning of 31 U.S.C. § 3801(a)(9) for which Respondent may be held liable for a civil penalty of $5,000. See 31 U.S.C. § 3802(a)(2).
II. Calculation of Assessment
Respondent next contends that nothing in the record supports the Administrative Law Judge's finding that the Form CA-8 dated February 23, 1987, caused OWCP to pay Respondent compensation in the amount of $15,211.92 for the period November 23, 1986, to August 29, 1987, or that the Form EN-1032 dated March 25, 1987, caused OWCP to pay Respondent compensation in the amount of$12,298.57 for the period August 30, 1987, to April 9, 1988 (I.D., FOF ¶ ¶ 26-27). According to Respondent, the Administrative Law Judge's findings concerning these payments were based solely on the confusing and inconsistent testimony of the OWCP claims examiner.
The Postal Service, on the other hand, argues that the claims examiner's testimony conclusively establishes that the lump-sum payment of $15,211.92 made September 2, 1987, resulted from submission of the Form CA-8 on February 23, 1987. The Postal Service also argues that payments totalling $12,298.57, which were made after Respondent was placed on the long-term disability roll, resulted from the submission of the Form EN-1032. Therefore, the Postal Service urges that the Administrative Law Judge's calculation of the assessment be affirmed.
The parties' contentions with regard to the status of the Form EN-1032 as a claim or statement have already been addressed in connection with Respondent's first exception. Since it has been determined that the Form is not a claim for which an assessment may be made in this case, further consideration of that Form in connection with this exception is unnecessary. However, the compensation paid Respondent as a result of the Form CA-8 dated February 23, 1987, remains an issue which must be addressed in connection with this contention.
Although, as Respondent contends, the testimony of the OWCP claims examiner is somewhat confusing, it persuasively establishes that the Form CA-8, dated February 23, 1987, was the document on which OWCP relied in paying Respondent disability benefits from February 1987, until termination of her benefits in April 1988. This Form CA-8 caused a lump-sum payment to be made to Respondent in September 1987, at which time she was placed on the long-term, disability roll (Tr. 102, 111 & 116), and in conjunction with medical reports, the Form EN-1032, and information obtained from a subsequent investigation, this Form CA-8 caused disability compensation to be paid to Respondent for the remainder of the benefit period (Tr. 102, 104, 111-114 & 116-118). The claims examiner's testimony also establishes that other than the Form EN-1032 verifying the information on the Form CA-8 dated February 23, 1987, no other forms were submitted which would have caused the continuation of payments to Respondent (Tr. 57, 114 & 127).
In the absence of any other claim forms having been submitted to OWCP by Respondent, the only forms on which payment could have been made are the two Forms CA-8 dated November 18, 1986 and February 23, 1987. Respondent does not seriously contest the Administrative Law Judge's conclusions that she was paid $1,816.94 in compensation for the period October 21 to November 22, 1986, as the result of submission of the Form CA-8 dated November 18, 1986. The remaining disability compensation paid to Respondent resulted from submission of the Form CA-8 dated February 23, 1987.
The total compensation paid to Respondent as a result of both Forms CA-8 was $29,327.43. Since both Forms CA-8 contained false self-employment information, an assessment based on the $29,327.43 compensation paid to Respondent was authorized under § 3802(a)(1) of the PFCRA.
III. Arbitrary and Unwarranted Assessment
Respondent claims that the Administrative Law Judge's recommended assessment of double the amount of compensation paid is arbitrary and unwarranted. According to Respondent, the Administrative Law Judge's conclusion that the Postal Service incurred damages in the form of investigation and litigation costs warranting an assessment of twice the amount paid to Respondent is based on an assumption, rather than any evidence contained in the record (I.D., COL ¶ 20). Respondent also takes the position that most of the Postal Service's costs were incurred during her criminal prosecution and therefore, cannot be considered a cost of this proceeding.
In contesting the double assessment, Respondent also claims that the Postal Service suffered no loss as a result of the false information provided on her claims. It is Respondent's position that even if OWCP had known of her self-employment status, her compensation payments would have remained unchanged since her psychiatric condition prevented her from returning to work at the post office. In support of this position, Respondent points out that the Postal Service was aware of her self-employment status, but took no action to reevaluate her medical condition or modify her benefits. Respondent, in addition, contends the Administrative Law Judge erred in failing to consider her medical condition as a mitigating factor when assessing her culpability in submitting the false claims.
The Postal Service argues that an assessment of twice the amount of compensation paid to Respondent is proper in this case since the costs of fraud, including deterrence, are intangible, and whatever investigation costs were incurred were the result of Respondent's misdeeds. It also suggests that it is impossible to determine what, if any, losses the Postal Service would have sustained had Respondent provided truthful self-employment information to OWCP, since OWCP was never given an opportunity to assess Respondent's continuing disability benefits on the basis of such information. The Postal Service further disputes Respondent's claim that her medical condition should be considered a mitigating factor in reducing her assessment since the Administrative Law Judge found that her testimony regarding her medical condition was not credible.
The PFCRA allows an assessment of not more than twice the amount of any false, fictitious or fraudulent claim, in lieu of damages sustained by the United States because of such claim. See 31 U.S.C. § 3802(a)(1). The purpose of the PFCRA is to compensate Federal agencies for losses resulting from false claims and statements and to deter such fraudulent behavior in the future. See S. Rep. No. 99-212, 99th Cong., 1st Sess. at 2 (1985). The double assessment and penalty provisions of the statute provide the remedies for accomplishing these statutory objectives.
The courts have consistently held that an assessment which is double the amount of the actual damages sustained is permissible since the Government's damages are difficult to compute and include not only the amount of the fraud itself, but also ancillary costs such as detection, investigation, litigation and enforcement. See United States v. Halper, 490 U.S. 435, 445-46 & 449 (1989); Helvering v. Mitchell, 303 U.S. 391, 401 (1938); United States v. A Parcel of Land, 884 F.2d 41, 44 (1st Cir. 1989); United States v. United States Fishing
Vessel Maylin, 725 F. Supp. 1222, 1223 (S.D. Fla. 1989). An assessment is only arbitrary and unwarranted if it is so disproportionate to the damages caused that it bears no rational relation to the goal of compensating the Government for its loss. See Halper, 490 U.S. at 449-50; Bay State Uniform Company, Inc., P.S. Docket No. PF-31 at 4-5 (P.S.D. Aug. 12, 1992).
In this case, the damages sustained by the Postal Service include the compensation paid to Respondent and the costs expended in processing, detecting, investigating, and litigating the claims against Respondent. Coupled with the intangible cost of deterring future false claims, the double assessment bears a rational relation to the goal of compensating the Postal Service for its loss. All of these costs were incurred because Respondent submitted false claims to OWCP. Thus these costs are chargeable to Respondent under the PFCRA even though they may have been incurred concurrently in connection with a criminal prosecution in which she was acquitted. Accordingly, under the circumstances of this case, the Administrative Law Judge did not err in finding Respondent liable for the maximum assessment permitted by the PFCRA.
Respondent's claim that she would have been entitled to the same benefits even if she had truthfully reported the extent of her self-employment activities is also not persuasive. Since Respondent never provided complete and truthful self-employment information to either OWCP or the Postal Service, neither had the opportunity to consider and evaluate her disability status based on that information (See Tr. 50-53, 70-71, 92-93, 121-122 & 134-140). Under such circumstances, it cannot be concluded that Respondent would have been entitled to the same benefits had she properly reported the extent of her self-employment activities.
Equally unpersuasive is Respondent's argument that the Administrative Law Judge erred by failing to consider her medical condition a mitigating factor for reducing the assess-ment. Respondent has provided no support for her contention that her medical disability should excuse her submission of a false claim or serve as a basis for reducing an assessment once that claim was submitted. Moreover, Respondent has not shown that as a result of her condition, she did not know she was submitting false claims to OWCP. On the evidence presented, the Administrative Law Judge properly concluded that Respondent knew she was deceiving the Government when she submitted her claims for disability compensation.6/
The Administrative Law Judge properly considered both aggravating and mitigating factors surrounding Respondent's culpability in submitting the false claims and subsequently reduced the penalty amount by $5,000. However, no basis in fact or law exists for reducing the assessment recommended by the Administrative Law Judge. Accordingly, Respondent's claim that the assessment imposed by the Administrative Law Judge is arbitrary and unwarranted is rejected.
IV. Application of The PFCRA Is Contrary To Law
Respondent next contends that her prior criminal acquittal and OWCP's failure to seek reimbursement under other statutes precludes an action under the PFCRA.
A. Prior Criminal Prosecution
Respondent asserts that Congress did not intend the PFCRA to be a secondary cause of action against individuals criminally prosecuted for the same false claims. Since Respondent was acquitted in a previous criminal trial involving the claims which are the subject of this proceeding,7/ she contends the Postal Service is precluded from bringing this action against her.
The Postal Service in turn argues that nothing in the Act's language or legislative history prohibits a PFCRA action following a criminal prosecution. According to the Postal Service, if Congress had intended to preclude such actions, it would have clearly expressed its intention in the language of the statute.
As Respondent contends, the PFCRA was intended to allow recovery of small monetary losses in cases where the Department of Justice (DOJ) declined prosecution. However, neither the legislative history nor the Act itself reflects an intent to prohibit the initiation of a PFCRA action following a criminal prosecution. See S. Rpt. No. 212, 99th Cong. 1st Sess. at 4, 6, 10, 18, 24, 34 & 36 (1985); 31 U.S.C. § § 3801-3812. The statute itself clearly contemplates concurrent civil and criminal proceedings involving the same claims since it authorizes the Attorney General to stay a PFCRA hearing which might adversely affect any "pending or potential" criminal or civil action on the same false claim or statement. See 31 U.S.C. § 3803(b)(3).
Based on this language and absent any other statutory language or clearly expressed contrary legislative intent, it is concluded that Respondent's prior criminal prosecution does not preclude the Postal Service from initiating this PFCRA action. Moreover, Respondent's acquittal in the prior criminal proceeding also does not require dismissal of this case. The Supreme Court has consistently held that due to the differing burdens of proof in criminal and civil cases, a criminal acquittal does not preclude a civil prosecution for the same cause of action. See United States v. One Assortment of 89 Firearms, 465 U.S. 354, 359 (1984); One Lot Emerald Cut Stones v. United States, 409 U.S. 232, 235 (1972); Helvering v. Mitchell, 303 U.S. at 397; Lewis v. Frick, 233 U.S. 291, 302 (1914). Accordingly, Respondent's contention that her prior prosecution and acquittal of criminal charges precludes the present PFCRA proceeding has no merit.
B. Other Remedies Available to OWCP
Respondent also contends that the PFCRA cannot be used to recoup compensation paid by OWCP under FECA since regulations implementing FECA provide specific procedures for forfeiture, collection and recovery of overpayments. According to Respondent, the remedies provided in these implementing regulations mandate a specific collection and recovery procedure which precludes recovery under the PFCRA.
The PFCRA was enacted after passage of FECA and promulgation of the implementing regulations. At the time the PFCRA was passed, Congress fully understood that some overlap existed in the civil remedies available to Federal agencies. See S. Rept. No. 212, 99th Cong. 1st Sess. at 24 (1985). Although Congress intended that monetary relief would be obtained under only one statute, no language in the PFCRA or its legislative history precludes its use in recovering overpayments made under FECA. Since collection of the overpayments has not been initiated under FECA or any other statute, the Postal Service is not precluded from bringing this action under the PFCRA.
Accordingly, Respondent's contention that the application of the PFCRA to her case is contrary to law is rejected.
V. Request for Remand
In addition to her exceptions to the Initial Decision, Respondent requests that this case be remanded to the Administrative Law Judge for consideration of an OWCP decision issued on June 28, 1990, which was not brought to the attention of the Administrative Law Judge. The OWCP's decision reverses an earlier OWCP decision rescinding Respondent's compensation benefits on the grounds that she had not been assaulted as alleged.
Respondent's request for remand and reconsideration is denied. The issues considered in the OWCP decision were (1) whether Respondent was assaulted in February 1986 as claimed, and (2) whether Respondent's benefits should have been rescinded under the provisions of FECA. While evidence relating to the assault may have been introduced in this proceeding, the issues here pertain solely to Respondent's submission of false claims concerning her self-employment status. The OWCP decision does not address this issue. Thus, even if Respondent's disability benefits had never been terminated, a right of action under the PFCRA would still exist. Therefore, the OWCP decision does not serve as a basis for remanding this case to the Administrative Law Judge for further consideration.
Conclusion
The findings and conclusions of the Initial Decision are modified to the extent indicated and otherwise affirmed. Accordingly, based on consideration of the entire record and Respondent's exceptions to the Initial Decision, it is concluded that Respondent is liable to the Postal Service, under the PFCRA, 31 U.S.C. § § 3801-3812, for an assessment of $58,654.86, plus a civil penalty in the amount of $10,000, for a total liability of $68,654.86.
James A. Cohen
Judicial Officer
1/ The Postal Service annually reimburses the Federal Employees' Compensation Fund for payments made to Postal employees. See 5 U.S.C. § § 8147(b) & (c).
2/ The parties stipulated that the amount of compensation paid to Respondent, after the PFCRA became effective, was $29,327.43 (Tr. 141).
3/ After determining Respondent was liable for a penalty in the amount of $15,000 for submitting three false claims, the Administrative Law Judge reduced the amount of the penalty to $10,000 after considering appropriate mitigating factors (I.D., COL ¶ ¶ 14-19).
4/ The PFCRA defines a claim as "any request, demand or submission . . . for property, services or money . . . ," and a statement as "any representation . . . with respect to a claim or to obtain approval for payment of a claim . . . ." 31 U.S.C. § § 3801(a)(3) & (9).
5/ Although the Form EN-1032 has been found to be a statement rather than a claim in this case, that Form may nonetheless be considered a claim under other circumstances. See, e.g., Robert L. Baker, P.S. Docket No. PF-7 (P.S.D. Mar. 29, 1991); Filomena D. Winslow, P.S. Docket No. PF-5 (P.S.D. Sept. 13, 1990).
6/ Respondent contends her openness with her treating physician somehow establishes that she did not know she was deceiving OWCP. I am not persuaded that Respondent disclosed to her physician the extent of her participation in her janitorial business or, if she did, that such disclosure establishes she did not know she was submitting false claims or otherwise serves as a mitigating factor.
7/ As Respondent contends, the Administrative Law Judge stated that the indictment "found" her to have violated 18 U.S.C. § 1001. However, the Administrative Law Judge clearly recognized that an indictment charges an individual with the commission of a crime and does not prove a violation of law, since he concluded that Respondent had been acquitted on all counts (I.D., FOF ¶ 45).