In the Matter of the Complaint Against     )
                                                                 )
NINA D. NEWBORN                                  )
664 Rickey Canyon Drive                        )
                                                                )
                  at                                           )
                                                                )
DeSoto, TX 75115-5086                          )  P. S. Docket No. PF-64

APPEARANCE FOR RESPONDENT:         Nina D. Newborn, pro se
                                                                664 Rickey Canyon Drive
                                                                DeSoto, TX 75115-5086

APPEARANCE FOR POSTAL SERVICE: Geoffrey A. Drucker, Esq.
                                                                United States Postal Service
                                                                Law Department
                                                                Washington, DC 20260-1148

INITIAL DECISION

Procedural History And Ruling
On Motion For Default Judgment

This proceeding arises out of a Complaint issued 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 C.F.R. Parts 273 and 962. The Complaint was sent to Nina Dewone Newborn ("Respondent") at 664 Rickey Canyon Drive, DeSoto, Texas 75115-5086. On January 10, 1994, Respondent filed with the U.S. Postal Service Recorder a Petition in the form of a letter, acknowledging receipt of the Complaint and requesting a hearing.

By order dated January 10, 1994, the Judicial Officer referred this proceeding to the undersigned as presiding officer ("Presiding Officer"). On January 11, counsel for the Postal Service transmitted the Complaint to the Presiding Officer and filed a Motion To Dismiss The Petition on the ground that the Respondent failed to admit or deny each of the allegations of liability in the Complaint, as required under 39 C.F.R. §962.3(f).

By order dated January 12, 1994, the Presiding Officer granted Respondent ten (10) days from the date of receipt of the order in which to file an amended Petition. On February 4, when no amended Petition had been filed by Respondent, the Presiding Officer issued an order dismissing the Petition.

On February 8, 1994, counsel for the Postal Service filed a Motion For Default Judgment requesting the Presiding Officer to issue an Initial Decision based upon the allegations set forth in the Complaint, pursuant to 39 C.F.R. §962.4(a). On that same date, the motion was sent by certified mail to Respondent at the address stated in her Petition, but it remained unclaimed until February 26, when it was returned to the Recorder. The Recorder resent the motion by regular mail on March 9, 1994.

On March 31, 1994, the Presiding Officer granted Respondent ten (10) additional days in which to file an amended Petition, due to the insufficiency of the evidence showing receipt by Respondent of the prior order granting her leave to amend. Respondent acknowledged receipt of this order on April 4, by signing a Domestic Return Receipt (PS Form 3811). To date, no amended Petition or response to the Postal Service's Motion for Default Judgment has been received. The Postal Service's Motion For Default Judgment is therefore granted and this Initial Decision is issued based on the information contained in the Complaint and documentation attached thereto, in accordance with 39 C.F.R. §962.4(a) and §962.15(d).

FINDINGS OF FACT

Respondent's Workers' Compensation Claim
And Subsequent Self-Employment

1. As of March 5, 1989, Respondent was employed as a distribution clerk at the Dallas, Texas Mail Processing Annex of the U.S. Postal Service. On that date, Respondent reported to her supervisor that she had slipped in the van area near one of the loading docks. Respondent did not indicate that she was injured and she completed a full day of work.

2. Respondent had scheduled days off on March 6 and 7, 1989. On March 8, 1989, Respondent claimed for the first time that she had injured herself on March 5 and was unable to work. Respondent filed a Form CA-1 (Federal Employee's Notice Of Traumatic Injury And Claim For Continuation Of Pay/Compensation) alleging that as a result of the fall, she had suffered injuries to her neck, back, right arm, and right hip.

3. The Office of Workers' Compensation Programs ("OWCP") of the U.S. Department of Labor approved Respondent's claim of a work-related injury. As a result, the U.S. Postal Service continued to pay Respondent her regular wages until April 22, 1989. On that date, the OWCP began paying Respondent workers' compensation benefits.

4. On September 20, 1989, Respondent applied to become a salesperson and group manager for the Diamite Corporation of Milpitas, California, a multi-level marketing firm that sells health and beauty products through networks of independent contractors. Respondent paid Diamite a $45 membership fee to become a salesperson. To qualify as a group manager, she paid $131 for a literature kit and purchased over $1000 worth of Diamite merchandise.

5. On March 14, 1990, a Postal Inspector who was working undercover attended a Diamite seminar at the Stouffer's Hotel in Dallas, Texas. Respondent introduced herself to the Inspector as a group coordinator and handed the Inspector a business card that identified her as the owner/president of Dewone's Enterprises, Diamite's Nutritional System.

6. On June 21, 1990, Respondent completed and certified an OWCP Form EN-1032 ("Form 1032"). In response to questions on the form, Respondent denied that she had been self-employed at any time during the 15 months prior to June 21, 1990. Respondent answered "N/A" (not applicable) to additional questions seeking to elicit information about the dates and other details concerning any self- employment. Respondent was self-employed as a salesperson during part of the 15 month period prior to filing this Form 1032.

7. On July 18, 1990, Respondent completed and certified a Form 1032 in which she denied that she had been self-employed at any time during the 15 months prior to July 18, 1990, and answered the questions seeking details concerning any self-employment as not applicable. Respondent was self-employed as a salesperson during part of the 15 month period prior filing this Form 1032.

8. On June 28, 1991, Postal Inspector Michael Castillo interviewed Respondent about her association with the Diamite Corporation. Respondent admitted purchasing products from Diamite and reselling them to others, but she disputed Inspector Castillo's characterization of such activity as self-employment. Respondent said that to her, employment meant punching a time clock. Inspector Castillo cautioned Respondent that her sales activities constituted self-employment.

9. On September 25, 1991, Respondent completed and certified a Form 1032 in which she denied that she was self-employed at any time during the 15 months prior to September 25, 1991, and answered the questions seeking details concerning any self-employment as not applicable. Respondent was self-employed as a salesperson during the entire 15 month period prior to filing this Form 1032.

The Labor Department Proceeding

10. On April 16, 1992, Tom Brenza, a Senior Claims Examiner for the OWCP ("the Examiner") determined that Respondent knowingly failed to report her self-employment on the three Forms 1032 discussed above. Consequently, the Examiner declared a forfeiture of the workers' compensation benefits paid to Respondent between April 22, 1989 and September 25, 1991.

11. Respondent appealed the Examiner's ruling. On May 26, 1993, Hearing Representative Warren D. Landis, Jr. upheld the ruling. In addition, since Respondent failed to present any information concerning her financial status, Mr. Landis ordered the OWCP to recover her debt by withholding 100% of future benefits payments.

CONCLUSIONS OF LAW

1. Respondent filed Forms 1032 dated June 21, 1990, July 18, 1990, and September 25, 1991, claiming full workers' compensation benefits, without any deduction for earnings from self-employment. Each of the three Forms 1032 contained false information because Respondent was self-employed from September 20, 1989 to September 25, 1991. Each false Form 1032 constitutes a claim for money within the meaning of the Program Fraud Civil Remedies Act, 31 U.S.C. §3801(a)(3).

2. Respondent knew or had reason to know that she was self-employed during the period from September 20, 1089 to September 25, 1991, because she was aware of her own actions. Respondent was also informed by a Postal Inspector on June 28, 1991, that her sales activities constituted self-employment. Each false Form 1032 constitutes a claim for money within the meaning of the Program Fraud Civil Remedies Act, 31 U.S.C. §3801(a)(3).

3. Respondent is liable for the amount of the benefits paid to her while she was self-employed but claimed that she was not self-employed. The amount of such benefits paid between September 20, 1989, and September 25, 1991, was $39,752.40. Since the Postal Service ultimately paid these benefits, the loss to the Postal Service totals $39,752.40.

4. The General Counsel requests an assessment equal to twice the amount of its loss, or $79,504.80, less any sum Respondent has repaid to the OWCP. In addition, the General Counsel seeks a civil penalty in the amount of $15,000 ($5000 for each of the three false claims) under 31 U.S.C. §3802(a)(1). The General Counsel's requests are in accordance with the Act. Moreover, the record discloses no mitigating factors.

5. Respondent is therefore liable to the Postal Service under 31 U.S.C. §3802(a)(1) for a civil penalty in the amount of $79,504.80 less any amounts that Respondent has repaid to the OWCP, plus an assessment of $15,000. The total of the penalties and assessments amounts to $94,504.80.

Judith A. Dowd
Acting Chief Administrative Law Judge