In the Matter of the Complaint Against    )
                                                                )
PHILLIP G. ARCADIPANE                         )
17 Eleanor Road                                      )
                                                                )
at                                                             )
                                                                )
Raynham, MA 02767-1205                      )   P.S. Docket No. PF 95-74

APPEARANCE FOR POSTAL SERVICE:  Nan K. McKenzie, Esq.
                                                                Enforcement Division
                                                                United States Postal Service
                                                                475 L'Enfant Plaza, SW
                                                                Washington, DC 20260-1148

APPEARANCE FOR RESPONDENT:         Joseph P. Sullivan, Jr., Esq.
                                                                176 Minot St
                                                                Dorchester, MA 02122-2003

DECISION ON MOTION FOR SUMMARY 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. In the Complaint, the Postal Service alleged that Respondent filed three false claims for workers' compensation payments, on September 7, 1990, September 7, 1991, and August 20, 1992, by submitting Department of Labor Forms EN-1032 on which he falsely stated that he was not employed or self-employed during the pertinent period.

The Complaint alleges that the Postal Service suffered a loss of $35,778.61 as a result of Respondent's false claims, and asks for an assessment equal to twice that amount, $71,557.22, as authorized by 31 U.S.C. §3802(a)(1). The Complaint also asks for the maximum penalty of $5000 for each false claim, for a total amount of $86,557.22.

Respondent filed a timely Petition for Hearing on March 20, 1995, and a hearing was scheduled for June 13, 1995. On May 26, 1995, the Postal Service filed a Motion for Summary Judgment, and Memorandum of Law in support, asserting that there are no material issues of fact, and that the Postal Service is entitled to judgment as a matter of law, both as to Respondent's liability, and as to the amount of penalties and assessment sought. The hearing was canceled, and Respondent filed a response opposing the motion on June 26, 1995. The Postal Service filed a Reply Brief on July 11, 1995.

The Postal Service Contentions

The Postal Service's argument is based on Respondent's criminal conviction for falsifying the same three Department of Labor Forms that provide the basis for this case. Respondent does not dispute that he was indicted on August 3, 1993 on three counts of filing false statements (the Forms 1032), in violation of 18 U.S.C. §1001, or that he was convicted of these offenses in a jury trial in the United States District Court for the District of Massachusetts in December 1993.⁽¹⁾ On March 24, 1994 Respondent was sentenced to a five month jail term, to be followed by supervised release for three years. He was also ordered to pay $35,778.61 in restitution to the Department of Labor.

The Postal Service contends that the jury verdict established that Respondent did knowingly and intentionally falsify the Forms 1032 on September 7, 1990, September 7, 1991, and August 20, 1992, and that Respondent cannot relitigate that issue in this administrative proceeding. The Postal Service also contends that "the unchallenged facts" demonstrate that the penalties and assessment sought, $86,557.22, are reasonable and appropriate.

With their Memorandum of Law, the Postal Service included a sworn Declaration of Postal Inspector Joseph Murphy, with a copy of pertinent portions of the District Court Judge's instructions to the jury, and a copy of the Court's decision on sentence, attached.

Respondent's Contentions

First, Counsel for Respondent attacks Mr. Murphy's Declaration, stating that Murphy's assertion that Respondent has failed to make any restitution payments is untrue.⁽²⁾ He also argues that Mr. Murphy is not competent to authenticate the court documents attached to his Declaration and, therefore, those documents cannot be used to support the motion. Next, he suggests that Respondent may have defenses to present in this civil forum that were not available in the criminal trial, and also that Respondent should be allowed to re-present the defense that he was following his attorney's advice when he submitted the false forms. Finally, he argues that the government maliciously delayed charging Respondent until the damages rose to a level that would justify severe punishment. He states an intention to call witnesses on this point.

Discussion

A grant of summary judgment is proper when there are no issues of material fact in dispute and when, as a matter of law, the moving party is entitled to judgment. Celotex Corp. V. Catrett, 477 U.S. 317, 322-24 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The moving party has the burden of establishing the absence of a genuine issue of fact and, if that burden is met, the opposing party must counter with something more than "mere denials or conclusory statements." Mingus Constructors, Inc. V. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987); see also Adickes v. S.H. Kress Co., 398 U.S. 144, 157-59: Fed. R. Civ. P. 56(e).

The Postal Service is correct in its assertion that Respondent is precluded from re-litigating the charges that he falsified the three Department of Labor Forms 1032, as alleged in Paragraph 30 of the Complaint. This is precisely what he was convicted of in District Court. The use of a criminal conviction as collateral estoppel in a subsequent civil or administrative proceeding is well established. Emich Motors Corp. v. General Motors Corp., 340 U.S. 558, 568 (1951); Otherson v. Department of Justice, 711 F2d 267 (D.C. Cir. 1983); United States v. Thomas, 709 F.2d 968 (5th Cir. 1983); Chisolm v. Defense Logistics Agency, 656 F2d 42 (3d Cir. 1981). The criteria for applying collateral estoppel, or "issue preclusion," are clearly articulated in Otherson at 273: first, the issue must have been actually litigated; second the issue must have been "necessarily determined" by the court's findings; and third, preclusion must not work an unfairness on the party against whom it is applied. All of these conditions are met in this case. The District Court records establish the first two,⁽³⁾ and Respondent has presented nothing to demonstrate that it is unfair not to permit him to relitigate the issue.

Postal Service precedents, in similar cases brought under the PFCRA, also provide ample authority for applying collateral estoppel to a criminal conviction, Willie J. Blocker, P.S. Docket No. PF-14 (P.S.D. July 19, 1993; I.D. July 15, 1991); or to factual determinations made in another administrative hearing (MSPB), James Anderson Smith, Jr., P.S. Docket No. PF-26 (I.D. April 9, 1992). There is, therefore, no genuine issue of material fact as to the allegation that Respondent submitted three false claims, in violation of 31 U.S.C. §3802(a)(1).

Whether the Postal Service is also entitled to summary judgment as to the penalty and assessment they seek is a more difficult question. The appropriate penalty and assessment must be determined by examining all the circumstances surrounding the false claims, including all aggravating and mitigating facts. Linda R. Phipps, P.S. Docket No. PF-48 (P.S.D. November 18, 1994. The Postal Service contends that all the pertinent circumstances are known, having been established by the District Court conviction, and by the pleadings in this case. Those pertinent circumstances, they argue, are simply that Respondent falsified the three forms on the dates alleged; that he received 28 checks, totaling over $59,000, as a result; that the loss to the Postal Service was $35,887.61; and that Respondent was found guilty in a criminal trial of intentionally defrauding the government. They also argue that Respondent has not contested allegations that he gave false information verbally to the Department of Labor in November 1992, and that the investigative costs of the Postal Inspection Service exceeded $20.000, both of which are offered as aggravating factors.

In his Opposition to the Motion for Summary Judgment, Respondent says very little on the matter of penalties and assessment other than that he "may further introduce evidence of mitigating factors and circumstances . . .." (Respondent's Opposition at p. 2.) However, the initial burden is on the moving party to establish the absence of any genuine issue of material fact. Celotex, 477 U.S. at 325. While the Postal Service has met this burden with respect to Respondent's violation of 31 U.S.C. §3802(a)(1), and his liability for some penalty and assessment, I cannot conclude from the record before me that there is no genuine issue as to his liability for the maximum penalty and assessment.

CONCLUSION

The Postal Service's Motion for Summary Judgment as to Respondent's liability for violation of 31 U.S.C. §3802(a)(1) is granted, but the motion is denied as to the amount of penalty and assessment to be imposed. Respondent is directed to inform the undersigned not later than August 4, 1995 whether he wishes to present matters in mitigation at an oral hearing, or by affidavits and other documents. In preparing any such matters, Respondent is referred to the model regulations often cited as guidance in determining appropriate penalties and assessments, 45 C.F.R. §79.31, and to the Postal Service decisions cited herein and in the General Counsel's Memorandum of Law.

Bruce R. Houston
Acting Chief Administrative Law Judge

1. See Complaint ¶¶ 25-27, and Petition ¶¶ 25-27. Respondent was also charged and convicted of twenty-eight counts of mail fraud, in violation of 18 U.S.C. §1341, based on his receiving twenty-eight disability payment checks from the Department of Labor between September 22, 1990 and October 17, 1992.

2. The Postal Service acknowledged, and corrected, this error in their Reply Brief. They assert, however, that the mere $75.00 that Respondent has paid thus far is little more than a token toward the $35,778.61 that the Court ordered.

3. In light of Respondent's admission in his Petition that he was tried and convicted of the same charges, and in the absence of any claim that the Court records attached to Inspector Murphy's Declaration are not accurate, Respondent's argument that the records are not properly authenticated is of no merit.