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ORFANOS v. HHS

August 18, 1995

ALEXANDRA E. ORFANOS, Petitioner,
v.
DEPARTMENT OF HEALTH AND HUMAN SERVICES, Respondent.



The opinion of the court was delivered by: PAUL L. FRIEDMAN

 Alexandra E. Orfanos, petitioner, admitted that she converted her deceased mother's Social Security Administration widow's benefit checks ("SSA checks") to her own use every month from 1971 to 1989. Although Ms. Orfanos admitted forging her mother's signature on 224 separate checks, she was found liable under the PFCRA for 34 counts of fraud, reflecting only the 34 checks she endorsed after October 21, 1986, the effective date of the PFCRA, in the total amount of $ 13,400. The HHS Administrative Law Judge found that an overriding number of aggravating factors, including the total duration of Ms. Orfanos' violations, warranted the imposition of the maximum penalty of $ 170,000 -- $ 5,000 for each of the 34 checks -- in addition to an assessment in the amount of $ 26,800. The judgment in the total amount of $ 196,800 was affirmed by the Departmental Appeals Administrative Board.

 Ms. Orfanos concedes that she owes $ 26,800 in double damages pursuant to the PFCRA and HHS regulations. She petitions the Court for a review of the penalty assessed, arguing that the decisions, findings and determinations of the HHS regarding the penalty are unsupported by substantial evidence and are arbitrary, capricious and excessively harsh under the facts and circumstances of her case. Respondent HHS moves for summary judgment, seeking a final judgment and an order directing the petitioner to pay $ 196,800 in assessments and penalties.

 The Court, having considered the petition, respondent's motion for summary judgment, petitioner's opposition, and the entire record herein, finds that the decisions of the ALJ and the Departmental Appeals Board are supported by substantial evidence and are not arbitrary, capricious or contrary to law. Furthermore, there are no extraordinary circumstances warranting the consideration at this stage of any new objections and no reasonable grounds for the consideration of new evidence not presented to HHS. 31 U.S.C. § 3805(d). On the record before the Court, the Court concludes that respondent HHS is entitled to judgment as a matter of law.

 I. FACTUAL BACKGROUND

 Ms. Orfanos' mother, Mary Economou, began receiving SSA widow's benefit checks in 1962 after her husband's death. Department of Health and Human Services Departmental Appeals Board Decision ("Decision") P 4. Ms. Economou moved into the Orfanos home in 1967 and Ms. Orfanos assumed responsibility for handling her mother's SSA checks because Ms. Economou was illiterate. Decision PP 5, 6. Ms. Economou endorsed the checks and Ms. Orfanos countersigned and cashed or deposited them for her mother. Decision P 6. Ms. Economou died on December 10, 1967. Decision P 7.

 Ms. Orfanos failed to notify the Social Security Administration of her mother's death, and Ms. Economou's benefit checks continued to be sent to the Orfanos home. Decision PP 9, 10. From January 1, 1971, to October 31, 1986, Ms. Orfanos received, endorsed and cashed or deposited 190 SSA checks made payable to Mary Economou totalling $ 47,367.20. Decision P 16. From November 1, 1986 to August 31, 1989, Ms. Orfanos received, endorsed and cashed or deposited 34 SSA checks totalling $ 13,400.00. Decision P 17.

 Ms. Orfanos was employed at Riggs Bank in its finance department's analysis division from 1968 to 1990; her responsibilities included the preparation of monthly financial analyses. Post-hearing Brief of the U.S. Department of Health and Human Services ("Post-hearing Br.") at 4. In order to enhance her career, she took more than fifteen courses with the American Institute of Banks in subjects such as economics, accounting, law and banking, money and banking and auditing. Post-hearing Br. at 4. She continued her employment at Riggs Bank until 1990 when she retired at the age of 76. Post-Hearing Br. at 5.

 HHS issued a complaint against Ms. Orfanos, alleging that she had fraudulently endorsed her deceased mother's SSA checks and converted them to her own use from 1971 to 1989. Because the PFCRA was not enacted until 1986, with an effective date of October 21, 1986, however, HHS only sought to pursue its administrative claim against Ms. Orfanos for the 34 checks disbursed between November 1, 1986 and August 1989. Ms. Orfanos admitted that she had endorsed and converted her mother's checks, but she testified at the administrative hearing that she believed her mother wanted her to have the money for her support. Opposition to Respondent's Motion for Summary Judgment ("Opp'n") at 5. Ms. Orfanos' son, George, testified at the administrative hearing that his mother was not wealthy and that he contributed to her support. Opp'n at 5.

 Ms. Orfanos does not contest the adjudication of liability or the assessment of $ 26,800 in double damages, but she does contend that the civil penalty of $ 170,000 is unreasonable, unfair and inequitable in light of her circumstances. Opp'n at 6. First, she asserts that the ALJ improperly considered the conversion of checks from 1971 to 1986 in determining the degree of her culpability and the amount of the penalty, thereby effectively applying the PFCRA retroactively. Petitioner's Memorandum in Support of Petition for Review ("Petitioner's Mem.") at 9-10. Next, she contends that the ALJ did not properly weigh her cooperation and confusion in determining the amount of penalty. Finally, she contends that the HHS placed too great a value on her real estate holdings in calculating her ability to pay the penalties. Opp'n at 11.

 II. DISCUSSION

 A determination of liability made by an ALJ under the PFCRA is reviewable upon petition by a United States district court. 31 U.S.C. § 3805(a), (b). On review of an HHS decision, the decisions, findings and determinations of the administrative authority with respect to questions of fact shall be final and conclusive, and shall not be set aside unless they are found by the court to be unsupported by substantial evidence. 31 U.S.C. § 3805(c). Substantial evidence is "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401, 28 L. Ed. 2d 842, 91 S. Ct. 1420 (1971) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 83 L. Ed. 126, 59 S. Ct. 206 (1938)). In concluding whether the decisions, findings and determinations of ...


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