The SSA initiated the Centenarian program in 1989. The program dispatched field representatives to conduct in-person visits to verify the status of very elderly recipients of SSA checks. Decision P 20. A field representative attempted to visit Ms. Economou on August 23, 1989, after a notification letter had been sent to the Orfanos address. Finding no one home, the representative left her business card and requested that someone call her regarding Ms. Economou. Decision P 22. Later that day, Ms. Orfanos telephoned the Wheaton, Maryland office and informed another field representative that her mother was away. Decision P 23. Ms. Orfanos continued to represent to the SSA that her mother was away or out of the country until September 8, 1989, when the SSA received a letter from Ms. Orfanos stating that Ms. Economou had died in 1970. Decision P 26.
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.
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 an authority are unsupported by substantial evidence, the court shall review the whole record or those parts of it cited by a party and must take due account of the rule of prejudicial error. 31 U.S.C. § 3805(c).
While procedurally this case is before the Court on a motion for summary judgment, the requisites for a motion for summary judgment set forth in Rule 56, Fed. R. Civ. P., and the relevant case law are not really apposite. When a federal district court is asked to review an administrative adjudication, it does not sit as a trier of fact, as it does in the typical civil case. It therefore is not called upon to isolate genuine issues of material fact that are to be tried before the court or a jury; the agency decision is reviewed, not tried, and it must be affirmed if supported by substantial evidence. See Olenhouse v. Commodity Credit Corp., 42 F.3d 1560, 1580 (10th Cir. 1994); State of Kansas v. Shalala, 884 F. Supp. 413, 415 (D. Kan. 1995); Lodge Tower Condominium v. Lodge Properties, Inc., 880 F. Supp. 1370, 1374-75 (D. Colo. 1995). Except in unusual circumstances, the Court may not consider extra-record materials such as affidavits and depositions as it does in connection with summary judgment motions under Rule 56(e), Fed. R. Civ. P.; rather, it is bound by the administrative record. See, e.g., 31 U.S.C. § 3805(d). Finally, in reviewing an agency determination such as the one at issue here, the Court does not defer to the evidence of the non-movant or draw justifiable inferences in its favor. See Anderson v. Liberty Lobby, 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). It must accept the decisions, findings and determinations of the administrative authority as final and conclusive unless they are unsupported by substantial evidence, or are arbitrary and capricious or otherwise contrary to law. See, e.g., 31 U.S.C. § 3805(c).
Petitioner contends that the Administrative Law Judge improperly considered the 16 years of uncharged misconduct and thus indirectly applied the PFCRA retroactively when he imposed the maximum penalty. She relies on Griffon v. United States Dept. of Health and Human Services, 802 F.2d 146, 155 (5th Cir. 1986). In Griffon, the petitioner was found to be civilly liable under the Civil Monetary Penalties Law ("CMPL"), a statute that was not enacted until three years after the petitioner's criminal conviction of 22 counts of fraud. The Fifth Circuit found that Congress had not explicitly and affirmatively expressed its intent that the CMPL apply retroactively, and it therefore held that the civil penalties directly assessed under the statute for the earlier fraud were invalid.
In this case, by contrast, HHS did not apply the PFCRA retroactively; rather, it applied the maximum statutory penalties for petitioner's misconduct from November 1, 1986 to 1989, a period during which the PFCRA was the law.
In determining the appropriate penalty under the PFCRA, however, the ALJ was permitted to weigh such factors as the number of false, fictitious or fraudulent claims or statements, the time period over which such claims or statements were made, the degree of the defendant's culpability, the amount of money falsely claimed, the relationship of the amount imposed as civil penalties to the amount of the government's overall loss, whether the defendant attempted to conceal the misconduct, and the need to deter others from engaging in similar misconduct. 45 C.F.R. § 79.31(b). He was also permitted to consider aggravating and mitigating circumstances other than the statutorily defined factors. 45 CFR § 79.31(c). To the extent the ALJ considered petitioner's conduct between 1970 and October 31, 1986, such consideration is not barred by statute or regulation and is a legitimate and relevant aspect of determining culpability.
B. Mitigating and Aggravating Factors
The ALJ found, and the Court agrees, that there are substantial aggravating circumstances that justify the penalty imposed. Forging another's endorsement on 34 checks over three years is itself a sufficiently substantial transgression to warrant the imposition of the maximum penalty of $ 5,000 per false claim. Furthermore, petitioner failed to notify the SSA of her mother's death both in 1970 and upon initial inquiry by the field representative handling the Centenarian contact in 1989, or at any time in between. In fact, Ms. Orfanos admitted that her mother was dead and that she had cashed the checks for her personal use only after first insisting on a number of occasions that her mother was away or out of the country. The administrative record also demonstrates that the ALJ carefully and properly considered other numerous aggravating factors, including the substantial length of time over which the fraud occurred, the fact that petitioner was the sole perpetrator of the check conversions and was under no coercion or compulsion, the cost and overall loss to the government of petitioner's fraud, and the importance of deterring similar schemes by others in the future, all of which are relevant factors under the regulations. See 45 C.F.R. § 79.31(c).
Despite the fact that petitioner may now claim to be confused and unsure about the suspect events, the administrative record shows that she was sufficiently competent to maintain steady employment at a bank and consistently earn favorable performance reviews until she was 76 years-old, a year after the violations had ceased. As a long-time bank employee with some training in banking, finance and accounting, she was relatively sophisticated about finances, checks and banking procedures, enabling her more easily to perpetuate the fraud over many years. While petitioner's admissions of liability, cooperation with the investigation and her own asserted naivete regarding the SSA checks are mitigating factors, they were evaluated by the ALJ. The agency decision shows, however, that the ALJ, in his discretion, concluded that the aggravating circumstances outweighed the mitigating factors. Petitioner presents no convincing evidence to show either that the ALJ ignored the mitigating circumstances or that the ALJ's determination of the degree of petitioner's culpability was unsupported by substantial evidence.
C. Alleged Inaccurate Evaluation of Petitioner's Financial Worth
Petitioner contends that HHS overestimated her net worth and the value of her assets in considering the amount of the penalty she can afford to pay. Despite petitioner's pleas, she presents no evidence aside from conclusory statements, such as her own property value estimate, to contradict or undermine the accuracy of the government's appraisal. In addition, the financial statement that petitioner herself submitted to HHS shows that her acknowledged assets of approximately $ 390,000 far exceed her liabilities of $ 41,000. While petitioner alleges that her monthly income is meager and must be supplemented by her son, the Court's sympathy cannot replace the lack of evidence to show that the maximum penalty is disproportionate when compared to the petitioner's total, rather than liquid, assets. The decisions of HHS on this score are supported by substantial evidence and are not arbitrary and capricious.
In any event, the statute and regulations do not mandate that petitioner's financial status be taken into account. While the ALJ could consider economic hardship as a mitigating factor, there is no requirement that the ALJ must limit the amount of the penalty imposed, so long as it is justified by substantial evidence and conforms to the statutory guidelines. Petitioner has failed to demonstrate that her financial situation is so grave as to mitigate significantly the aggravating circumstances found by the ALJ and to warrant the reduction of the penalty. The record demonstrates that the penalty imposed by the ALJ is permitted by the statute and regulations and is neither unwarranted in law nor unjustified in fact. NL Industries, Inc. v. Dep't of Transportation, 284 U.S. App. D.C. 35, 901 F.2d 141, 144 (D.C. Cir. 1990).
Petitioner presents no evidence to demonstrate that the Administrative Law Judge's assessment of penalties is unsupported by substantial evidence. The ALJ had substantial evidence to find, in his discretion, that the aggravating circumstances significantly outweighed the mitigating circumstances. The respondent's motion for summary judgment is granted. The Court concludes that the United States Department of Health and Human Services is entitled to judgment as a matter of law in the total amount of $ 196,800. An Order consistent with this ruling is entered this same day.
PAUL L. FRIEDMAN
United States District Judge
This case comes before the Court on Respondent's Motion for Summary Judgment. Upon consideration of the Petition, Respondent's Motion for Summary Judgment, Petitioner's Opposition thereto, and the entire record in this case; and for the reasons stated in the accompanying Opinion, it is hereby
ORDERED that Respondent's Motion for Summary Judgment is GRANTED; it is
FURTHER ORDERED that the Petition for Review of Affirmance of Action by the Departmental Appeals Board of the United States Department of Health and Human Services is DENIED and the Decision of the Appeals Board is AFFIRMED; and it is
FURTHER ORDERED that judgment be and is hereby entered in favor of respondent in the amount of $ 196,800.
PAUL L. FRIEDMAN
United States District Judge