In the Matter of the Complaint Against: 

 JAMES M. COX,
 687 Elliott Avenue,
 Ashland, KY  41101-5507

 P.S. Docket No. PF-18

 02/04/92

 Grant, Quentin E., Chief Administrative Law Judge


 APPEARANCE FOR RESPONDENT: Rodney S. Justice, Esq., Wilson, Stavros and
 Justice, P. O. Box 807, Ashland, KY  41105-0807 

 APPEARANCE FOR COMPLAINANT: Janet E. Noble, Esq., Labor Law Division,
 Law Department, United States Postal Service, Washington, DC  20260-1133

On May 21, 1991, the General Counsel of the Postal Service issued a complaint against Respondent James M. Cox alleging a violation of the Program Fraud Civil Remedies Act (PFCRA), 31 U.S.C. § 3801-3812, in that Mr. Cox submitted a false statement in support of a claim for payment under the Federal Employees' Compensation Act (FECA). Mr. Cox filed a timely petition requesting a hearing under the PFCRA. The hearing was held on October 16, 1991, in Ashland, KY. At the conclusion of the hearing both parties were given the opportunity to file proposed findings of fact, conclusions of law and written argument. Only the Complainant has done so. Respondent's legal arguments, however, were placed in the record by his counsel in an opening statement. Complainant's proposed findings and conclusions together with the arguments of both parties have been fully considered. To the extent indicated they have been adopted; otherwise, they have been rejected as irrelevant, immaterial, or contrary to the evidence. The findings of fact and conclusions of law set forth below are based on the entire record including briefs, stipulations, testimony, exhibits, and other relevant evidence adduced at the hearing and observation of the witnesses and their demeanor.

1. Respondent James M. Cox began working as a distribution clerk in the Ashland, Kentucky, Post Office in 1984. His duties included unloading trucks, moving equipment and working mail in manual cases (Tr. 11, 12).

2. During the next six years, the respondent submitted six claims for workers' compensation benefits for alleged work-related injuries (Tr. 58). Since June of 1986, he has either been in an off-duty status, collecting continuation of pay (COP) n1 or workers' compensation benefits, or in a limited duty assignment n2 (Tr. 12, 14, 58-65, 104). He has never returned to regular duty (Tr. 104).

n1 COP is paid directly by the Postal Service to an employee who claims a traumatic on-the-job injury. It covers the first 45 days of disability. After the expiration of the 45 days, payment comes directly from the Department of Labor (Tr. 65-66). There is usually a delay in payment between the expiration of the 45-day period and the beginning of DOL's compensation payments, and additional paperwork must be submitted to trigger payment by DOL (Tr. 66; Ex. 10, p. 6).

n2 Limited duty is work provided to employees injured on the job and includes only duties which can be performed within the employee's medical restrictions (Tr. 12-13). The Office of Workers' Compensation Programs (OWCP) of DOL requires that the Postal Service provide limited duty for employees deemed by OWCP to have been injured at work (Tr. 13).

3. In 1989, the Injury Compensation Office in the Lexington, KY MSC undertook a review of the cases of twelve employees who were considered at the time to be in permanent limited duty positions (Tr. 57). The respondent was one of the twelve. As part of this review, Dr. Matt Vuskovich, a specialist in occupational medicine from Lexington, examined the respondent on April 18, 1990 (Tr. 57. 153, 157-160; Ex. 9). At that time, Dr. Vuskovich diagnosed the respondent as exhibiting magnified illness behavior and stated that he was malingering and was capable of returning to his regular duties at the Post Office (Ex. 9).

4. On July 12, 1990, the respondent claimed to have suffered an injury when his knee gave way as he was walking across the mail room floor, causing him to fall and hit his head on a table (Tr. 15). He signed a Form CA-1 requesting COP (Tr. 16; Ex. 1). He was seen at the emergency room at a local hospital, where the doctor on call completed a PS Form 3956 n3 authorizing three days off as a result of the alleged injury (Ex. 2). The respondent was advised to follow up with his family doctor if he was unable to return to his limited duty job within three days (Tr. 106; Ex. 11).

n3 Form 3956 is an Authorization for Medical Attention (Ex.2). Employees must submit to the Postal Service a Form 3956 or a Form CA-17 after seeing a doctor in order to receive COP (Tr. 17-18).

5. The respondent did not return to work after the three-day period. Rather, he made an appointment with Dr. Colin Craythorne, an orthopedic surgeon who had treated him for work-related injuries since 1986 (Tr. 19, 108, 119, 126-127). Dr. Craythorne made no objective findings with regard to the respondent's alleged injury (Id.). He authorized the respondent to remain off work for two weeks, or until August 2, 1990 (Tr. 130; Ex. 13). Dr. Craythorne made this authorization on a PS Form 3956 (Tr. 131-132; Ex. 3) and a Form CA-17 (Tr. 129-131; Ex. 12). Dr. Craythorne also wrote a letter to OWCP regarding his examination of the respondent on July 19, 1990 (Tr. 132; Ex. 13). On the basis of Dr. Craythorne's authorization, the respondent received two weeks of COP (Tr. 20).

6. The Postal Service Injury Compensation Office scheduled the respondent for a second evaluation by Dr. Vuskovich on August 2, 1990 (Tr. 75-76). Dr. Vuskovich examined the respondent in Lexington on that date. He again found the respondent physically fit for his regular duties at the Post Office (Tr. 166; Ex. 14). In making this finding, Dr. Vuskovich relied upon a series of examinations designed to diagnose illness magnification (Tr. 161-165). He found that the respondent exhibited an array of positive non-organic physical findings, n4 and did not find any evidence of disease (Tr. 165). He found that the respondent was physically able to return to work (Tr. 179).

n4 Non-organic physical findings are examination techniques used by physicians to determine whether chronic pain has a physical basis or is actually caused by psychological problems or malingering (Tr. 162).

7. During the examination, the respondent told Dr. Vuskovich that his treating physician, Dr. Craythorne, wanted him to remain off work for an additional three weeks (Tr. 169). Dr. Vuskovich believed his reply was that he should follow his doctor's instructions. Dr. Vuskovich did not tell the respondent or his wife that he recommended that the respondent remain off work for three more weeks, or that he should undergo additional physical therapy (Tr. 169-170, 178).

8. In fact, Dr. Craythorne had not spoken with the respondent since July 19, when he authorized two weeks off from July 19 to August 2 (Tr. 132-133). Dr. Craythorne had not recommended prior to August 2 that the respondent take an additional three weeks off.

9. Based upon his examination of the respondent, Dr. Vuskovich completed a Form 3956 stating that he was fit for duty (Ex. 4). However, Dr. Vuskovich did not have the authority to return the respondent to work. He could only make a recommendation to the Postal Service (Tr. 46, 167). Only the respondent's treating physician, Dr. Craythorne, could make the decision regarding when the respondent would return to work (Tr. 27, 77, 179).

10. In his report dated August 6, 1990, to Judy Dean, Injury Compensation Specialist at the Lexington MSC, Dr. Vuskovich recommended that the respondent, from a psychological standpoint, should not be returned to work because he might endanger himself or others "when he attempts to manipulate his environment with these episodes of his 'lower extremity giving out'" (Ex. 14). This was simply a recommendation by Dr. Vuskovich. The Postal Service could only follow the recommendations of the respondent's treating physician (Tr. 46, 167). Dr. Vuskovich included that recommendation in his report because of his concern about the respondent's psychological problems, knowing it was not within his authority to make such a decision (Tr. 179). This recommendation was not communicated to the respondent or his wife (Tr. 171, 178).

11. On August 9, 1990, the respondent returned to Dr. Craythorne's office. Dr. Craythorne did not examine him that day (Tr. 133). The respondent told Dr. Craythorne that he was improving, but that the Postal doctor, Dr. Vuskovich, recommended that he remain off work until August 27, 1990 (Tr. 133).

12. By returning to work August 27, respondent would have used the maximum 45 days of COP.

13. Dr. Craythorne testified that he authorized the additional COP because he did not disagree with what the respondent told him was Dr. Vuskovich's recommendation (Tr. 136). He also testified that had the respondent told him on August 9 that he was still suffering back pain and needed more time off he would have given it to him (Tr. 136-138). However, Dr. Craythorne testified that he did, in fact, base his decision to authorize the additional COP upon the respondent's statement that Dr. Vuskovich recommended that he remain off work until August 27 (Tr. 137-139). He also testified that respondent's only statement about his condition on August 9, was that he was improving but that Dr. Vuskovich recommended more time off (Tr. 138-139).

14. Based upon the respondent's statement as to what Dr. Vuskovich had recommended, which I find to be false, Dr. Craythorne completed a Form CA-17 and a Form 3956 indicating that the respondent could return to work on August 27 (Tr. 139-141; Ex. 5 & 6).

15. After leaving Dr. Craythorne's office, the respondent submitted to the Post Office a Form 3971, Request For or Notification of Absence, claiming COP for the period August 10-25, 1990 (Tr. 119; Ex. 7). Based upon the respondent's Form 3971 and the Form 3956 submitted by Dr. Craythorne, the Postal Service complied with his request and he received COP for that period, amounting to $1,405.44 n5 (Tr. 26, 119).

n5 This amount was stipulated by the parties during the hearing (Tr. 30).

16. The respondent knew or had reason to know on August 9, 1990, that the Form 3971 he submitted was false, fictitious or fraudulent because his absence had been authorized by Dr. Craythorne based upon the respondent's false statement to him on that date.

17. The respondent's requested COP for the period August 10-25 would not have been paid without the authorization for absence by Dr. Craythorne on the Form 3956 or a Form CA-17 (Tr. 23, 79).

18. When Bill Johnson, the superintendent of postal operations of the Ashland Post Office, received the Forms CA-17 and 3956 after returning from a vacation, he found a discrepancy on the forms n6 and called Dr. Craythorne's office to inquire why the respondent had still not returned to work (Tr. 22-25). Mr. Johnson was informed by Dr. Craythorne's office staff that Dr. Craythorne had authorized the respondent to remain off until August 27 because the Postal doctor (Dr. Vuskovich) had so recommended (Tr. 25). Mr. Johnson then spoke with Dr. Craythorne, who also stated that the respondent had told him that the Postal doctor recommended three more weeks off, and Dr. Craythorne, having no objection to that recommendation, authorized the time off (Tr. 34).

n6 In Box 17 on the Form CA-17, Dr. Craythorne had noted that the respondent was partially disabled from July 17 until August 27, 1990. Since a partially disabled employee is expected to work at least part-time, and respondent had not returned to work at all, Mr. Johnson wanted an explanation (Tr. 23-24).

19. After speaking with Dr. Craythorne, Mr. Johnson contacted the Injury Compensation Office in Lexington (Tr. 35). Judy Dean, the Injury Compensation specialist, contacted Dr. Vuskovich after speaking with Mr. Johnson (Tr. 79). Dr. Vuskovich told Ms. Dean that he had not told the respondent that he should be off for an additional three weeks (Tr. 80). After Ms. Dean spoke with Dr. Craythorne, who repeated that his reason for authorizing the additional COP was the respondent's statement about Dr. Vuskovich's recommendation, Ms. Dean contacted the Postal Inspection Service and requested an investigation (Tr. 81-82).

20. Inspector Frank O'Connor conducted an investigation into the respondent's conduct after receiving Ms. Dean's request (Tr. 91). He submitted his findings in the form of an Investigative Memorandum dated January 14, 1991, to the Ashland Post Office and to the Postal Service Law Department (Tr. 92; Ex. 15).

21. Effective COB January 18, 1991, Mr. Cox's employment by the Postal Service was terminated on account of the same false statements alleged in this PFCRA proceeding. Mr. Cox appealed the termination to the Merit Systems Protection Board (MSPB). The MSPB proceeding was settled, prior to decision, by agreement dated April 18, 1991, whereby the termination was converted to a 30-day suspension and 60 days leave without pay. Mr. Cox returned to duty on April 19, 1991. The suspension and leave without pay covered a total of 90 days, twice the period for which Mr. Cox received the COP involved in this proceeding. Mr. Cox has filed a claim for worker's compensation for the 30-day suspension period claiming he should have been provided limited duty work during that period. This claim remained undecided at the time of the PFCRA hearing (Tr. 54, 84).

22. On May 24, 1991, Mr. Cox was served with the complaint in this proceeding. At the time he executed the settlement agreement in the MSPB proceeding, he did not know this PFCRA proceeding was about to be initiated (Tr. 116). Neither did the Postal Service personnel involved in the MSPB proceeding and the settlement thereof, none of whom had any authority with respect to the initiation or settlement of postal PFCRA proceedings (Tr. 48-49). Cox testified that he would not have settled his MSPB appeal had he known this proceeding would be brought against him (Tr. 116).

On the question whether either of the two physicians, Vuskovich or Craythorne, told Mr. Cox he should remain off work until August 27, 1990, I find their testimony denying such advice more credible than that of the Coxes to the contrary. Neither doctor had any apparent motive to be other than truthful about the question. The Coxes did. Mr. Cox has been a chronic filer of workers' compensation claims and has exhibited a pattern of collecting COP, returning to his limited duty job, and soon thereafter filing another claim. He has twice been diagnosed by Dr. Vuskovich as a symptom magnifier and malingerer (Ex. 9 and 14). At the time he filed his July 12, 1990, claim he had very low sick and annual leave balances (Tr. 30-31). He had the motive to fabricate in order to receive COP because he had no other way of taking paid time off. He was familiar with COP, having filed so many previous claims and, thus, knew that he could take up to 45 days COP and pay it back later should it be determined that he was not entitled to it (Tr. 70-71). By returning to work on August 27, 1990, Mr. Cox took exactly 45 days of COP.

1. The respondent's August 9, 1990, claim for COP was false and in violation of the PFCRA § 3802(a)(1) because the authorization for it was induced by the respondent's false statements to Dr. Craythorne about Dr. Vuskovich's recommendation. The respondent knew or should have known that he was submitting a false claim for COP because Dr. Vuskovich had not made the recommendation the respondent told Dr. Craythorne he had. The respondent received $1,405.44 as the result of the false claim.

2. The respondent asserts the defense of res judicata arguing that the complainant is barred from recovery under the PFCRA because of the settlement agreement entered into between the respondent and the local Postal facility in respondent's appeal to the MSPB following his removal from his job on account of the same claim for compensation benefits as involved in this proceeding. This argument is rejected. The doctrine of res judicata does not apply here because only a final decision on the merits bars further action based on the same cause of action. Montana v. United States, 440 U.S. 147, 153 (1979). In the MSPB case, no final decision on the merits was ever reached.

3. Respondent also contends that the Postal Service should be estopped from claiming, or be held to have implicitly waived, the penalty and assessment sought herein because of its failure to advise him at the time of the MSPB settlement that it intended to initiate this proceeding. As found above (FOF 22) the Postal personnel involved in the MSPB settlement had no knowledge of a possible PFCRA proceeding. Therefore, they were in no position to advise him of that possibility. Moreover, the settlement agreement provided that it was entered into without prejudice to the position of the Postal Service in any other case. I, therefore, find no estoppel or waiver.

4. Complainant seeks a civil penalty of $5,000.00, and an assessment of $2,810.88 (twice the amount of the COP paid on the false claim) the maximum amounts imposable in this case under $S3802(a)(1)(D) of the Act. The amount to be imposed must be determined by examining all of the circumstances surrounding the false claim, including all aggravating and mitigating factors. See, S. Rep. No. 99-212, 99th Cong., 1st Sess. 18 (1985). Many government agencies have adopted a set of model regulations proposed by the President's Council on Integrity and Efficiency containing a list of factors which, although not binding in this case, may be considered as guidance. E.g., 45 CFR § 79.31 (1988); 52 Fed. Reg. 27423, 27432. Factors applicable in this case are discussed below.

(a) Only one false claim by Mr. Cox has been alleged and proved in this proceeding. There is, however, a need to deter him and others from engaging in similar conduct.

(b) Respondent's conduct was clearly reprehensible. He knew exactly what he was doing when he told Dr. Craythorne, falsely, that Dr. Vuskovich has recommended that he remain off work until August 27, 1990. The nearest Dr. Vuskovich came to making such a recommendation was his advice that Cox should follow Dr. Craythorne's instructions which Cox falsely told Dr. Vuskovich were that he should remain off work for three more weeks. Mr. Cox must have known that the three additional weeks which he deviously persuaded Dr. Craythorne to order would keep him off work up to the 45-day maximum for payment of COP.

(c) Mr. Cox received only $1,405.44 in COP as a result of his false claim. However, it is reasonable to assume that the value of the loss to the Postal Service resulting from the false claim, including foreseeable consequential damages and the costs of investigation exceeds that amount.

(d) The 30-day suspension and 60-day LWOP imposed on Respondent in the settlement of the MSPB proceeding resulted in his losing in wages approximately twice the amount of the COP he wrongfully received. Although the settlement, as held above, does not estop the Postal Service from seeking PFCRA relief or constitute res judicata, it may be considered as a mitigating factor in determining the amounts of penalty and assessment to be imposed here.

Considering all of the circumstances and the factors discussed above, it is concluded that Respondent is liable for a civil penalty in the amount of $2,500.00 and an assessment in the amount of $2,500.00, for a total liability of $5,000.00