March 21, 1996
In the Matter of the Complaint Against
VINCENT N. AVALLONE
2303 S. Lambert Street
Philadelphia, PA 19145-3513
P.S. Docket No. PF-59
APPEARANCE FOR COMPLAINANT:
Geoffrey A. Drucker. Esq.
United States Postal Service
Enforcement Division
475 L'Enfant Plaza, SW
Washington, DC 20260-1148
APPEARANCE FOR RESPONDENT:
Frank J. Marcone, Esq.
19 W. Third Street
Media, PA 19063-2803
POSTAL SERVICE DECISION
Respondent, Vincent N. Avallone, has filed an appeal from an Initial Decision in which an Administrative Law Judge concluded that Respondent had submitted two false claims for disability compensation to the Department of Labor (DOL) and was, therefore, liable for an assessment and civil penalty of $7,718.02 under the Program Fraud Civil Remedies Act (PFCRA) 31 U.S.C. §3801 et seq. Complainant, the United States Postal Service, opposes the appeal and argues that the Initial Decision should be affirmed.
BACKGROUND
Complainant initiated this proceeding by serving a Complaint on Respondent which alleged that Respondent had submitted to DOL, two Forms CA-8, Claim[s] for Continuing Compensation on Account of Disability, in which he failed to disclose that he was self-employed during a portion of the time he claimed and received disability compensation. As a result, Complainant sought an assessment of $2,718.02 (twice the amount claimed during the period covered by the forms), and a civil penalty of $10,000, ($5,000 per false claim), for a total assessment and penalty of $12,718.02.[1]
Respondent filed an Answer and Petition for Hearing in which he denied that he had submitted any false claims or that he was liable for an assessment or penalty under the PFCRA. Following a hearing, at which both parties presented evidence, the Administrative Law Judge issued an Initial Decision in which she concluded that Respondent falsely indicated on the two DOL forms that he was not self-employed during the periods for which he was claiming disability compensation, when in fact he was self-employed as a karate instructor and operator of a karate studio.[2] Therefore, the Administrative Law Judge concluded that Respondent was liable under the PFCRA for an assessment of $2,718.02, and a penalty of $5,000.00,[3] for a total assessment and penalty of $7,718.02.[4] Respondent timely appealed the Administrative Law Judge's Initial Decision.
DISCUSSION
On appeal, Respondent contends that the Administrative Law Judge improperly evaluated the evidence[5] and applied an incorrect evidentiary standard in arriving at the conclusion that Respondent had submitted two false claims to DOL. Respondent also contends that the DOL forms on which he submitted the alleged false claims were ambiguous and did not adequately place him on notice of the activities required to be reported. Therefore, Respondent argues he did not make any false claims and thus, is not liable for any assessment or penalty under the PFCRA.
Respondent has not shown that the Initial Decision is erroneous as a matter of fact or law or that any other grounds exist to grant his appeal. Contrary to Respondent's assertion, the Administrative Law Judge properly applied the evidentiary standard required by the PFCRA,[6] evaluated all of the evidence presented and did not ignore evidence favorable to Respondent.[7] Moreover, Respondent has not shown that the DOL forms are ambiguous or that they could reasonably be read to support his contention that he was not required to report his karate activities.
The testimony of the two Postal Inspectors and the exhibits introduced into evidence, coupled with Respondent's failure to testify on his own behalf,[8] establish that Respondent was self-employed during the period he sought and received disability compensation and that he failed to report his self-employment on the two DOL forms.[9] Although Respondent argues that his karate activities were a hobby[10] and that because of his disability he could not have conducted any karate classes,[11] the Administrative Law Judge, after weighing all of the evidence,[12] concluded that Respondent had not persuasively rebutted the evidence that established that Respondent was self-employed as the operator of a karate studio during the period covered by the two DOL forms.[13] Based on a review of the entire record the same conclusion is reached on appeal. Accordingly, Respondent's contention to the contrary is without merit.
Respondent's assertion that the language of the DOL forms is ambiguous and therefore, must be construed against the Postal Service, also lacks merit. The two DOL forms, under the heading "Commission and Self-Employment," require the applicant to "[s]how all activities, whether or not income resulted from your efforts.[14] This language is clear on its face and could not reasonably be construed to relieve Respondent of the requirement to report his karate studio as a self-employment activity. Moreover, in the absence of evidence that Respondent interpreted the form differently or that such interpretation was reasonable[15] and relied on by Respondent when he completed the forms,[16] it cannot be concluded that the forms are ambiguous or that they should be interpreted against the Postal Service.[17]
Conclusion
After consideration of the entire record and Respondent's contentions on appeal, it is concluded that the Initial Decision is not erroneous as a matter of fact or law and that Respondent is liable to the Postal Service under the PFCRA, 31 U.S.C. §3801 et seq., for an assessment of $2,718.02 and civil penalty of $5,000 for a total assessment and penalty of $7,718.02. Accordingly, Respondent's appeal is denied.
James A. Cohen
Judicial Officer
[1] The Postal Service reimburses DOL for administrative costs and the amount of benefits paid to postal employees. I.D. FOF 5 and 8.
[3] After examining all aggravating and mitigating circumstances surrounding the false claims, the Administrative Law Judge concluded that the total penalty assessed should be reduced from the maximum of $10,000.00 claimed by Complainant to $5,000.00. I.D. COL 3-8.
[5] After the presentation of Complainant's evidence at the hearing, Respondent's counsel moved to dismiss the Complaint. After argument the Administrative Law Judge concluded that Complainant had presented a prima facie case in support of the allegations contained in the Complaint and therefore, denied Respondent's motion (Tr. 162-66). Although on appeal Respondent contends that the denial of his motion was erroneous, in view of the conclusions reached in this decision it is clear the Administrative Law Judge's denial of the motion was proper.
[6] Respondent cites United States v. Hanlon, 548 F .2d 1096 (2d Cir. 1977) to support his contention that clear and convincing evidence is required to show that he had a "conscious and wrongful state of mind." Hanlon, however, is inapplicable to this proceeding since under 31 U.S.C. §§3802(a) and 3803(f), and 39 C.F.R §962.5(b) the Postal Service is only required to show by a preponderance of the evidence that Respondent knew or had reason to know he was making a false claim.
[8] Baxter v. Palmigiano, 425 U.S. 308, 318 (1976); National Acceptance Co. of America v. Bathalter, 705 F .2d 924, 929 (7th Cir. 1983); Hudak v. Woods, 743 F. Supp. 374, 377 (W.D. Pa 1990), aff'd, 931 F.2d 50 (3rd Cir. 1991).
[15] C. Sanchez & Sons, Inc. v. United States, 6 F.3d 1539 (Fed. Cir. 1993) (determination of ambiguity can be made only after each party offered evidence supporting its interpretation); Bloomington Hospital v. United States, 29 Fed. Cl. 286 (1993); WPC Enterprises v. United States, 323 F .2d 874 (Ct. Cl. 1963) (Each party must show an interpretation which falls within a "zone of reasonableness").
[16] Craft Machine Works, Inc. v. United States, 20 Cl. Ct. 355 (1990) rev'd on other grounds, 926 F.2d 1110 (Fed. Cir, 1991) (reliance required and must be proved by clear and affirmative evidence); Randolph Engineering Co. v. United States, 367 F .2d 425 (Ct. Cl. 1966) (reasonable reliance required by party arguing contra proferentem).
[17] Respondent relies on United States v. Dixon, 536 F.2d 1388 (2d Cir. 1976) to support his contention that the DOL forms should be construed against the Postal Service and that a mistake in filling out the forms should not give rise to PFCRA liability. However, the rule requiring interpretation of a document against the drafter is only applied where an ambiguity exists. Tulelake Irrigation District v. United States, 342 F.2d 447 (Ct. Cl. 1965); Deloro Smelting & Refining CO. v. United States, 317 F.2d 382 (Ct. Cl. 1963); Peter Kiewit Sons' Co. v. United States, 109 Ct. Cl. 390, 418 (1947). Since it has been concluded that the forms are not ambiguous and there is no evidence that Respondent made a mistake in filling out the forms, Dixon does not support Respondent's contention on appeal.