February 21, 1997

In the Matter of the Complaint Against

RICHARD M. TICE
103 Cheshire Road

          at

Prospect, CT 06712-1611

P. S. Docket No. PF 94-52

APPEARANCE FOR RESPONDENT:
Richard M. Tice
103 Cheshire Road
Prospect, CT 06712-1611

APPEARANCE FOR COMPLAINANT:
Geoffrey A. Drucker, Esq.
Enforcement Division
United States Postal Service
Washington, DC 20260-1148

Respondent, Richard M. Tice, has filed an appeal from an Initial Decision in which an Administrative Law Judge concluded that Respondent had submitted to the United States Postal Service (Complainant) a false claim for mail services and therefore is liable for an assessment and civil penalty totaling $4,412.62 under the Program Fraud Civil Remedies Act (PFCRA or the Act), 31 U.S.C. §3801 et seq. Complainant opposes the appeal and argues that the Initial Decision should be affirmed.

Complainant, by its General Counsel, initiated this proceeding by serving a Complaint on Respondent, alleging that between February 11 and September 1, 1993, Respondent knew or had reason to know he used postage in the amount of $956.31 which he did not pay for, and that the use of the unpaid postage was a false claim under the PFCRA. Complainant sought an assessment of twice the amount of unpaid postage used by Respondent, $1,912.62, and a single civil penalty of $5,000.00,¹ for a total assessment and penalty of $6,912.62.

Respondent filed a reply to the Complaint in which he denied he had made any mailings with unpaid postage or that he had submitted any false claims for which he could be found liable under the PFCRA. Following a hearing at which both parties presented evidence, the Administrative Law Judge issued an Initial Decision in which he concluded that Respondent knowingly deposited mail with unpaid postage from a mis-set postage meter² into the postal system and that the deposit of this mail constituted a false claim under the PFCRA. After considering all aggravating and mitigating circumstances, the Administrative Law Judge concluded that Respondent was liable for the maximum assessment of $1,912.62, and a civil penalty of $2,500.00 for a total assessment and penalty of $4,412.62. Respondent appealed the Administrative Law Judge’s Initial Decision.

On appeal, Respondent contends that he was entitled to a jury trial under either the Sixth or Seventh Amendment to the United States Constitution and that he did not receive an impartial hearing because the Postal Service investigated, prosecuted and decided this matter. Respondent further contends that Complainant did not prove its case by a preponderance of the evidence, and he specifically takes exception to Findings of Fact Nos. 28-31. Finally, Respondent contends that the assessment and civil penalty are excessive.

None of Respondent’s contentions have merit. The PFCRA does not provide for a jury trial³ and the Judicial Officer has no authority to determine that the Act is unconstitutional.⁴  Moreover, the Supreme Court has held that Congress may assign the adjudication of public rights to administrative agencies which are not authorized to conduct jury trials.⁵ Therefore, Respondent was not entitled to a jury trial in this PFCRA proceeding.

Respondent’s assertion that he did not receive an impartial adjudication of his rights because the investigating official, the presiding officer and the Judicial Officer are all Postal Service officials is equally lacking in merit. The proceeding was conducted in accordance with the procedures specified in the PFCRA,⁶ the Administrative Procedure Act,⁷ and the Postal Reorganization Act⁸ and implementing regulations;⁹ and the participating officials were those designated in those Acts or regulations to serve as the investigating official,¹⁰ reviewing official,¹¹ presiding officer¹² and authority head.¹³ Respondent has not shown that any of these officials acted improperly in the performance of their assigned duties, that he was not afforded his full due process rights or that the Initial Decision was not fairly and impartially decided. Accordingly, there is no merit to this contention.

Respondent’s contention¹⁴ that Complainant did not prove its case by a preponderance of the evidence as required by 39 C.F.R. §962.5¹⁵ is not supported by the record. While it is true that the case against Respondent is somewhat circumstantial, the evidence establishes that it is more probable than not¹⁶ that the meter was mis-set by the Postal Service,¹⁷ that the additional postage for which no payment was made was used by Respondent¹⁸ and Respondent knew or had reason to know he was using unpaid postage between February 11 and September 1, 1993.¹⁹ As Respondent argues, Postal Service witnesses did testify it was possible that the discrepancy in the meter reading was caused by a malfunction in the meter. However, the meter was tested on two occasions and both times it was found to be functioning properly.²⁰ Under these circumstances the Administrative Law Judge found that the only plausible explanation for the discrepancy in the meter reading was that the meter had been set incorrectly by a Postal Service employee on February 11, 1993.²¹ The possibility of a malfunction does not overcome the more probable conclusion reached by the Administrative Law Judge that the meter was mis-set.

Respondent’s disagreement with the Administrative Law Judge’s findings that his testimony was not credible,²² that a mis-set postage meter is the only plausible explanation for the meter readings,²³ that Respondent was aware he was using unpaid postage²⁴ and that the postage used between February 11 and September 1, 1993 was comparable to usage in prior years²⁵ does not establish that any of these findings are in error. All of the findings are supported by citations to credible evidence in the record, are consistent with reason and logic and are based on a preponderance of the evidence presented. Therefore, there is no basis for making any contrary findings.

Respondent’s final contention is that the dollar amount of the civil penalty and assessment is excessive. According to Respondent, the imposition of the penalty and assessment would be unduly burdensome as he is no longer in business and no longer has the resources to pay the amount of the PFCRA judgment. Respondent also argues the assessment and penalty should be reduced because he attempted to settle this matter to save everyone time and money, but he was told by a Postal Inspector that there would be no compromises.

In arriving at the total of the assessment and penalty, the Administrative Law Judge considered all of the circumstances surrounding the false claim, including all aggravating and mitigating factors.²⁶ However, ability to pay is not generally considered a mitigating factor in determining the appropriate amount of an assessment and penalty,²⁷ and the Administrative Law Judge properly did not address this issue since Respondent never raised it in either his pleadings or at the hearing. While a good faith offer of settlement may be considered in determining the total amount of an assessment and penalty, Respondent has not shown that such an offer was made in this case. Although Respondent made an initial offer to a Postal Inspector to "split the difference," he did not respond to Complainant’s counsel’s²⁸ invitation to discuss the possibility of settlement thereafter.²⁹ Further, the Administrative Law Judge has already reduced the amount of the penalty to an amount which is rationally related to the loss incurred by the Postal Service.³⁰

CONCLUSION

After consideration of the entire record and Respondent’s exceptions, it is concluded that Respondent is liable to the Postal Service under the PFCRA for an assessment of $1,912.62, plus a civil penalty of $2,500.00 for a total of $4,412.62. Accordingly, Respondent’s appeal is denied.

					James A. Cohen
					Judicial Officer

² Postage meters are rented from authorized manufacturers and then licensed by the post office where the metered mail is to be deposited. The meters are set by the licensing post office and the postage is paid for at the time the meter is set. (ID FOF 1-4). The Postal Service discovered that Respondent's meter had been mis-set when it was returned for resetting on September 1, 1993, and there was a discrepancy between the meter readings and the control numbers maintained at the post office (ID FOF 15-18). The Administrative Law Judge found that the meter had been incorrectly set by a postal employee on February 11, 1993, the last time the meter had been brought into the post office (ID FOF 29).

³ See 31 U.S.C. §3803.

⁴ Sierra F. Kirtley, P.S. Docket No. PF-12 at 4 (P.S.D. April 26, 1991). Cf. David Sellers, P.S. Docket No. 37/153 at 4 (P.S.D. Aug. 17, 1993) and cases cited therein; Health Care Products, Inc., P.S. Docket No. 28/90 at 9 (P.S.D. March 3, 1989); Athena Products, Ltd., P. S. Docket No. 11/107 at 20 (P.S.D. Aug. 1, 1982).

⁵ See Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989); Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982); Atlas Roofing Co. v. Occupational Safety & Health Review Comm'n, 430 U.S. 442 (1977); Willie J. Blocker, P.S. Docket No. PF-14 at 7 (P.S.D. July 19, 1993). See also Senate Report No. 99-212, 99th Cong., 1st Sess. 30-32 (1985) in which the Senate Committee on Governmental Affairs concluded that the Seventh Amendment did not preclude the administrative adjudication of PFCRA cases.

⁶ 31 U.S.C. §§3801 and 3803.

⁷ 5 U.S.C. §§554 and 556.

⁸ 39 U.S.C. §401.

⁹ 39 C.F.R. Part 962.

¹⁰ 31 U.S.C. §3801(a)(4); 39 C.F.R. §962.2(d).

¹¹ 31 U.S.C. §3801(a)(8); 39 C.F.R. §962.2(m).

¹² 31 U.S.C. §3801(a)(7); 39 C.F.R. §962.2(I).

¹³ 31 U.S.C. §3801(a)(2); 39 C.F.R. §§962.2(e) and 962.21.

¹⁴ According to Respondent, two of Complainant's witnesses admitted it was possible the postage meter malfunctioned, and the only thing Complainant proved was that "an extra $1,000 was showing on [his] meter."

¹⁵ Steadman v. SEC, 450 U.S. 91, 100-102 (1981) (finding that preponderance of the evidence is the correct standard for administrative hearings).

¹⁶ Greenwich Collieries v. Director, Office of Workers' Compensation Programs, United States Dep't of Labor, 990 F.2d 730, 733 (3d Cir. 1993) ("evidence which as a whole shows that the fact sought to be proved is more probable than not") (citing Black's Law Dictionary 1182 (6th Ed. 1990)); Duke Laboratories, Inc. v. United States, 222 F. Supp. 400, 406 (D. Conn. 1963) (evidence which "when considered and compared with that opposed to it, has more convincing force and produces in your minds the belief that what is sought to be proved is more likely than not true").

¹⁷ ID FOF 29.

¹⁸ ID FOF 30 and 32.

¹⁹ ID FOF 30.

²⁰ ID FOF 20 and 22.

²¹ ID FOF 29.

²² ID FOF 28. The Administrative Law Judge heard the testimony and observed the demeanor of the witnesses, and his credibility determinations are accorded great weight. Sharon Boddie, P.S. Docket No. PF-6 at 6, fn. 5 (P.S.D. Oct. 27, 1992); Willie J. Blocker, P.S. Docket No. PF-14 at 13 (P.S.D. July 19, 1993); James M. Cox, P.S. Docket No. PF-18 at 6 (P.S.D. Sept. 30, 1993) and cases cited therein.

²³ ID FOF 29.

²⁴ ID FOF 30.

²⁵ ID FOF 31.

²⁶ ID COL 5-14.

²⁷ See Sharon Boddie, P.S. Docket No. PF-6 at 9 (P.S.D. Oct. 27, 1992); 45 C.F.R. §79.31.

²⁸ See 39 C.F.R. §962.26. Although either party may propose a settlement or compromise, only the General Counsel has the authority to accept a compromise regarding PFCRA liability on behalf of Complainant.

²⁹ Tr. 86, 97-99.

³⁰ ID COL 11; see United States v. Halper, 490 U.S. 435, 449-50 (1989); Neldie Nelson, P.S. Docket No. PF-3 at 11-12 (P.S.D. Aug. 19, 1992).