In the Matter of the Complaint   	) July 31, 1997          
Against                         	)
                                 	)
FRANK E. RODGERS, JR.            	)
9214 S. Dairy Ashford Street     	)
#2803                            	)
                                 	)
        at                       	)
                                 	)
Houston, TX 77099-4940           	) P.S. Docket No. PF 95-148 

APPEARANCE FOR COMPLAINANT:		Harold E. Durham, Esq.
					Enforcement Division
					United States Postal Service
					Washington, DC 20260-1148

APPEARANCE FOR RESPONDENT:		Frank E. Rodgers, Jr.
					9214 S. Dairy Ashford St., #2803
					Houston, TX 77099-4940

Respondent, Frank E. Rodgers, Jr., has filed an appeal from an Initial Decision in which an Administrative Law Judge concluded that Respondent is liable to the United States Postal Service for a civil penalty of $2,500 under the Program Fraud Civil Remedies Act, 31 U.S.C. §§3801 et seq. (PFCRA or the Act). The Postal Service opposes the appeal and argues that the Administrative Law Judge's determination of liability should be affirmed, but the amount of the civil penalty increased to $12,500, the amount sought in the Complaint.

Complainant, the General Counsel of the United States Postal Service, initiated this proceeding by filing a Complaint alleging that Respondent was liable to the Postal Service under the PFCRA for a civil penalty of $12,500⁽¹⁾ for his failure to disclose self-employment information on five Forms EN-1032⁽²⁾ submitted to the Department of Labor's Office of Workers' Compensation Programs (OWCP)⁽³⁾ between 1989 and 1994. Respondent filed a reply to the Complaint in which he denied he had submitted any false claims to OWCP or that he was liable for any penalty under the PFCRA.

Following a hearing at which both parties were given a full opportunity to present evidence, the Administrative Law Judge issued an Initial Decision in which he concluded that Respondent had submitted five false claims to OWCP for workers' compensation benefits. As a result, the Administrative Law Judge concluded that Respondent was liable for a civil penalty of $2,500 ($500 per false claim). Respondent filed a timely appeal from the Administrative Law Judge's Initial Decision.

On appeal, Respondent contends that the Administrative Law Judge did not give proper weight to his arguments or evidence and did not base his decision on the entire record. Respondent also argues that the Administrative Law Judge did not properly consider the importance of recent changes to the Form EN-1032, which he contends support his assertion that he correctly responded to all of the form's questions. Finally, Respondent contends he was not self-employed during the period covered by the forms and therefore is not liable for any civil penalty under the PFCRA. The Postal Service takes issue with each of Respondent's contentions and in addition requests an increase in the amount of the civil penalty to $12,500.

Contrary to Respondent's contention, the Initial Decision reflects that the Administrative Law Judge properly considered Respondent's arguments and properly weighed the evidence presented. In addition, a preponderance of the evidence supports the Administrative Law Judge's conclusion that Respondent was self-employed during the period he failed to report his self-employment status on the five OWCP forms.

The record establishes that in September, 1987 Respondent began a business called Kustomized Komplaints and Consumer Investigations (KKCI), which was designed to assist consumers in resolving disputes with commercial establishments.⁽⁴⁾ In connection with this business, Respondent filed an assumed name certificate with the local county, opened a bank account, installed a second telephone line in his home, listed the business in the local yellow pages, had business cards printed and issued press releases for the business.⁽⁵⁾ Respondent spent an estimated 20-25 hours per week as a consumer representative, but only received a total of $2,065 for his efforts during the period from September 1987 to March 1994.⁽⁶⁾

Between 1989 and 1994, Respondent submitted five Forms EN-1032 to OWCP on which he reported he was not self-employed.⁽⁷⁾ The OWCP Forms EN-1032 filed by Respondent required a recipient of workers' compensation benefits to report any self-employment during the period covered by the form. Respondent contends that the requirement to report self-employment on the OWCP forms was qualified by the forms' use of the terms "earnings" and "revenue" and that dictionary definitions of these and related terms, as well as his Internal Revenue Service training and the Master Tax Guide, clearly support his position that he was not self-employed during the period covered by the five forms. In addition, Respondent argues that the small amount of money he received for his efforts could not be considered "business income,"⁽⁸⁾ a term read into the OWCP forms by Respondent which he contends is a prerequisite to finding that he was self-employed.

There were two versions of the Form EN-1032 filed by Respondent between 1989⁽⁹⁾ and 1994.⁽¹⁰⁾ Both clearly and in unmistakable language required Respondent to report that he was self-employed, regardless of the amount of money he received. The earlier form stated that "self-employment (such as .... services, operating a store, business, etc.) must be reported" and specifically asked the question, "Were you self-employed during any time covered by this form? Answer Yes or No."⁽¹¹⁾ The use of the term "revenue"⁽¹²⁾ on the form does not lead to a contrary conclusion, since the form required the reporting of an "enterprise...from which you received revenue, even if operated at a loss."⁽¹³⁾ The later version of the form was equally clear, as it used almost identical language except that the first sentence required the reporting of "earnings from self-employment,"⁽¹⁴⁾ rather than just stating that "self-employment...must be reported." The use of the term "earnings" on the form did not in any way qualify Respondent's obligation to report his self-employment.⁽¹⁵⁾

The additional definitions on which Respondent relies also would require him to report that he was self-employed. During the period covered by the OWCP forms, Respondent was "working for oneself, with direct control over work, services, etc. undertaken and fees, charges, etc. set"⁽¹⁶⁾ and "earning income directly from one's own business, trade, or profession rather than as a specified salary or wages from an employer."⁽¹⁷⁾ Moreover, he was receiving "money or other gain...for labor or services..."⁽¹⁸⁾ even though he was not making a profit.

OWCP published definitions also should have placed Respondent on notice that he was required to report that he was self-employed, and not merely "attempting" to be self-employed as he contends.⁽¹⁹⁾ Under these regulations "earnings from self-employment" are defined as "a reasonable estimate of the rate of pay it would cost the employee to have someone else perform the work or duties the employee is performing."⁽²⁰⁾ This definition was incorporated in the language of both versions of the Form EN-1032⁽²¹⁾ and clearly should have alerted Respondent to the requirement that he was to report his business activities without regard to the amount of money, either net or gross, received by the business.⁽²²⁾

Although Respondent contends that tax principles reflected in the Master Tax Guide support his assertion that he was not self-employed, his background and experience in tax matters should have made him fully aware that his reliance on these principles and the Master Tax Guide definitions⁽²³⁾ was misplaced. Tax concepts are highly specialized and technical, and the Guide's purpose is to assist in understanding these concepts,⁽²⁴⁾ which are quite different from the layman's understanding of the same or similar terms.⁽²⁵⁾ Indeed, in his testimony, Respondent recognized that the commonly understood meanings⁽²⁶⁾ and the OWCP definitions of the terms used on the Form EN-1032 differed from the definitions of the same terms used in a tax context.⁽²⁷⁾ Nevertheless, Respondent continues to argue that tax principles should be applied to interpret the OWCP form.

In both his written and oral arguments, Respondent selectively relied on definitions he believed would support his decision not to report his self-employment and then repudiated parts of those definitions when necessary to defend his position.⁽²⁸⁾ In addition, he read additional terms into the forms⁽²⁹⁾ and drew fine distinctions or relationships to tax concepts which are not justified by common understanding or the language used on the OWCP forms,⁽³⁰⁾ because he did not want to lose whatever "meager benefits"⁽³¹⁾ he was receiving. Under such circumstances, it was not improper for the Administrative Law Judge to have given little weight to Respondent's arguments or evidence in reaching his conclusion that Respondent was self-employed and that he had submitted five false claims to OWCP on the Forms EN-1032.

Respondent next contends that the Administrative Law Judge did not give proper consideration to a 1995 revision to the Form EN-1032, which Respondent asserts expanded the scope of information sought and would have caused him to report his self-employment activities. Respondent suggests that the revision was an attempt to correct "any ambiguity" in the form's language that he pointed out in his filings to OWCP. The Postal Service objects to the consideration of the revised form in this proceeding because it was not introduced at the hearing and does not constitute newly discovered evidence. The Administrative Law Judge considered the revisions to the form, but concluded they were minor and not supportive of Respondent's arguments.⁽³²⁾

As Complainant contends, Respondent did not attempt to introduce the revised form into evidence nor has he shown that the form was newly discovered or that there were any reasonable grounds⁽³³⁾ for his failure to present this evidence at the hearing. Therefore, the revised form will not be considered in this proceeding.⁽³⁴⁾ Moreover, Respondent has not shown that the changes to the Form EN-1032 would have caused him to respond differently since the questions asked regarding self-employment are substantially the same as those found on the previous versions of the form, and he has asserted repeatedly that he was not self-employed.⁽³⁵⁾ Accordingly, Respondent's argument that the 1995 revisions to the Form EN-1032 support his argument that he answered the previous versions of the form as correctly as possible is rejected.

Finally, Respondent argues that no civil penalty should be imposed because he did not submit any false claims for workers' compensation benefits. The evidence does not support Respondent's argument. It has already been concluded that Respondent was self-employed during the period between 1987 and 1994 and that he did not report his self-employment on five Forms EN-1032. I am persuaded Respondent knew he was self-employed, but did not truthfully report his self-employment on the five OWCP forms because he did not want to take the chance of losing his benefits.⁽³⁶⁾ Under such circumstances, there is no basis for reducing the penalty assessed against Respondent.

In calculating the appropriate amount of the penalty, the Administrative Law Judge properly considered all of the surrounding circumstances including all aggravating and mitigating factors.⁽³⁷⁾ While my consideration of the aggravating and mitigating factors might have led me to assess the higher penalty of $12,500 sought by Complainant, I can find no reversible error on the part of the Administrative Law Judge. Since under the terms of the Act⁽³⁸⁾ and the implementing regulations,⁽³⁹⁾ the agency authority head may only "affirm, reduce, reverse, or remand a penalty or assessment determined by the Presiding Officer," I am unable to increase the penalty on appeal. Accordingly, the amount of the civil penalty determined by the Administrative Law Judge will not be increased as requested by Complainant.

After consideration of the parties' contentions on appeal and the evidence in the record, the Initial Decision is affirmed, and Respondent is liable for a civil penalty in the amount of $2,500.

						James A. Cohen
						Judicial Officer

2. The Form EN-1032 is used by the Department of Labor to determine whether an employee is receiving the correct amount of benefits in connection with a disability claim or whether the benefits should be adjusted. 20 C.F.R. §§10.303 and 10.124; ID FOF 6.

3. The Postal Service annually reimburses the Federal Employees' Compensation Fund for payments made to postal employees by OWCP. 5 U.S.C. §§8147(b) & (c); ID FOF 8.

4. ID FOF 14.

5. ID FOF 14 & 15.

6. ID FOF 16.

7. ID FOF 17-20.

8. Tr. 28-30.

9. The earlier version of the form read in pertinent part:

Self-Employment. Self-employment (such as farming, sales, service, operating a store, business, etc.) must be reported. Report any such enterprise in which you worked, and from which you received revenue, even if operated at a loss or if profits were reinvested. You must show as "rate of pay" what it would have cost you to have hired someone to perform the work you performed.

a) Were you self-employed during any time covered by this

form? Answer Yes or No:

10. The later version of the form was modified slightly to provide in pertinent part:

Self-employment. Earnings from self-employment (such as farming, sales, service, operating a store, business, etc.) must be reported. Report any such enterprise in which you worked, and from which you received revenue, even if it operated at a loss or if profits were re-invested. You must show as "rate of pay" what it would have cost you to have hired someone to perform the work you did.

a) Were you self-employed during any time covered by this

form? Answer Yes or No:

11. Supra text accompanying note 9.

12. Respondent (Res.) Item 7, dictionary definition relied on by Respondent which defines "revenue" as "the return from property or investment; income."

13. Supra text accompanying notes 9 and 10 (emphasis added).

14. Supra text accompanying note 10.

15. Res. Item 6, dictionary definition of "earnings." Although Respondent relied on the secondary meaning of the word earnings, "money made by an investment or an enterprise; profits," neither that definition nor the primary meaning, "money, etc. earned by labor or service; wages or other recompense," supports his contention.

16. Res. Item 1, dictionary definition of "self-employed" relied on by Respondent.

17. Res. Item 2, dictionary definition of "self-employed" relied on by Respondent.

18. Res. Item 3, dictionary definition of "income" initially relied on by Respondent, but accepted by him only in part during cross-examination because it did not support his position. Tr. 70-71.

19. Tr. 32, 49-50.

20. 20 C.F.R. §10.125(c). Additionally, "earnings" from employment are defined as "gross earnings or wages before any deductions" and not net earnings, as Respondent argues business principles would dictate.

21. Supra text accompanying notes 9 and 10.

22. Respondent also argues on appeal that the form's verification statement should not be read in conjunction with the questions regarding self-employment. However, the form must be read as a whole and the warnings concerning the consequences for failing to provide accurate information are clear.

23. Res. Items 5, 8, 10, 11; Tr. 23-24.

24. Res. Item 5, §701.

25. See Res. Item 5, §702 ("[Supreme] Court decisions have developed a concept of the term 'income' which is quite different from the layman's concept.").

26. United States v. Dale, 991 F.2d 819, 833 (D.C. Cir. 1993)(finding that government forms are to be interpreted in a reasonable manner with the terms given their common meanings).

27. Tr. 22-23, 32-33, 50-54, 58-59.

28. Tr. 70-73.

29. Tr. 47-48, 59.

30. Tr. 23-32, 47.

31. Tr. 33.

32. ID COL 4, n. 5.

33. The Judicial Officer will not remand a matter to the Presiding Officer for consideration of additional evidence unless a "party demonstrates to the satisfaction of the Judicial Officer that [the] additional evidence not presented at the hearing is material and that there were reasonable grounds for the failure to present such evidence" to the Presiding Officer. 39 C.F.R. §962.21(b)(4).

34. It could also be argued that the revised form would be excludable under Federal Rule of Evidence 407, which reads in pertinent part:

	When, after an event, measures are taken which, if taken previously,
	would have made the event less likely to occur, evidence of the
	subsequent measures is not admissible to prove negligence or
	culpable conduct in connection with the event. 

35. Tr. 31-33, 48-50.

36. Tr. 33.

37. ID COL 6-9.

38. 31 U.S.C. §3803 (I)(2)(C).

39. 39 C.F.R. §962.21(b)(2).