SUBJECT:

Social Security Administration,

Petitioner,

Lorene Griffith.

I. Background

On September 23, 2001, SSA sent Respondent a letter advising her of the SSA-OIG's decision to impose a CMP against her in the amount of $5000. Respondent was advised that the penalty was being imposed because she had made statements while acting as the representative payee for her son, Rhett Griffith, that Respondent knew or should have known were false or misleading. According to the OIG, these false statements led to Respondent receiving Social Security payments to which she was not entitled. ⁽¹⁾ SSA Ex. 4.

On October 26, 2001, Respondent timely filed a request for hearing. After a telephone prehearing conference during which the parties agreed that an in-person hearing was unnecessary, I agreed to decide the case based on the briefs and submitted exhibits and established a briefing schedule.

On August 16, 2002, SSA filed it's Motion for Judgment Affirming the Inspector General's Decision to Impose Civil Monetary Penalty and it's Brief in Support of the Inspector General's Decision to Impose Civil Monetary Penalty (SSA Br.). SSA also submitted proposed exhibits 1 - 17. On September 30, 2002, Respondent untimely filed Respondent's Brief and Statement of Facts (R. Br.). Because SSA did not object to Respondent's late filing, I accepted the brief and considered it for this decision. Because Respondent did not object to SSA's proposed exhibits, I have admitted them into the record. They are identified as SSA Ex. 1 - 17. Respondent submitted no proposed exhibits with her brief.

Neither party requested an opportunity to submit a reply brief or additional proposed exhibits. On December 6, 2002, however, I issued an Order to Develop the Record. On January 10, 2003, Respondent filed additional records (R. Supplement). ⁽²⁾ On January 16, 2003, SSA filed Petitioner's Response to December 6, 2002 Order to Develop the Record. Petitioner included proposed exhibits D1 - D7. Absent objection, all proposed exhibits and supplements are admitted into the record.

My decision herein is based on a careful review of the exhibits, the parties' arguments, and the applicable law.

Title XVI of the Act provides for the payment of Supplemental Security Income (SSI) for certain individuals. SSA dispenses funds based upon an applicant's need. In order to be eligible for SSI payments, a person must be: (1) 65 years of age or older; (2) blind; or (3) disabled. SSA defines disability as an impairment that prevents an individual from doing his past work or other work existing in substantial numbers in the economy and that is expected to last for at least one year or result in death. ⁽³⁾ 20 C.F.R. �� 416.202, 416.905, 416.906. Additionally, a person must have limited income and resources. 20 C.F.R. �� 416.202, 416.1100. Anything other than a car and a primary residence is considered a resource or asset, and there is a dollar-for-dollar offset for resources and assets. 20 C.F.R. � 416.1210.

Some SSI beneficiaries, either because of their age or disability, cannot manage their own benefits. 20 C.F.R. �� 416.601, 416.610. SSA will then appoint an interested party (often a parent if the SSI beneficiary is a minor) as a representative payee who is authorized to receive payments on behalf of the intended recipient. Representative payees are required to use the benefits properly for the beneficiary's well-being. Representative payees are also required to report any changes that might affect the recipient's eligibility for benefits, and/or their own ability to continue serving as the representative payee. 20 C.F.R. �� 416.635, 416.640.

A representative payee has a responsibility to --

(b) Notify us of any event that will affect the amount of benefits the beneficiary receives or the right of the beneficiary to receive benefits.

20 C.F.R. � 416.635(b).

Section 1129 of the Act authorizes a CMP against any person who knowingly makes or causes to be made, a false or misleading statement or representation of a material fact for use in determining any initial or continuing right to, or the amount of, benefits or payments under Title XVI of the Act. A material fact is defined as one which the Commissioner of Social Security may consider in evaluating whether an applicant is entitled to SSI benefits or payments. Individuals who violate section 1129 are subject to a CMP of not more than $5000 for each such false or misleading statement or representation. In determining the amount of a CMP, SSA will take into account: (1) the nature of the subject statements and representations and circumstances under which they occurred; (2) the degree of culpability of the person committing the offense; (3) the person's history of prior offenses; (4) the person's financial condition; and (5) such other matters as justice requires. 20 C.F.R. � 498.106.

Section 1129 of the Act is implemented according to procedures set forth at 20 C.F.R. Part 498. Under the implementing regulations, a person against whom a CMP has been imposed can request a hearing before an Administrative Law Judge (ALJ) of the Departmental Appeals Board. The ALJ has jurisdiction to determine whether the person should be found liable for a CMP. 20 C.F.R. � 498.215(a). The person requesting the hearing; that is, Respondent, has the burden of going forward and the burden of persuasion with respect to any affirmative defenses and any mitigating circumstances. 20 C.F.R. � 498.215(b)(1). SSA has the burden of going forward as well as the burden of persuasion with respect to all other issues. The burdens of persuasion are to be judged by a preponderance of the evidence. 20 C.F.R. � 498.215(c).

III. Parties' Contentions

A. SSA's factual and legal contentions

Respondent applied for SSI payments for her son Rhett Griffith originally on October 8, 1985. SSA determined that Rhett met the disability requirements and the limited resources and assets required for those with whom he lived. Respondent was appointed representative payee for the SSI payments payable to her then minor child Rhett beginning in November 1985. ⁽⁴⁾ Rhett's continuing eligibility for SSI payments were dependent on his continuing to meet both the disability and limited asset and resource requirements. Rhett's continuing eligibility for SSI payments would obviously be affected by his ability to work and any income he might receive from working.

Because Respondent was Rhett's representative payee, she was required to complete various SSA forms on Rhett's behalf. SSA claims that on two of those forms, Respondent made false statements and misrepresented Rhett's work activity. Specifically, SSA charges that Respondent signed forms SSA-795 on January 5, 1997 and on February 8, 1998 that contained false statements. SSA contends that in the January 1997 statement, Respondent wrote, "Rhett has not worked anywhere in 1996 or 1997. He has lived with me the entire time." SSA Ex. 7. SSA alleges Respondent further represented in that statement that any earnings listed under Rhett's Social Security number (SSN) from an employer named "Brown and Root" were not Rhett's but belonged to another individual. SSA also alleges that Respondent again misrepresented Rhett's work history by writing that "Rhett has never worked. The earnings that are posted on his record in 1996 and 1997 do not belong to him." SSA Ex. 8.

Thus, SSA alleges that:

�Respondent's statements were contrary to documented earnings information received by SSA.

�Respondent knew or should have known that her statements were false.

�Based on his work activity, Rhett's monthly SSI payment amount should have been reduced for the months in which he had earnings. Therefore, the false statements concerned "material facts."

�Respondent's misrepresentations regarding Rhett's work activity resulted in an overpayment of $1,925.81 in benefits to Rhett.

B. Respondent's factual and legal contentions

Respondent claims that "Rhett, at the insistence of his father, wrote the Social Security Administration that he was no longer living with his mother, and that he did not need the social security check any longer." R. Br. at 1. ⁽⁵⁾ Rhett, however, did not stay with his father more than three weeks and stayed with Respondent thereafter. Respondent claims she had no knowledge of Rhett's letter declining further SSI payments. Rhett did not work with his father or live with his father for any length of time. Respondent further claims that Rhett went out of town with his brother, a pipefitter, for a few days at a time, but Rhett never brought money home or told Respondent that he had worked and received a paycheck. Respondent disclaims any knowledge of any income from Rhett from any job at any time.

Respondent asserts that her son, Rhett, "has never worked very much anywhere, and he still isn't working because he is mentally disabled." R. Br. at 3. In conclusion, Respondent argues that because she had no knowledge of Rhett's working she is not culpable in causing or participating in any kind of fraud or deceit. R. Br. at 4.

IV. Findings of Fact and Conclusions of Law

Each finding is discussed below the enumerated paragraph.

1. Rhett Griffith worked and earned money during the time he was receiving SSI payments.

Respondent's son, Rhett Griffith, was born September 2, 1977. SSA Ex. 3. He received SSI payments for disability beginning in November 1985. Respondent was her son's representative payee. SSI payments for Rhett were sent to her. At all times relevant to this case, Respondent gave her address as 198 Delma Burke Rd., Uvalda, Georgia. Rhett Griffith's SSI checks were sent to Respondent at this address. P. Ex. D1.

Someone giving his name as Rhett Griffith, a date of birth as September 2, 1977, an address as 198 Delma Burke Road, and Rhett Griffith's social security number reported work to SSA as follows:

I will take judicial notice that persons have used others' identities and SSNs and have given that information to employers in order to work. Therefore, I asked the parties to develop the record so that I could determine whether, indeed, the earnings listed above were Rhett's. I asked for information about Rhett's disability because, had it been profound, Rhett would have likely not been the person working under his SSN.

Based on the information provided and the fact that Rhett is no longer considered disabled, I find that Rhett would have been able to get a job, and I do not automatically rule out the earnings as his. See P. Ex. D3, D4. In fact, Rhett signed a statement that certain work activity reported under his SSN represented his own earnings. P. Ex. D6. Moreover, Respondent has not suggested that Rhett's wallet or identifying information was lost or stolen about the time of the work activity reported under his SSN. Thus, I find the preponderance of the evidence shows that the work activity reported under Rhett's SSN was performed by Respondent's son, Rhett.

2. Respondent knowingly made two false statements to SSA.

On January 5, 1997, Respondent affirmed and signed the following statement:

Rhett has not worked anywhere in 1996 or 1997. He has lived with me the entire time. He was in school at Tombs Co. High School until he was age 19. The earnings from Brown & Root do not belong to Rhett.

SSA Ex. 7.

On February 8, 1998, Respondent affirmed and signed the following statement:

Rhett has never worked. The earnings that are posted to his record in 1996 and 1997 do not belong to him. Please remove all earnings from his record.

SSA Ex. 8.

Respondent does not deny she made the statements quoted above. Her argument is that she did not know Rhett had worked in 1996 or 1997. I do not find Respondent's avowed lack of knowledge to be credible. ⁽⁶⁾ Knowing, as used in the statute, refers to a conscious or subjective knowledge of a fact. Jimmy Paul Scott, Ph.D., DAB CR8 (1986). "Reason to know" or "should have known" applies when a person has sufficient information to create an obligation to investigate to find out the truth. George A. Kern, M.D. DAB CR12 (1987).

The preponderance of evidence in this case is that Respondent knew or should have known that Rhett was working and earning some money in 1996 and 1997, as follows:

�First, there is no indication that Respondent worked during 1996 and 1997 such that she would have been absent from her house and not have known whether or not Rhett was in the house or out working during the day.

�Second, Rhett would have turned nineteen in September 1996. Respondent reported that Rhett was in high school until the age of 19. Thus, the earnings reported for September 1996 would correspond to the time Rhett left high school.

�Third, although Respondent has suggested Rhett left her home various times, either to be with his father or his brother, Respondent has provided no verifying or corroborating information that, in fact, Rhett left her household for any appreciable length of time.

�Fourth, Respondent cannot be considered reliable as she has made a number of contradictory statements regarding her son's presence in her household. In her January 1997 statement, she told SSA that Rhett had lived with her for the entirety of 1996. At other times, she has stated he went to be with his father or his brother for periods of time. See SSA Ex. 16, at 2; SSA Ex. 17, at 1. ⁽⁷⁾

�Fifth, even if Rhett had been gone for several weeks, Respondent surely would have asked Rhett, after being shown earnings by SSA, whether Rhett worked when he was out of her house. Certainly, the second time SSA asked Respondent about Rhett's earnings, she would have asked him. She has not indicated she ever inquired of Rhett whether he had a job. It appears she did not want to know. Nonetheless, as a representative payee, Respondent had sufficient information to create an obligation to investigate.

�Sixth, Respondent appears to argue that Rhett never brought any money home to her. That, however, does not respond to the question as to whether she knew he had worked. Whether or not Rhett was giving Respondent money for room and board did not entitle her to Rhett's SSI checks. She was at all times receiving Rhett's checks in her capacity as representative payee. P. Br. at 3.

3. Respondent's knowingly false statements to SSA were material to SSA in determining Rhett's continued entitlement to SSI payments and in determining the amount of the payments.

Because all SSI payments under Title XVI are based on the recipient's income and resources, any statements denying work activity and earnings are material to determining the amount of SSI payments the recipient is to receive and whether the recipient is still eligible to receive payments as a disabled person. Respondent's statements to SSA were material misstatements of fact.

4. SSA has proven, by a preponderance of the evidence, all of the elements required for the imposition of a CMP against Respondent.

In order for SSA to impose a CMP pursuant to section 1129 of the Act, SSA must show: (1) the person made a statement; (2) that such statement "the person knows or should know is false or misleading . . . or makes a statement with knowing disregard for the truth . . . "; and (3) that the statement is a material fact for use in determining a continuing right to or the amount of benefits or payments under Title XVI; i.e., SSI.

In this case, SSA has shown by a preponderance of the evidence each of the three elements required for the imposition of a CMP against Respondent.

5. SSA's imposition of a $3000 CMP against Respondent is reasonable.

The regulations under 20 C.F.R. Part 498 are silent regarding the deference I must give to SSA's determination of the correct CMP. SSA indicates it considered the appropriate factors listed in 20 C.F.R. � 498.106(a)(1)-(5); i.e.; the nature of the statements and representations and the circumstances under which they occurred; the degree of culpability; financial condition; history of prior offenses; and such other matters as justice may require. Therefore, I have reviewed all of the evidence with respect to the above-stated factors and have made a de novo determination that a CMP of $3000 against Respondent is reasonable, rather than the $5000 CMP assessed by SSA.

With respect to the nature of the statements and the circumstances under which they occurred, I was persuaded that even if Respondent's first statement was arguably made on-the-spot, out of surprise, and with information just provided her, Respondent's second statement a year later was not made under the same circumstances. Thus, I must find that her statements were knowingly made with the intent to assure her continued receipt of Rhett's SSI checks.

I next considered Respondent's culpability. There is no evidence Respondent was spending Rhett's SSI benefits on luxuries or otherwise diverting the money from Rhett's care. On the contrary, the evidence presents to me a person who has limited means to maintain a household where her son can have a regular roof and meals. Nor is there any evidence that Respondent was known to brag about "beating the system."

Culpability, however, relates to the degree of Respondent's knowledge and intent. Had Respondent made an unintentional error or unrecognized error and taken steps immediately thereafter to correct the error, I might have found Respondent less culpable. That is, after SSA informed her of SSA's records of Rhett's work activity in 1996, if Respondent had checked with Rhett and corrected her misstatement, she would be found less culpable. Not only did Respondent not correct her error made in January 1997, she essentially repeated the statement in February 1998.

With respect to Respondent's history of prior offenses, I find her lack of prior problems with SSA to be cancelled out by Respondent's making two clearly false statements about her son's work history.

I next considered Respondent's financial condition. Respondent has the burden of proving by a preponderance of the evidence that her financial condition would prevent her from being able to pay the penalty imposed against her. Unsupported assertions of financial distress do not justify the reduction of a proposed penalty and assessment. Berney R. Kessler, M.D., DAB CR107 (1990). In February 2001, Respondent sent a letter to SSA-OIG stating that she has large doctor bills but she provided no evidentiary support. SSA Ex. 16, at 2. Later in April 2001, when Respondent submitted a financial form to the SSA-OIG concerning her financial condition, she listed no outstanding medical bills. She listed minimal expenses and no income. SSA Ex. 3. Other than reporting that her older children help her, Respondent provided no information about how she could live on no income. SSA Ex. 17, at 3. Respondent did not meet her burden of showing that she cannot repay a penalty.

Finally, I considered whether, in the interest of justice, there were other factors to be weighed in determining a reasonable CMP. The purpose of a CMP is deterrence and protection of the financial aid programs rather than retribution or punishment. Deterrence should serve the two purposes of encouraging others to follow the law and to keep a respondent from committing the wrong again. Chapman v. U.S. Dep't of Health and Human Services, 821 F.2d 523 (10^th Cir. 1987).

Petitioner argued that because Respondent was looking for a job, see SSA Ex. 17, at 3, she is able to earn wages and improve her financial situation. Certainly, Respondent's actions were serious and she should be required to pay back the monies she obtained by deceiving SSA and pay a penalty for deterrence. On the other hand, I give more weight to the Respondent's vocational profile in determining the enormity of $5000 as a CMP than did SSA. I am persuaded that Respondent is a 59-year-old woman who has limited experience in working outside the home. ⁽⁸⁾ Her ability to obtain a job that will cover her living expenses and allow her to pay back a $5000 fine will be sorely tested. I find that a CMP in the amount of $3,000, approximately double the amount of the currently assessed overpayment, is reasonable and yet serves the purpose of deterring Respondent and others from failing to report as required by SSA rules and regulations.

V. Conclusion

I sustain the SSA's imposition of a CMP against Respondent. However, I determine that a lesser amount of $3000 is a reasonable penalty; therefore, I reduce the penalty assessed by SSA to $3000.

Anne E. Blair

Administrative Law Judge

1. Although in an earlier advice letter dated January 23, 2001, the OIG referred to false statements regarding the domicile of Respondent's married daughter, the OIG's actual notice letter to Respondent does not refer to Respondent's daughter as cause for the CMP. In the notice letter, the OIG stated to Respondent that "[w]e have taken into account your explanation concerning the marriage of your daughter and have decided to give you the benefit of the doubt . . . ." SSA Ex. 4. Therefore, I do not consider that issue to be before me.

2. Respondent did not identify by number the documents in R. Supplement. To keep the record clear, I paginated the material and will refer to it as R. Supplement and, as appropriate, at 1- 48.

3. Somewhat different rules apply for determining the disability of a child. 20 C.F.R. �� 416.924 et seq.

4. Rhett was born on September 2, 1977. Rhett's disability was considered to be his Attention Deficit Hyperactivity Disorder (ADHD). P. Ex. D4.

5. Neither party submitted a copy of a letter sent by Rhett to SSA stating he no longer needed SSI benefits. In my Order to Develop the Record, I asked about communications Rhett may have sent SSA. SSA responded by submitting P. Ex. D6. There appears to be no such letter as described by Respondent wherein Rhett disclaims interest in further SSI benefits.

6. I asked the parties to provide information concerning whether SSA had waived repayment of the overpayment made to Respondent. I did so because SSA can waive an overpayment only if the overpaid party is without fault in creating the overpayment. 20 C.F.R. � 416.550. Had one part of SSA determined that Respondent was not at fault in creating the overpayment, I did not think I could find that Respondent knew, or should have known, that Rhett had worked and earned the reported earnings. Based on the evidence provided by Petitioner, Respondent had applied for a waiver of overpayment but that request was denied on January 27, 2000. There was no finding that Respondent was "without fault" in creating the overpayment. P. Ex. D7.

7. Neither Respondent nor Rhett have shown particular reliability. For example, in her affidavit (R. Supplement), Respondent swore that Rhett tried to obtain a driver's license but did not pass the test. Rhett, on the other hand, told an examining psychologist that he had a driver's license but lost it due to speeding tickets. P. Ex. D4.

8. According to P. Ex. D-1, Respondent was born on September 1, 1943.