SUBJECT:

Social Security Administraation,

Angela Ricketts,

Respondent.

DECISION

Pursuant to section 1129(a)(1) of the Social Security Act (the Act) (42 U.S.C. � 1320a-8(a)(1)) a total civil money penalty (CMP) of $5,000 should be imposed against Respondent for knowingly omitting information regarding her work as a private investigator from two Social Security Administration (SSA) forms she completed or adopted in 1999.

I. PROCEDURAL HISTORY

Respondent, Angela Ricketts, requested a hearing by letter dated December 9, 2002, pursuant to 20 C.F.R. � 498.202. Respondent appeals the November 25, 2002 notice of the Social Security Administration (SSA), Counsel to the Inspector General (I.G.) proposing imposition of a CMP of $15,000.00 against Respondent pursuant to section 1129 of the Act. The request for hearing was received at the Civil Remedies Division (CRD) of the Departmental Appeals Board (DAB) on December 17, 2002, docketed, and assigned to me for hearing and decision on February 3, 2003. I have jurisdiction pursuant to 20 C.F.R. � 498.201-202.

A hearing was convened in this matter on May 12, 2003 in Columbia, Missouri. Petitioner, is represented by counsel, Joscelyn N. Funnie, Esq., Social Security Administration, Office of the Inspector General. Respondent, having been advised of her right to counsel elected to represent herself. Tr. 6. A 196 page transcript of proceedings was prepared. By letter dated June 2, 2003, the parties were requested to review the transcript and submit a list of any material errors, but no such errors have been identified. SSA offered and I admitted SSA exhibits (SSA Ex.) 1 through 17. Tr. 17. Respondent offered and I admitted as Respondent's exhibit (R. Ex.) 1, a packet of documents consisting of 24 pages. Tr. 26. The I.G. presented the testimony of the following witnesses: Angela M. Ricketts, Richard B. Ricketts, Pamela D. Ricketts, Kathi J. Donohue, Frederick K. Schilb, Kathy A. Buller. Respondent, Angela Ricketts, presented the testimony of Kathi J. Donohue and Kathy A. Buller.

The I.G. filed its post hearing brief (I.G. Brief) on July 22, 2003. Respondent filed a post hearing brief (R. Brief) on July 1, 2003 and a response to the I.G. brief (R. Response Brief) on July 29, 2003. The record was closed at my direction on September 1, 2003 after SSA advised that it would file no reply brief.

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. FINDINGS OF FACT

The following findings of fact are based upon the exhibits admitted and the transcript of the proceedings. Citations to transcript pages and exhibit numbers related to each finding of fact may be found in the analysis section of this decision.

1. In 1985, Respondent applied for and began to receive Supplemental Security Income (SSI) benefits under Title XVI of the Act, based on a finding that Respondent was disabled, i.e. she was unable to work within the meaning of the Act, and met the income and resource requirements for eligibility to receive such benefits.

2. Respondent reported that she worked for the Boone County Senior Center when she made her initial application for SSI benefits in 1985.

3. In 1999 or 2000, Respondent was suspected by SSA employees or the Disability Determination Service of not fully cooperating in a "continuing eligibility review" and the matter was referred to the I.G. for investigation.

4. On about June 23, 1999, Respondent signed a Report of Continuing Disability Interview, SSA Ex. 4, from which she knowingly omitted her work activity as a private investigator in the spring of 1999.

5. On about December 6, 1999, Respondent signed a Reconsideration Report For Disability Cessation, SSA Ex. 2, from which she knowingly omitted her work activity as a private investigator in the spring of 1999.

6. In 2000, Respondent's SSI benefits were terminated and SSA initiated a collection action for a $16,798.53 overpayment.

7. Respondent's financial disclosure report and the testimony of Respondent and her husband reflect that they have available net income of more than $600 per month from which to repay the overpayment and a CMP.

B. CONCLUSIONS OF LAW

1. Respondent timely requested a hearing.

2. The I.G. has not shown by a preponderance of the evidence that:

a. Respondent made a false statement or representation or omitted from a statement or representation that she was residing with Richard Ricketts during the period November 1996 through the termination of her SSI benefits in 2000.

b. Respondent ever worked for Overton Realty.

c. Respondent ever engaged in a bird selling business or did that type of work.

d. Respondent ever engaged in a wholesale computer business or did that type of work.

3. The I.G. has shown by a preponderance of the evidence that Respondent did engage in a private investigation business and did private investigator work in the spring of 1999.

4. The I.G. has shown by a preponderance of the evidence that Respondent knowingly omitted to report in two separate forms that she completed in June and December 1999, that she had engaged in work activity as a private investigator.

5. Work activity is material to the Commissioner's determination of continuing eligibility for SSI benefits.

6. Section 1129(a)(1) of the Act does not authorize a CMP for a failure to report or disclose material information.

7. A $5,000 penalty for two instances of omitting information regarding work activity from SSA forms is reasonable in this case considering the factors specified by section 1129(c) of the Act.

III. DISCUSSION

A. ISSUES

Whether there is a basis for the imposition of a CMP or assessment pursuant to section 1129(a)(1) of the Act.

Whether the penalty or assessment proposed is reasonable considering the factors specified by section 1129(c) of the Act.

B. APPLICABLE LAW

Pursuant to Title XVI of the Act certain eligible individuals are entitled to the payment of SSI on a needs basis. To be eligible for SSI payments, a person must be: (1) 65 years of age or older; (2) blind; or (3) disabled. Disability is determined based on the existence of one or more impairments that prevent an individual from doing his or her past work or other work that exists in substantial numbers in the economy for at least one year or that will result in death. 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 that is considered to determine whether an individual is of the limited resources and assets which qualify. 20 C.F.R. � 416.1210. The income and resources of a spouse or other individuals in a household are also subject to being considered. 20 C.F.R. �� 416.1201-1204 and 416.1802.

Section 1129(a)(1) of the Act authorizes the imposition of a civil money penalty against "(a)ny person . . . who makes, or causes to be made, a 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, that the person knows or should know was false or misleading or knows or should know omits a material fact or makes such statement with knowing disregard for the truth . . . . " 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. Section 1129(a)(2). Individuals who violate section 1129 are subject to a CMP of not more than $5,000 for each such false or misleading statement or representation. Violators are also subject to an assessment in lieu of damages, of not more than twice the amount of the benefits or payments made as a result of the statements or representations. Section 1129(a)(1). However, no actions may be initiated more than six years after the date of the alleged violation. The Commissioner has delegated enforcement authority to the SSA I.G. pursuant to section 1129(h)(2). In determining the amount of a CMP, the I.G. must consider: (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. Section 1129(c); 20 C.F.R. � 498.106.

Section 1129(b)(2) provides that the Commissioner of Social Security shall not decide to impose a CMP or assessment against a person until that person is given written notice and an opportunity for the determination to be made on the record after a hearing at which the person is allowed to participate. The Commissioner has provided by regulations at 20 C.F.R. Part 498 that a person against whom a CMP is proposed by the I.G., may request a hearing before an administrative law judge (ALJ) of the Departmental Appeals Board of the Department of Health and Human Services. 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). The I.G. 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).

C. ANALYSIS

It is not disputed that the I.G. initiated this action by notice dated November 25, 2002. SSA Ex. 17. ⁽¹⁾ No issue has been raised regarding improper service of the notice and any objection to the form of service is waived pursuant to 20 C.F.R. � 498.224. See Act, � 1129(b)(1) (service to be in a manner authorized by Federal Rule of Civil Procedure 4). The Act provides that the Commissioner may not initiate action more than six years after the date a violation was allegedly committed. Act, � 1129(b)(1). Thus, any alleged act of Respondent that occurred prior to November 26, 1996, may not be the basis for a penalty or assessment. ⁽²⁾

The notice of November 25, 2002 advises Respondent that the I.G. proposed imposing a $15,000 penalty pursuant to section 1129 of the Act. The grounds for the penalty were "three false statements" by Respondent to SSA that Respondent "knew or should have known were false or misleading" for purposes of obtaining payment of benefits under Title XVI. SSA Ex. 17, at 1. The specific acts alleged were:

1. On June 23, 1999, during an in-person interview, Respondent did not report her entire work history to the Claims' Representative filling out a Report of Work Activity form for Respondent. Respondent allegedly omitted the material fact that in February 1999 she began her own business and that from July 1987 to December 1991 she worked for Overton Realty as a Property Manager.

2. On June 23, 1999, Respondent signed a Report of Continuing Disability Review in which she indicated she had worked since being found disabled but allegedly omitting to mention the business and work for Overton Realty.

3. On December 6, 1999, Respondent completed a Reconsideration Report for Disability Cessation and failed to disclose her business and work for Overton Realty.

Id.

The I.G. alleges in his prehearing brief that Respondent violated section 1129 of the Act by "making statements to SSA containing several omissions of material fact" which statements Respondent either knew or should have known contained such omissions and resulted in the "improper payment of at least $16,798.53 in SSI benefits to the Respondent." I.G. Prehearing Brief at 1. The I.G. does not dispute that in 1985, Respondent applied for and began to receive SSI benefits under Title XVI of the Act, based on a finding that Respondent was disabled, i.e. she was unable to work within the meaning of the Act, and met the income and resource requirements for eligibility to receive such benefits. Id., at 3. However, at some point in 1999 or 2000, Respondent was suspected by SSA employees or the Disability Determination Service of not fully cooperating in a "continuing eligibility review" and the matter was referred to the I.G. for investigation. Id., at 4; SSA Exs. 6, 7 & 14. The I.G. alleged in his prehearing brief that Respondent failed to report or omitted from reports, the following allegedly material facts:

1. Respondent started a private investigation business in February 1999;

2. Respondent worked for Overton Reality from July 1987 to December 1991;

3. Respondent attended Columbia Hair Academy;

4. Respondent attended Columbia College;

5. Respondent lived with her husband Richard Ricketts since at least October 1993; and

6. Richard Ricketts income made Respondent ineligible for SSI benefits.

Specifically the I.G. alleges that Respondent failed to report these facts when they arose and then omitted them from several statements she gave to SSA in 1999. Respondent's SSI benefits were terminated and SSA initiated a collection action for the $16,798.53 overpayment. ⁽³⁾ Id., at 5. The I.G. alleges in his prehearing brief that Respondent also made false statements in her request for hearing. Id., at 6. The I.G. asserts in its prehearing brief that a penalty of $15,000 is reasonable and provides its analysis of the factors specified by section 1129(c) and 20 C.F.R. � 498.106. Id., at 13-16.

In opening statement, counsel for the I.G. indicated that the I.G. was proceeding on three material omissions by Respondent related to her "living arrangements, her income and resources, and her educational and training experience." The I.G. also requested that I exercise authority under 20 C.F.R. � 498.220(b) and increase the CMP to $45,000. Tr. 35. In its post hearing brief, the I.G. argues that it has shown by a preponderance of the evidence that Respondent made several statements to SSA in which she omitted material facts that she knew or should have know were misleading or false resulting in an overpayment of $16,798.53, and that a CMP of $30,000 is appropriate. I.G. Brief at 2, 5-6. The I.G. asserts that at issue are the continuing eligibility determination documents that Respondent completed on June 23, 1999 at SSA Ex. 3 and 4 and December 6, 1999 at SSA Ex. 2, from which Respondent omitted the material facts that she was living with her husband; that she worked for multiple employers that she did not list; and that she owned and operated businesses. I.G. Brief at 7. ⁽⁴⁾ Specifically, the I.G. alleges that Respondent omitted the fact that she lived with Richard Ricketts, her husband, from three different documents (I.G. Exs. 2, 3 and 4) and that she failed to self-report that she was living with her husband. I.G. Brief at 7. The I.G. also alleges that Respondent failed to disclose in I.G. Exs. 2, 3 and 4 that she owned a private investigation business, she operated a bird selling business, she operated a wholesale computer business, she worked for Boone County Senior Services; and she worked for Overton Realty. I.G. Brief at 8. The I.G. asserts that it proved by a preponderance of the evidence that Respondent "knowingly omitted six material facts from three statements" warranting a penalty of $30,000. I.G. Brief at 14.

Respondent argues in her post hearing brief that her psychological impairment as reflected by R. Ex. 1, prevented her from following through with things, and that led to not reporting to SSA. R. Brief at 1. ⁽⁵⁾ Respondent asserts in her response brief at page 2 that she did report her marriage to Richard Ricketts through a notice of a change of name. She admits that she did not report her living arrangements with Richard Ricketts "on a few occasions in part because [she] did not expect them to last for very long." Id., at 2. In her response brief, Respondent asks that I find she and Richard Ricketts did not live together from 1997 through 2000 because they "were constantly separating." R. Response Brief at 3-4. Respondent asserts that she never worked for Overton Realty. R. Brief at 3. In her response brief, Respondent denies ever owning a wholesale computer business or a business selling birds. R. Response Brief at 3.

The I.G.'s allegations against Respondent have changed since the November 25, 2002 I.G. notice, from making false or misleading statements to omitting to report material information. Even the nature of the allegedly omitted information has changed. Thus, as an initial matter it is necessary to determine whether the evidence shows that there was, in fact, information that Respondent failed to report sometime after November 26, 1996 - any allegations prior to that date being barred by the statute of limitations. I will then consider wether the omitted information was "material" within the meaning of the Act and, finally, whether the omission was known, should have been known or whether it was done with conscious disregard for the truth.

The I.G. asserts that it proved by a preponderance of the evidence that Respondent "knowingly omitted six material facts from three statements" warranting a penalty of $30,000. I.G. Brief at 14. The material facts the I.G. alleges that Respondent omitted are:

1. Respondent omitted from I.G. Exs. 2, 3 and 4 that she was living with Richard Ricketts, her husband.

2. Respondent failed to self-report that she was living with her husband.

3. Respondent failed to disclose in I.G. Exs. 2, 3 and 4, work activity that included:

a. She owned a private investigation business,

b. She operated a bird selling business,

c. She operated a wholesale computer business,

d. She worked for Boone County Senior Services, and

e. She worked for Overton Realty.

1. Respondent failed to report she was living with her husband, Richard Ricketts but did not omit information from the SSA Exs. 2, 3 &4.

Respondent testified that she married Richard Ricketts June 12, 1992, and reported the marriage to SSA shortly thereafter. She also testified that in 1993 she reported to SSA that she had separated from Mr. Ricketts. She admitted that she never reported to SSA that she moved back in with Mr. Ricketts, even though she knew she should have. Tr. 80-82, 97.

SSA Exhibit 2 is a Reconsideration Report for Disability Cessation (Form SSA-782-BK). There is no dispute that Respondent signed this form on about December 6, 1999. Instructions on the first page of the form indicate it is to be used "to provide information about your disabling condition that you did not give us on your last report of continuing disability interview." SSA Ex. 2, at 1. I have reviewed the form and find no indication on the face of the form that Respondent was requested or required to include on that form information that she was then living with her husband, Richard Ricketts.

SSA Exhibit 3 is a Work Activity Report - Employee (Form SSA-821-F4). Respondent's signature does not appear on this form and she did not specifically acknowledge having completed the form. I note that Block 1 was not completed by SSA so it is not clear what information SSA sought to elicit. My review of the form reveals no location where Respondent was requested or required to include information that she was living with her husband.

SSA Exhibit 4 is a Report of Continuing Disability Interview (Form SSA-454-BK). It is not disputed that Respondent signed this form on about June 23, 1999. SSA Ex. 4, at 8. I note that on the first page of the form there is a blank where a date is to be inserted to establish a period for which information is requested, but no date has been inserted. Again, I find no location on the form where Respondent was requested or required to include information that she was living with her husband. ⁽⁶⁾

The evidence supports the conclusion that Respondent resided with Richard Ricketts during the majority of the period in question from November 1996 through the termination of her benefits in 2000. Based on Respondent's admission in testimony, I conclude that she knowingly failed to report that she had returned to living with her husband, Richard Ricketts, during the period in issue. However, I do not find that Respondent knowingly omitted such information from SSA exhibits 2, 3 and 4, as those forms do not request or require such information.

Respondent urges me to find that she separated from Richard so often that she practically did not reside with him. R. Brief at 4. Of course, the fact that Respondent frequently separated from Richard implies that she frequently moved back with him. Respondent's testimony regarding the length of separations was that no separation lasted as long as six months and most were no more than brief periods of up to two months. Tr. 81, 91. Richard, however, testified that the longest separation was only a couple of weeks while Respondent lived with her sister and that was only once after 1996. Tr. 104 -105. Respondent's testimony was vague and not credible on the frequency and duration of the periods of separation. Richard's testimony was much more credible in this regard and I conclude that after 1996 the two lived separately no more than two weeks while Respondent lived with her sister.

I also do not find Respondent's professed ignorance of her lawful reporting requirements to be a credible defense in this case. R. Brief at 4. Clearly, in her initial application she agreed to report immediately any change in "living arrangements, family size or composition" or if she returned to work. SSA Ex. 1, at 9. Respondent has also not denied that she was repeatedly reminded of these obligations after her initial application in 1985 and that she in fact did selectively report some similar information. Further, Respondent admitted in testimony that she knew she should have reported residing with her husband. Tr. 91-92.

Respondent argues that the fact she returned to living with Mr. Ricketts and the resulting deeming of his income to her for purposes of calculating benefits, would not have made her ineligible for SSI benefits. R. Brief at 4. Whether or not Ms. Ricketts is correct in this assertion I need not decide, as it is her failure to report that constitutes the alleged violation before me and not whether her living with Mr. Ricketts resulted in an overpayment of benefits, a matter not before me.

2. Respondent omitted information regarding work activity from two SSA forms.

I find based upon her admissions and SSA Exs. 8 and 9, that in February 1999, Respondent opened a private investigation business. The business lasted only a brief period, but Respondent provided service to one client during the brief existence of the business. Respondent admitted she never reported the job to SSA. Respondent also worked for the Boone Retirement Center in 1985, but that employment was reported. The I.G. has failed to show by competent evidence that Respondent ever owned, operated or worked for a business that dealt in birds. The I.G. has also failed to show that Respondent ever owned, operated, or worked for a computer wholesale business. Respondent's husband's testimony regarding birds and computers is so vague as to whether Respondent was ever so employed or merely thought of such work activity, that the testimony is of little or no probative value. Regarding the alleged employment at Overton Realty, I also conclude that the I.G. has failed to present sufficient evidence that Respondent was ever so employed. While the Boone County employment application is weighty evidence in light of Respondent's concession that she completed the form and included the information, I find more credible Respondent's testimony on-the-record in open court and under oath that she lied in that application.

I conclude that in two forms, Respondent failed to report one period of employment and that was as a private investigator in the spring of 1999. Respondent did not report the work activity in the Reconsideration Report for Disability Cessation that she completed on December 6, 1999 (SSA Ex. 2) or in the Report of Continuing Disability Interview dated June 23, 1999, both of which purport to bear her signature. The information also does not appear on SSA Ex. 3, Work Activity Report - Employee, however because that form is not signed or dated by Respondent nor specifically adopted by her in testimony, there is insufficient evidence to conclude that she either made or adopted the statements on that form.

Based on Respondent's admission during testimony, I conclude she knew she should have reported this work activity. Tr. 92.

3. Information regarding residing with a spouse and work activity is material information in determining continuing eligibility for SSI benefits.

The regulations reflect the importance or materiality of information regarding residing with a spouse and work activity. For example, in determining eligibility and benefit amount the regulations provide that the income of an ineligible spouse will be deemed to the spouse applying for or receiving benefits. See 20 C.F.R. � 416.1160-1169. The regulations also provide that the amount of ones work activity as well as the quality of that work activity impacts the determination of initial and continuing eligibility for SSI benefits. See 20 C.F.R. � 416.971-976. While work activity may not be disqualifying unless it meets the definition for substantial gainful activity, that determination cannot be made unless and until the applicant or beneficiary reports the work activity. Residing with a spouse and any work activity is information material to the determination of disability and continuing disability or eligibility based on income and resources.

4. Failure to report is not the same as a statement or representation within the meaning of section 1129 of the Act.

I have concluded that Respondent failed to report to SSA that sometime after 1993 she returned to living with her husband and they continued to reside with one another except for a brief period, until Respondent's benefits ceased sometime in 2000. I have also concluded that Respondent did not knowingly omit such information from SSA exhibits 2, 3 and 4, as those forms do not request or require such information and have no space or line where such information would be reported. Other than SSA exhibits 2, 3 and 4, the I.G. points to no other conduct by Respondent that may be construed to be a statement or representation by Respondent regarding whether or not she was residing with her husband. The conduct admitted to and at issue was a "failure to report" rather than an omission of material fact from a statement or representation. This raises the issue of whether a failure to report is subject to a penalty or assessment pursuant to section 1129.

The plain language of section 1129(a)(1) imposes the threshold requirement that there be a "statement or representation:"

Any person . . . who makes, or causes to be made, a statement or representation of a material fact . . . .

Section 1129 authorizes a penalty or assessment when it is shown that:

(1) the person knows or should have known that the statement or representation was false or misleading; or

(2) the person knows or should know the statement or representation omits a material fact; or

(3) the person makes a statement or representation with knowing disregard for the truth.

Section 1129 does not address a complete failure to report an incident, event or occurrence but requires a "statement or representation." This interpretation is consistent with the legislative history which indicates that Congress intended to extend the authority to impose civil money penalties to SSI cases when "an individual or entity has been involved in submitting or causing to be submitted any false statement under the SSI program" (1994 U.S. Code Cong. and Admin. News, at 1536) "or any statement that the individual knows or should know is false or misleading, or knows or should know omits a material fact ( Id., at 1611). The conclusion that Congress did not intend to cover a failure to report in section 1129, is also consistent with the fact that there are provisions of the Act where Congress specifically addressed failure to report or disclose. For example, section 208(a)(4) of the Act ( 42 U.S.C. � 408(a)(4)) specifically criminalizes a failure to disclose or active concealment of any event that affects a beneficiaries initial or continued right to payment of benefits. In section 208(a)(3), the making or causing to be made a false statement or representation of a material fact is also criminalized. The fact that Congress specifically addressed a failure to disclose or report in section 208(a)(4) shows that Congress recognizes the distinction between making a false statement or representation and a failure to disclose or report. The fact that Congress did not specifically include a failure to disclose or report in section 1129 is, thus, consistent with the conclusion that Congress did not intend to authorize by that section, a CMP for a failure to disclose or report. ⁽⁷⁾

Accordingly, I conclude that Respondent's admitted failure to report that she had returned to living with her husband is not a basis for the imposition of a CMP under section 1129. ⁽⁸⁾

5. A $5,000 penalty for two instances of omitting information regarding work activity from SSA forms is reasonable in this case. ⁽⁹⁾

Based on the foregoing analysis, I conclude that the proven misconduct subject to a penalty or assessment in this case, is the omission from SSA Exs. 2 and 4, specifically block 11, of the information that Respondent engaged in a brief period of work as a private investigator. The maximum penalty authorized is $5,000 for each false statement or representation. Act, � 1129(a)(1)(C); 20 C.F.R. � 498.103. For two material omissions, Respondent is subject to a maximum penalty of $10,000. Pursuant to 20 C.F.R. � 498.220, I have the authority to affirm, deny, increase, or reduce the penalties or assessment proposed by the I.G. In determining the amount of penalties or assessment my review is de novo and just as the I.G. did when proposing penalties, I must consider the factors specified by section 1129(c):

(1) the nature of the statements and representations . . . and the circumstances under which they occurred; (2) the degree of culpability, history of prior offenses, and financial condition of the person committing the offense; and (3) such other matters as justice may require.

See also SSA v. Lorene Griffith, DAB CR1019 (2003); SSA v. Estal, DAB CR1049 (2003). Pursuant to 20 C.F.R. � 498.215(b) the I.G. has the burden of going forward with the evidence and the burden of persuasion as to all issues, except Respondent's affirmative defenses and mitigating circumstances.

a. Nature of the omissions and representation and the circumstances under which they occurred.

Respondent has never denied that when initially applying for benefits, she agreed to advise SSA if she returned to work. SSA Ex. 1, at 9. She acknowledged during testimony that she did some work as a private investigator that she knew she should have reported but did not. Tr. 92. Respondent's assertion that she did not understand that she had to report every time she tried to work and that she thought there was some leeway (R. Response Brief at 4) is not particularly credible, except to the extent that Respondent did report other work activity. See SSA Ex. 4, at 5. I also consider that the unrebutted testimony about the investigator work shows it involved minimal activity by Respondent and with the assistance of her husband, for a minimal amount of money, and over a very brief period of time. Tr. 57-58, 107-108.

The evidence Respondent produced regarding her medical condition (R. Ex. 1) is not contemporaneous with the failure to report the work in 1999. Thus, the medical evidence has no bearing upon and is irrelevant to the determination of the circumstances surrounding the omission of the work history.

I also recognize that the omissions were of the same information from forms completed roughly six-months apart. SSA Exs. 2 and 4.

b. Degree of culpability.

I consider that only two omissions have been proven that are subject to section 1129, and they are omissions of the same information regarding Respondent's work as a private investigator. I further consider that the work was of brief duration, minimal nature, and there was only a minimal amount of money shown to be involved. Considering the minimal nature of the work and the money, I find it difficult to believe that Respondent was highly culpable in omitting the work as a private investigator from two SSA forms, particularly since she reported other work activity.

The I.G. argues in its post hearing brief at page 14 that when Respondent's benefits were ceased, she filed an appeal "in which she continued to deceive SSA about her work activity and living arrangements." The document the I.G. refers to at SSA Ex. 5 is actually a request for reconsideration of the SSA determination to cease disability benefits dated December 6, 1999. Respondent omits the name and social security number of her spouse on this form but, that is not alleged to be a basis for a CMP in this case. ⁽¹⁰⁾ The remainder of the form requests no information about living arrangements or work history. Respondent argues on the form that her medical condition prevents her from traveling and her poor memory prevented her from remembering an appointment. SSA Ex. 5. Thus, I do not agree with the I.G. conclusion that there was deception on SSA Ex. 5.

c. History of prior offenses.

The I.G. presented the testimony of Kathi Donohue, an SSA Operations Supervisor and a former Claims Representative. Tr. 126-127. Ms. Donohue testified that she worked on redeterminations related to Respondent, and she reviewed the SSA computer records in preparation for hearing. Tr. 135-136. Ms. Donohue testified that nine overpayments had been assessed against Respondent, three related to work activity and six due to living with her spouse and his earned income. Tr. 138-139. However, Ms. Donohue then clarified:

I want to be real clear on that. It's hard to tell from looking at the computer record without the paper file exactly what happened. I could tell from some of the computer records and the dates involved that the overpayment and the wages were detected in connection with a scheduled redetermination where we made the contact to do the review and then either - we would have asked her if she had worked and she told us that she had. Tr. 139-140.

She then stated that "I haven't seen her file for years." Tr. 141. Counsel for the I.G. and the I.G. investigator subsequently clarified that Respondent's Title XVI file was somewhere in storage and as of the hearing, they had been unable to recover it. Tr. 151. I advised the I.G. that if the file was recovered, it could be offered as evidence post hearing subject to any objection by Respondent. Tr. 157. As the file has not been offered, I infer it was not recovered and could not be produced.

The I.G. argues in its post hearing brief that the nine overpayments should be considered prior offenses. The I.G. argues that Respondent "caused a total of nine overpayments due to her repeated failure to report work activity and living arrangements" citing the testimony of Ms. Donohue. However, that was not the testimony of Ms. Donohue. She testified that she could determine from the agency computer that Respondent had been found to have received nine overpayments, six related to work activity and six due to living with her spouse and work activity. Tr. 138-139. However, it was then revealed that Ms. Donohue had not seen Respondent's file in years and she could not be sure of exactly what happened without the paper file. Tr. 139-141. Because overpayments and under payments are not always the fault of the beneficiary ⁽¹¹⁾, it is incorrect to simply assume that Respondent was at fault in causing any of the prior nine overpayments, particularly where as here, the agency has failed to produce the file that actually contains the administrative record related to those overpayments. I will not simply assume Respondent was at fault in causing the prior overpayments or that they represented an "offense" against the Act or program. I also find unsupported the I.G. assertion that "Respondent falsely reported that she was not living with her husband." I.G. Brief at 15. The evidence shows Respondent did not report that she was living with her husband again after 1993, not that she falsely reported that she was not living with him. Accordingly, I conclude that there is no evidence of any prior offense in this case.

d. Financial condition of Respondent.

The regulation that allocates burdens of going forward with the evidence and the burden of persuasion imposes upon Respondent the burdens related to any affirmative defenses and mitigating factors. 20 C.F.R. � 498.215(b)(1). The regulation does not, however, specify what are the mitigating factors for which Respondent bears the burden. Respondent is in the best position to present evidence of her financial situation. Thus, I conclude it is incumbent upon her to present any evidence upon which I might decide that her financial condition is such that any penalty or assessment should be mitigated. The I.G. complains that Respondent has not been particularly forthcoming regarding her financial condition. I.G. Brief at 16. Respondent did however, provide a completed financial statement which has been admitted as SSA Ex. 11, at 3-7, so that I may consider. Respondent and her husband also testified regarding their current financial condition. Tr.82-85, 106, 110-111, 116.

My review of the financial statement shows that Respondent and her husband had gross monthly income of $2,800 to $3,000. Their monthly expenses totaled $1,926 to $2,116 without their car payment of $240 and $2,166 to $2,356 including the car payment. Thus, income less expenses ranged from $634 to $644 per month. SSA Ex. 11, at 4-7. Respondent's husband testified that Respondent was working only part-time as of the hearing with little or no income on a monthly basis. Tr. 110. However, Respondent's husband testified that his current pay was $17 per hour. Tr. 106. Assuming a normal 40 hour work week without any overtime and two weeks unpaid vacation, Respondent's husband's gross monthly income would be approximately $2,800 rather than the $2,000 reflected on the financial report. SSA Ex. 11, at 4. Thus, without consideration of any income earned by Respondent, her and her husband's income less expenses still results in a net of $634 per month. Respondent offered no evidence of any tax liabilities and I will not make any assumptions in that regard. Thus, I conclude that with $634 per month, Respondent has the ability to repay both the overpayment ⁽¹²⁾ and the penalty I approve in this case, at least overtime as suggested by the I.G. I.G. Brief at 17.

e. Other matters as justice may require.

The I.G. argues that Respondent has made multiple false statements in addition to those alleged to provide the basis for the CMP and that Respondent has failed to cooperate. I.G. Brief at 17-19. Except for the omission of the work as a private investigator from the two SSA forms, the I.G. has not proven any false statements by Respondent or other misconduct by a preponderance of the evidence. While the I.G. construes Respondent's conduct leading up to the hearing as being uncooperative, the I.G. allegations may also be viewed as a lay person's refusal to simply concede the issues without understanding exactly what those issues are in a case of this type. Thus, I conclude that justice does not require that I construe the acts alleged by the I.G. against Respondent.

Respondent argues that she is unable to work and that affects her ability to pay any CMP. However, there is no current finding that Respondent is disabled or any statement by any of her treating physicians that she is physically or mentally unable to work. Accordingly, I conclude that she retains some capacity to work and earn money.

My review of the factors specified by section 1129(c) of the Act in light of the proven misconduct, leads me to the conclusion that an appropriate civil money penalty in this case is $2,500 per occurrence, a total of $5,000.

IV. CONCLUSION

For the foregoing reasons, I conclude that a civil money penalty of $5,000 should be imposed against Respondent for knowingly omitting information regarding her work as a private investigator from two SSA forms she completed or adopted in 1999.

KEITH W. SICKENDICK

Administrative Law Judge

1. The I.G. previously sent Respondent a notice dated December 7, 2001, advising her that the I.G. intended to commence a civil action against her. The December 2001 notice does not propose to impose a penalty but rather states that the I.G. intended to determine whether to impose a penalty. SSA Ex. 15. The I.G. sent Respondent a notice dated February 1, 2002, in which the I.G. advised Respondent that a penalty of $15,000 was proposed. SSA Ex. 16. The I.G. did not proceed on the notice of February 1, 2002, but rather issued another notice dated November 25, 2002. SSA Ex. 17. It is the notice of November 25, 2002 that triggered the request for hearing and it is treated as the notice initiating the I.G. action subject to my review.

2. The I.G. recognizes the application of the statute of limitations as a bar to proceeding and acknowledged such in its prehearing brief. I.G. Prehearing Brief at 8, fn. 7.

3. The I.G. discusses settlement negotiations that occurred in this case. I.G. Prehearing Brief at 5; I.G. Brief at 18. Evidence related to offers of compromise or settlement are not admissible except in limited circumstances as provided by Federal Rule of Evidence 408. 20 C.F.R. � 498.217(e). Accordingly, I have not considered information related to settlement negotiations for any purpose in reaching this decision.

4. The I.G. concedes that it did not prove by a preponderance of the evidence that Respondent's omissions regarding training and education were material. I.G. Brief at 14.

5. R. Ex. 1 includes medical records for Respondent for the period February 6, 2001 through November 13, 2001. There is no indication that this is a comprehensive collection of Respondent's medical records for the period. The records indicate a possible neurologic problem not definitely diagnosed plus, during the November 2001 admission to the Boone Hospital Center, some depression and anxiety (R. Ex. 1, at 3). These records do not relate to the period of the alleged violation and give no insight as to Respondent's mental functioning during that period. Thus, the submitted medical documents establish no defense to the alleged misconduct.

6. On page 5 of SSA Ex. 4, in the block titled "Social Contacts," Respondent wrote "I live with my sister." The I.G. does not specifically allege that this was a false statement and has not offered proof that at the time of the statement the Respondent was not living with her sister.

7. The Commissioner's regulations implementing section 1129 also only discuss statements or representations and do not address a failure to report or disclose. 20 C.F.R. � 498.102.

8. This case must be distinguished from the case in which Judge Montano recently issued an opinion, SSA v. Estal, CR1049 (2003). In Estal, the opinion indicates that there was evidence that the representative payee, Ms. Estal, received and cashed ten benefit checks issued for her son, falsely representing thereby that her son continued to live with her and the money was used for his benefit. No doubt, Ms. Estal also failed to report that her son no longer resided with her, but the findings turned on the misrepresentation of a material fact by the act of signing and cashing the 10 SSI benefit checks. In the case before me, the I.G. presented no similar evidence from which I might find a false or misleading representation.

9. The I.G. indicates that no assessment was proposed in this case due to Respondent's agreement to repay the overpayment. I.G. Brief at 12.

10. I will not assume the I.G. simply overlooked this omission as the basis for a CMP, rather than intentionally not making the allegation due to the existence of some neutral explanation for the omission.

11. See 20 C.F.R. �� 416.536, 416.537, 416.550, 416.551-556.

12. According to Ms. Donohue who reviewed the agency records, the remaining balance to be paid on the overpayment was $12,558.53 as of the date of the hearing. Tr. 143.