SUBJECT:

The Inspector General,

Department of Health and Human Services,

Petitioner,

U.S. Seminar Corporation, et.al.,

Respondents.

DECISION

The Inspector General for the Department of Health & Human Services (the I.G.) has failed to prove by a preponderance of the evidence that Respondents, U.S. Seminar Corporation, Jeffrey Ribera, Richard Price, and Darrell Braithwaite, violated section 1140 of the Social Security Act (the Act) (42 U.S.C. � 1320b-10). Accordingly, there is no basis for the imposition of a civil money penalty (CMP).

I. PROCEDURAL HISTORY

By letter dated April 3, 2003, Larry J. Goldberg, Assistant Inspector General for Legal Affairs, Office of the I.G., Department of Health and Human Services (HHS) notified U.S. Seminar Corporation, Jeffrey Ribera, Richard Price, and Darrell Braithwaite, that pursuant to delegated authority of the Secretary of HHS (the Secretary), a CMP of $1,086,258 was proposed for violation of section 1140 of the Act. Mr. Goldberg advised the Petitioners that the I.G. considered them to be jointly and severally liable for the proposed CMP. The I.G. notice lists Mr. Ribera as President of U.S. Seminar Corporation (U.S. Seminar), Mr. Price as Vice-President, and Mr. Braithwaite as Operations/Sales Manager of the corporation. The I.G. alleged that section 1140 of the Act was violated by the mailing of 362,086 solicitations that misused Medicare program words, symbols, emblems, or names. The I.G. alleged that the mailings were done in four separate batches in February 2001, December 2001, July 2002, and August 2002.

On June 2, 2003, U.S. Seminar, Jeffrey Ribera, Darrell Braithwaite, and Richard Price requested hearings before an administrative law judge pursuant to 42 C.F.R. �� 1003.109(b) and 1005.2. Pursuant to 42 C.F.R. � 1005.2(b), the parties in a case involving a proposed CMP are the I.G. and the Respondents, in this case the corporation and the individuals. The requests for hearing were separately docketed for each Respondent as C-03-474, C-03-475, C-03-476, C-03-477, and assigned to me for hearing and decision on June 11, 2003. A Notice of Prehearing Conference and Prehearing Case Development Order was issued in the four cases at my direction on June 18, 2003. A prehearing conference was conducted by telephone on July 10, 2003, the substance of which is memorialized in my Order of July 14, 2003. The case was set for hearing in San Diego, California, from January 26, 2004 through February 6, 2004, pursuant to the agreement of the parties. By Order dated January 5, 2004, the four cases were consolidated under the single docket number C-03-474, titled Inspector General v. U.S. Seminar Corporation, Jeffrey Ribera, Richard Price, and Darrell Braithwaite, and docket numbers C-03-475 through C-03-477 were dismissed. A prehearing conference was conducted by telephone on January 8, 2004, the substance of which is memorialized in my Order of January 9, 2004.

A hearing was convened in this case on January 26, 2004 in San Diego, California, and adjourned on January 30, 2004. A 1,530 page transcript was prepared and submitted to the parties for review and approval and no prejudicial errors have been identified. The following I.G. exhibits (I.G. Ex.) were admitted during the hearing: 1, 1A, 1B, 2 through 7 (including 7A, B, C, D, E, and F) ⁽¹⁾, 17 through 22, 24 through 69, ⁽²⁾ 71, 72, 73A, 74 through 76, 78 through 90, 95, 96, 102, 102A, 103, 103A, 104 through 111, 113 through 124, 127 through 129. ⁽³⁾ Other exhibits offered by the I.G. were not admitted or considered in this decision. Tr. 99, 103, 117, 167, 185, 189-191, 195, 197, 199, 201, 242-44, 609. The following Respondents' exhibits (R. Ex.) were admitted: 9 through 11, 13 through 19, 21 through 26. ⁽⁴⁾ Respondents' exhibits 1 through 8 and 12 were withdrawn, R. Ex. 20 was remarked and admitted as I.G. Ex. 129, and 27 and 28 were not received as evidence. Tr. 251, 1363, 1513. The I.G. presented the testimony of 16 witnesses. Respondents did not object to the appearance of two of the I.G. witnesses by telephone. Respondents called six witnesses. The parties filed their post-hearing briefs on July 30, 2004, and their post hearing reply briefs on September 14, 2004.

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. FINDINGS OF FACT

1. Respondent U.S. Seminar is a for-profit, California corporation, incorporated in 1996, and located in La Mesa, California. Joint Stipulation (Jt. Stip.), dated December 3, 2003.

2. U.S. Seminar offered seminars to health care providers and practitioners throughout the United States, the subject of the seminars often included Medicare regulatory changes and billing requirements. ⁽⁵⁾ Jt. Stip.

3. Respondent Jeffrey Ribera is the President of U.S. Seminar and Chairman of the Board of Directors. Jt. Stip.

4. Respondent Richard Price is the Vice President, Secretary, and Chief Financial Officer of U.S. Seminar. Jt. Stip.

5. Respondents Ribera and Price are the sole shareholders of U.S. Seminar. Jt. Stip.

6. Respondent Darrel Braithwaite is the Sales and Operations Manager of U.S. Seminar. Jt. Stip.

7. U.S. Seminar contracted with Post Haste Mailing Services, Inc. (Post Haste) from 1998 through December 2002, for the printing, sorting, copying, and mailing of advertisements, periodicals, postcards, brochures, catalogues and other items. Jt. Stip.

8. Post Haste routinely mailed to health care providers and practitioners through the United States Postal Service, three types of advertisements of U.S. Seminar seminars: a brochure, followed by a yellow card, and then a pink postcard. Jt. Stip.

9. U.S. Seminar also used telephone sales employees to contact health care providers by telephone to solicit attendance at its seminars. Jt. Stip.

10. In 1997, Special Agent Gerald Roy of the HHS Office of the Inspector General, met with Mr. Ribera and Mr. Braithwaite and advised them that any claim that U.S. Seminar seminars were mandatory or that U.S. Seminar had any affiliation with Medicare was unlawful. Jt. Stip.

11. William M. Libercci, Reviewing Official for the I.G., sent U.S. Seminar a cease and desist letter dated February 10, 1998, in which the I.G. advised U.S. Seminar that certain conduct, including the use of the word "Medicare" in written materials and telephone solicitations in which it is suggested that seminar attendance is required by the government, is in violation of section 1140 of the Act. Jt. Stip.; I.G. Ex. 122.

12. Mr. Ribera, by letter dated February 20, 1998, advised Mr. Libercci that U.S. Seminar did not want to mislead its customers as it was bad for business, and Mr. Ribera enclosed written materials that included a specific disclaimer of association or approval by the government. Jt. Stip.; I.G. Ex. 121.

13. Mr. Libercci advised Mr. Ribera by letter dated February 25, 1998, that the U.S. Seminar response in Mr. Ribera's letter of February 20, 1998, and the changes incorporated in the advertising, satisfied the I.G.'s concerns. Jt. Stip.; I.G. Ex. 120.

14. In a letter dated May 24, 2000, Mr. Libercci advised Mr. Ribera that the I.G. had made a preliminary determination that U.S. Seminar was in violation of section 1140 of the Act, because: (a) the disclaimer then in use was different than that submitted by Mr. Ribera with his letter of February 20, 1998, and the I.G. was aware that one provider did not understand; (b) the "Medicare Information Line" text on one U.S. Seminar document looked like a government sponsored activity; and several people complained that U.S. Seminar telephone solicitors said that they were associated with the Health Care Financing Administration ⁽⁶⁾ or Medicare. Jt. Stip.; I.G. Ex. 119.

15. The I.G. and U.S. Seminar continued to correspond about alleged violations between June 1, 2000 and April 4, 2003. Jt. Stip.

16. By letter dated April 3, 2003, Larry J. Goldberg, Assistant Inspector General for Legal Affairs, Office of the I.G., HHS, notified Respondents that a CMP of $1,086,258 was proposed for violation of section 1140 of the Act, which violation was by Respondents' mailing of 362,086 solicitations that misused Medicare program words, symbols, emblems, or names, in four separate batches in February 2001, December 2001, July 2002, and August 2002. Request for Hearing.

17. On June 2, 2003, Respondents requested hearings before an ALJ. Request for Hearing.

18. Respondents do not deny that four batches of solicitations were mailed on behalf of U.S. Seminar by Post Haste in February 2001, December 2001, July 2002, and August 2002, totaling 362,086 individual solicitations. Tr. 28-29, 58.

19. Representative samples of the 362,086 solicitations mailed by Post Haste on behalf of U.S. Seminar in February 2001, December 2001, July 2002, and August 2002 were admitted as evidence marked as I.G. Exs. 7D and 7F and R. Exs. 21 and 22.

20. The I.G.'s sole basis for imposing a CMP in this case are the 362,086 mailings that were done in February 2001, December 2001, July 2002, and August 2002, representative copies of which are at I.G. Exs. 7D and 7F and R. Exs. 21 and 22. Tr. 41-42, 60-62, 137, 240-41.

B. CONCLUSIONS OF LAW

1. Respondents' request for hearing was timely and I do have jurisdiction.

2. No reasonable person would develop the false impression, based upon the face of the documents in issue, that those documents were approved, endorsed, or authorized by HHS.

3. Respondents did not know, nor should they reasonably have known, that a reasonable person might develop the false impression that the documents in issue were approved, endorsed, or authorized by HHS.

4. The I.G. has failed to prove by a preponderance of the evidence that Respondents violated section 1140 of the Act.

5. There is no basis for the imposition of a CMP.

III. ANALYSIS

A. ISSUES AND BURDEN

The general issues are whether or not the I.G. has a basis for the imposition of a CMP and whether or not the proposed CMP is reasonable. The I.G. alleges in this case that Respondents committed 362,086 violations of section 1140 of the Act and that a CMP of $3.00 per violation is appropriate. According to the parties' Joint Statement of Issues, dated December 3, 2003, the I.G. must prove by a preponderance of the evidence, either that:

Respondents sent from 1 to 362,086 documents to providers by mail under circumstances where Respondents knew or should have known that the mailing would convey the false impression that the mailing was approved, endorsed, or authorized by HHS or that U.S. Seminar had some connection with or authorization from HHS; or that

Respondents sent from 1 to 362,086 documents to providers by mail, which documents could reasonably be interpreted or construed as conveying the false impression that the mailing was approved, endorsed, or authorized by HHS or that U.S. Seminar had some connection with, or authorization from HHS

If no violation of section 1140 of the Act is proven, then there is no basis for a CMP and no issue as to its reasonableness.

The burden of persuasion is allocated by the regulation at 42 C.F.R. � 1005.15(b). Respondents bear the burden of going forward and the burden of persuasion on any defenses or mitigating circumstances. The I.G. bears the burden of going forward with the evidence and the burden of persuasion as to all other issues, including, in this case, the elements of the alleged violation of section 1140 of the Act, and, if such violation is found, the factors specified by 42 C.F.R. � 1003.106(a)(3) related to determining an appropriate CMP.

The quantum of evidence required is a preponderance of the evidence. 42 C.F.R. � 1005.15(d). A preponderance of the evidence is:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

Black's Law Dictionary 1220 (8^th ed. 2004).

B. LAW APPLICABLE

Section 1140 of the Act provides that "no person may use, in connection with any item constituting an advertisement, solicitation, circular, book, pamphlet, or other communication, or a play, motion picture, broadcast, telecast or other production . . . " a protected word or symbol. In this case, there is no dispute that the 362,086 documents in issue were advertisements or solicitations or otherwise met this element. Section 1140 prohibits the use of word "Medicare" (among other words and symbols) in advertisements or solicitations where the use of the word would constitute a violation of section 1140. In this case, the only prohibited word found in the 362,086 documents mailed (I.G. Exs. 7D and 7F and R. Exs. 21 and 22) is the word "Medicare." Section 1140 makes it unlawful to use the word "Medicare"-

in a manner which such person knows or should know would convey, or in a manner which reasonably could be interpreted or construed as conveying, the false impression that such item is approved, endorsed, or authorized by the Social Security Administration, the Health Care Financing Administration, or the Department of Health and Human Services or that such person has some connection with, or authorization from, the Social Security Administration, the Health Care Financing Administration, or the Department of Health and Human Services.

Act, � 1140(a)(1). The use of a disclaimer in an advertisement or solicitation is no defense to a violation of section 1140. Act, � 1140(a)(3). The Secretary of HHS, or the Commissioner of the Social Security Administration (SSA), is authorized to impose a CMP of up to $5,000 per violation and each piece of mail represents a separate violation. Act, � 1140(b). The Secretary's implementing regulations are found in 42 C.F.R. Part 1003.

Section 1140 of the Act is applicable to both words and symbols of SSA and HHS. There are no reported ALJ or Departmental Appeals Board (the Board or DAB) cases related to an action by the HHS I.G. prosecuting an unlawful use of HHS or Medicare words or symbols. There are, however, three reported cases involving SSA words and symbols: Administrative Law Judge Hughes' decision in Social Security Administration v. National Federation of Retired Persons, DAB CR968 (2002); the Board's recommended decision to the Commissioner of SSA in Social Security Administration v. National Federation of Retired Persons, DAB No. 1885 (2003) (upon review of Judge Hughes' decision); and Administrative Law Judge Kessel's decision in Social Security Administration v. United Seniors Association, Inc., DAB CR1075 (2003). ⁽⁷⁾ Judge Hughes, Judge Kessel, and the Board treat section 1140 of the Act as creating two liability standards consistent with their reading of the legislative history of the section. ⁽⁸⁾

The Board referred to the two liability standards under section 1140 as the knowledge standard and the reasonableness standard. National Federation of Retired Persons, DAB No. 1885, at 17. The Board characterized the knowledge standard as a negligence standard and stated that one violates section 1140 when he or she "knew or, in the exercise of reasonable care, should have known that [the documents or mailers involved in that case] would create the false impression of official endorsement, approval, or authorization." Id. at 22-23. The reasonableness standard leads to a conclusion that section 1140 is violated when a person uses program words or symbols listed in section 1140 and the document "reasonably could be interpreted or construed as conveying" the impression that it was approved, endorsed, or authorized by either SSA or HHS. Id. at 17. In analyzing the facts under the "reasonableness standard" the Board suggested that the test considers whether the "person of average intelligence" could get the false impression that a document was endorsed, approved, or authorized by SSA. Id. The Board also referred to the "average consumer." Id. at 21. The Board did not cite the source of a "person of average intelligence" or an "average consumer" test. The Board did note that it is not necessary for the I.G. to prove that any person was actually deceived by a document but, rather, it is sufficient if the document leaves or creates a "false impression," which the Board defined as "a suspicion or vague notion based on an incomplete or erroneous understanding of the facts." Id. at 17-18.

In United Seniors, Judge Kessel states that section 1140 creates "two compliance standards:" (1) "it prohibits a person from intentionally, recklessly, or negligently sending a communication that would convey the false impression that it is approved, endorsed or authorized" by either SSA or HHS; and (2) "it prohibits a person from sending a communication which reasonably could be interpreted or construed as conveying the false impression that it is approved, endorsed, or authorized" by SSA or HHS. United Seniors, DAB CR1075, at 3. Judge Kessel states that intent is an element of the first standard but not the second. Id. The second standard establishes a very low threshold for liability in that it only need be shown that a document using the terms or symbols protected by section 1140 could reasonably be interpreted or construed to cause the false impression that it was approved, endorsed, or authorized by HHS or SSA. According to Judge Kessel, it is only necessary to prove a reasonable possibility that a reasonable person could be misled to believe that the document had "official sanction." Id. at 5.

I adopt a "reasonable person" standard for the analysis of the case before me. The Board in National Federation of Retired Persons indicated that its "knowledge standard" is really a negligence standard. Although the Board did not specifically indicate that it was applying a reasonable person test, such a test is usually applied to judge conduct in negligence cases. The Board's "reasonableness standard," also sounds like something akin to a negligence standard. However, even if the Board did not intend that its "reasonableness standard" be considered akin to a negligence standard, it seems logical that in applying a "reasonableness standard" one should consider the reasonable person's view of what is reasonable, rather than some specific individual's view. The Board's use of the formulations "a person of average intelligence" or "average consumer" do not provide much guidance for analysis, as these formulations are not commonly applied standards and are not given meaning by the Act or its legislative history, or by the regulations. My reading of the Board's decision is that it probably intended to apply a "reasonable person" standard such as is commonly applied in negligence cases and was applied by Judge Kessel in United Seniors, and for which meaning is provided by a wealth of cases and treatises. The Board also noted that Judge Hughes applied a "reasonable person" standard in her analysis in National Federation of Retired Persons, and the Board did not indicate that that was error in any respect. National Federation of Retired Persons, DAB No. 1885, at 15.

A "reasonable person" is defined in Black's Law Dictionary (8^th ed. 2004):

A hypothetical person used as a legal standard, esp. to determine whether someone acted with negligence; specif., a person who exercises the degree of attention, knowledge, intelligence and judgment that society requires of its members for the protection of their own and of others' interests. The reasonable person acts sensibly, does things without serious delay, and takes proper but not excessive precautions.

Id. at 1294. The "reasonable person" standard is similarly defined at Restatement (Second) of Torts � 283. This standard is an objective one and has been recognized as such by the Board and ALJs. See Wesley Hal Livingston and Shoals Medical Equipment and Supply Co., DAB No. 1406 (1993); Timothy L. Stern, M.D., DAB CR154 (1991); George A. Kern, M.D., DAB CR12 (1987). The Restatement commentary notes that the advantage of the use of the reasonable man or reasonable person standard is that it enables the trier of fact to decide whether the actor's conduct is such as to subject him to liability based on a community standard rather than an individual standard. The Corpus Juris Secundum explains that, because the reasonable person standard is an objective community standard rather than an individual standard, witness testimony is not received on the issue of whether one acted as the reasonable person because the trier of fact is competent to judge the conduct of the actor against the reasonable person standard without such testimony. The often recognized exception is where expert testimony is required to aid the trier of fact to understand the standard of care required and the alleged deviation from that standard, e.g., in a case where the issue is whether one acted as the "reasonable medical provider." 32 C.J.S. Evidence � 514.

C. DISCUSSION

Having reviewed the documents in issue, I conclude that a reasonable person would consider those documents "junk mail," and no reasonable person would develop the false impression, based upon the face of the documents in issue, that those documents were approved, endorsed, or authorized by HHS. Because of the foregoing conclusion, I also conclude Respondents neither knew nor could know that the documents in issue would create the false impression that they were officially endorsed, approved, or authorized by HHS. Thus, I find that the documents do not constitute a violation of section 1140 of the Act.

The I.G. introduced much evidence in this case related to documents other than the documents which are alleged to cause Respondents to be in violation of section 1140. The I.G. introduced evidence regarding telephone sales calls or solicitations. The I.G. introduced evidence regarding the sale of literature at Respondents' seminars. ⁽⁹⁾ However, the I.G. has been clear throughout this case that only the four mail documents admitted as I.G. Ex. 7D, at 2-7 and I.G. Ex. 7F, at 2-3 and 5-8 are the basis for the alleged violations of section 1140. The I.G. has never alleged in the case before me that Respondents violated section 1140 by other mailings, telephone calls, product sales, or any other activities. Tr. 41-42, 60-62, 137, 240-42.

The I.G. also introduced the testimony of multiple witnesses and offered statements of many more collected during the investigation of this case, in which those witnesses speak to the impressions they developed based upon Respondents' documents and telephone calls involving Respondents' employees. It is significant, however, that while some documents these witnesses discussed may have been similar to those in issue, none of the witnesses actually received the documents in issue or had any conversations with Respondents or their employees about those documents. Furthermore, while I do not intend to suggest that the I.G. witnesses were not "reasonable persons," their testimony is unnecessary to the correct application of an objective reasonable person test, as they can only testify about their individual perceptions. Contrary to the suggestion of Respondents (Respondents' Second Post Hearing Brief (R. Reply) at 7), this is not a case where expert opinion testimony is necessary to determine a correct standard to apply. It is true that all the mailings in issue were sent to medical providers' offices, but the "reasonable person" to be considered is not the doctor or nurse and does not involve some standard of medical care. Rather, the reasonable person under consideration is the office administrator, clerical, or other administrative staff of the provider's office that receives and acts upon such mail, and I see no reason to apply any special standard to them. ⁽¹⁰⁾

The analysis of the documents in this case begins and ends with me, in my capacity as the trier of fact, applying the reasonable person standard to the documents. As applied in this case, the standard is whether or not a reasonable person, i.e., "a person who exercises the degree of attention, knowledge, intelligence and judgment that society requires of its members for the protection of their own and of others' interests" and who "acts sensibly, does things without serious delay, and takes proper but not excessive precautions," ⁽¹¹⁾ "reasonably could" ⁽¹²⁾ have looked at the documents in issue and developed the false impression that they were approved, endorsed, or authorized by HHS.

There are four different documents involved. There are two, two-page documents, I.G. Ex. 7D, at 2-3 and I.G. Ex. 7F, at 2-3. Examination of these documents shows that they are printed on both sides of a single sheet of yellow paper or card stock (approximately 5.5 inches by 11 inches) and mailed without folding with the return address and bulk rate U.S. Postage mark printed on one side. No envelope was required for the mailing of these documents. The content of the documents is similar, but with some variation in format. I.G. Ex. 7D, at 2-3, refers to local Arkansas Medicare changes and I.G. Ex. 7F, at 2-3, refers to local New Jersey Medicare changes. The other two documents consisted of four printed pages (printed front and back on a 11-inch by 17-inch sheet of paper, as at R. Ex. 22) folded for mailing so that the return address and bulk rate postage mark was visible. No envelope was necessary for mailing these documents. I.G. Ex. 7D, at 4-7, refers to local Northern California Medicare changes and I.G. Ex. 7F, at 5-8, refers to local Texas Medicare changes. The content of the two is similar with slight variation in format.

All four documents contain multiple occurrences of the word "Medicare" on each page. However, "Medicare" is the only word that appears in any of these documents that is subject to protection under section 1140 of the Act. I note that if the word "Medicare" is removed from the documents the documents are rendered meaningless. Respondents could not have done their business of running training seminars about Medicare changes and billing requirements without referring to the term "Medicare." Of course, the use of the term "Medicare" is not unlawful under section 1140, only its use in such a way as to cause the false impression of endorsement, approval, or authorization by HHS. Unlike the United Seniors and National Federation of Retired Persons cases, Respondents used no opaque envelope that contained a protected word, a design or style associated with government or other important mail, nor a picture of the U.S. Capitol. In this case, the return address appears on all four documents as "United States Seminar Corporation." No abbreviation or acronym was used as was done in United Seniors or National Federation. Although the presence of a disclaimer is not a defense, consideration of its impact upon a reasonable person is not made irrelevant by the Act. When folded for mailing, the text, in all capital letters directly above the return address on I.G. Ex. 7D, at 4-7, is the disclaimer of any affiliation with the U.S. government. I.G. Exs. 7D, at 2-3, and I.G. Ex. 7F, at 2-3, actually include disclaimer language in the return address. ⁽¹³⁾ The documents in issue in this case are very similar to solicitations that lawyers commonly receive for continuing legal education seminars, although not as well done as most of those. At first blush, it can be seen that the documents are produced in quantity and probably at low cost, folded, and mailed bulk rate with no envelope. ⁽¹⁴⁾ These are the characteristics of mail that reasonable persons recognize to be junk mail. ⁽¹⁵⁾

Even if one considers the testimony of the I.G. witnesses who claim they were confused about whether or not U.S. Seminar was in some way connected with the government or a contractor, that testimony is not helpful to the I.G.

Mary Muchow testified that, as a Medical Fraud Information Specialist with Wisconsin Physician's Service, the Medicare Part B contractor for Illinois, Michigan, Minnesota and Wisconsin, she received reports that providers were confused by Respondents' brochures, thinking that Medicare was offering the seminars advertised by Respondents. Tr. 274-88. However, on cross-examination, Ms. Muchow clarified that she never actually received a call from a provider about Respondents' brochures, so she did not know specifically what was said by the providers calling or the actual substance of those calls. Ms. Muchow agreed that she received all her information second-hand and served as a conduit for information to the I.G. Tr. 318, 321, 325, 330. It is also clear from Ms. Muchow's testimony that she did not know whether complaints or inquiries were made about the documents that are in issue in this case or even if the brochures that were the source of providers' inquiries were closely similar to those in the case before me. Tr. 320-21. Finally, Ms. Muchow gave no indication of the actual number of provider inquiries reported to her. Tr. 315-30.

Dr. Theodore Oslick, a retired pulmonologist, and a member of the Pennsylvania Medicare Carrier Advisory Committee, was called by the I.G. and testified that he received the postcard at I.G. Ex. 73, at 2. Tr. 347, 350. He testified that he wrote the letter at I.G. Ex. 73, at 1, in which he expresses the concern that the postcard might cause confusion. Tr. 351. Dr. Oslick does not suggest that he was confused, but opined that some provider might be confused that the postcard might have been sent by a Medicare contractor. Tr. 350-51, 355-56. I note that the postcard which Dr. Oslick received is not one of the documents at issue in this case.

Dr. Murray Kopelow, Chief Executive Officer of the Accreditation Council for Continuing Medical Education, testified that his organization received about 15 or 16 complaints, regarding U.S. Seminar, as reflected by his letter at I.G. Ex. 123. Tr. 374-76, 397, 404-06, 419. However, Dr. Kopelow never tied those complaints to the documents before me. In fact, Dr. Kopelow's letter is dated September 5, 2000, six months before the first mailing (in February 2001) of any document in issue before me. Furthermore, Dr. Kopelow's letter does not refer to complaints that providers were misled into thinking that U.S. Seminar was approved, endorsed, or authorized by the government.

Lourdes Caballero, who operates a medical billing business in Miami, Florida, was called as a witness by the I.G. Tr. 434. She testified that she received a brochure in the mail from Respondents similar to that at I.G. Ex. 17, at 3, which she received by facsimile from a client in June 2000. Tr. 435-36, 449-50, 464. June 2000 is more than six months prior to the mailing of the first document in issue before me. Ms. Caballero testified on direct that she believed U.S. Seminar was Medicare or the government, based on the mailing and several telephone calls she received. Tr. 434-36. On cross-examination, she indicated that she received more calls from Respondents than mail and her perception that U.S. Seminar was with the government was mainly based on telephone calls. Tr. 460, 462-64. On redirect examination, Ms. Caballero testified that her perception was based on both the mail she received and the telephone calls. Tr. 473-74. A review of Ms. Caballero's letter from June 21, 2000 (I.G. Ex. 17, at 1-2), reveals that Ms. Caballero's complaint to U.S. Seminar was about the telephone calls she received and mentioned nothing about her being misled by any mailing she received from Respondents. Ms. Caballero did not explain in testimony why, if she felt the mail she received in 2000 was misleading, she did not complain in her June 2000 letter about both the mail and the telephone calls. I accept Ms. Caballero's contemporaneous writing in June 2000 to be a more accurate representation of her state of mind at the time than her testimony before me in 2004.

Ms. Sandra Hurlbutt, Billing Manager for Metro Tulsa Foot and Ankle Clinic, testified for the I.G. that, in November 2001, she received a postcard, a copy of which is at I.G. Ex. 60, at 4-5. Tr. 495-522. None of the documents in issue before me are postcards. Ms. Hurlbutt testified that when she received the postcard, "there was doubt in [her] mind that it was from Medicare . . . ." Tr. 502. She also testified, in response to my questioning, that she was not aware of Medicare using postcards rather than formal letters. Tr. 521.

Ms. Kathy Jo Wootton, Office Manager for Blackfoot Physical Therapy, Blackfoot, Idaho, testified for the I.G. that she received documents from Respondents in the mail, copies of which are at I.G. Ex. 89, pages 3-8. Tr. 525-80. I note that none of the documents Ms. Wootton received are the same as the documents in issue before me, although there are similarities among the documents, except, of course, the postcards. Ms. Wootton testified that she received seven or eight solicitations but threw them all away except for the last three she received. She testified:

I found out that it was not Medicare approved, and so I just started throwing them away. And I kept getting them, and finally I called my Medicare carrier . . . .

I called Karen Newton over at Medicare that takes care of all of our Medicare stuff for us and asked her if I needed to attend any of these seminars. I was unsure whether I should or not.

Tr. 527. I.G. Ex. 89, at 2, is a letter addressed to Karen Newton from Kathy Wootton with the date stamp December 4, 2000. The letter indicates that Ms. Wootton was sending Karen "all the things . . . received in the past year re: Medicare changes from United States Seminar Corp." After being shown the next page following her letter (I.G. Ex. 89, at 3), the witness testified that she recognized it as a copy of a document she received from United States Seminar. When asked by I.G.'s counsel her first impression of the document, which I note to be a postcard, she testified:

I was confused. I wondered if this was something I needed to attend or not. It wasn't very clear to me at all, and that was my first thought . . . .

I thought it was through Medicare. I thought it was sanctioned by Medicare.

Tr. 530. Clearly Ms. Wootton's testimony is internally inconsistent and not credible. She testified that she found out that U.S. Seminar's seminars were not approved before she ever contacted "Medicare" and so threw away all but the last three of seven or eight solicitations she had received. After having thrown away some solicitations, knowing that U.S. Seminar was not connected with the government, she testified that she continued to receive solicitations and then contacted "Medicare." I.G. Ex. 89, at 3-8, are, if her testimony is to be believed, the last documents she received, saved and sent to Medicare. My understanding of Ms. Wootton's testimony is that she actually was aware that U.S. Seminar was not approved, endorsed, or authorized before she received any of the documents at I.G. Ex. 89, and her testimony that she had any confusion about the documents in I.G. Ex. 89 is simply not credible. Even if I found her testimony credible, Ms. Wootton indicated it was the postcard at I.G. Ex. 89, at 3, that caused her confusion and not the other documents which are allegedly more similar to those in issue before me. Finally, I note that Ms. Wootton had never seen "Medicare" use documents such those that caused her concern. Tr. 576.

Ms. Rita Franks, the office manager for an orthopedic surgeon in Essexville, Michigan, was called to testify by the I.G. Tr. 580-614. Ms. Franks testified that she was solicited to attend a U.S. Seminar by telephone and that she received no document soliciting her attendance about which she formed a false impression. Tr. 583-84.

The I.G. also elicited testimony from Robert Lucero, Jr., General Manager, Fikes Orthopedic Specialties, in Lakeside, Arizona. Tr. 622-53. Mr. Lucero testified that he received a document from Respondents. Mr. Lucero testified by telephone and did not have documents before him to identify. Tr. 629. Nevertheless, the evidence is consistent with Mr. Lucero having received a document, a copy of which is at I.G. Ex. 69, at 3-6. Mr. Lucero received this document from U.S. Seminar by mail. Tr. 628. Mr. Lucero testified that he believed, based on the document, that U.S. Seminar was connected with Medicare and that he had to attend a seminar. Tr. 629. I note that the document is not one of the four in issue before me and is not similar to those documents in issue. Thus, Mr. Lucero's testimony is not helpful on whether the four documents in issue create a false impression for anyone.

Ms. Lynn Marie Spencer, Office Manager for Associates in Urology, Bennington, Vermont, was called by and testified as a witness for the I.G. Tr. 667-86. Ms. Spencer received a postcard from U.S. Seminar, a copy of which is found at I.G. Ex. 77, at 4-6. Tr. 670. She testified that she had the impression from the postcards that U.S. Seminar was associated with Medicare. Tr. 673. Ms. Spencer had never received a similar mailing from Medicare or its contractors before. Tr. 684. The evidence does not show that Ms. Spencer ever received a document similar to those in issue before me.

There is no question that the foregoing I.G. witnesses never received copies of the documents at issue before me. Furthermore, my review of the documents received by those who testified that they were confused based upon the content or appearance of a U.S. Seminar mailing, rather than a telephone call, shows that those witnesses were not confused by a U.S. Seminar document similar to those charged as violations by the I.G.

The I.G. also offered as evidence numerous statements of individuals collected in the course of its investigation. The statements contain allegations that the individuals were misled to think that U.S. Seminar was approved, endorsed, or authorized by the government. However, the majority of the statements relate to telephone calls (I.G. Exs. 19, 20-21, 24, 28-30, 33, 35, 39, 43-47, 49, 50-51, 53, 56, 59, 61, 63-64, 66, 68, 71-72, 75, 78, 81-82, 84, 85, 88), postcards (I.G. Exs. 18, 48, 52, 60, 62), or a document which is referred to but not provided or only partly provided (I.G. Exs. 27, 31, 34, 35, 36, 37, 38, 53, 65, 67, 74, 81A). I.G. Ex. 41 includes a document similar to but not the same as those at issue, but there is no allegation of confusion about whether U.S. Seminar was approved, endorsed, or authorized by the government. I.G. Ex. 57 includes a document that is not the same as those at issue before me, and there is an allegation that the individual was misled by a telephone call, but the return address on the document caused her to be suspicious. Both I.G. Exs. 58 and 79 include documents that might be considered more similar to the documents in issue and the recipients allege that they were misled. However, the recipients were not produced at the hearing by the I.G. for examination. Given the problematic testimony of the I.G. witnesses who were present, and the fact that the declarations used were clearly forms with conclusory legal language prepared by the I.G., I do not accord I.G. Exs. 58 and 79 any weight in my decision.

My conclusion that no reasonable person would consider the documents in issue or their content to be approved, endorsed, or authorized by HHS leads to the conclusion that Respondents cannot be found to have known, nor should they reasonably have known, that a reasonable person might develop such a false impression. Nevertheless, it is appropriate to briefly address the I.G.'s evidence regarding knowledge of the Respondents. There is no doubt that the Respondents, and employees Roderick Stevens and Miguel Troy, were aware of either the existence of the May 24, 2000 I.G. letter or that there were calls to U.S. Seminar by potential seminar attendees who wanted to know whether or not U.S. Seminar was part of the government, a government contractor, and whether seminar attendance was required, or of both these facts. But Respondents and their employees denied knowledge of any confusion or inquiries related to the specific documents in issue before me, and it was not established that any confusion or inquiries were caused by documents that are similar in form or content to those in issue. Tr. 856-57, 862, 905-06, 910, 918-19, 921-25, 1046, 1067-68, 1105, 1117, 1160, 1169-70. Furthermore, it was clear to all after the May 24, 2000 I.G. letter that some investigation was being undertaken, particularly after service of the I.G. subpoenas. To the extent the May 24 letter can be viewed as putting Respondents on notice of the misleading nature of their mailings, however, that letter does not address the types of mailings at issue before me. For example, the May 24 letter complains about postcards, not documents that look like those at issue before me; the use of the phrase "Medicare Information Line," which does not appear in the documents before me; and telephone solicitations that are not alleged to be violations of section 1140 of the Act. I.G. Ex. 119. In fact, I see no evidence that the I.G. notified Respondents that documents similar to those at issue before me were a problem prior to the I.G. notice of intent to impose a CMP dated April 3, 2003.

IV. CONCLUSION

For the foregoing reasons, I conclude that the I.G. has failed to prove by a preponderance of the evidence that Respondents violated section 1140 of the Act by the conduct alleged in the I.G. notice dated April 3, 2003.

KEITH W. SICKENDICK

Administrative Law Judge

1. The index of the transcript erroneously indicates that I.G. exhibits 9-11, 13, and 14 were admitted at Tr. 254. In fact the discussion at Tr. 254 clearly indicates that the exhibits considered were Respondents'.

2. The index of the transcript erroneously indicates that I.G. exhibit 25 was admitted as evidence at Tr. 128, but it was actually received at Tr. 149.

3. I.G. Ex. 129 was previously marked as Respondents' exhibit 20, but was not offered or admitted as a Respondents' exhibit. Tr. 1363.

4. The index of the transcript does not reflect that R. Ex. 23 was admitted at Tr. 1363.

5. U.S. Seminar is no longer in the business of offering seminars about Medicare. Tr. 1085.

6. The Health Care Financing Administration (HCFA) was renamed the Centers for Medicare & Medicaid Services (CMS) effective July 5, 2001. 66 Fed. Reg. 35437.

7. A fourth reported case is United States v. Federal Record Service Corporation, 1999 WL 335826 (S.D.N.Y. 1999), an action for preliminary injunction to prohibit the defendant from future violations of section 1140 of the Act where the District Court found a substantial likelihood of success on the merits of the violation of section 1140 and granted the injunction. While the court reviewed the substantive claims regarding the alleged section 1140 violation, the analysis provides little guidance for the instant case.

8. Judge Hughes provided a detailed discussion of the legislative history of section 1140 in Social Security Administration v. National Federation of Retired Persons, which was repeated to some extent by the Board in its recommended decision to the Commissioner in that case. I see no reason to set forth the legislative history in this case and simply refer the reader to the works of Judge Hughes and the Board.

9. Much of the evidence was admitted to be considered on the issues of whether or not Respondents had knowledge, and in judging a reasonable CMP. Of course, neither issue requires further consideration given my conclusion that no reasonable person would develop a false impression about the documents in issue.

10. I recognize that, in a medical provider's office, staff probably develops knowledge of Medicare and Medicaid which may or may not impact how they view documents received in the mail. Administrative staff in a provider's office is likely more concerned about ensuring Medicare and Medicaid compliance than a person who does not work in a provider's office and would likely be cautious about the handling of any document which includes the words Medicare or Medicaid. However, administrative staff in a provider's office should also be more knowledgeable of what official correspondence looks like than the average person who does not work in a provider's office. While it might be possible to develop a "reasonable medical provider's administrative staff" standard, I have not been presented evidence that would allow me to do so. Further, it is likely that the administrative staff's increased awareness and knowledge of all things Medicare and Medicaid, when applied as a standard against the documents in question, would lead to no different result anyway.

11. Black's Law Dictionary, supra.

12. Act, � 1140(a)(1).

13. Even if I give no consideration to the presence of the disclaimer language based upon an overly strict reading of the Act, my ultimate conclusion is unchanged.

14. Christine Hartman, who operates Post Haste Mailing Services Incorporated, testified, at the request of the I.G., that the documents are known as "self-mailers," folded and mailed without envelopes. Tr. 687-88, 693-94.

15. I have no evidence that CMS, HHS, or any governmental agency, regularly sends mailings of the type I have described, such that a reasonable person might take into account past government practice.