Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )
)
Social Security Administration )
Inspector General, ) Date: March 8, 2007
)
Petitioner, ) Docket No. C-06-435
) Decision No. CR1571
v. )
)
Thomas Tobias, )
)
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 $5000 is imposed against Respondent for
making a false or misleading statement on May 8, 2003, in support of his application for
benefits or payments under the Act.

J. Background

Respondent, Thomas Tobias, timely requested a hearing by an administrative law judge
(ALJ) pursuant to 20 C.F.R. § 498.202. Respondent appeals from the March 9, 2006
notice of the Social Security Administration (SSA) Inspector General (I.G.) that proposes
imposition of a civil money penalty (CMP) of $15,000 against him pursuant to section
1129 of the Social Security Act (Act) (42 U.S.C. § 1320a-8).
2

The request for hearing was received at the Civil Remedies Division (CRD) of the
Departmental Appeals Board (DAB) and assigned to me for hearing and decision on May
11, 2006. On June 7, 2006, I convened a telephonic prehearing conference to discuss and
establish the schedule to hearing in this case. The substance of the prehearing conference
is set forth in my Scheduling Order and Notice of Hearing dated June 12, 2006. An
additional prehearing conference was convened by telephone on October 10, 2006, to
discuss final procedural details. Transcript (Tr.) 16-20.

On October 17, 2006, a hearing was convened in this case in Hammond, Louisiana. Erin
M. Justice, Esquire, appeared on behalf of Petitioner, the SSA LG. Respondent appeared
without counsel but he was assisted by Marion Tobias, Jr. Respondent was advised of his
right to representation but he elected to proceed without an attorney. Tr. 3, 8-9. The IG.
offered and I admitted Petitioner’s exhibits (P. Ex.)' 1 through 22. Respondent offered
and I admitted Respondent’s exhibits (R. Ex.) 1 and 2.

A 254-page transcript of the hearing was prepared and provided to the parties. SSA filed
its “Petitioner’s Post-Hearing Brief” (P. Brief) on December 7, 2006 and its post-hearing
reply brief (P. Reply) on December 18, 2006. Respondent submitted multiple documents
post-hearing: an undated letter postmarked November 14, 2006 and received at the CRD
on November 16, 2006; an undated letter postmarked November 20, 2006 and received at
CRD on December 13, 2006; a letter dated December 13, 2006; a letter dated December
19, 2006; and a letter dated January 5, 2007.

II. Discussion
A. Applicable Law

Pursuant to title II of the Act, an individual who has worked in jobs covered by Social
Security for the required period of time, who has a medical condition that meets the
definition of disability under the Act, and who is unable to work for a year or more
because of the disability, may be entitled to monthly cash disability benefits. 20 C.F.R.
§§ 404.315-404.373. Pursuant to title XVI of the Act, certain eligible individuals are
entitled to the payment of Supplemental Security Income (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 under both programs is determined based on the existence of one or
more impairments that prevent an individual from doing his or her past work or other

' Petitioner incorrectly marked its exhibits “R. Ex.” but that marking shall be read
to be “P. Ex.” Tr. 13-14.
3

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 to be eligible for SSI. 20 C.F.R. §§ 416.202,
416.1100. All assets, other than a car and a primary residence, are considered resources
when determining whether an individual has “limited” resources. 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; 416.1802.

Section 1129(a)(1) of the Act authorizes the imposition of a CMP or an assessment
against:

(a)(1) Any person... who —

(A) 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 monthly
insurance benefits under title I] or benefits or payments under
title VIII or XVI, that the person knows or should know is
false or misleading,

(B) makes such statement or representation for such use with
knowing disregard for the truth, or

(C) omits from a statement or representation for such use, or
otherwise withholds disclosure of, a fact which the person
knows or should know is material to the determination of any
initial or continuing right to or the amount of monthly
insurance benefits under title II or benefits or payments under
title VIII or XVI, if the person knows, or should know, that
the statement or representation with such omission is false or
misleading or that the withholding of such disclosure is
misleading ....

A material fact is a fact that the Commissioner of the Social Security Administration (the
Commissioner) may consider in evaluating whether an applicant is entitled to benefits or
payments under titles II, VIII, or XVI of the Act. Act § 1129(a)(2).

Individuals who violate section 1129 are subject to a CMP of not more than $5000 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
4

payments made as a result of the statements or representations. Act § 1129(a)(1).
Because Respondent received no benefits or payments in this case, no assessment could
be made.

The Commissioner has delegated enforcement authority to the SSA I.G. as authorized by
section 1129(i) of the Act. 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. Act § 1129(c); 20 C.F.R. §498.106.

Section 1129(b)(2) specifies that the Commissioner 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 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 fora 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 L.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).

B. Issues

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

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

C. Analysis

In this case, the I.G. notified Respondent that it was imposing CMPs of $5000 for each of
three false or misleading statements made in the following documents: (1) a
“Supplemental Interview Outline” form completed on May 8, 2003; (2) a “Function
Report — Adult” completed on April 18, 2004; and (3) a “Disability Report — Adult”
completed on October 4, 2005. P. Ex. 18; 19. After reviewing all the evidence and the
5

arguments of the parties, I conclude that: (1) the I.G. has proven by a preponderance of
the evidence that Respondent made false or misleading statements that blindness
prevented work or activities of daily living (ADLs) on May 8, 2003, based on the fact that
Respondent renewed his driver’s license after that date; (2) the I.G. has failed to prove the
charge that Respondent made any false or misleading statement on April 18, 2004 and, in
fact, no document with that date has been produced by the government; and (3) the I.G.
has failed to prove by a preponderance of the evidence that Respondent made any false or
misleading statements on October 4, 2005, that blindness prevented work or ADLs given
the credible medical evidence of significant visual impairment and the absence of credible
evidence that Respondent actually engaged in work or ADLs that he stated he could not
perform.

1. Respondent made a false or misleading statement on May 8, 2003,
related to his 2003 applications for title II and title XVI benefits, when
completed a “Supplemental Interview Outline” form.

Respondent filed an application for disability insurance benefits under title II of the Act
on April 28, 2003. He alleged in the application that he became unable to work on March
31, 2003, due to a disabling condition. The application does not identify the disabling
condition. P. Ex. 1. Respondent also filed an application for supplemental security
income pursuant to title XIV of the Act on April 28, 2003. Respondent alleges in the
application that he is disabled and that the disability began on March 31, 2003. This
application also fails to identify the alleged disabling condition, however, the application
includes the statement that “I am not blind.” P. Ex. 2. Both applications include a
warning above the line on which Respondent’s signature appears that it is a crime to
make a false statement or representation of material fact or to knowingly lie or
misrepresent the truth when making an application under the Act. P. Ex. 1, at 3; P. Ex. 2,
at3.

The L.G. charges Respondent with making false or misleading statements that he could
not work and had limited ADLs due to blindness on the “Supplemental Interview
Outline” he signed on May 8, 2003. P. Ex. 3.? The I.G.’s case is not based upon evidence

? On April 28, 2003, Respondent’s son, Thomas J. Tobias, completed a “Disability
Report Adult” related to Respondent’s applications. Thomas J. Tobias stated that
Respondent suffered from “loss vision/blurred vision — Glaucoma servre (sic) optic nerve
Damage” that began to bother him in January 1997 and caused him to become unable to
work on March 31, 2003, due to “loss of vision/for safety reasons and work related
‘task’.” P. Ex. 4, at 2. The form indicates that Respondent saw Dr. Hollimon who gave

(continued...)
6

that Respondent worked or that he engaged in ADLs that he denied he could perform.
Prehearing, the I.G. argued that Respondent made false statements and that the falsity of
Respondents statements is shown by evidence that: (1) Respondent applied for and
received a renewal of his driver’s license in December 2003, and he claimed on the
application that his uncorrected vision was 20/40 in each eye; and (2) in October 2005,
Respondent was videotaped “walking and climbing stairs to a convenience store,
unassisted and without the use of a cane.” P. Prehearing Brief at 11; Tr. 47. In post-
hearing briefing, Petitioner relies upon the same evidence except that the I.G. now agrees
that the video does show Respondent was carrying a cane when recorded at the
convenience store. Petitioner also argues in post-hearing briefing that Respondent’s
testimony at hearing also shows that he made false statements. P. Brief at 3, 11; P. Reply
at 2. Respondent has never denied that he made or caused to be made statements on any
orms. Rather, Respondent’s position is that he was blind and that all statements made
are true.

The fact issue to be resolved is whether or not Respondent, when he completed the
“Supplemental Interview Outline,” was “blind” or unable to see to the extent that his
ADLs and ability to drive were as limited as he reported on the form. The
Commissioner’s regulations in the “Listing of Impairments” at 20 C.F.R. Part 404,
Subpart P, Appendix 1, Listings 2.00 through 2.04, establish standards for finding one
isabled due to impairment of visual acuity, contraction of peripheral visual fields, and
loss of visual efficiency. Blindness as used in the Act is also referred to as “statutory
blindness” and refers to the degree of visual impairment as described in Listings 2.02 and
2.03. 20 C.F.R. Part 404, Subpart P, Appendix 1, Listing 2.00A.7; § 404.1581. However,
an applicant for benefits or payments does not meet the requirements specified by the
listing of impairments, under the Commissioner’s five-step sequential evaluation process
it must be determined whether given established impairments one’s residual functional
capacity permits a return to past work or other work existing in substantial numbers in the
economy. The Commissioner’s sequential evaluation process provides a convenient
model for analysis for this case that considers first the medical evidence and, if it is not
conclusive, focuses upon evidence of “functional capacity.”

*(...continued)
him Travatan drops to relieve the pressure in his eyes and that he saw Dr. Armini for a
second opinion. P. Ex. 4, at 4,7. The I.G. does not allege that statements on this form
are a basis for imposing a CMP.
7

The medical evidence from 2003 reveals visual impairment but does not establish that
Respondent was blind.

Jerry A. Hollimon, O.D.*, indicates in a letter dated March 26, 2003, that he saw
Respondent on March 19, 2003. Dr. Hollimon states that Respondent complained of
problems seeing his computer and driving vehicles. On visual examination, Dr. Hollimon
found optic nerve changes. Best corrected visual acuity for Respondent was determined
to be 20/30 and 20/40 in each eye. A visual field study revealed severe peripheral field
loss in both eyes. Dr. Hollimon diagnosed low tension glaucoma for which he prescribed
drops to prevent further deterioration of Respondent’s optic nerve. Dr. Hollimon did
opine that Respondent’s glaucoma made it difficult for him to perform normal tasks and
he requested that Respondent be indefinitely excused from work. P. Ex. 21, at 1.

Dr. Hollimon signed another letter dated April 16, 2003, in which he states that he saw
Respondent on March 19, April 1, and April 16, 2003. Dr. Hollimon states the findings
included in his previous letter and further that, “(t)his glaucoma problem is causing Mr.
Tobias severe visual fatigue, loss of sight and blurred vision.” Dr. Hollimon further
opines that damage to Respondent’s optic nerve previous to prescribing medication has
made it difficult for him to perform any work related tasks and that he cannot work. P.
Ex. 21, at 2.

On April 24, 2003, Michael Armini, M.D., signed a note on a prescription pad that
indicates he saw Respondent who complained of loss of vision to the level of light
perception only since March 19, 2003. Dr. Armini did not give a diagnosis but referred
Respondent to Louisiana State University for further evaluation. P. Ex. 21, at 3.
Respondent testified that he never went to Louisiana State University on the referral by
Dr. Armini because the visit would not be covered by his insurance. Tr. 201-08.

The state agency that processed Respondent’s 2003 applications sent him to consultative
examinations. Michael L. Fajoni, M.D., Eye Physicians & Surgeons, Inc., examined
Respondent and issued a report dated May 12, 2003. Dr. Fajoni noted Respondent’s
complaint of decreased visual acuity and that his only medication was Travatan eye drops
for low tension glaucoma. Dr. Fajoni commented that it was inconsistent that
Respondent’s visual acuity was measured by Dr. Holliman in April of 2003 as 20/30 and
20/40, but when Respondent saw Dr. Armini his visual acuity had dropped to the level of

* A licensed optometrist is an acceptable medical source for determining
measurements of visual acuity and visual fields for purposes of determining eligibility for
benefits or payments. 20 C.F.R. §§ 404.1513(a)(3); 416.913(a)(3).
8

lindness. Dr. Fajoni found no indication of low tension glaucoma and he commented
that evaluation of the visual field performed by Dr. Holliman’s office is not consistent
with glaucoma. Dr. Fajoni opined that, based on his normal examination, the visual field
performed by Dr. Holliman is more consistent with “post-chiasmal pathology or a non-
organic cause.” Dr. Fajoni explains that cortical or cerebral blindness is a complete or
incomplete loss of visual acuity from occipital lobe damage rather than eye disease.
Because Respondent had both normal pupillary light responses and a normal fundus
examination, cortical or cerebral blindness might be the explanation for loss of visual
acuity. Dr. Fajoni recommended an MRI to try to determine that. He also noted that
hysteria and malingering (non-organic causes) might also be indicated by a normal MRI
examination. P. Ex. 21, at 4-5.

Respondent was also referred to Pervez Mussarat, M.D.,’ for a consultative examination
on July 3, 2003. Dr. Mussarat reported that Respondent complained of losing his vision
starting in March 2002 and the vision loss progressed to the point that, at the date of the
examination, he had total loss of vision. Dr. Mussarat also notes, however, that
Respondent reported having blurred vision making it difficult for him to read and he
reported that he could not see or count fingers. Dr. Mussarat lists Respondent’s various
physical complaints and states that Respondent was referred to him “to rule out any
physical disability.” Dr. Mussarat opined, apparently based upon notes provided from Dr.
Hollimon, that Respondent had central vision only. Dr. Mussarat records as his
impression that Respondent was “legally blind” based on visual field testing by Dr.
Hollimon. P. Ex. 21, at 7. He ordered an MRI but a hand-written note dated July 22,
2003, indicates that Respondent was a no show for the MRI. /d.

The record also contains a letter on Tulane University Hospital & Clinic letterhead, dated
July 28, 2003, from Leon A. Weisberg, M.D., Director and Professor, Tulane Neurology,
addressed to T. Hamilton, Disability Determination. Dr. Weisberg reports that
Respondent was referred to him for a neuropsychiatric consultation that occurred on July
28, 2003. Dr. Weisberg reports that Respondent told him he was involved in a car wreck
in February 2000, that his vision became blurred and then progressed to blindness over a
period of one month, and that, as of the date of the examination, he was totally blind. Dr.
Weisberg opined that Respondent did not appear to be malingering and there was no
evidence of a conversion reaction. Dr. Weisberg observed that Respondent’s optic discs
appeared normal and that his pupils reacted to light. Dr. Weisberg states that Respondent

* Whether or not Dr. Mussarat is a specialist in a particular field of medicine is not
clearly indicated on his report. However, the report indicates he performed a neurologic
examination.
9

could finger count, but he also states Respondent is totally blind, an obvious
inconsistency. Dr. Weisberg concluded that he found no evidence of optic nerve disease,
that he did not feel there was a conversion reaction, and that he had no “good explanation
for Respondent’s visual loss.” P. Ex. 21, at 9. He found no evidence to suggest
glaucoma cither based on his own examination or the report of the ophthalmologist. He
opined that Respondent’s report was inconsistent with damage within the occipital cortex.
But he concluded that Respondent “can not (sic) care for himself because of the
blindness.” P. Ex. 21, 8-10.

Medical evidence from 2003 shows Respondent was reporting visual disturbance, but the
nature and degree of that disturbance is not settled by the medical experts, either
Respondent’s treating sources or the consultative examiners. Respondent’s treating
optometrist Dr. Holliman concluded on examination on March 19, 2003, that Respondent
retained corrected visual acuity of 20/30 and 20/40 in each eye. Although Dr. Holliman
opined that there was severe peripheral field loss in each eye and that Respondent would
ave a great deal of difficulty driving, he recommended frequent rest to prevent visual
strain, but did not indicate that he told Respondent he had to quit driving. Dr. Holliman
also never states in either of his reports that Respondent is blind. P. Ex. 21, at 1-2. Dr.
Armini’s note dated April 24, 2003, is of little probative value as it does not reflect the
basis for his conclusion that Respondent’s level of vision had been reduced to light
perception only in both eyes since March 19, 2003. Dr. Armini’s report is also clearly at
odds with Dr. Holliman’s reports. Dr. Fajoni, in his report of May 12, 2003, highlights
the fact that the reports of Holliman and Armini are inconsistent. Dr. Fajoni also found
Dr. Holliman’s opinions to be inconsistent. Dr. Mussarat states that Respondent is legally
lind, but that conclusion is based upon Dr. Holliman’s conclusions. Dr. Weisberg also
found no evidence of glaucoma and noted inconsistencies in Respondent’s presentation.
He could not rule out brain injury, but noted no depression, psychosis, or organic brain
disturbance. Dr. Weisberg states that Respondent cannot take care of himself because of
blindness, but he reveals no basis for concluding Respondent is blind other than
Respondent’s subjective complaints. P. Ex. 21, at 8-10.

[he most damning piece of evidence against Respondent and his allegation that he was
blind in March of 2003, is the fact that he applied for a driver’s license on December 24,
2003, less than six months after his last consultative medical examination. Petitioner
produced Respondent’s renewal application for Louisiana Personal Driver’s License

lated December 24, 2003, which bears Respondent’s signature. The application indicates
that Respondent requested a downgrade of his license from an “A” to an “E”; that he
reported no physical or mental condition that could impair his ability to operate a motor
vehicle safely; and that he did not wear contact lenses or glasses. The form indicates that
Respondent’s vision without correction was 20/40 in both eyes. The form indicates that

10

Respondent certified by his signature subject to legal penalty, that all statements on the
application were true. Respondent was issued a class “E” license without restrictions that
is effective until January 3, 2008. P. Ex. 15; Tr. 94-95. Respondent showed me his
driver’s license at the hearing. The license was a class “E” with an expiration date of
January 3, 2008, and there were no endorsements or restrictions listed. Respondent
testified that the license renewal notice was read to him by his son. He knew he could not
pass the examination but he wanted an identification card. He testified that he told the
lady at the motor vehicle division that he was having eye problems and that the doctor had
taken his glasses because they did him no good. The lady had him look in the eye
machine. He testified that he told her things were blurred. He testified he saw a few
letters of the alphabet and told the lady he could not see anymore, she said okay and then
they took his picture. He testified that his son had to put his hand on the line so that he
could sign his name. In response to cross-examination by counsel for the I.G.,
Respondent testified that he continued to drive between 2000 and 2003, despite
occasional loss of vision. He testified that when doing the vision examination he recalled
seeing the first of the letters but then told her he could not see anymore. Tr. 216-39. I do
not find credible Respondent’s assertions that he only sought an identification card and
that he was essentially given a renewal of his driver’s license in error or through
negligence by licensing officials. Two documents bearing Respondent’s signature and
dated December 24, 2003, show that he applied for a Louisiana personal driver’s license,
that he had uncorrected 20/40 vision bilaterally, and that he had no physical or mental
conditions that impaired his ability to operate a motor vehicle safely. Respondent
admitted taking the eye examination, that he told the examiner that he was having some
vision problems and that his vision was blurry, but he admitted that he was able to read
some of the letters. Tr. 206-08. Respondent has never asserted that he told the examiner
that he was blind or that he could not see to drive.

Respondent’s testimony also shows that he engaged in more ADLs in 2003 than he
reported on the form in question. Respondent testified that in April 2000 he experienced
his first loss of vision, but it returned after a short time. Tr. 192-93. He began seeing Dr.
Holliman in 2001. Between 2000 and 2003, sometimes he could see; sometimes he could
not; and sometimes his vision was blurred. Tr. 193. Respondent testified that he used
one cane for balance and a different cane to help find his way in unfamiliar locations. Tr.
194. Respondent testified that he did attend church activities but other people transported
him. Tr. 200, 203. Respondent testified that he could take a shower or bath except when
his body pains prevented it. He testified that blindness never prevented him from
showering or bathing, although, he sometimes had assistance to ensure he had all the soap
off and was dried completely. He testified that he never cooked because he never learned
11

how. He recalled last watching television in 2003, although he still listens. He lived by
himself from April 2000 to July 2006, although sometimes people stayed with him for
rief periods. Tr. 200-04.

espondent’s testimony indicates that between 2000 and 2003 he was experiencing
instances of blurred or lost vision. Tr. 193-94. However, during the processing of his
2003 applications and specifically at the time he made or caused to be made the entries on
the Supplemental Interview Outline, the evidence shows that Respondent was not as
imited as he alleged on that form. Respondent admitted that he continued to live alone,
albeit with occasional assistance from family or friends, he continued to participate in
church activities, and he remained able to do some self-care ADLs such as showering or
athing. Tr. 200-04.

conclude that the preponderance of the evidence shows that Respondent was not blind
or suffering visual impairment to the extent he alleged in the Supplemental Interview
Outline on May 8, 2003. Respondent has never denied that he provided the responses that
appear on the Supplemental Interview Outline or that he signed that form on or about
May 8, 2003. The form includes entries that state, among other things: “I can not see at
all to do for myself” (P. Ex. 3, at 1); “I can not do for myself because I can not see” (P.
Ex. 3, at 1); “I can’t see” “I’m legally blind” “T have loss (sic) my sight in both eyes” (P.
Ex. 3, at 2); “I can not see (I am legally blind) (P. Ex. 3, at 2); “I can not see the food or
the prices” (P. Ex. 3, at 2); “I can’t see the words (legally blind)” (P. Ex. 3, at 3); “I can
not see (legally blind)” (P. Ex. 3, at 3); “I am disabled to protispate (sic) in activities
because of loss of sight (legally blind)” (P. Ex. 3, at 4); and “I am legally blind future test
and exams to follow” (P. Ex. 3, at 4). I find that Respondent either made or caused to be
made each of these statements and that he either knew or should have known that they
were false or misleading when he made them in order to gain benefits or payments under
the Act. There is no question that that document was prepared by Respondent and
submitted to convince the Commissioner to find Respondent entitled for benefits or
payments under title II and title XVI of the Act. Evidence such as the Supplemental
Interview Outline must be considered when the disability determination is made. 20
C.F.R. § 404.1512(b)(3). Thus, the statements in the Supplemental Interview Outline are
material within the meaning of section 1129(a)(2) of the Act. I also conclude that
Respondent knew or should have known that his statements on the Supplemental
Interview Outline were false or misleading and that they were made intentionally. I do
not doubt that Respondent was having some visual disturbance in 2003. However, the
evidence is clear to me that Respondent’s limitations were not as great as he claimed.
12

The false or misleading statements Respondent made or caused to be made on the
Supplemental Interview Outline on May 8, 2003, are a basis for the imposition of a CMP
pursuant to section 1129(a)(1) of the Act.

2. Petitioner has not proven by a preponderance of the evidence that
Respondent made or caused to be made a false or misleading statement
on April 18, 2004, or that he completed a form entitled “Function
Report — Adult” on that date.

Congress specified in the Act that the Commissioner shall not make a determination
adverse to any person under section 1129 until the person has been given written notice
and an opportunity for a hearing. Act § 1129(b)(2). The Commissioner’s regulations
implementing section 1129 of the Act are even more specific than the Act regarding
notice. The Commissioner requires that the SSA I.G. serve written notice upon the
person against whom a CMP will be imposed. The notice must include, among other
things:

(2) A description of the false statements, representations, and
incidents, as applicable, with respect to which the penalty and
assessment, as applicable, are proposed;

20 C.F.R. § 498.109(a)(2).

Petitioner notified Respondent by letter dated January 24, 2006, that imposition of a CMP
under section 1129 was being considered based upon false statements or misleading
representations. Petitioner alleged that Respondent made four misrepresentations in a
“Supplemental Interview Outline” form that he completed on May 8, 2003. The specific
misrepresentations alleged were that Respondent was blind and therefore he did not
prepare his own meals; he did not do other household chores; he did not read; and he did
not participate in any clubs or groups. Petitioner also alleged Respondent made a false
statement on April 18, 2004 when completing a form entitled “Function Report — Adult”
because he said that he did not drive due to blindness. Finally, Petitioner alleged
Respondent made a false statement on October 4, 2005, when he completed a form
entitled “Disability Report — Adult,” on which he indicated that he was unable to work
due to blindness that began in March 2003. P. Ex. 18.

Petitioner notified Respondent by letter dated March 9, 2006, that a CMP of $15,000 was
proposed pursuant to section 1129 of the Act. The basis for the CMP was alleged to be
false statements Respondent made to SSA on the May 8, 2003, “Supplemental Interview
Outline,” including the statements that he was blind in both eyes; that he did not clean
13

house, launder clothes, or do other work around the house due to blindness; that he did
not read due to blindness; and that he did not participate in clubs or groups due to
blindness. SSA alleged in the notice that the CMP was also based on a false statement
Respondent made on April 18, 2004 in a “Function Report — Adult,” specifically that he
did not drive due to blindness. SSA also cited an alleged false statement Respondent
made on an October 4, 2005, “Disability Report — Adult,” specifically that he was unable
to work since March 2003, due to blindness. P. Ex. 19.

Both the January 24 and March 9, 2006, SSA notices allege that Respondent made false
statements on April 18, 2004, on a form entitled “Function Report — Adult.” However,
Petitioner has offered no such form as evidence or any evidence that such a form exists.
Furthermore, Petitioner does not refer to such a form with that date in its prehearing or
post-hearing briefing. Petitioner’s Prehearing Brief at 2-5; P. Brief at 1-4.

The I.G. does discuss in its briefs a “Function Report — Adult” dated April 18, 2005,
alleging that Respondent made false statements in that form. Petitioner’s Prehearing
Brief at 2; P. Brief at 2-3. However, it is not alleged in either the January 24, 2006 or the
March 9, 2006 notices to Respondent that he made false statements on such a form on
April 18, 2005, or that those alleged false statements were the basis for the I.G.’s proposal
to impose a CMP.

One might argue that the date “2004” in the L.G. notices of January 24, 2006 (P. Ex. 18, at
1) and March 9, 2006 (P. Ex. 19, at 1) was a typographical error that should be
overlooked based on the fact that the I.G. has produced and argued about a document
with a similar title dated April 18, 2005. The error, even if a clerical error, is too
significant and too prejudicial to be simply overlooked. Congress was specific that the
target of a CMP be given written notice and an opportunity to be heard. The
Commissioner was no less specific in his regulations. Absent accurate notice of the basis
for a CMP, one responding to such allegations can be deprived of the opportunity to
adequately defend, particularly where as here a citizen elects to defend him or herself. It
is fundamental to our system of jurisprudence that due process requires proper notice and
an opportunity to defend. Proper notice was not given in this case, even if that failure
may be attributed to a “typo.”

Petitioner has not complied with the notice requirement of the Act as interpreted by the
regulation with regard to any false statements allegedly made in the form dated April 18,
2005. Accordingly, those statements may not be considered the basis for a CMP at this
point. Petitioner has also failed to produce any evidence that Respondent made or caused
to be made a false or misleading statement on April 18, 2004. Accordingly, I conclude
14

that Petitioner failed to establish by a preponderance of the evidence that Respondent
made a false statement on April 18, 2004, when completing a form entitled “Function
Report — Adult.”

3. Petitioner has not proven by a preponderance of the evidence that
Respondent made or caused to be made false or misleading statements
in support of his applications for title I] and title XVI benefits and
payments in 2005.

One might be tempted to assume, because Respondent has been found to have made false
or misleading statements in 2003, that his statements in 2005 are also false or misleading.
However, such an assumption is neither permitted nor warranted in this case. The I.G.
bears the burden of proving by a preponderance of the evidence that statements upon
which it seeks to impose a CMP are false or misleading. The I.G. may not be relieved of
its burden by the simple expedient of an assumption. Rather, evaluation of the medical
and other evidence related to the application and statement in 2005 is required to
determine whether the I.G. has met its burden and whether or not Respondent has
overcome the I.G. showing.

I have no evidence that shows when Respondent filed applications for title IT and title
XVI benefits and payments in 2005. However, there is no dispute that he did apply for
benefits and payments in 2005. The March 9, 2006, I.G. notice indicates that Respondent
has not been paid any benefits and | infer that Respondent’s 2005 applications were
denied. P. Ex. 19 at 2.

The I.G. alleges that Respondent made false or misleading statements in a “Disability
Report — Adult” on October 4, 2005 (P. Ex. 10) and that the false or misleading
statements were that Respondent could not work due to blindness that began in March
2003. Tr. 43-44; P. Brief at 2-3. The I.G. argues that I should conclude that Respondent
made false or misleading statements in support of his 2005 applications because he made
false or misleading statements in support of his 2003 application and because a video shot
by investigators in October 2005 appears to show Respondent walking with little
assistance. Petitioner has presented no evidence that during the period 2003 through
2005 that Respondent drove or worked. The video shot by the investigators does not
show that Respondent was not blind or that he could work or drive. Furthermore, SSA’s
medical evidence is convincing that Respondent’ vision was significantly more impaired
in 2005 than it was in 2003.
15

The medical evidence from consultative examinations in 2005 is consistent with
Respondent’s assertion that in 2005 his vision was extremely limited to the extent that he
could not drive or work. Dr. Satyarthi Gupta states on an eye examination report dated
May 26, 2005, that “(c)linical findings do not correlate with the loss of vision” but he
provides no narrative to explain his conclusion. Dr. Gupta’s diagnosis includes a cataract
and chronic open angle glaucoma. He made no findings of central visual acuity and
questioned whether or not Respondent was cooperative with the examination, but he does
not explain the basis for his suspicion that Respondent was not cooperative. P. Ex. 21, at
12-13. Joshua Willis, M.D., performed a consultative examination of Respondent on
June 4, 2005. Dr. Willis reported that Respondent’s vision was 20/200 bilaterally.* Dr.
Willis also reported that Respondent’s claim of blindness was clinically consistent
because Respondent had no direct light reflex, which in the words of Dr. Willis “is
something that you cannot fake.” P. Ex. 21, at 14-17. Dr. Stephen J. Capps, M.D.,
completed a consultative examination report dated August 16, 2005. Dr. Capps reported
in the blanks for central visual acuity that Respondent had “light perception” only. Dr.
Capps’ diagnosis indicates “decreased vision, etiology unclear.” Dr. Capps also notes
that the examination was not consistent with complaints or with acuity, but he provides no
narrative explanation. P. Ex. 21, at 18. Although, Dr. Willis is apparently not an
ophthalmologist, his observation that Respondent has no light reflex is not the type of
clinical finding that requires a specialist in ophthalmology. Furthermore, Dr. Willis’
narrative report is sufficiently detailed to allow one to assess that he did a thorough
examination lending credibility to his opinion. The absence of narrative in Dr. Gupta’s
and Dr. Capps’ reports make it difficult to assess those reports as credible and the
statements noted on the forms they completed are subject to various and conflicting
interpretations.

The medical evidence, while not conclusive that Respondent is blind, certainly indicates
that Respondent was suffering significant visual impairment in 2005. Dr. Willis’ findings
make it impossible to find by a preponderance of the evidence that Respondent was not
blind or suffering extremely limited vision as he alleged in 2005. Based upon the medical
evidence, the charge of false or misleading statement against Respondent cannot be
proved unless there is other evidence that he was engaging in activities inconsistent with
blindness or significant visual impairment.

° Statutory blindness is 20/200 or less in the better eye with the use of correcting
lenses. 20 C.F.R. § 404.1581.
16

The I.G. called Special Agent Ozwaldo Fong, of the SSA I.G., who assisted the CDI unit
with conducting surveillance of Respondent on October 17, 2005. Agent Fong and Agent
Chester Davis made video recordings of Respondent. P. Ex. 16. The video was viewed
at hearing and Agent Fong described what he observed. Agent Fong identified
Respondent in the video arriving for a consultative examination with a cane of the type
used by blind people, wearing dark glasses, and with the assistance of another person.
After Respondent exited the location for the consultative examination, Agent Fong
testified that Respondent and his driver, who was identified as Respondent’s brother
Marion, traveled to a gas station and convenience store. On arriving at the convenience
store Respondent exited the right, passenger-side, turned his head to the right and left,
walked to the convenience store without apparent assistance of Marion, opened the door
and entered the convenience store. Marion Tobias and Respondent exited the store after a
brief time and Respondent entered the passenger-side without apparent assistance by
Marion. Surveillance ended when the car passed into Mississippi. Tr. 122-32.

The I.G. also called Louisiana State Police Investigator Chester Davis who was detailed
to work with the CDI unit. Investigator Davis also viewed the video and described what
he observed for the record. Investigator Davis testified that the week prior to hearing he
went to Respondent’s residence and interviewed a neighbor, Denise Nichols. Ms.
Nichols identified Respondent from a picture. Ms. Nichols told Investigator Davis that
she saw Respondent drive, move around on his own with a walking cane, but not the kind
the blind use, and that he looks at her, speaks, and waves. Investigator Davis also
interviewed Robin Brown who said that when she saw Respondent outside he would
sometimes speak and wave to her first. Tr. 135-47.

Marion Tobias testified that at the convenience store Respondent used a cane; and that he
gave Respondent verbal instruction for finding the railing that led into the store, that there
were three steps up to the store, and the location of the door handle. Marion Tobias
testified that he also gave Respondent verbal instructions as they left the store. Tr. 54,
176-86.

Respondent testified on cross-examination that he had no idea why Denise Nichols said
she saw him driving but she was a new neighbor who simply assumed the person she saw
driving was him. He testified that he never really talked to Nichols about his affairs but
indicated that they had been introduced. Nichols and Brown just moved to the
neighborhood in 2005. He acknowledged that when he was outside he did wave at
people, but he could not be sure who it was as he simply waved when he heard a car pull-
up and a door close or a horn blow. Respondent testified that he does own a 2001 Mazda
17

pickup truck, but it has not been in his possession for a while as his brother has been
using it. He stated that the pickup truck has been at his address on many occasions. Tr.
235-238.

I find that the video is not persuasive on the issue of whether or not Respondent was blind
or suffering significant visual impairment. I note that Marion Tobias, upon questioning
by the I.G., testified in detail how he verbally directed Respondent at the convenience
store. Marion Tobias gave this testimony before he had an opportunity to view the video.
His testimony was not inconsistent with what was observed on the video when it was
viewed. His testimony prior to viewing the video was also not inconsistent with his
additional testimony after viewing the video. Tr. 54, 59, 177-86. Marion Tobias’
testimony that he gave verbal direction to Respondent at the convenience store is credible.
The fact that Respondent was not wearing dark glasses at the convenience store or that he
turned his head left and right is also not inconsistent with Respondent’s position that he
was blind or significantly visually impaired.

I give no weight to the hearsay statements of either Denise Nichols or Robin Brown.
These witnesses could have been subpoenaed to testify subject to cross-examination or
my questioning, but they were not. I have no doubt that Investigator Davis accurately
testified to what he recalled being told by Respondent’s two neighbors. However, I find
insufficient indicia of reliability for their out-of-court statements because there has been
no opportunity to inquire as to their ability to observe Respondent, the conditions under
which they allegedly observed Respondent, or whether they could accurately identify
Respondent.

I conclude that the I.G. has not shown by a preponderance of the evidence that
Respondents’ statements in 2005 were false or misleading. Thus, no CMP may be
imposed for those statements pursuant to section 1129(a)(1) of the Act.°

° My conclusion in this regard may not be read to be a conclusion that Respondent
meets the requirements for a finding he is disabled or that he is eligible for benefits or
payments under title II or title XVI of the Act. These issues are not within my
jurisdiction.
18

4. A $5000 CMP is reasonable in this case.

I have found that Respondent made a false statement on May 8, 2003, related to his 2003
applications for title II and title XVI benefits, when completing the “Supplemental
Interview Outline” form. Thus, there is a basis for the imposition of a CMP pursuant to
section 1129(a)(1) of the Act.

The maximum penalty authorized is $5000 for each false or misleading statement or
representation. Act, § 1129(a)(1)(C); 20 C.F.R. § 498.103. 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 SSA 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) of the Act:

(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 y. 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 statements and representations and the
circumstances under which they occurred.

Petitioner alleged that Respondent made four false statements on the “Supplemental
Interview Outline” dated May 8, 2003. P. Brief at 1-2. I conclude, however, that the
“Supplemental Interview Outline” should be treated as a single statement for purposes of
imposition of a CMP in this case. Treating the “Supplemental Interview Outline” as a
single false or misleading statement for purposes of imposing a CMP is consistent with
the I.G. notices to Respondent dated January 24, 2006 and March 9, 2006. The January
24-notice advised Respondent that the I.G. was considering a $15,000 CMP based upon
four misrepresentations in the “Supplemental Interview Outline,” a false statement in a
“Function Report-Adult” dated April 18, 2004, and another false statement in a
“Disability Report — Adult” dated October 4, 2005. The March 9-notice states that a $15,
000 CMP was proposed based upon false statements in the “Supplemental Interview
Outline,” a false statement in a “Function Report-Adult” dated April 18, 2004, and
19

another false statement in a “Disability Report — Adult” dated October 4, 2005. My
reading of both notices is that the I.G. treated the “Supplemental Interview Outline” as a
single false or misleading statement for purposes of proposing the CMP.

(b) Degree of culpability, history of prior offenses, and financial
condition of Respondent.

have no evidence of any prior offense by Respondent. Respondent has not presented
evidence to support his allegations at hearing that he is in difficult financial
circumstances. Respondent admitted to owning a vehicle, that he received a significant
ayment from his employer in 2003, and that he owned a private residence, albeit subject
to a mortgage that Respondent alleges is near foreclosure. I do not have sufficient
evidence of Respondent’s financial circumstances to find he is unable to pay a $5000
CMP or that the amount of the CMP should be mitigated.

do find that Respondent was culpable for making a false or misleading statement in the
form of the “Supplemental Interview Outline.” Certainly one knows if he is blind.
Further, it is clear from the record that rather than accurately report the impact of a visual
impairment, Respondent simply chose to overstate the degree of his visual impairment
and the impact upon his ADLs when he completed the “Supplemental Interview Outline.’

.

(c) Other matters as justice may require.

I impose the maximum penalty permitted under the Act for a single false or misleading
statement. The first applications Respondent signed in 2003, warned him that making
false or misleading statements could lead to punishment. Furthermore, deterrence of
others prone to over-state their impairments, is a legitimate consideration in imposing a
CMP in this case. I do not consider that Respondent may ultimately be found disabled
due to impaired vision as grounds for mitigating the CMP.

D. Findings of Fact

The following findings of fact are based upon the exhibits admitted and the testimony at
hearing. Citations to exhibit numbers or transcript pages related to each finding of fact
may be found in the analysis section of this decision if not indicated here.

1. Petitioner notified Respondent by letter dated January 24, 2006, that imposition of
a CMP under section 1129 of the Act was being considered based upon false
statements or misleading representations in a “Supplemental Interview Outline”
20

form that he completed on May 8, 2003; a “Function Report — Adult” that he
completed on April 18, 2004, and a “Disability Report — Adult” that he completed
on October 4, 2005. P. Ex. 18.

Petitioner notified Respondent by letter dated March 9, 2006, that a CMP of
$15,000 was proposed pursuant to section 1129 of the Act based upon false
statements Respondent made to SSA in a May 8, 2003 “Supplemental Interview
Outline,”an April 18, 2004 “Function Report — Adult,” and an October 4, 2005
“Disability Report — Adult.” P. Ex. 19.

Respondent did not make or cause to be made false or misleading statements in a
“Function Report — Adult” dated April 18, 2004, and no such document has been
presented as evidence.

Petitioner did not give Respondent notice that it considered or proposed imposition
of a CMP based upon an alleged false or misleading statement that he made or
caused to be made on a “Function Report — Adult” dated April 18, 2005.

Respondent filed applications for disability insurance benefits under title II of the
Act and for Supplemental Security Income under title XVI of the Act on April 28,
2003, in which applications he alleged that he became disabled March 31, 2003.

Respondent’s April 28, 2003 applications were denied and he received no payment
thereon.

Respondent completed or caused to be completed by filling in various blanks, a
“Supplemental Interview Outline” that he signed on May 8, 2003, on which he
indicates that he has very limited ADLs due to blindness.

Petitioner has not presented evidence that Respondent did perform ADLs that he
stated he could not perform on the “Supplemental Interview Outline” that he
signed on May 8, 2003.

Jerry A. Hollimon, O.D. examined Respondent on March 19, 2003, found optic
nerve changes; best corrected visual acuity for Respondent was determined to be
20/30 and 20/40 in each eye; he diagnosed glaucoma and prescribed eye drops; but
he did not state Respondent was blind or direct that he no longer drive. P. Ex. 21,
at 1-2.
10.

11.

21

Michael L. Fajoni, M.D., Eye Physicians & Surgeons, Inc., examined Respondent
and issued a report dated May 12, 2003, in which he found no indication of low
tension glaucoma, and that Respondent had a normal examination with both
normal pupillary light responses and a normal fundus examination. P. Ex. 21, at 4-
5.

Leon A. Weisberg, M.D., Director and Professor Tulane Neurology, Tulane
University, signed a letter dated July 28, 2003, in which he reports as his findings
of examination of Respondent, that Respondent did not appear to be malingering
and there was no evidence of a conversion reaction; that Respondent’s optic discs
appeared normal and that his pupils reacted to light; that Respondent could finger
count but he also states Respondent is totally blind, an obvious inconsistency; that
he found no evidence of optic nerve disease; that he did not feel there was a
conversion reaction or glaucoma; and that he had no “good explanation for
Respondent’s visual loss.” P. Ex. 21, at 8-10.

Respondent applied to renew his Louisiana Personal Driver’s License on
December 24, 2003, requesting on the application that his license be downgraded
from a commercial to a personal license; he reported no physical or mental
condition that could impair his ability to operate a motor vehicle safely; he
reported that he did not wear contact lenses or glasses and that his vision without
correction was 20/40 in both eyes; and the renewed license was issued and remains
effective until January 3, 2008. P. Ex. 15; Tr. 94-95.

On December 24, 2003, Respondent did not tell the driver’s license examiner that
he was blind or that he could not drive due to limited vision.

Respondent was not blind or suffering visual impairment to the extent he alleged
in the Supplemental Interview Outline that he completed on May 8, 2003.

Respondent filed applications for benefits and payments under title II and title XVI
of the Act in 2005.

Respondent’s 2005 applications for benefits or payments under title II and title
XVI of the Act were denied and he received no payments thereon.
17.

19.

20.

22

Respondent made or caused to be made statements on a “Disability Report —
Adult” on October 4, 2005, that he could not work since March 31, 2003, due to
“(b)lindness, lower back/neck pain/hand/arm and leg pain — caused by car
accident” and that “extensive pain constantly” limited his ability to work. P. Ex.
10 at 1.

Petitioner presented no credible evidence that Respondent did any work or that he
drove in 2005 or in the period March 31, 2003 through whatever was the date of
his application in 2005.

Joshua Willis, M.D., performed a consultative examination of Respondent on June
4, 2005, finding that Respondent’s vision was 20/200 bilaterally; and that
Respondent’s claim of blindness was clinically consistent because Respondent had
no direct light reflex, which in the words of Dr. Willis “is something that you
cannot fake.” P. Ex. 21, at 14-17.

The evidence does not show that Respondent was not blind or significantly
visually impaired in 2005.

E. Conclusions of Law
Respondent timely requested a hearing.

Respondent made statements that he knew or should have known were false or
misleading on May 8, 2003, related to his 2003 applications for title II and title
XVI benefits, when completing a “Supplemental Interview Outline” form.

The false or misleading statements Respondent made on May 8, 2003, were
material to the Commissioner’s determination as to whether to find Respondent
eligible or entitled to receive benefits or payments based on Respondent’s 2003
applications for title II and title XVI benefits.

The false or misleading statements Respondent made or caused to be made on the
Supplemental Interview Outline on May 8, 2003, are a basis for the imposition of a
CMP pursuant to section 1129(a)(1) of the Act.

The L.G. has not proven by a preponderance of the evidence that Respondent made
or caused to be made a false or misleading statement on a form entitled “Function
Report — Adult” dated April 18, 2004 and no such form has been presented as
evidence by Petitioner.
10.

23

Petitioner did not notify Respondent that it proposed a CMP based upon alleged
false or misleading statements Respondent made in a “Function Report — Adult”
dated April 18, 2005, thus, Petitioner has not complied with the notice requirement
of section 1129(b)(2) of the Act, as implemented by 20 C.F.R. § 498.109(a), and
those statements may not be considered the basis for a CMP.

Petitioner has not proven by a preponderance of the evidence that Respondent
made false or misleading statements in support of his applications for title II and
title XVI benefits and payments in 2005.

Petitioner has not shown by a preponderance of the evidence that Respondent’s
statements in the October 4, 2005, Disability Report — Adult were false or

misleading.

Petitioner has not shown by a preponderance of the evidence that Respondent
could or did work or drive during the period March 31, 2003 through 2005.

A $5000 CMP is reasonable in this case.

Ill. Conclusion

For the foregoing reasons, I conclude that a CMP of $5000 is appropriate for the false or

misleading statements that Respondent made on a “Supplement Interview Outline” on
May 8, 2003.

/s/

Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Western State Hospital, ) Date: March 1, 2007
)
Petitioner, )
)
-V.- ) Docket No. C-06-645
) Decision No. CR1570
Centers for Medicare & Medicaid )
Services. )
)
DECISION

I consider here whether a hospital has a right to a hearing on the Centers for Medicare &
Medicaid Services’ (CMS’s) determination that it was not in substantial compliance with
Medicare conditions of participation where CMS ultimately declines to terminate its
Medicare provider agreement. I conclude that the hospital is not entitled to a hearing, and
grant CMS’s motion to dismiss.

Petitioner, Western State Hospital, was a hospital accredited by the Joint Commission on
Accreditation of Healthcare Organizations (JCAHO), and, under the Medicare
regulations, was deemed to be in compliance with Medicare conditions of participation.
42 C.F.R. § 488.5(a). However, based on the findings of a June 8, 2006 survey conducted
by the Kentucky State Survey Agency, CMS determined that the hospital no longer met
the requirements for Medicare participation, and that its deficiencies posed “an immediate
and serious threat to the health and safety of patients.” In a notice letter dated June 21,
2006, CMS advised Petitioner that its Medicare provider agreement would be terminated
effective July 1, 2006. CMS Ex. 1, at 1.

Petitioner timely appealed. CMS Exs. 3 and 4.
2

In the meantime, the hospital apparently made changes that were acceptable to CMS, and,
in a letter dated July 7, 2006, CMS informed Petitioner that, based on the Kentucky State
Agency’s June 30, 2006 revisit survey, it had determined that the hospital

was back in compliance with Medicare conditions of participation. CMS Ex. 2.

CMS now asks that I dismiss Petitioner’s hearing request, and Petitioner opposes. In
addition to its motion to dismiss, CMS files four exhibits (CMS Exs. 1-4).

1. Petitioner is not entitled to a hearing because its Medicare provider
agreement was not terminated; hospitals are not entitled to a hearing on CMS’s
findings of noncompliance.'

Section 1866(h)(1) of the Social Security Act provides that an institution (such as a
hospital) is entitled to an administrative hearing to challenge CMS’s determination that it
is not a provider of services. By regulation, CMS has established the limits of that
hearing right. 42 C.F.R. Part 498. A provider dissatisfied with CMS’s “initial
determination” is entitled to further review, but administrative actions that are not initial
determinations are not subject to appeal. 42 C.F.R. § 498.3(d). The regulations specify
which actions are “initial determinations” and set forth examples of actions that are not.
CMS’s determination to terminate a provider agreement is an initial determination
reviewable by an administrative hearing. 42 C.F.R. § 498.3(d)(8). But here, CMS opted
not to terminate. What remains is its determination that the facility was not in compliance
with Medicare conditions of participation. Among the listed administrative actions that
are not initial determinations is the finding that a JCAHO-accredited hospital “is not in
compliance with a condition of participation, and a finding that that hospital is no longer
deemed to meet the conditions of participation.” 42 C.F.R. § 498.3(d)(9). Thus, the
regulations unambiguously preclude me from reviewing the determination of
noncompliance.

Petitioner complains that CMS’s June 21, 2006 findings were wrong, and argues that
CMS effectively — if not literally — imposed a remedy because, to avoid termination, the
hospital had to expend large sums of money and the hospital suffered adverse media
coverage. Petitioner also complains that dismissal effectively shuts off its appellate
review, leaving it no adequate remedy. This may be so, but I am bound by the
regulations; the regulations are unequivocal; and these complaints do not create a hearing
right.

' There being no dispute of fact in this case, I make this one conclusion of law.
3

An ALJ may dismiss a hearing request where a party has no right to a hearing. 42 C.F.R.
§ 498.70(b). I therefore grant CMS’s motion to dismiss and order this case dismissed.

/s/

Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)

Social Security Administration, ) Date: February 28, 2007
Office of the Inspector General, )
)

-V.- ) Docket No. C-06-411
) Decision No. CR1569
Anthony Koutsogiannis, )
)
Respondent. )
)
DECISION

I sustain the determination of the Social Security Administration (SSA) Inspector General
(I.G.) to impose civil money penalties totaling $10,000 and an assessment of $95,218
against Respondent, Anthony Koutsogiannis.

I. Background

I hear and decide this case pursuant to section 1129 of the Social Security Act (Act).
Section 1129(a)(1) of the Act authorizes the I.G. to impose civil money penalties and an
assessment against any person who:

(A) 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 monthly insurance benefits under [Social Security] or benefits under
[other programs including Medicare], that the person knows or should know
is false or misleading,
2

(B) makes such a statement or representation for such use with knowing
disregard for the truth, or

(C) omits from a statement or representation for such use, or otherwise
withholds disclosure of, a fact which the person knows or should know is
material to the determination of any initial or continuing right to or the
amount of monthly insurance benefits under [Social Security] or benefits or
payments under [other programs including Medicare], if the person knows,
or should know, that the statement or representation with such omission is
false or misleading or that the withholding of such disclosure is misleading

The Act defines a “material fact” to be a fact which the Commissioner of Social Security
may consider in evaluating whether a person is eligible for Social Security or other
benefits. Act, section 1 ]29(a)(2).

The I.G. is authorized to impose civil money penalties of not more than $5,000 for each
statement or representation that contravenes section | 129(a)(1) and, in addition, an
assessment in lieu of money damages of not more than twice the amount of benefits paid
as a consequence of such statement or statements. Act, section 1129(a)(1).

On February 14, 2006, the I.G. notified Respondent of his intent to impose civil money
penalties and an assessment against him based on false statements made by Respondent
relating to his work activity while receiving Social Security disability benefits.
Respondent requested a hearing and the case was assigned to me for a hearing and a
decision. I held a hearing in Boston, Massachusetts, on November 27, 2006. At the
hearing I received into evidence exhibits from the I.G. which are identified as SSA Ex. | -
SSA Ex. 21, and exhibits from Respondent which are identified as AK Ex. | - AK Ex. 19.
Each party filed a pre-hearing and a post-hearing brief.

II. Issues, findings of fact and conclusions of law
A. Issues
The issues in this case are whether:
1. Respondent deliberately made false or misleading statements, as are

described at section 1129(a)(1) of the Act, concerning his eligibility for
Social Security disability benefits, and
3

2. If he made such statements, penalties and an assessment as proposed by
the I.G. are reasonable.

B. Findings of fact and conclusions of law

1 make findings of fact and conclusions of law (Findings) to support my decision in this
case. I set forth each Finding below as a separate heading. I discuss each Finding in
detail.

1, Respondent deliberately made false or misleading statements
concerning his eligibility for disability benefits.

At issue in this case are two statements made by Respondent to SSA concerning his work
activity. I find that these statements are deliberately false and misleading as to material
facts. In making these statements Respondent concealed from SSA work or work-related
activity that he performed during the period when he received Social Security disability
benefits thereby depriving SSA of information that it needed in order to evaluate whether
he was eligible to receive such benefits.

On December 17, 1996, Respondent applied for Social Security disability benefits,
alleging that he was not working and had been medically disabled and unable to work
since March 14, 1995. SSA Ex. I, at 1.!_ SSA accepted Respondent’s application and in
July 1996 determined him to be eligible for disability benefits. Respondent received
disability benefits with benefits payments retroactive to January 8, 1996.

In 2000 an alleged financial creditor of Respondent informed SSA that Respondent was
working under the table at a business named Professional Image in the Fall River,
Massachusetts area. SSA Ex. 3, at 1. That allegation prompted SSA to send an inquiry to
Respondent on March 14, 2000. /d. at 2. SSA advised Respondent that it had been
informed that he was working at Professional Image and told him that he was required by
law to report “any and all work.” Jd. It requested Respondent to complete a statement
concerning his work activity. SSA explicitly told Respondent that it wanted to know
about any work activity he performed subsequent to his disability onset date.

' Respondent’s wife filed an application for SSA children’s benefits on behalf of
Respondent’s three children on March 7, 1997. SSA Ex. 2.
4

The information sought by SSA from Respondent was highly material to its evaluation of
Respondent’s continuing eligibility to receive disability benefits. Any work or work-
related activity engaged in by Respondent after the alleged onset date of his disability
related directly to the criteria used by SSA for determining whether Respondent was
cligible to receive disability benefits. Any concealment by Respondent from SSA of
work or work-related activities from SSA would deprive that entity of material
information that it wanted and needed in order properly to evaluate Respondent’s status.

Professional Image is a men’s retail clothing store in Fall River. AK Ex. 19, at 3.
Beginning in the mid-1990’s and up until the present, Respondent’s parents rented space
from Professional Image at which they ran a tailoring business under the name of Mr. and
Mrs. K’s Custom Tailoring. Jd.

Respondent replied to SSA’s inquiry with a handwritten statement which he signed on
March 17, 2000 (March 17, 2000 statement). SSA Ex. 4. The March 17, 2000 statement
is the first of two statements that the I.G. contends are willfully false. In it, Respondent
averred that:

I am not working and have not worked since I have been receiving
disability benefits. My parents have a business at the same building as
Professional Image and I may go to visit my parents at their business from
time to time.

Id. This statement is outright false in some respects and thoroughly misleading in others.
The statement conveys the distinct image of a man who engaged in no work and who, at
best, was an occasional visitor to his parents’ business. But, that was far from the truth.
Respondent was not an occasional visitor to Professional Image and his parents’ business,
he was there from four to seven days per week for periods of from three to eight hours at
atime. Hearing Transcript (Tr.) at 121. And, while he was there he performed many of
the duties of a clothing salesman and a tailor. He showed suits to customers, answered
the phone, measured customers for alterations, and wrote up sales receipts for them. Jd.;
AK Ex. 12, at 12.

Moreover, Respondent held himself out to the public as an employee of Professional
Image and/or his parents’ business. SSA Ex. 12, at 5. On April 3, 2002, an I.G. agent
visited Professional Image and Mr. and Mrs. K’s Custom Tailoring in an undercover
capacity. Jd. The agent posed as a customer seeking to have two pairs of pants altered.
Respondent met the agent at the entrance to the business, measured and marked the pants
for alteration, discussed the alterations he would make, totaled the cost of the alterations,
and assisted the agent in looking at several suits. Jd. He advised the agent that he had
5

additional suits coming in the next day. He gave the agent his parents’ business card,
telling him that he had worked as a tailor full time for four years but that he wanted to be
“incognito.” Jd.; AK Ex. 12, at 6. During a subsequent visit a week later Respondent
provided the agent with the altered pants and told the agent that he had performed the
tailoring work. SSA Ex. 12, at 7.7

Respondent argues that I should find not to be credible the report of the I.G. agent who
investigated Respondent’s work activity. He contends that the agent exaggerated the
extent of Respondent’s activities. To support this argument Respondent asserts that the
agent never observed Respondent actually altering garments or sewing. Respondent’s
post-hearing brief at 11.- 13. However, the I.G. agent never contended that he saw
Respondent alter garments or sew. Notwithstanding Respondent’s arguments, I find
nothing in the agent’s report to be incredible or exaggerated. Indeed, much of it was
corroborated by Respondent’s admissions of the extent of the activity he engaged in while
he was at Professional Image or his parents’ business. SSA Ex. 12; Tr. at 121.

Respondent also asserts — even as he admits the truth of much of the agent’s findings —
that he lied about the extent of his work activities when he described them to the I.G.’s
agent. According to Respondent:

[I]f I told him the truth I would have had to have shared the fact that I had
(multiple sclerosis] and was a substance abuser, couldn’t work and couldn’t
support my family. Rather than share that information with a stranger, I let
him leave with the impression that I was a tailor and had been for about
four years. That information was not true because they had not identified
themselves as government agents I felt no need to share the truth with them.

AK Ex. 12, at 14. I find this statement to be self-serving and not credible. Respondent
did not have to admit to anyone that he had an illness or was a substance abuser in order
to be truthful about his activities at his parents’ business, if, in fact, he was merely a
social visitor to the enterprise. He merely had to tell the agent that he was not an
employee.

? On this visit an unidentified woman working at the counter confirmed that
Respondent did the tailoring work on the pants. SSA Ex. 12, at 8.
6

Finally, in discussing his activities at Professional Image and his parents’ business,
Respondent argues that none of the activities that the agent observed really were in the
nature of work. According to Respondent, assisting customers, conducting business
matters on the telephone, and processing payments for tailoring work are not true work
activities but are “simple activities which virtually anyone could perform.” AK Ex. 12, at
12. He therefore seems to argue that he was not actually working at Professional Image if
he did not perform the full range of activities of a skilled tailor. He seems also to argue
that the allegedly simple activities that he performed for his parents’ business were not
material to SSA. However, the issue in this case is not whether Respondent made false or
misleading statements to SSA about his work as a skilled tailor, it is whether Respondent
made false or misleading statements to SSA about any work or work-related activities
that he performed. The “simple activities” that Respondent admits to having performed
are precisely the types of activities that comprise work. They involve both exertion and
mental activity that are consistent with work activity.

The March 17, 2000 statement also is false in that it failed to disclose that Respondent
worked in another capacity after the onset date of his disability. In 1996 or 1997
Respondent worked as an apprentice electrician for Raymond D. Melanson Electric, an
electrical contractor. SSA Ex. 18, at 2 - 3. There is a dispute about the precise dates
when Respondent performed this work. It is unnecessary, however, that I resolve that
issue. It is apparent from Mr. Melanson’s testimony that Respondent performed this work
at some time after January 8, 1996, the date when Respondent first began qualifying for
disability benefits payments. Jd. at 3.

SSA continued to receive numerous communications after March 2000 from an
individual or individuals who alleged that Respondent was working while receiving
disability benefits. SSA Ex. 9. In May 2001 SSA conducted a review of Respondent’s
case and determined to cease his disability benefits based on Respondent’s failure to
present medical evidence demonstrating continuing disability. SSA Ex. 5. Respondent
challenged this determination. On November 16, 2004, Respondent made a statement in
support of his assertion that he should continue to receive disability benefits (November
16, 2004 statement). SSA Ex. 15. The November 16, 2004 statement is the second
statement by Respondent that the I.G. avers is willfully false. In it Respondent states:

I did not work at all since I have been on disability.

Id.
7

This statement, as with the March 17, 2000 statement is false and misleading because it
implicitly denies both Respondent’s work activity for Professional Image and Mr. and
Mrs. K’s custom tailoring and for R.D. Melanson Electric on dates after Respondent first
began receiving disability benefits.

The concealment by Respondent of his work and work-related activities was deliberate.
The deliberately false quality of Respondent’s blanket denials of work becomes evident
when the two statements are read in the context of what Respondent knew SSA was
interested in determining. Respondent knew that SSA might terminate his benefits if it
determined that he had been working or if it concluded that he was physically and
mentally capable of working. SSA’s interest in Respondent’s possible post-onset work
activity was made plain by the March 14, 2000 letter that SSA sent to him. SSA Ex. 3, at
2.

Respondent argues that he made no deliberately false or misleading statements because he
never believed that what he was doing for Professional Image or his parents constituted
work. Respondent contends that he thought that his activities were not work because they
allegedly were not remunerative. Tr. at 127; Respondent’s post-hearing brief at 4 - 5.
This assertion is utterly unpersuasive. Respondent knew that his eligibility for disability
benefits hinged not only on whether he was working but on whether he was able to work.
The activities that he performed for his parents and Professional Image would certainly be
disqualifying if they provided substantial remuneration to Respondent. But, even if
Respondent took nothing in return for those activities, they were evidence of his physical
and mental capacity for work and might have been used by SSA to disqualify him from
receiving disability benefits. It blinks at reality to accept the premise that Respondent
was unaware that activities consisting of assisting in a tailor shop and clothing store,
several days a week, for up to eight hours a day, would not have potentially disqualified
him from receiving disability benefits, had SSA been aware of such activities. Thus,
how — or whether — Respondent was paid for his services for his parents and Professional
Image is not necessary to my finding that Respondent deliberately and falsely misstated
his work activity.’

> I make no findings in this case as to whether Respondent was paid for his
services for Professional Image and his parents because it is unnecessary that I do so.
There is evidence in the record, however, from which I could infer that Respondent was
paid. Tr. at 142 - 150.
8

According to Respondent, his understanding of what it means to work is consistent with
SSA’s own definition of “work”, which Respondent characterizes as being employment
for wages. I disagree with that characterization. Respondent knew — his protests
notwithstanding — that the duties he performed for his parents and Professional Image
arguably would be disqualifying even if he received no pay for them. In asking
Respondent to describe his work activities, SSA plainly was interested in learning more
from Respondent than whether he worked for pay. Unemployment and disability are not
synonymous terms. A person is eligible for disability if he or she is not working and if he
or she is unable to work. 20 C.F.R. § 404.1505. Performance of work certainly is a
disqualifying factor. But, performance of physical and mental activities that establish the
ability to work also is a disqualifying factor.

Respondent argues that he did not intentionally conceal his work for R.D. Melanson
Electric because his statements that he did no work since he began receiving disability are
literally true. He argues that he worked for this employer some time in 1996 but prior to
July 8, 1996, the date when SSA notified him that he was awarded disability benefits. He
contends that his statements that he did no work since he began “receiving disability
benefits” and since “being on disability” reflect his belief that his disability benefits
began on July 8, 1996. I find this assertion to be unbelievable. Respondent may have
received notification from SSA on July 8, 1996. However, that notification told
Respondent — based in part on Respondent’s representations as to his medical condition
and his past work activity — that SSA had determined that he had been eligible to receive
disability benefits since January 8, 1996, and that he would be paid benefits retroactively
to that date.*

The defenses in this case rest heavily on Respondent’s assertions of honesty and
credibility. In effect, Respondent argues that his statements, even if false or misleading in
fact, were never intended by him to be false or misleading. Obviously, the strength of
Respondent’s assertion of benign intent rests on the plausibility of his explanation for his

* As I discuss above, there is a dispute as to when Respondent worked for R.D.
Melanson Electric. Ray Melanson originally told the I.G.’s agents that Respondent
worked for him in 1997. SSA Ex. 12, at 3. He subsequently averred that the agents had
either mischaracterized what he said or misunderstood him and that Respondent actually
had worked for him in 1996. I do not resolve this dispute because it is unnecessary that I
do so. Whether Respondent worked for R.D. Melanson in 1996 or 1997, it was after the
onset date of his disability and, as I find above, Respondent knew that when he stated
twice, in 2000 and 2004, that he had done no work after first receiving disability benefits.
9

statements. AsI discuss above, I find Respondent’s explanation to be implausible. But,
of course, his declaration of honesty also rests heavily on his overall credibility. I
conclude that Respondent is simply not believable.

Respondent’s history of dealing with SSA shows that he has never been honest with the
agency. Assuming his assertion to be true that he worked for R.D. Melanson Electric in
1996 but prior to July 8 of that year, the date when he was found to be eligible for
benefits, then his December 17, 1996 application for disability benefits — in which he
avers that he last worked prior to March 14, 1995 — along with the two statements that are
at issue in this case, is deliberately false. SSA Ex. |, at 1. Given that, I find no reason to
accept as honest his protestations that he never intended to lie in his March 17, 2000 and
November 16, 2004 statements.

His assertions of honest intent also are unbelievable when they are weighed in the context
of the testimony he gave at the hearing. His recall of facts under cross-examination was
convenient. There was an obvious pattern to his testimony in which time after time
Respondent could not remember facts that were potentially damaging to his case. Thus,
Respondent asserted that he could not remember:

+ Any of the details of a conversation that he had with I.G. agents on May 3, 2002.
Tr. at 115 - 116. It was during this meeting that the agents confronted Respondent
with evidence that he had held himself out to an agent, in previous encounters, as
working for his parents’ business. SSA Ex. 12, at 16;

* When he became unable to work as a consequence of his disability. Tr. at 125;

¢ When he worked for R.D. Melanson Electric. Tr. at 125;

¢ What he meant in a statement he made to a health care provider on July 20, 1999
when he listed as a “Job/School/Living” problem: “Helping father at Store.” Tr. at

128; AK Ex. 3, at 9;

+ Telling a health care provider on May 7, 1998 that he was an electrician who
“hasn’t worked in | year”. Tr. at 129 - 130; AK Ex. 7, at 3;

« Telling a physician, also on May 7, 1998, that he was an electrician “who stopped
full time work last year.” Tr. at 130; AK Ex. 7, at 7.
10

In Respondent’s written direct testimony he asserts that:

I would like the court to be aware that during my cross-examination I might
forget certain facts. If this happens, I am not trying to be evasive it is
simply acondition or symptom of my disease. If I am reminded of a
particular event or fact, however, it may help my memory.

AK Ex. 12, at 9. Ido not find this to be a persuasive explanation by Respondent for his
convenient memory lapses at the hearing. He demonstrated an acute recall, in both his
direct testimony and in redirect testimony, of those facts that he thought were helpful to
his case. See AK Ex. 12; Tr. at 134 - 138.

2. Civil money penalties of $10,000 and an assessment of $95,218 are
reasonable,

The I.G. argues that I should impose civil money penalties against Respondent totaling
$10,000. Additionally, the I.G. asks that I impose an assessment of $95,218 against
Respondent.

The I.G. confuses somewhat the concepts of civil money penalty and assessment by
treating the proposed assessment as being part and parcel of the civil money penalties that
he asks me to impose. I.G.’s post-hearing brief at 10 - 13. However, and as a matter of
law, a civil money penalty and an assessment are separate remedies. Act, section
1129(a)(1); 20 C.F.R. §§ 498.103, 498.104. Civil money penalties are limited to $5,000
for each deliberately false or misleading statement that a person makes about a material
fact. An assessment may be for up to double the benefits paid by SSA as a consequence
of a false statement or statements. Id.

In this case the I.G. seeks the maximum allowable civil money penalties of $5,000 for
each of the two false statements made by Respondent. The I.G.’s proposed assessment of
$95,218 is well below the maximum allowed by law if it is assumed that Respondent was,
by virtue of the false statements he made about his work activity, entitled to none of the
disability benefits he or his family received from SSA after March 2000.5

> In the I.G.’s February 24, 2006 notice of intent to impose remedies against
Respondent, the I.G. originally proposed an assessment of $89,422. That amount
appeared, from the face of the notice letter, to equal the total amount of benefits that the
I.G. asserted that Respondent had received after March 2000 based on his false
statements. Subsequently, the I.G. increased the proposed assessment to $95,218 based
11

Section 1129(c) of the Act establishes criteria for determining the amounts of penalties
and assessments. These criteria have been implemented by regulation at 20 C.F.R. §
498.106(a):

(1) The nature of the [false or misleading] statements and representations
. .. and the circumstances under which they occurred;

(2) The degree of culpability of the person committing the offense;
(3) The history of prior offenses of the person committing the offense;
(4) The financial condition of the person committing the offense; and
(5) Such other matters as justice may require.

I have considered the evidence of this case in light of all of these factors. I decide that the
penalties and assessment sought by the I.G. are warranted. Respondent demonstrates a
very high degree of culpability for his actions. The evidence in this case is that his false
statements were designed intentionally to deceive SSA. Respondent certainly was aware
of the probable impact that his false statements would have on SSA. In March 2000 and
thereafter Respondent knew that SSA had received information from other sources that he
was working for his parents’ business and Professional Image. He knew that SSA was
interested in learning exactly what he was doing for these entities. He knew also that he
engaged in a broad range of activities for these enterprises that any reasonable person
would conclude were work or at least work related. His denials, made in the face of this
knowledge, clearly were intentional and willful untruths.

The level of Respondent’s culpability for his false statements is made all the more evident
by his history of uttering falsehoods to SSA about his work activity. As I discuss above,
Respondent made a false statement in his initial application for disability benefits — an
application which ultimately succeeded in convincing SSA to award benefits to him —
concerning his work activity. On December 17, 1996, when he filed that application, he

on a recalculation of the total benefits that Respondent and his family received.
Respondent has not disputed the accuracy of this sum. I note that both the original and
amended assessment amount are well under the maximum that the Act allows, if one
assumes that all of the benefits that Respondent received were obtained by him
improperly.
12

averred to SSA that he had not worked since March 14, 1995. In fact, and as Respondent
now admits, he worked after March 14, 1995. If his assertions are accepted as true, he
worked for R.D. Melanson Electronics sometime before July 8, 1996, the date when SSA
determined that he was disabled based, in part, on Respondent’s assertion that he was not
working.

The very high level of Respondent’s culpability coupled with his long history of
untruthful statements about his work activity clearly justifies imposing the maximum civil
money penalties of $5,000 for each of the two false statements for which the I.G. seeks
penalties. I find also that this culpability and history justifies imposition of the
assessment of $95,218 sought by the 1.G. Respondent obtained disability benefits and he
continued to receive them for several years premised on his false statements. The
assessment demanded by the I.G. is equal in dollar amount only to the amount of benefits
paid to Respondent and his family members after Respondent made his March 17, 2000
false statement.’ It is only 50 percent of the allowable maximum assessment amount and
I find it to be justified fully by Respondent’s culpability and history.

Respondent argues that I must take into account his financial condition. He argues that he
and his wife have never earned more than $34,537 in a year. Respondent’s post-hearing
brief at 20; AK Ex. 10, at 34. He asserts that civil money penalties and an assessment in
the amounts sought by the I.G. would work substantial financial hardship on him, his
children, and on his extended family as well. I do not find Respondent’s argument to be
persuasive. He has not established a detailed picture of his financial status. He has not,
for example, offered as evidence complete information concerning his total resources.
Nor has he offered income tax returns for years after 2004. I note also that Respondent
failed to cooperate with the I.G. when the I.G. sought information about Respondent’s
income and resources before making a penalty and assessment determination. I.G.’s pre-
hearing brief at 21.

/s/

Steven T. Kessel
Administrative Law Judge

® Respondent does not dispute the accuracy of the I.G.’s calculation of benefits
paid to him and his family after March 2000.