Opinion ID: 480275
Heading Depth: 1
Heading Rank: 1

Heading: constitutionality of the cmpaa

Text: 10 If the CMPAA is deemed to be a criminal statute, the proceedings against the Mayers would have been constitutionally inadequate. We therefore must consider whether the penalty imposed was civil or criminal in nature. 11 In determining whether a particular statute is civil or criminal in nature, a two prong inquiry is utilized. United States v. Ward, 448 U.S. 242, 248-49, 100 S.Ct. 2636, 2641, 65 L.Ed.2d 742 (1980). The first inquiry is whether Congress has expressly or impliedly designated the statute as civil or criminal. The Mayers argue that the legislative intent in enacting the CMPAA was to provide the government with an alternative means of prosecuting Medicare/Medicaid fraud cases. Citation is made to numerous legislative reports in support of this argument. E.g., H.R.Rep. No. 158, 97th Cong., 1st Sess., vol. III, at 329 (1981) (The civil monetary penalty provided for in this bill is intended to provide an alternative to criminal proceedings so as to increase the effectiveness of enforcement in the medicare and medicaid programs.). The clear congressional intention, however, is that the alternative to prosecution is to be a civil proceeding. As in United States v. Ward, 448 U.S. 242, 100 S.Ct. 2636, 65 L.Ed.2d 742 (1980), the labeling of the sanction as a civil penalty is determinative of Congressional intent. This is particularly true in light of the name given by Congress to the act--the Civil Monetary Penalties & Assessment Act. 12 The second prong of the inquiry is whether the statute is so punitive either in purpose or effect as to negate [the intention of Congress]. Ward, 448 U.S. at 249, 100 S.Ct. at 2641. Rarely will a court find a statute to be criminal in nature when Congress has exhibited an intent to impose civil sanctions: [O]nly the clearest proof could suffice to establish the unconstitutionality of a statute on such a ground. Flemming v. Nestor, 363 U.S. 603, 617, 80 S.Ct. 1367, 1376, 4 L.Ed.2d 1435 (1960). The issue to be addressed by this court is whether the sanctions are so severe that the excessive nature of the penalty has transformed what was clearly intended as a civil remedy into a criminal penalty. Rex Trailer Co. v. United States, 350 U.S. 148, 154, 76 S.Ct. 219, 222, 100 L.Ed. 149 (1956). 13 The Mayers' argument that the CMPAA is criminal in nature is primarily based on two aspects of the act. First, the CMPAA provides for a $2,000 civil penalty for each item falsely claimed. It is contended that such a penalty based upon individual line items rather than the total claim is so excessive as to constitute a criminal penalty. Second, appellants emphasize that the penalty is based on the amount claimed rather than the actual loss sustained by the government. Such a process, it is argued, is designed to exact retribution rather than restitution. 14 We find this argument unpersuasive. Numerous statutes which exact heavy civil penalties have been held constitutional. See, e.g., Rex Trailer Co., Inc. v. United States, 350 U.S. 148, 76 S.Ct. 219, 100 L.Ed. 149 (1956) ($2,000 penalty per fraudulent act permissible under Surplus Property Act of 1944); United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443 (1943) (False Claims Act). Just as these acts have been found to be permissible civil penalties, neither does the CMPAA violate the mandate of the constitution. 15 The basic premise of appellant's argument is that the civil penalty grossly exceeds the damages sustained by the government. Such a presumption is incorrect. The costs which fraud has placed upon our nation's Medicare and Medicaid programs have been severe. See Kusserow, Civil Money Penalties Law of 1981: A New Effort to Confront Fraud and Abuse in Federal Health Care Programs, 58 Notre Dame L.Rev. 985 (1983). It has been estimated that as much as ten percent of federal funds allocated to health care programs may be lost each year to fraudulent claims. Id. at 985 n. 1. The cost of investigating and prosecuting such fraudulent claims has been extremely costly as well. Appellant is correct that the civil penalty imposed does exceed the amount that was directly disbursed as a result of the defendants' fraudulent conduct. Appellant, however, fails to recognize that each fraudulent claim filed exacts an immense toll from society. Just as punitive damages in tort law or treble damages under antitrust law encompass a civil remedy in excess of the tangible damages sustained by a plaintiff, here the government has made a determination that activities in violation of the CMPAA result in damages in excess of the actual amount disbursed by the government to the fraudulent claimant. Such a legislative determination is not constitutionally infirm. 16 Additionally, it is argued that the CMPAA is unconstitutional as applied to the Mayers. The Mayers sought reimbursement in the amount of $145,550 for the fraudulent items presented. The Mayers actually received a total of $24,697.73 from the Medicare program toward these claims. The penalty assessed against the Mayers was in the amount of $1,791,100. 1 Although the judgment imposed is seventy times greater than the amount actually collected from the medicare program for these false claims, the amount of the judgment does not result in an unconstitutional application of the CMPAA. The size of the penalty is a direct result of the defendants' conduct. The defendants chose fraudulently to request payment for 2,702 items. We also note that the aggravating circumstances in this case amply justify the award. Among numerous other aggravating circumstances, the Administrative Law Judge found that the 2,702 fraudulent claims were but a small part of a larger pattern of activity. Furthermore, the Mayers attempted to deceive investigators by fabricating documents during the course of the investigation. In light of the Mayers' conduct, the civil penalty imposed by the Administrative Law Judge was proper.