Opinion ID: 217934
Heading Depth: 2
Heading Rank: 1

Heading: The PFCRA

Text: The PFCRA was enacted in 1986 to allow administra- tive agencies to pursue remedies for false or fraudulent claims for benefits or payments. See 31 U.S.C. § 3802; Vermont Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 786, n.17 (2000); Orfanos v. Dep’t of Health & Human Servs., 896 F. Supp. 23, 24-25 (D.D.C. 1995). The statute subjects violators to a civil penalty of $5,000 per claim and to an assessment, in lieu of damages, of up to twice the amount of such claim. 31 U.S.C. § 3802(a)(1); 38 C.F.R. § 42.3(a). According to the VA’s implementing regulations, allegations of liability under the PFCRA are referred to the VA OIG, who conducts an investigation and reports to the VA General Counsel. 38 C.F.R. § 42.4. If the General Counsel believes there is adequate evidence of liability, the General Counsel can only issue a complaint under this regulatory scheme after providing written notice to the Attorney General of its intentions and after receiving a statement of approval from the Attorney General. Id. at §§ 42.5, 42.6. After the General Counsel issues a complaint and receives an answer, the matter is referred to an ALJ for a hearing. 4 Although it is unclear, Roberts appears to chal- lenge the underlying determination that he committed fraud. The question of whether Roberts’s statements were fraudulent, however, is a factual question over which we lack jurisdiction. See 38 U.S.C. § 7292(d)(2); Flores v. Nicholson, 19 Vet.App. 516, 522 (2005) (findings of fraud are factual questions). ROBERTS v. DVA 12 38 C.F.R. § 42.11. The PFCRA is a “sister scheme” to the False Claims Act (“FCA”) and is “designed to operate in tandem with the FCA.” Stevens, 529 U.S. at 786, n.17. The legislative history of the PFCRA indicates that it was intended to address “small-dollar cases” of fraud against the government because, in such cases, the “cost of litigation generally exceeds the amount recovered, thus making it economically impractical for the Justice Department to go to court.” See H.R. Rep. No. 99-1012, at 257-59 (1986) (Conf. Rep.), reprinted in 1986 U.S.C.C.A.N. 3868, 390204. Consistent with that purpose, the PFCRA does not apply to allegations of liability where the fraudulent claims at issue are for more than $150,000. 31 U.S.C. § 3803(c)(1); 38 C.F.R. § 42.6(a)(2). The legislative history refers to this figure as a “jurisdictional cap.” H.R. Rep. No. 99-1012, at 259. Roberts’s fundamental argument on appeal is that the PFCRA is “controlling law,” such that “[o]nce an allegation of fraud has been made the PFCRA must be fol- lowed.” Appellant’s Br., pp. 5, 40, 49. He contends that VA employees “may not conduct fraud adjudications,” because such adjudications are quasi-criminal in nature, are unsuitable for ex parte adjudication, and are inconsistent with the VA’s veteran-friendly claims process. 5 Id. 5 Notably, Roberts’s position before this court directly contradicts his position during his criminal proceeding. In that proceeding, Roberts moved to dismiss the indictment, arguing that the VA was the appropriate agency to make determinations about veterans benefits because of its “specialized knowledge, expertise and connection with the regulation of Veterans’ Benefits.” United States v. Roberts, Case No. 05cr118 (E.D. Wis. May 9, 2006) (Motion to Dismiss the Indictment on Grounds of Violation of Separation of Powers Doctrine, 13 ROBERTS v. DVA Roberts contends that, if the VA referred this matter to an ALJ pursuant to the PFCRA, Roberts would have had “proper notice, a neutral forum, and due process as provided by the Fifth and Sixth Amendments of the Constitution.” Reply Br., p. 1. In effect, Roberts argues that the VA’s only course of action to sever his benefits because of fraud was through the PFCRA, and because the VA did not follow that course, it improperly severed Roberts’s benefits and violated his constitutional rights. There are several reasons why Roberts’s position is without merit. Most significantly, the PFCRA is not an exclusive remedy. The remedies it provides are “in addition to any other remedy that may be prescribed by law.” 31 U.S.C. § 3802(a)(1). Even if the VA were required to act pursuant to the PFCRA, that would have no effect on the VA’s ability to sever Roberts’s benefits. The Veterans Court also correctly concluded that the jurisdictional cap in the PFCRA precluded the VA from pursuing a complaint under that statute. Roberts, 23 Vet.App. at 424. The PFCRA does not apply when more than $150,000 “is requested or demanded in violation of [31 U.S.C. § 3802]” in a fraudulent claim or a group of related fraudulent claims. 31 U.S.C. § 3803(c)(1); 38 C.F.R. § 42.6(a)(2). As indicated above, the legislative history expressly refers to this restriction as a “jurisdictional cap.” H.R. Rep. No. 99-1012, at 259. Here, the record clearly reflects that Roberts’s fraudulent claims exceeded the $150,000 jurisdictional threshold of the PFCRA. Indeed, Roberts appears to concede as much. Reply Br., p. 14. That the jurisdictional threshold was exceeded is confirmed by the results of Roberts’s criminal proceeding, in which Roberts was ordered to pay over ECF No. 103, p. 5). Here, Roberts argues the opposite – that the VA is incapable of making such determinations. ROBERTS v. DVA 14 $260,000 in restitution. Thus, putting aside whether the PFCRA was the required procedure, it clearly was not available given the amount of penalties and assessments at issue. Roberts contends that the $150,000 amount is not jurisdictional, citing Orfanos v. Department of Health & Human Services, 896 F. Supp. 23 (D. D.C. 1995). In that case, however, the petitioner fraudulently obtained only $13,400 in violation of the statute, far below the jurisdictional cap. Id. at 25. Although the district court affirmed an award of $196,800 under the PFCRA, the vast majority of that was based on an assessment of $170,000 in penalties and an additional $13,400 as a result of double damages, amounts which are not considered for purposes of the jurisdictional limit. That case, therefore, did not implicate the PFCRA’s jurisdictional cap and does not support Roberts’s argument. Finally, even if the amount at issue was less than $150,000, there is nothing in the relevant statutory or regulatory language that compels the VA to act pursuant to the PFCRA in lieu of utilizing its own procedures. Roberts’s assertion that the VA is not permitted to act on matters relating to fraud is inconsistent with the statutes and regulations that specifically refer to severance of service connection based on fraud. See, e.g., 38 U.S.C. § 1159 (service connection for disability or death in effect for ten or more years shall not be severed “except upon a showing that the original grant of connection was based on fraud”); 31 C.F.R. § 3.957 (same). To the extent Roberts challenges the VA’s ability to recoup benefits through avenues other than the PFCRA (as distinct from severing them), that argument is without merit. The Government has several mechanisms at its disposal to recover benefits resulting from fraudulent 15 ROBERTS v. DVA claims, and the PFCRA specifically contemplates parallel criminal proceedings. See 31 U.S.C. § 3803(b)(3) (providing that a proceeding under the PFCRA shall be stayed if the Attorney General believes it “may adversely affect any pending or potential criminal or civil action” (emphasis added)); 38 C.F.R. § 42.4 (contemplating deferring a report to a reviewing official “to avoid interference with a criminal investigation or prosecution”). Indeed, the very purpose of requiring agencies to obtain approval from the Attorney General before instituting an administrative proceeding under the PFCRA is to permit the Attorney General to pursue an action at his election. See H.R. Rep. No. 99-1012, at 258 (“This procedure ensures that the [Justice] Department will have an opportunity to review the charges and elect, if it so chooses, to litigate in federal court”). In this case, the Government instituted a criminal proceeding, and Roberts concedes that there is a valid and enforceable criminal restitution order in place. 6 Moreover, the VA’s severance of benefits based on fraud does not improperly displace other mechanisms to recoup benefits because severance simply cuts off benefits prospectively, it does not result in the automatic recovery of past payments. While it is true that the effective date of a “discontinuance or reduction” of benefits based on an act of commission or omission by the payee is the effective date of the award, 38 U.S.C. § 5112(b)(9); 38 C.F.R. § 3.500(b)(1), that only establishes that there has been an overpayment of benefits. The Government can recoup that overpayment through several avenues, including through a criminal proceeding, the PFCRA, if applicable, or the FCA. Here, the Government pursued a criminal proceeding, which, as discussed above, is entirely com- 6 See Oral Arg. at 5:35-5:45, available at http://www.cafc.uscourts.gov/oral-argumentrecordings/2010-7104/all. ROBERTS v. DVA 16 patible with the PFCRA. Roberts also contends that the VA violated his Fifth and Sixth Amendment rights by failing to refer the matter to an ALJ pursuant to the PFCRA. Specifically, he asserts that he “was denied a copy of the OIG report, a full statement of the allegations against him, and the opportunity to challenge them.” Appellant’s Br., p. 6. To the extent this argument reiterates his contention that the VA was required to act pursuant to the PFCRA, we reject it for the reasons stated above. We do not see any other support for Roberts’s contention that his constitutional rights were violated. In August 2004, the VA provided notice to Roberts of its proposed severance of his service connection with a cover sheet explaining his rights to submit evidence within sixty days, to request a personal hearing, and to legal representation. The notice referred to the OIG investigation (about which Roberts was aware because he was interviewed in connection with that investigation), included five paragraphs detailing the findings of the investigation, and the reasons why the VA found Roberts’s prior statements regarding Holland’s death to be fraudulent. On appeal, the Board conducted a hearing in June 2005, at which Roberts and his wife testified and during which he was represented by counsel. The Veterans Court correctly concluded that these procedures satisfied the VA’s procedural due process safeguards. 7 See 38 C.F.R. § 3.103 (“Every claimant has the right to written 7 As noted above, Roberts also was convicted of fraud in a criminal proceeding in federal district court under a much higher “beyond a reasonable doubt” standard and with the benefit of the accompanying constitutional safeguards inherent in such a proceeding. His conviction was affirmed on appeal by the Seventh Circuit. United States v. Roberts, 534 F.3d 560 (7th Cir. 2008). 17 ROBERTS v. DVA notice of the decision made on his or her claim, the right to a hearing, and the right of representation”). Accepting Roberts’s position on this point would require this court to find that the VA’s procedural safeguards, even when followed faithfully, do not satisfy the requirements of constitutional due process. We find no justification for such a conclusion.