U.S. v. Cormier, 80-5136

• Citation: 639 F.2d 1177
• Decision Date: 16 March 1981
• Docket Number: No. 80-5136,80-5136
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Pauline R. CORMIER, Defendant-Appellant. . Unit B
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1177

639 F.2d 1177

UNITED STATES of America, Plaintiff-Appellee, v. Pauline R. CORMIER, Defendant-Appellant.

No. 80-5136.

United States Court of Appeals, Fifth Circuit.

Unit B

March 16, 1981.

Mark A. Pizzo, Asst. Fed. Public Defender, Robert W. Knight, Federal Public Defender, Tampa, Fla., for defendant-appellant.

Gary L. Betz, U. S. Atty., Douglas J. Titus, Jr., Asst. U. S. Atty., Tampa, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before HILL, KRAVITCH and HATCHETT, Circuit Judges.

KRAVITCH, Circuit Judge:

Pauline Cormier appeals from her conviction for concealing or failing to disclose to the Social Security Administration her employment and earnings, with intent to secure fraudulently unauthorized Social Security benefits, in violation of 42 U.S.C. § 408(d). ¹ Cormier, at her election, was tried by a magistrate, and found guilty. Judgment was affirmed by the district court. ² On appeal she raises two arguments: 1) the agency's failure to comply with its own guidelines mandated dismissal, and 2) the evidence was insufficient to support her conviction. Rejecting both claims, we affirm.

Cormier first applied for Social Security survivors insurance benefits for herself and her three children on January 10, 1963, shortly after her husband's death, and was awarded and received benefits. In 1968 she began employment with the Social Security Administration and continued working there until June 25, 1971, when she left to open a card and gift shop. That business failed, and Cormier returned to work for the Social Security Administration on January 7, 1973.

During the period from 1968 through 1972 Cormier received and filed annual income reports with Social Security, as required by 42 U.S.C. § 403(h). ³ Due to the fact that her 1971 and 1972 earnings did not equal her anticipated earnings, she received a retroactive entitlement check in 1973 covering her loss of benefits for the two prior years. Cormier's oldest child, Ronald, stopped attending school full-time in 1972 and his eligibility terminated. ⁴

During the years 1973 through 1978, after her return to the Administration, Cormier failed to file annual income reports although she continued to collect benefits for herself and two children. She testified at trial that she did not receive forms for such reports. (The Administration's general practice is to mail such forms to all benefit recipients.) In 1978, through "Project Match," the Department of Health, Education and Welfare program comparing federal employee rolls with federal beneficiary lists, the Department discovered that Cormier had been employed while collecting benefits from 1973 through 1978, during which period she had failed to report her earnings. Because Cormier's earnings during this time exceeded "allowable earnings," the amount she could earn and yet receive full benefits, ⁵ Cormier had received benefits in the amount of $10,385.90 to which she was not entitled. ⁶

As a result of this discovery, agents of the Social Security Administration's Program Integrity Branch interviewed Cormier. Two months later she received a detailed account of her alleged overpayments, both the total and an itemized breakdown for the years 1973 through 1977. The letter also advised her of her available remedies: to request that the Social Security Administration re-examine its overpayment determination in order to assess its validity, and/or to request waiver, should the Administration conclusively determine that an overpayment had been made. A recipient could request waiver on the ground that repayment would create hardship, or that the overpayment was not the recipient's fault. Cormier also received a document entitled "Important Information About Your Review Rights." That form stated:

You may, anytime within 60 days of the date you receive this notice, request reconsideration of the overpayment determination and/or request that recovery of the overpayment be waived.... If you request a reconsideration and/or waiver within 30 days from the date of the enclosed notice, your right to review will take the form of a preadjustment review, and your benefits will not be reduced to recover the overpayment until a preadjustment review of your case has been completed.

The document advised that she would be entitled to a more formal "conference" were the decision at the preadjustment review adverse, at which she, with the benefit of representation, could testify and present witnesses. Finally, it informed her that she should return a "tear-off portion" if she desired preadjustment review:

If you wish to request either a reconsideration of the overpayment and/or you believe you meet the requirements for waiver, you should fill out this form and mail it to any social security office, or you may call or visit any social security office.

Cormier returned that portion of the form, as well as executing an additional form addressed solely to waiver applicants. The Social Security Administration, however, failed to grant Cormier preadjustment review, instituting criminal proceedings instead.

Noncompliance with Regulations

Cormier first argues that the district court erred in failing to dismiss the information because the Social Security Administration contravened its own regulations by denying her request for an adjudicatory hearing before undertaking formal prosecution. The government asserts, alternatively, that no violation occurred but that even if breach did occur, internal regulations provide no rights to benefit recipients. We agree with the second contention.

The Social Security Claims Manual, ⁷ which sets forth internal agency procedures, provides:

§ 5502(c) Fraud Involved:

Where a violation of one of the criminal provisions of the act in connection with a claim is suspected and an overpayment exists, all appropriate post-adjudicative and recovery actions must be taken before referring the suspected violation through reviewing office channels to the U.S. Attorney or OPO, BRSI, Program Compliance Branch in accordance with §§ 7543 ff. Thus, action to recover an overpayment will be taken as described above and in the succeeding sections notwithstanding fraud involvement.

This provision unquestionably applied in Cormier's case, as she was eventually prosecuted for fraudulently receiving benefits to which she was not entitled. The Department thus violated internal regulations by instituting criminal proceedings against Cormier without first affording her informal review. Nonetheless, we conclude that this violation did not require dismissal of the charge against Cormier. In United States v. Caceres, 440 U.S. 741, 99 S.Ct. 1465, 59 L.Ed.2d 733 (1979), the Supreme Court refused to exclude evidence obtained in violation of Internal Revenue Service regulations. Although the Court stated that "(the judicial) duty to enforce an agency regulation is most evident when compliance with the regulation is mandated by the Constitution or federal law," 440 U.S. at 749, 99 S.Ct. at 1470, it indicated additional circumstances under which the duty would operate. None of those circumstances is present here: neither the Constitution nor statute mandates compliance with the Social Security Administration regulations at issue, nor can Cormier claim a due process violation in that she relied on the Social Security Administration regulation or that its breach affected her conduct since her failure to file annual income reports and her receipt of benefits occurred long before the agency breached its own rule. ⁸ On this basis, we rejected analogous claims in United States v. McInnis, 601 F.2d 1319 (5th Cir. 1979) (holding that we will not enforce the Petite policy, barring a federal trial after state prosecution for the same acts without compelling reason because the policy only sets internal guidelines for the Justice Department) and in Kirkland Masonry, Inc. v. Commissioner of Internal Revenue, 614 F.2d 532 (5th Cir. 1980) (holding that an Internal Revenue Service Handbook directive to agency employees does not suffice to create a duty to the public). Hence, we conclude that § 5502(c) of the Social Security Claims Manual reposed no right of adherence in a benefit recipient and that the Social Security Administration's denial of a preadjustment review, despite its offer to Cormier of such review and her acceptance of that offer, did not mandate dismissal of the information by the court below.

Sufficiency of Evidence

Cormier's second ground of appeal is that insufficient evidence supported her conviction. 42 U.S.C. § 408, under which Cormier was convicted, provides:

Whoever ... (d) having knowledge of the occurrence of any event affecting (1) his initial or continued right to any payment under this subchapter ... conceals or fails to disclose such event with an intent fraudulently to secure payment either in a greater amount than is due or when no payment is authorized ... shall be guilty of a misdemeanor and upon conviction thereof shall be fined not more than $1,000 or imprisoned for not more than one year, or both.

Recently, in United States v. Phillips, 600 F.2d 535, 536 (5th Cir. 1979), we defined the government's burden in proving "fraudulent intent" under § 408(d):

First, the government must show that the defendant knew that he was legally obligated to disclose certain information. Second, the government must prove that the defendant knew that by withholding the information he would receive greater payments than he was entitled to. In other words, a defendant is not guilty under § 408(d) unless he is aware both that he is deceiving the government and that the government will pay out more money because of his deception.

At trial, the government presented evidence showing that Cormier knew that she was required to file annual income reports: her original application for benefits notified her of this requirement, and Cormier's job since 1974 as a...