Crespo v. Colvin

• Decision Date: 31 May 2016
• Docket Number: No. 14-3779,14-3779
• Parties: Jose Crespo, Petitioner, v. Carolyn W. Colvin, Acting Commissioner of Social Security, and Sylvia Mathews Burwell, Secretary of Health and Human Services, Respondents.
• Court: U.S. Court of Appeals — Seventh Circuit

824 F.3d 667

Jose Crespo, Petitioner

v.Carolyn W. Colvin, Acting Commissioner of Social Security, and Sylvia Mathews Burwell, Secretary of Health and Human Services, Respondents.

No. 14-3779

United States Court of Appeals, Seventh Circuit.

Argued April 14, 2016

Decided May 31, 2016

Garry A. Payton, Attorney, Law Offices of Garry A. Payton, Chicago, IL, for Petitioner.

James M. Kuhn, Sr., Attorney, Office of the United States Attorney, Chicago, IL, for Respondents.

Before Posner, Kanne, and Hamilton, Circuit Judges.

Kanne, Circuit Judge.

Petitioner Jose Crespo served as the representative payee for his mother so that she could get Supplemental Security Income benefits. But Crespo's mother was not entitled to those benefits because she lived in Puerto Rico, a fact that Crespo hid from the Social Security Administration by falsely representing that she lived with him in Illinois. As a result, an ALJ imposed a $114,956 civil monetary penalty on Crespo for the misrepresentations. Crespo appealed to the Departmental Appeals Board of the Department of Health and Human Services, which dismissed his appeal as untimely. We affirm.

I. Background

A. Request to Serve as Representative Payee

On November 9, 2009, Crespo applied to be the “representative payee” for his mother, Minerva Quinones Sostre, to receive her Supplemental Security Income (“SSI”) disability benefits on her behalf. In the application, Crespo represented that he should be his mother's representative payee because he “take[s] care of her” and she “lives with [him]” in Elmwood Park, Illinois. By signing the application, Crespo agreed to notify the Social Security Administration (“SSA”) “promptly” if his mother left his custody, changed address, moved, or left the United States for more than thirty days. United States, for purposes of SSI benefits, means the fifty states, the District of Columbia, and the Northern Mariana Islands, not Puerto Rico. See 20 C.F.R. § 416.215.

By signing the form, Crespo acknowledged that he could be held liable for any improper overpayments he caused. The SSA then mailed confirmation to Crespo at the Elmwood Park address and reminded him that he had declared, under penalty of perjury, that the information he provided was true and correct.

Crespo submitted three representative payee reports during his tenure, confirming that his mother lived in the United States. In a report signed August 30, 2009, he reported that his mother lived with him in Elmwood Park, Illinois. In a report signed May 26, 2010, he reported no change in her living situation. In a report signed June 15, 2011, Crespo wrote that his mother continued to live with him but at a new address located in Chicago.

B. Suspected–Fraud Investigation

On August 27, 2012, Crespo's sister contacted the SSA and informed it that Quinones lived in Puerto Rico and that she only returned to Illinois to fill out SSI forms.

As a result, the SSA initiated an investigation into Quinones's residency. On August 29, 2012, Crespo and Quinones met with SSA Service Representative Margie Hernandez at a suspected-fraud interview. Crespo said that his mother lived with him in Illinois. But airline records showed that Quinones flew from Puerto Rico to Chicago the day before the interview. Hernandez told Crespo he would face a penalty for every lie told to the SSA, to which he responded “that he was not lying, that his mother lived with him in Illinois, and that she had never lived in Puerto Rico.”

In a statement signed after the interview, Crespo said his mother lived with him in Skokie, Illinois, that she left the United States on February 15, 2012, but that she had returned on February 20 or 21, 2012. Again, the airline records repudiate his claim that she returned in February, instead showing that she did not return until August 28, 2012.

On August 31, 2012, Crespo returned to the SSA office and signed another statement asserting that his mother had “always” traveled between Chicago and Puerto Rico. He claimed that she was in Puerto Rico from February to August 2012 but that she only stayed that long because his grandmother had died.

Quinones also wrote a statement, dated September 10, 2012, in which she claimed that she went to Puerto Rico on February 15, 2012, because her mother had died but that she returned to Illinois two weeks later. She said that she had not returned to Puerto Rico since February until September 9, 2012, but that she intended to remain there. Quinones's statement is also undermined by airline records indicating that she flew from Puerto Rico to Chicago on August 28, 2012.

Further undercutting Crespo's and Quinones's residency claim is the fact that Quinones was serving as representative payee for retirement benefits for her own mother , Esperanza Sostre.¹ In that role, Quinones represented her residency as Manati, Puerto Rico. The monthly checks for Sostre were mailed to Quinones in Puerto Rico, and Quinones endorsed and deposited the checks in a bank in Puerto Rico.

The SSA interviewed Crespo again on October 11, 2012. When asked how Quinones could have deposited checks in Puerto Rico if she were living in Illinois, Crespo speculated that his grandmother had signed his mother's name, despite having already identified the signature as his mother's. In addition, he said that he would sometimes mail the SSI funds to his mother in Puerto Rico. He said that Quinones was currently living in Puerto Rico, but that she used to travel frequently between Illinois and Puerto Rico. He admitted that he did not tell the SSA she resided in Puerto Rico but said he did not know he had to do so.

C. SSA's Suit for a Civil Monetary Penalty

In April 2013, the SSA brought a civil action against Crespo pursuant to 42 U.S.C. § 1320a-8, alleging that he falsely misrepresented his mother's residence.

1. Decision of the ALJ

Crespo contested the penalty, seeking review by an ALJ. The ALJ determined that Crespo “deliberately deceived SSA about his mother's place of residence, so that she could continue receiving SSI payments,” and in so doing, violated 42 U.S.C. § 1320a-8. The ALJ rejected Crespo's claim that he “did not reasonably know” his mother could not reside in Puerto Rico. The ALJ concluded that Crespo's statements “consisted of half-truths, claims that defy credulity, and verifiable falsehoods.” Accordingly, the ALJ found a civil monetary penalty appropriate.

Having resolved liability, the ALJ then determined the appropriate amount of the penalty. The SSA sought a total civil monetary penalty of $114,956. The statute authorizes “an assessment, in lieu of damages” in an amount “not more than twice the amount of benefits or payments paid as a result of such a statement or representation or such a withholding of disclosure.” § 1320a-8(a)(1). The SSA sought an award of $19,956, representing twice the amount of benefits improperly paid while Crespo was acting as representative payee.

In addition, the statute authorizes a “civil money penalty of not more than $5,000 for each such statement or representation or each receipt of such benefits or payments while withholding disclosure of such fact.” § 1320a-8(a)(1). The SSA sought a $95,000 penalty, consisting of $5,000 for nineteen months² of receipt of benefits while withholding a material fact.

After finding that the penalty sought was within statutory limits, the ALJ then considered the regulatory criteria to determine whether the specific penalty sought was appropriate. The regulations require the ALJ to consider:

(1) [t]he nature of the statements, representations, or actions ... and the circumstances under which they occurred; (2) [t]he degree of culpability of the person committing the offense; (3) [t]he history of prior offenses of the person committing the offense; (4) [t]he financial condition of the person committing the offense; and (5) [s]uch other matters as justice may require.

20 C.F.R. § 498.106.

The ALJ pointed to several factors in favor of imposing the penalty. Specifically, it noted that Crespo engaged in a lengthy pattern of deception by knowingly withholding his mother's residence. When asked about his mother's residence during the investigation, he lied and gave conflicting or false information on several occasions.

In considering mitigating factors, the ALJ noted that Crespo did not have a history of prior offenses. Crespo also argued that his financial condition was a factor in mitigation because he is a “lower middle class individual” who is a supervisor at the Illinois Department of Employment Security.³ But Crespo did not provide any documented evidence of his financial condition. Without any evidence establishing his financial condition, Crespo did not meet his burden to show that he could not pay the penalty.

Accordingly, the ALJ found the $114,956 penalty reasonable and imposed it on March 6, 2014.

2. Untimely Appeal to the Departmental Appeals Board

A party may appeal a civil monetary penalty imposed by an ALJ to the Departmental Appeals Board (“DAB”) of the Department of Health and Human Services “within 30 days of the date of service of the initial decision.” 20 C.F.R. § 498.221(a). If sent by mail, the date of service is “deemed to be five days from the date of mailing.” 20 C.F.R. § 498.220(d). The ALJ's decision was mailed on March 7, 2014, so it was deemed served on March 12, 2014, at which point Crespo had thirty days to file his notice of appeal.

Crespo did not file a notice of appeal until April 16, 2014—five days late. The DAB ordered Crespo to show cause as to why his appeal should not be dismissed as untimely. Crespo responded that he “reasonably believed” he had thirty days from March 18, 2014—the date the decision was “actually delivered.” He claimed “he received only approximately 24 days or so” because the decision was not delivered “in the normal expected period of 5 days.”

The DAB rejected Crespo's argument as to why his untimely filing should be excused. It noted that the regulations are clear that decisions sent by mail are...