U.S. v. Sforza

• Decision Date: 10 April 2003
• Docket Number: Docket No. 02-6017.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Alfred SFORZA and Josephine Sforza, Defendants-Appellants.
• Court: U.S. Court of Appeals — Second Circuit

Page 107

326 F.3d 107

UNITED STATES of America, Plaintiff-Appellee, v. Alfred SFORZA and Josephine Sforza, Defendants-Appellants.

Docket No. 02-6017.

United States Court of Appeals, Second Circuit.

Argued: December 2, 2002.

Decided: April 10, 2003.

Peter Tufo, Law Offices of Paul Kalker, Hauppauge, New York, NY, for Defendants-Appellants.

Ramon E. Reyes, Jr., Assistant United States Attorney, New York, New York (James B. Comey, United States Attorney for the Southern District of New York, Jeffrey S. Oestericher, Assistant United States Attorney, on the brief), for Plaintiff-Appellee.

Before: VAN GRAAFEILAND, CARDAMONE, and JACOBS, Circuit Judges.

JACOBS, Circuit Judge.

The United States brought suit under the False Claims Act ("FCA"), 31 U.S.C. §§ 3729 et seq., and federal common law, seeking recoupment of disability payments made to Alfred Sforza following a slip and fall. Alfred and Josephine Sforza appeal from a final judgment entered in the United States District Court for the Southern District of New York (Freeman, M.J.), enforcing a $200,000 settlement negotiated in open court. On appeal, the Sforzas (1) challenge subject matter jurisdiction on the ground that under 5 U.S.C. § 8128(b), benefit determinations under the Federal Employee Compensation Act ("FECA") are "final and conclusive for all purposes," and "not subject to review by another official of the United States or by a court by mandamus or otherwise," and (2) contest the enforceability of the settlement.

We affirm.

BACKGROUND

On January 18, 1982, Alfred Sforza submitted a claim for workers' compensation benefits pursuant to the FECA, 5 U.S.C. § 8101 et seq., asserting that while on duty earlier that day as a letter carrier for the United States Postal Service ("USPS"), he had slipped on ice and suffered a back injury. Sforza's claim was submitted to the Office of Workers Compensation Programs ("OWCP"), which makes FECA eligibility determinations under the authority of the Secretary of the Department of Labor ("DOL"). See 5 U.S.C. § 8145(2). In October 1984, OWCP found Sforza eligible for FECA benefits, retroactive to March 1983.

Alfred Sforza maintained his eligibility for FECA benefits over the next fifteen years by regularly providing OWCP with sworn affirmations that he remained disabled and by submitting to physical examinations by DOL doctors. In his sworn affirmations (submitted on form CA-1032) and at the medical examinations, Sforza claimed that he could not sit, stand, walk, lie down, or drive for any significant period because of pain in his back and leg. Sforza also certified that he understood the requirement that he immediately report to OWCP any improvements in his physical condition. As early as 1990, DOL's doctors became skeptical, but Sforza continued to receive benefits, largely on the basis of his sworn representations.

The USPS (leaping into action) put Mr. Sforza under surveillance in November 1996. Over the next year, he was observed and videotaped while driving, shopping, mowing his lawn, and performing other yard work. In October 1997, after he had been videotaped on many occasions doing things he had sworn he could not do, he appeared with his wife Josephine Sforza in DOL's Manhattan office for a rehabilitation interview. At this interview, he made statements that were corroborated by his wife but belied by the videotapes.

In March 1998, Mr. Sforza was charged in a five-count indictment with making false statements in connection with claims for FECA benefits, in violation of 18 U.S.C. §§ 1001(a), 1920. He pleaded guilty in February 1999 to one count, admitting he made false statements at the October 1997 interview, and was sentenced to three years of probation (four months of which were to be spent in home detention), and was ordered to pay $19.289.50 to OWCP in restitution for benefits that had continued to be paid even after the October 1997 interview.

In February 2000, the United States commenced this civil suit against the Sforzas, claiming that they had conspired to submit false claims as to each form CA-1032 submitted to OWCP between 1990 and 2000. The government sought treble damages under the FCA in an amount to be determined at trial, as well as a $10,000 civil penalty for each of the Sforzas' false claims. The government also alleged several causes of action under federal common law based upon the same alleged conduct.

The Sforzas moved to dismiss for lack of subject matter jurisdiction, arguing principally that the district court's jurisdiction was barred by FECA's preclusion-of-review provision, codified in 5 U.S.C. § 8128(b), which states:

The action of the Secretary or his designee in allowing or denying a payment under this subchapter is—

(1) final and conclusive for all purposes and with respect to all questions of law and fact; and

(2) not subject to review by another official of the United States or by a court by mandamus or otherwise.

Id. By Memorandum and Order dated December 11, 2000, the district court (Schwartz, J.) denied the motion on the ground that § 8128(b) "only precludes review of the decision by OWCP (the Secretary of Labor's Designee) to award or deny FECA benefits," and OWCP's decision to award benefits was not being directly challenged by the government. See United States v. Sforza, 00 Civ. 1307(AGS), 2000 WL 1818686, at *2-*6 (S.D.N.Y. Dec. 12, 2000). Discovery followed.

In August 2001, just before trial, settlement discussions were conducted under the auspices of Magistrate Judge Maas. The judge met separately with each party (off the record), and then (on the record) obtained the parties' agreement to settle the case for $200,000, subject to one contingency: a sign-off from the Chief of the Civil Division of the United States Attorney's Office for the Southern District of New York. The Sforzas acknowledged on the record that the agreement announced by Judge Maas included "the terms that [each had] agreed to."

However, after the required sign-off was given by the Chief of the Civil Division, the Sforzas refused to execute the written settlement agreement prepared by the government, and denied to the district court that there had been a meeting of the minds. According to the Sforzas, they had intended that the release cover criminal liability as well as civil claims, thereby assuring that Josephine Sforza be protected from prosecution for her complicity. The government tendered a letter disclaiming any present intention to prosecution Josephine Sforza, but refused to provide the extraordinary release on which the Sforzas insisted.

The district court (Freeman, M.J.) nevertheless entered an Order and Final Judgment on December 11, 2001, directing the Sforzas to pay $200,000 to the government in exchange for general releases, and dismissing the case with prejudice. United States v. Sforza, 00 Civ. 1307 (DF), at 3-4 (S.D.N.Y. Dec. 11, 2001). The court ruled that the oral statements on the record constituted a legally binding contract to exchange $200,000 for a release from civil (but not criminal) liability. Id.

DISCUSSION

On appeal, the Sforzas challenge (1) the December 11, 2000 ruling denying their motion to dismiss for lack of subject matter jurisdiction, and (2) the December 11, 2001 ruling that the oral agreement to settle the case constituted a legally binding contract.

I. Jurisdiction

We review the district court's legal rulings as to its own jurisdiction de novo. See Jaghory v. New York State Dep't of Educ., 131 F.3d 326, 329 (2d Cir.1997). In doing so, we apply the same standard as the district court, under which a court may dismiss for lack of subject matter jurisdiction only if it appears that the plaintiff can prove no set of facts that would support jurisdiction. See Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 742 n. 1, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

A

It is uncontested that the FCA, by its terms, provides subject matter jurisdiction. Under the FCA, a violation occurs whenever a person:

(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;

(2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; [or]

(3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid....

31 U.S.C. § 3729(a). The complaint alleges that the Sforzas conspired to submit false claims to OWCP to obtain FECA benefits, and thus adequately invokes jurisdiction under the FCA.

Defendants' principal argument is that FECA precludes the district court from exercising its FCA jurisdiction. This argument cuts against well-established law that strongly disfavors preclusion of one federal statute by another absent express manifestations of preclusive intent. See United States v. General Dynamics Corp., 19 F.3d 770, 774 (2d Cir.1994) (citing Radzanower v. Touche Ross & Co., 426 U.S. 148, 154, 96 S.Ct. 1989, 48 L.Ed.2d 540 (1976)). Courts "are not at liberty to pick and choose among congressional enactments, and when two statutes are capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective." Local 1814, Int'l Longshoremen's Ass'n, AFL-CIO v. New York Shipping Ass'n, 965 F.2d 1224, 1237 (2d Cir.) (quoting Morton v. Mancari, 417 U.S. 535, 551, 94 S.Ct. 2474, 41 L.Ed.2d 290 (1974)), cert. denied, 506 U.S. 953, 113 S.Ct. 406, 121 L.Ed.2d 331 (1992). To overcome the presumption against preclusion, defendants must demonstrate a clear congressional intent to preclude, or a positive repugnancy between the two federal statutes. See Traynor v. Turnage, 485 U.S. 535, 548-49, 108 S.Ct. 1372, 99 L.Ed.2d 618 (1988); United States...