United States v. Schmidt

• Decision Date: 09 May 1962
• Docket Number: No. 60-C-213.,60-C-213.
• Citation: 204 F. Supp. 540
• Parties: UNITED STATES of America, Plaintiff, v. Milton W. SCHMIDT, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

204 F. Supp. 540

UNITED STATES of America, Plaintiff, v. Milton W. SCHMIDT, Defendant.

No. 60-C-213.

United States District Court E. D. Wisconsin.

May 9, 1962.

James B. Brennan, U. S. Atty., by Louis W. Staudenmaier, Jr., Asst. U. S. Atty., Milwaukee, Wis., for plaintiff.

Robert G. Polasek, Cudahy, Wis., for defendant.

GRUBB, District Judge.

This is a civil action brought by the United States under the False Claims Act, 31 U.S.C.A. § 231 et seq., alleging that the defendant in applying for free medical treatment for a non-service connected disability at the Veterans Administration Hospital made a "false claim" against the United States in certifying that he was financially unable to defray the cost of private treatment, knowing that such certification was "false, fictitious, or fraudulent." The statute provides for a forfeiture to the United States in the sum of $2,000 and, in addition, double the amount of damage which the United States may have sustained. In this action the cost of hospitalization was $323.50.

Section 706, 38 U.S.C.A. (1952 ed.),^* provides that veterans are eligible for free hospitalization for non-service connected disabilities if they are unable to defray the necessary expenses therefor, and the statement under oath of the applicant shall be accepted as sufficient evidence of inability to defray necessary expenses.

There is very little dispute as to the facts. The defendant, a World War II veteran, had been suffering with ulcers prior to October 30, 1957. He had had one hospitalization. His personal physician recommended to him that he go to the Veterans Administration Hospital for treatment.

A few days before October 30, 1957, defendant received a medical examination at the Veterans Administration Hospital at Wood, Wisconsin, and had been declared eligible for treatment so far as the medical staff was concerned. On October 30, 1957, he made application for treatment. This application was in writing. A Mrs. Rudolph, admissions clerk, typed the information furnished by the defendant on VA Form 10-P-10, "Application for Hospital Treatment or Domiciliary Care," and on the "Addendum to VA Form 10-P-10."

In answer to question 14 on said application, defendant gave as his occupation "Sporting Goods Store Operator — Owner." In answer to question 27, he stated that he had hospital care insurance. Question 27A inquires as to the agency or organization, and defendant answered "Personal Policy — Metropolitian (sic) Life, Milw., Wisc." Question 28 reads: "Are you financially able to pay necessary expenses of hospital or domiciliary care?" Below the question are two squares, one followed by the word "Yes" and the other followed by the word "No." Either the defendant or Mrs. Rudolph originally answered this question "Yes."

At the same time, defendant gave Mrs. Rudolph information from which she filled in the addendum to the application. This addendum shows net assets in the total amount of $68,300. In answer to question 28 I in the addendum, defendant stated that his average monthly income for the last six months was $1,500.

Mrs. Rudolph stated to defendant that with question 28 answered "yes," he was not eligible to receive hospital care. At this point there is some uncertainty in the testimony of Mrs. Rudolph as to the conversation. Mrs. Rudolph, while impressing the court as a frank and conscientious witness, testified that during her time at the Veterans Administration Hospital as admissions clerk, she filled in twenty to forty applications daily. It was some years later that this particular application was called to her attention, and while she made a conscientious attempt to recall the conversation in detail, it stands to reason that her recollection would not be as accurate as the recollection of the defendant who had only one experience like this.

Defendant's testimony was that Mrs. Rudolph had stated that there were many veterans in the hospital who had more assets than did defendant, and that they got in by answering question 28 "no." She stated that it was up to the defendant as to how he should answer that question but that he could not get in the hospital unless he answered it "no." Neither could recall whether Mrs. Rudolph erased the "yes" in answer to question 28 and answered it "no" or whether the defendant did following the conversation. Mrs. Rudolph did not tell the defendant the penalty for any false answers, as she testified that she did not even know the penalty.

The defendant impressed the court as being completely frank, fair, and honest. He certainly was in the information he gave Mrs. Rudolph, and he also was on the witness stand, readily admitting all matters adverse to his interests.

At the pretrial conference held November 29, 1961, counsel for the plaintiff and counsel for the defendant agreed that "The principal issue involved in this case is the intent of the defendant — did he intend to violate the statutes and regulations of the Veterans Administration."

All of the information was at all times available to Mrs. Rudolph and to the Veterans Administration Hospital. On leaving the hospital, the defendant endeavored to pay the bill through his hospital insurance company. The defendant and his insurance company had great difficulty getting figures from the hospital, although both were at all times ready, willing, and anxious to reimburse the plaintiff. That willingness continued up to and including the pretrial conference, at which time the defendant again wanted to reimburse the government for the cost of his hospitalization plus interest thereon.

The legal questions involved are:

1. Whether the defendant presented for payment or approval "* * * any claim upon or against the Government of the United States, or any department or officer thereof, knowing such claim to be false, fictitious, or fraudulent, * *." The statute also prohibits the making of any such false, fictitious, or fraudulent claim substantiated by any affidavit or deposition, knowing the same to contain any fraudulent or fictitious statement.

2. Whether this application, assuming it can be construed as presenting a claim for payment or approval, was false, fictitious, or fraudulent within the meaning of the statute.

With regard to the first issue, the definition of a "claim" has been defined by the Supreme Court in United States v. Cohn, 270 U.S. 339, at pages 345-346, 46 S.Ct. 251, at page 252, 70 L.Ed. 616 (1926), as follows:

"* * * While the word `claim' may sometimes be used in the broad juridical sense of `a demand of some matter as of right made by one person upon another, to do or to forbear to do some act or thing as a matter of duty,' Prigg v. Pennsylvania, 16 Pet. 539, 615 10 L.Ed. 1060, 1089, it is clear, in the light of the entire context, that in the present statute, the provision relating to the payment or approval of a `claim upon or against' the Government relates solely to the payment or approval of a claim for money or property to which a right is asserted against the Government, based upon the Government's own liability to the claimant. * * *"

This conception of a "claim" as connoting a demand for money or for some transfer of public property under this statute was again applied in United States v. McNinch, 356 U.S. 595, 78 S.Ct. 950, 2 L.Ed.2d 1001 (1958), in which an application for F.H.A. credit insurance was held not to be a "claim." As to the specific issue here, i. e., whether an application for hospital care at the Veterans Administration is a "claim," the following statement in United States v. Borth, 266 F.2d 521, at page 523 (10th Cir. 1959), is persuasive:

"The application of the defendant sought no money or property of the Government. Its acceptance entitled him to free hospital service and medical care, but in no sense, to

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