Jose Crespo v. Carolyn W. Colvin, et al
Filing
Filed opinion of the court by Judge Kanne. The decision of the Department of Health and Human Services is AFFIRMED. Richard A. Posner, Circuit Judge; Michael S. Kanne, Circuit Judge and David F. Hamilton, Circuit Judge. [6754273-1] [6754273] [14-3779]
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14‐3779
JOSE CRESPO,
Petitioner,
v.
CAROLYN W. COLVIN, Acting Commissioner of Social Security,
and SYLVIA MATHEWS BURWELL, Secretary of Health and Hu‐
man Services,
Respondents.
____________________
Petition for Review of an Order of the
Department of Health and Human Services
No. A‐14‐63
____________________
ARGUED APRIL 14, 2016 — DECIDED MAY 31, 2016
____________________
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 Sup‐
plemental 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
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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 “repre‐
sentative 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 Is‐
lands, 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 pen‐
alty of perjury, that the information he provided was true and
correct.
Crespo submitted three representative payee reports dur‐
ing 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
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signed May 26, 2010, he reported no change in her living sit‐
uation. In a report signed June 15, 2011, Crespo wrote that his
mother continued to live with him but at a new address lo‐
cated 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 Qui‐
nones’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 repudi‐
ate 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 “al‐
ways” 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.
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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 state‐
ment 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 ad‐
dition, he said that he would sometimes mail the SSI funds to
his mother in Puerto Rico. He said that Quinones was cur‐
rently living in Puerto Rico, but that she used to travel fre‐
quently 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.
1 Unlike SSI benefits, residents of Puerto Rico are eligible to collect social
security retirement benefits. 20 C.F.R. § 404.460(a)(1).
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C. SSA’s Suit for a Civil Monetary Penalty
In April 2013, the SSA brought a civil action against Cre‐
spo 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 con‐
tinue 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 false‐
hoods.” Accordingly, the ALJ found a civil monetary penalty
appropriate.
Having resolved liability, the ALJ then determined the ap‐
propriate amount of the penalty. The SSA sought a total civil
monetary penalty of $114,956. The statute authorizes “an as‐
sessment, 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 represen‐
tation or each receipt of such benefits or payments while with‐
holding disclosure of such fact.” § 1320a‐8(a)(1). The SSA
sought a $95,000 penalty, consisting of $5,000 for nineteen
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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 de‐
termine 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 of‐
fenses of the person committing the offense; (4) [t]he
financial condition of the person committing the of‐
fense; and (5) [s]uch other matters as justice may re‐
quire.
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 infor‐
mation on several occasions.
In considering mitigating factors, the ALJ noted that Cre‐
spo did not have a history of prior offenses. Crespo also ar‐
gued that his financial condition was a factor in mitigation be‐
2 The SSA only sought a penalty for the months from February 2011
through August 2012, despite evidence that Crespo was withholding the
fact of his mother’s travel and residence since November 2009.
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cause he is a “lower middle class individual” who is a super‐
visor at the Illinois Department of Employment Security.3 But
Crespo did not provide any documented evidence of his fi‐
nancial condition. Without any evidence establishing his fi‐
nancial condition, Crespo did not meet his burden to show
that he could not pay the penalty.
Accordingly, the ALJ found the $114,956 penalty reasona‐
ble 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 de‐
livered.” He claimed “he received only approximately 24 days
3 We find it hard to believe that someone who evaluates unemployment‐
benefits claims would “not know” that there is an obligation to be truthful
in one’s applications for benefits, but as there is far more upon which to
reject Crespo’s arguments, we do not dwell on the point.
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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 un‐
timely filing should be excused. It noted that the regulations
are clear that decisions sent by mail are deemed filed five days
after mailing, regardless of the date of actual delivery, and
that notices of appeal are due thirty days after service. Fur‐
thermore, the DAB guidelines enclosed with the ALJ’s deci‐
sion set out the filing deadlines.
Finally, the DAB noted that Crespo could have sought an
extension of the filing deadline if he needed more time in
which to file his appeal, but he did not. Accordingly, on June
4, 2014, the DAB declined to review Crespo’s appeal because
it was untimely filed.
D. Petition for Federal Review
On August 4, 2014, Crespo filed a petition for review in
federal district court. The district court granted the SSA’s mo‐
tion to dismiss for lack of subject‐matter jurisdiction because
petitions for review of civil monetary penalties must be filed
directly in the court of appeals pursuant to 42 U.S.C. § 1320a‐
8(d)(1). Crespo appealed.
We heard oral argument on August 4, 2015, and asked
why the district court could not have transferred the case to
this court pursuant to 28 U.S.C. § 1631. The district court in‐
dicated that it was willing on remand to vacate its judgment
and transfer the appeal. We granted Crespo’s motion to re‐
mand, and the district court vacated its judgment and trans‐
ferred the appeal.
After the district court transferred the appeal, we ordered
the parties to submit new briefs. We specifically ordered the
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parties to “address whether Crespo filed a timely appeal of
the ALJ’s decision to the [DAB] and, if not, whether an un‐
timely appeal to the [DAB] would affect this court’s ability to
review the ALJ’s decision.”
Finally, after much ado, the merits of Crespo’s petition for
review are properly before us.
II. ANALYSIS
On appeal, Crespo continues to argue that his petition for
review was properly before the district court. That is incor‐
rect. As to the merits of his petition, he argues (1) that he “was
improperly assessed fine and penalties” under 42 U.S.C.
§ 1320a‐8 and (2) that the civil monetary penalty violates the
excessive fines clause of the Eighth Amendment. We reject
Crespo’s arguments.
A. Jurisdiction in the Court of Appeals
Crespo renews his argument that jurisdiction over this ap‐
peal is proper in the district court pursuant to 42 U.S.C.
§ 405(g). Section 405(g) permits review in the district court of
any “final decision of the Commissioner of Social Security”
after “[a]dministrative determination of entitlement to bene‐
fits,” § 405(b). Crespo argues that because the ALJ’s decision
in effect terminated his mother’s SSI benefits, review is proper
in the district court.
Crespo is mistaken. He seeks relief from the $114,956 civil
monetary penalty that was imposed pursuant to 42 U.S.C.
§ 1320a‐8, which requires petitions for judicial review to be
filed in the court of appeals. § 1320a‐8(d)(1); see also 30 Fed.
Proc., L. Ed. § 71:690 (“In a proceeding under the statute pe‐
nalizing false statements in connection with … supplemental
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security income payments, the jurisdiction of the Court of Ap‐
peals is exclusive … .”).
Judicial review may be sought by “[a]ny person adversely
affected by a determination of the Commissioner of Social Se‐
curity” by filing in the court of appeals “within 60 days fol‐
lowing the date the person is notified of the Commissioner’s
determination[,] a written petition requesting that the deter‐
mination be modified or set aside.” § 1320a‐8(d)(1). “Upon
such filing, the court shall have jurisdiction of the proceeding
and of the question determined therein[.]” Id.
The SSA concedes that Crespo filed a petition for judicial
review within sixty days after notification of the DAB’s deci‐
sion. After the district court vacated its judgment and trans‐
ferred Crespo’s petition to this court pursuant to 28 U.S.C.
§ 1631, the petition was in the proper forum for review.
B. Review of the Administrative Agency’s Decision
Having satisfied ourselves of jurisdiction being proper in
this court, we turn now to the merits of Crespo’s petition.
1. Exhaustion of Administrative Remedies
The SSA would have us summarily dismiss this appeal for
failing to exhaust administrative remedies. Specifically, the
SSA contends that by not timely appealing the ALJ’s decision
to the DAB, Crespo is precluded from seeking any judicial re‐
view.4
4 In direct contravention of our order, Crespo does not address the effect
on our review of the DAB’s dismissal for untimeliness. That deficiency is
sufficient to find that Crespo has waived the point, Hildebrandt v. Ill. Dep’t
Nat. Res., 347 F.3d 1014, 1025 n.6 (7th Cir. 2003), but we will exercise our
discretion and reach the merits.
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We disagree. Crespo filed his petition for judicial review
within sixty days after the DAB’s decision declining review of
the ALJ’s initial decision. A decision by the DAB “to decline
review” is as much a “decision of the Commissioner” as a de‐
cision on the merits. See 20 C.F.R. § 498.222(a). Therefore, by
timely filing a petition for judicial review, Crespo preserved
our jurisdiction to review “the question determined therein”—
meaning the question resolved by the DAB in its decision. 42
U.S.C. § 1320a‐8(d)(1) (emphasis added).
The DAB declined to review the ALJ’s decision on the
grounds that the appeal was not timely filed. Therefore, Cre‐
spo has exhausted his administrative remedies on the ques‐
tion of whether his appeal to the DAB was timely filed. See 42
U.S.C. § 1320a‐8(d)(1); 20 C.F.R. § 498.222(a); see also Laboski v.
Ashcroft, 387 F.3d 628, 631 (7th Cir. 2004) (“Because the [Board
of Immigration Appeals] had ample opportunity to consider
[an asylum applicant’s] argument concerning the timeliness
of his appeal, he did not fail to exhaust his administrative
remedies on this issue, and it is properly before this Court.”).
2. Review of the DAB’s Decision
Although we may not, as Crespo would have it, review the
ALJ’s initial decision, we do review the DAB’s decision that
Crespo’s appeal was untimely filed.
We review a final agency action only to determine whether
it was “arbitrary, capricious, an abuse of discretion, or other‐
wise not in accordance with law.” 5 U.S.C. § 706(2)(A). The
agency’s findings of fact, “if supported by substantial evi‐
dence,” are conclusive. 42 U.S.C. § 1320a‐8(d)(2).
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Crespo argues that the DAB was incorrect in finding that
his appeal “was untimely, not within 30 days of receiving no‐
tice.” (Pet’r’s Br. at 5.) Crespo’s argument rests on a misinter‐
pretation of the filing regulations. Unless an individual seeks
an extension of time to file, the regulations provide that the
time to file an appeal is within thirty days after the ALJ serves
the parties with the initial decision. 20 C.F.R. § 498.220(d).
That deadline is extended by five days if the initial decision is
served by mail. Id. Nothing in the regulations, however, ties
this deadline to when an individual receives actual notice.
The ALJ’s initial decision was mailed on March 7, 2014,
meaning that “service” occurred on March 12, 2014. Crespo
had thirty days—until April 11, 2014—to either file an appeal
or request an extension of time for good cause pursuant to 20
C.F.R. § 498.221(a).
Crespo did neither. Instead, he filed an appeal on April 16,
2014—five days too late. The DAB gave him the opportunity
to show “good cause” for the late filing. His cause was that he
“reasonably believed” he had thirty days from March 18, the
day he actually received the ALJ’s initial decision. He added
that the “spirit of the law” in § 498.221 “is to give appellants
30 days” to file an appeal, and that “he received only approx‐
imately 24 days or so.”
The DAB did not abuse its discretion in rejecting Crespo’s
untimely filed appeal and finding good cause lacking. The
regulation is clear that appeals are due thirty days after the
ALJ’s initial decision is deemed served, which is five days af‐
ter the date of mailing. A copy of the regulation is included
when the decision is delivered. Furthermore, Crespo offered
no reason why he did not request an extension pursuant to 20
C.F.R. § 498.221(a) if he needed more than twenty‐four days.
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The DAB’s decision to decline review was well within its au‐
thority, and Crespo has offered no valid reason why it was an
abuse of discretion.
C. Excessive Fines Clause
Finally, in three conclusory, redundant sentences, Crespo
asserts that the penalty imposed violates his Eighth Amend‐
ment right against excessive fines and cruel and unusual pun‐
ishment. U.S. Const. amend. VIII.
Crespo never raised this argument to the DAB. 42 U.S.C.
§ 1320a‐8(d)(1) commands that “[n]o objection that has not
been urged before the Commissioner of Social Security shall
be considered by the court, unless the failure or neglect to
urge such objection shall be excused because of extraordinary
circumstances,” none of which are present here.
Moreover, “perfunctory and undeveloped arguments, and
arguments that are unsupported by pertinent authority, are
waived (even where those arguments raise constitutional is‐
sues).” United States v. Berkowitz, 927 F.2d 1376, 1384 (7th Cir.
1991). Instead of developing his excessive‐fines‐clause argu‐
ment, Crespo devoted his brief to attacking our jurisdiction
and the ALJ’s initial decision. Crespo’s complete lack of devel‐
opment of this argument is sufficient to find waiver, espe‐
cially given that this area of law is quite unsettled.
As an initial matter, it is not even clear that the excessive
fines clause applies to civil monetary damages. See United
States v. Rogan, 517 F.3d 449, 453–54 (7th Cir. 2008) (noting that
it is not established that treble damages under False Claims
Act are “fines”); Browning‐Ferris Indus. of Vermont, Inc. v. Kelco
Disposal, Inc., 492 U.S. 257, 259–60 (1989) (holding that puni‐
tive damages are not “fines”).
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Even if we were to accept that a penalty paid to the sover‐
eign constitutes a “fine” within the meaning of the Eighth
Amendment, see Browning‐Ferris, 492 U.S. at 265, it is even less
clear that the penalty assessed in this case qualifies as “exces‐
sive.” That is because “judgments about the appropriate pun‐
ishment for an offense belong in the first instance to the legis‐
lature.” United States v. Bajakajian, 524 U.S. 321, 336 (1998). The
penalty imposed against Crespo was within statutory limits.
Suffice it to say that for this court to wade into this unset‐
tled sea, the litigant advocating it must do far more than
baldly assert its applicability. Accordingly, we hold that Cre‐
spo has waived the claim.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the decision of the
Department of Health and Human Services.
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