SUBJECT:

Social Security Administraation Office of the Inspector General,

DATE: April 26, 2005

Delliece L. White, Respondent

and

Joseph R. O'Lone, Respondent.

I. Introduction

The Inspector General (IG) for the Social Security Administration (SSA) brings these actions for Civil Money Penalties (CMPs) under section 1129 of the Social Security Act (Act). The IG charges that, in applying for Title II (Social Security Disability Insurance or SSDI) benefits, Respondent, Joseph R. O'Lone, knowingly made false statements and misleading representations as to his earnings and work activity. The IG proposes imposing against him a $5,000 CMP plus an assessment in lieu of damages in the amount of $41,810. The IG also charges that, in responding to questions posed by SSA, Respondent O'Lone's employer, Deliece L. White, knowingly made false statements and misleading representations regarding Respondent O'Lone's earnings and work history. The IG proposes imposing a $10,000 CMP against Respondent White.

For the reasons set forth below, I agree that Respondents knowingly misrepresented material facts to SSA for its use in determining Respondent O'Lone's eligibility for Title II benefits, and I consider reasonable the amounts of the penalties proposed.

II. Procedural Background

Respondent White was the owner, president "and every other office that there was, treasurer, secretary, whatever" (Transcript (Tr.) 124) of White & Associates, Inc., a non-attorney consultant firm that represented claimants for Title XVI benefits (Supplemental Security Income or SSI) and SSDI benefits, among other matters. Respondent O'Lone was employed by White & Associates. Although the record is murky as to his exact position within the firm, in correspondence he sometimes referred to himself as "Senior Director and Hearings Officer." IG Exhibit (Ex.) 5, at 4. ⁽¹⁾ Whatever his title, his job involved soliciting and representing claimants for SSDI and SSI benefits.

On April 10, 1999, Respondent O'Lone applied for SSDI benefits on his own behalf, claiming that he became unable to work because of a disabling condition on August 5, 1998. IG Ex. 1. ⁽²⁾ That claim was apparently denied, and he did not appeal. Respondent O'Lone (RO) Ex. 16, at 3-4 (O'Lone Affidavit ¶ 9). Instead, he filed a second application on December 14, 1999, this time claiming that he became unable to work because of a disabling condition on September 2, 1999. IG Ex. 2. ⁽³⁾ In processing these applications, SSA sent Respondent White routine inquiries as to Respondent O'Lone's earnings and work activity, which she completed and returned. IG Exs. 25, 26. Respondent O'Lone was awarded benefits effective August 1998. IG Ex. 29, at 2.

The Commissioner of Social Security has delegated to the IG the authority to impose penalties under § 1129. See 20 C.F.R. § 498.102. In separate investigations, the IG determined that both respondents made false and/or misleading statements to SSA. By letter dated January 3, 2003, the IG advised Respondent White of its determination and proposed penalty. She timely requested a hearing by letter dated February 28, 2003, and the matter was assigned to me as Docket No. C-03-305. In the meantime, by letter dated March 5, 2003, the IG advised Respondent O'Lone of its determination to impose a CMP against him. In a letter dated April 22, 2003, Respondent O'Lone timely requested a hearing, and that matter was assigned to me as Docket No. C-03-499.

I determined that the two cases involved substantially the same set of underlying facts, and could more efficiently be heard as a consolidated case. In a joint telephone conference call, held October 27, 2003, only Respondent White objected to consolidating the matters, citing potential prejudice to her position. In a written order dated October 28, 2003, I found little likelihood of prejudice to either respondent, and consolidated the cases. I left open the possibility of issuing separate decisions, if necessary, to avoid prejudice. However, none of the parties have argued for separate decisions, and I find it unnecessary to issue them.

I convened a hearing on August 19, 2004, in Orlando, Florida. The IG was represented by Ms. Tamika B. Hrobowski. Respondent White was represented by Mr. John R. Kancilia of Gray Robinson, P.A. Respondent O'Lone, although fully advised of his right to be represented, elected to represent himself during the proceedings. Tr. 7. At the hearing, I admitted into evidence IG Exhibits 1 through 34, and Respondent White (RW) Exhibits 1 through 9. Tr. 7-8, 28. Respondent O'Lone brought to the hearing proposed exhibits marked RO Exhibits 1 through 40. They were not submitted timely in accordance with the regulations (20 C.F.R. § 498.208(a)) nor with my earlier orders, and I recognized that the IG was disadvantaged by their last-minute submission. I nevertheless admitted them because of Respondent O'Lone's pro se status ⁽⁴⁾ and his recent hospitalization. Tr. 15.

Following the hearing, the parties submitted closing briefs. Respondent O'Lone attached additional exhibits to his closing brief, consisting of medical records and opinions, as well as declarations of witnesses. The IG has strongly objected to their admission. The IG argues that Respondent O'Lone was afforded ample opportunity to submit his evidence and was even allowed to produce his exhibits for the first time on the day of the hearing. At the close of the hearing, he did not ask that the record be kept open for submission of additional exhibits, nor indicate that he would seek to submit additional evidence. The IG also questions the probative value of his new submissions. I agree that the documents are of limited probative value. Moreover, to the extent that they are probative, their admission would be highly prejudicial to the IG, who has had no opportunity to cross-examine the declarants, nor otherwise respond to their contents. The IG presented its exhibits, witness lists, and documents well in advance of the hearing, so Respondent O'Lone had ample opportunity to prepare and present his case. He has not demonstrated good cause for submission of additional evidence. I therefore decline to admit the documents that accompany his closing brief. See 20 C.F.R. §§ 498.208(a) ("[a]t least 15 days before the hearing, the parties shall exchange . . . copies of proposed hearing exhibits") and 498.208(b) ("[f]ailure to comply may result in the exclusion of evidence").

II. Statutory and Regulatory Background

Section 1129 of the Act subjects to penalty any person (including an organization, agency, or other entity) -

who makes, or causes to be made, a statement or representation of a material fact for use in determining any initial or continuing right to or the amount of . . . monthly insurance benefits under title II . . . or benefits or payments under title XVI, that the person knows or should know is false or misleading or knows or should know omits a material fact or makes such a statement with knowing disregard for the truth . . . .

Act, section 1129(a)(1). The statute defines "material fact" as one that "the Commissioner of Social Security may consider in evaluating whether an applicant is entitled to benefits under title II . . . or eligible for benefits or payments under title XVI." Act, section 1129(a)(2).

The statute authorizes the imposition of a CMP of "not more than $5,000 for each such statement or misrepresentation," and an "assessment in lieu of damages . . . of not more than twice the amount of benefits or payments paid as a result of such a statement or representation." Act, section 1129(a)(1); 20 C.F.R. §§ 498.103(a), 498.104.

Regulations implementing the statutory provisions are found at 20 C.F.R. Part 498. Echoing the statutory language, they authorize the IG to impose a penalty against any person who has made a statement or representation of a material fact for use in determining any initial or continuing right to or amount of Title II or Title XVI benefits, and who knew, or should have known, that the statement or representation was false or misleading, or who omitted a material fact, or who made such a statement with "knowing disregard for the truth." 20 C.F.R. § 498.102(a).

With respect to the amount of the penalty, the regulations reflect the statutory amounts: up to $5,000 for each violation, and an assessment in lieu of damages of not more than twice the amount of benefits or payments paid as a result of the misrepresentation. 20 C.F.R. §§ 498.103(a), 498.104. I am specifically authorized to increase or reduce the penalties proposed by the IG, taking into account the following factors: 1) the nature of the statements and misrepresentations and the circumstances under which they occurred; 2) the degree of culpability of the person committing the offense; 3) the history of prior offenses of the person committing the offense; 4) the financial condition of the person committing the offense; and 5) such other matters as justice may require. 20 C.F.R. §§  498.106(a), 498.220.

If the IG seeks to impose a penalty and assessment, he serves the respondent with written notice of his intent. 20 C.F.R. §  498.109. The party served is entitled to a hearing before an administrative law judge (ALJ). 20 C.F.R. § 498.202. The hearing is not limited to the specific items and information set out in the notice letter; additional items or information may be introduced by either party, subject to the 15-day exchange requirements of 20 C.F.R. § 498.208. 20 C.F.R. § 498.215(e).

Respondents have the burden of going forward and the burden of persuasion with respect to affirmative defenses and any mitigating circumstances. The IG bears the burden of going forward and the burden of persuasion with respect to all other issues. The burden of persuasion "will be judged by a preponderance of the evidence." 20 C.F.R. § 498.215(b) and (c).

The ALJ issues an initial decision, based on the record, that affirms, denies, increases, or reduces the penalties proposed by the IG. 20 C.F.R. § 498.220. The ALJ may not review the IG's exercise of its discretion to impose a CMP or assessment. 20 C.F.R. § 498.204(c)(5).

III. Issue

For each Respondent, the issues are: 1) did Respondent make, or cause to be made, to SSA a statement or representation of a material fact for use in determining Respondent O'Lone's entitlement to SSDI or SSI benefits, that Respondent knew or should have known, was false or misleading, or did Respondent omit a material fact or make such a statement with knowing disregard for the truth; and 2) if so, is the amount of the proposed penalty reasonable.

IV. Discussion

A. Respondent O'Lone made statements or representations to SSA that he knew or should have known were false or misleading. In the alternative, he omitted facts and made statements to SSA with knowing disregard for the truth. ⁽⁵⁾

On multiple occasions, Respondent O'Lone unambiguously told SSA that he was disabled and had not worked in any capacity since his alleged onset of disability date. Specifically:

•In his April 1999 application for benefits, he declared that he became unable to work on August 5, 1998, and agreed to notify SSA if he went to work, "whether as an employee or a self-employed person." IG Ex. 1.

•In his December 1999 application for benefits, he was even more definite, stating that since his alleged onset date, he had "not performed any services in any business at all since September 1999," had not "been self employed or worked for any wages," and was not "operating or involved in any business ventures for [himself] or in conjunction with anyone else." IG Ex. 2, at 2-3.

•In a Work Activity Report (Form SSA-821-F4) signed June 23, 2000, he said that August 5, 1998 was the last day he worked, and that his "medical leave benefits/sick leave expired on 10/1/99 (benefits ended in 9/99)." That form directed him to list the months after August 5, 1998, in which he earned more than $75.00. He left the item blank. With respect to his job at White and Associates, the form directed him to check a box if he had worked three months or less and stopped because of his injury or illness. He left the box blank, and wrote in "I did not return back to my employment. No employment since 8/5/98." When asked if he was employed by a friend or relative or "through a special training or rehabilitation program," he checked "no." The form asked if his job duties are or were different from those of other workers with the same job title (e.g., shorter hours, fewer or easier duties, extra help given, other differences (e.g., frequent absences)). He drew a line through the question and wrote in N/A. IG Ex. 3.

Notwithstanding these representations to SSA, the overwhelming evidence - including credible testimony from his clients, credible testimony from other White & Associates employees, and Respondent O'Lone's own paper trail - establishes that Respondent O'Lone continued to perform significant and lucrative work after August 5, 1998. Although he had periods of relative inactivity following the date he claimed he no longer worked, he continued to solicit clients, signed agreements to represent them, represented them before administrative agencies, solicited them for additional fees, and received multiple payments from them.

According to Respondent O'Lone, on August 4, 1998, his psychologist told him "to take a month off." Tr. 180. Then in September he became physically ill, lost a significant amount of weight, and attempted suicide. He stated that he nevertheless wanted to be "useful as a person." Tr. 181. He "wanted to do something with the company" and "felt very fortunate that Ms. White allowed me to on many turns." Id. He conceded that he chose to be involved in some specific cases "in some capacity." Tr. 182. Nevertheless, he argues, his attendance was always sporadic, and he depended on others to drive him around. Id.

I do not doubt that Respondent O'Lone became seriously ill and either stopped reporting to work or worked only sporadically for a time. However, in late 1998 and early 1999, he was performing the "kind of work usually done for pay or profit." 20 C.F.R. § 404.1572(b). It is undisputed, for example, that on December 14, 1998, he rode with Respondent White to the apartment of a client, Dawn Carouthers. There, Respondent O'Lone, Respondent White, and Ms. Carouthers executed a fee agreement, authorizing White & Associates to represent her in her claims for SSDI and/or SSI benefits. Tr. 160 ⁽⁶⁾; I.G. Ex. 4. ⁽⁷⁾

His own correspondence establishes that in late 1998, Respondent O'Lone represented Terry Tucker, a claimant for SSI benefits, at a meeting with SSA officials. As he later wrote:

On December 24, 1998, we met with the claims representative at the Social Security District Office and addressed matters concerning SSI entitlement. It was diplomacy and the art of persuasion that allowed us to clarify the issues and logically establish your SSI entitlement.

IG Ex. 13, at 1.

Even more significant, through much of 1999 and well into the year 2000, Respondent O'Lone spent considerable time representing Mr. Tucker in a child support matter. After Mr. Tucker was awarded disability benefits, he ran into problems of liability for child support that had been ordered by an Alaska state court. Tr. 38-39. In a letter dated January 14, 1999, Respondent O'Lone advised Mr. Tucker and Mr. Tucker's mother, Katharine Van Meter (who was paying her son's bill), that he had "carefully reviewed" the case, was prepared to provide an analysis and recommendation, and would commit "a minimum of fifty hours in preparation and deliberation." IG Ex. 1, at 1. He wrote that he considered it "more than likely" that he would have to attend a hearing in Alaska. Id. The four-page, single-spaced letter goes into considerable detail about the case, and concludes with a solicitation for the following fees: 1) a "retainer fee" of $5,000 payable to Joseph R. O'Lone; 2) an "initial $500 expense charge" payable to White & Associates, Inc., for expenses such as long distance telephone calls, postage, faxes, and "other general office expenditures;" 3) a flat $2,000 retainer/fee allocated for a "co-counsel attorney located in the State of Alaska;" and 4) a second and final installment of $2,000 payable to Joseph R. O'Lone, due the week a board hearing is secured. I.G. Ex. 5, at 4.

A week later, on January 21, 1999, Katharine Van Meter wrote Respondent O'Lone a check for $5,000. I.G. Ex. 6; Tr. 39.

Because the record is silent on the issue, I assume that Respondent O'Lone did not perform any work on the Tucker case over the next four to five months. However, on July 29, 1999, he and Mr. Tucker signed a fee agreement covering representation in the matter. IG Ex. 7. Documents show that by August, Respondent O'Lone was actively working. In a letter faxed August 16, 1999, he refers to an earlier meeting, agrees to respond to correspondence Mr. Tucker received from the State of Alaska, invites Mr. Tucker to call ("I am up all night preparing papers and other things, and I am glad to receive your telephone call"), and offers to visit him in the hospital to obtain a necessary signature. IG Ex. 8. Additionally, in an August 20, 1999 letter, he asks for $2,000 from Mr. Tucker, $1,500 to pay for an attorney in Alaska, and "a $500 draw against the final $2,000 balance that is designated for myself is needed for general expenses in accordance with the original agreement." IG Ex. 9. That day, Mr. Tucker's mother wrote Respondent O'Lone a check for $2,000. IG Ex. 10.

In an October 27, 1999 letter, Respondent O'Lone assures Mr. Tucker that, "My commitment to your case is 100% and I will see it through all the way." IG Ex. 11, at 1-2. Subsequent correspondence shows that he did, in fact, "see it through all the way." In a letter dated December 8, 1999, less than a week before he filed his own, ultimately successful application for disability benefits, Respondent O'Lone declared, "I have been the responsible party in arranging the travel arrangements with the State of Alaska." IG Ex. 13, at 1. Thereafter, in a letter dated March 8, 2000, Respondent O'Lone's attorneys wrote Terry Tucker, reiterating Respondent O'Lone's activities:

Whereas, Joseph R. O'Lone entered into an agreement with Terry T. Tucker on January 14, 1999, to act in the capacity as director and liaison concerning a Child Support Enforcement Division (CSED) matter based in Anchorage, Alaska. Joseph R. O'Lone is a non-attorney. To further act as liaison and retain legal counsel in Anchorage and to act in your behalf, and secure services with other subcontractors as deemed necessary by Joseph R. O'Lone in exchange for compensation of time. Joseph R. O'Lone's compensation for time ($7,000) is separate from the expenses associated with your case.

IG Ex. 15. The letter goes on to say that Respondent O'Lone spent more than 200 hours on the case, and that he traveled to Anchorage "with two other subcontractors," one of whom was Respondent White. According to the letter, over a five-day period, Respondent O'Lone coordinated appointments and directed meetings with counsel from two different law firms, the Alaska Child Support Agency, and the Attorney General's Office. Id. See also Tr. 46-47.

Mr. Tucker himself confirmed that he hired Respondent O'Lone to help him with the child support matter, and that Respondent O'Lone represented him in a satisfactory manner, which included traveling with him to Alaska to meet with state officials. He estimated that he met with Respondent O'Lone "a few more times than six" over the "better part of a year" to complete the matter. Tr. 41-43. Mr. Tucker acknowledged that "more often than not" he had difficulty reaching Respondent O'Lone when he called White & Associates, but characterized him as "the worker bee." Tr. 49-50. Mr. Tucker stated that even though Respondent O'Lone looked "pale from time to time," and said that he was not feeling well, Respondent O'Lone "was trying to function the best he could." Tr. 50. Contrary to Respondent O'Lone's claims that he was unable to function independently, Mr. Tucker remembered "a couple of times" when a relative of Respondent O'Lone's was driving, but other than that, he did not remember that Respondent O'Lone was accompanied at their meetings and appointments. Tr. 58. He testified, "I don't even think Deliece ever drove around on any of the business errands. I think it was primarily you, or I met you someplace." Id.

Nor was Terry Tucker the only client represented by Respondent O'Lone during the time he told SSA he was not working. Roger Fisher testified that in late 1999, he hired White & Associates to represent him in his Social Security disability case, that Respondent O'Lone represented him, and that he was awarded benefits about two years later. I.G. Ex. 16; Tr. 62-63. ⁽⁸⁾ Consistent with his testimony, the fee agreements he signed are dated October 19, 1999. IG Ex. 16. He met with Respondent O'Lone "about every two or three months" at the offices of White & Associates. Tr. 66. Those meetings usually lasted about a half hour. Mr. Fisher also testified that he observed other clients going out or coming in. He was satisfied with Respondent O'Lone's representation of him, and he paid White & Associates $4,000 for it, which came out of his retroactive benefits. Tr. 66-68. ⁽⁹⁾

I found Mr. Tucker and Mr. Fisher completely without guile. Indeed, they did not even seem to understand that their testimony damaged respondents. They simply and credibly described their relationships with Joseph O'Lone and with White & Associates.

Documentary evidence establishes that Respondent O'Lone represented others after August 1998. In extensive correspondence to another client, Diane Erdmann, Respondent O'Lone himself discusses client meetings, case strategies, and justifies his demands for additional charges. IG Exs. 21, 22, 24 (dated July 31, 2000, September 11, 2000, and January 5, 2002, respectively). In a written statement to SSA, Ms. Erdmann confirms that she was represented by Respondent O'Lone during this time. IG Ex. 33. In a letter dated July 15, 2002, Respondent O'Lone appears to be negotiating with Brian and June Lewis over fees and payments for his services, and on August 2, 2002, June Lewis wrote a check to J. O'Lone in the amount of $1,000 for SSA fees and "CDR" (continuing disability review). IG Ex. 27. ⁽¹⁰⁾

Linda Metzkow was an administrative assistant for White & Associates from March 1999 until March 2002. Tr. 72. She testified that when she started working there, Respondent O'Lone was ill and not in the office. However, in August 1999, he started working with her on the Tucker child support case, at first by telephone and, in late September or October, he started coming into the office "on a pretty regular basis." Tr. 73-74, 84-85. When he looked pale, and she suggested that he go home, he usually stayed. Tr. 84. Occasionally, Respondent O'Lone "would just kind of go away for about four days and take a break and just need to be left alone." Tr. 83. During those periods, he would usually call in. Tr. 84.

She described a typical day: they would meet and she and other staff would be given directions for the day. She was often asked to sit in and take notes when he interviewed clients and claimants. Tr. 85. Respondent O'Lone would work on reports. Ms. Metzkow testified that he "did a lot of writing, a lot of putting together, a lot of going through files." Tr. 86. Referring to her desk calendar for the period, Ms. Metzkow described a matter that she and Respondent O'Lone handled in October 1999, a man who died while they were "trying to get him hooked up with a vocational rehab counselor." Tr. 82-83. She described other matters, including a woman "that signed on in May," and a man who had been arrested for knocking out the Social Security office's window. Tr. 82. Ms. Metzkow also testified:

Subsequently, there were just lots of people that we saw each month, and we worked with another man that had quite a few child support problems in May 2000 in the [S]tate of California, so we were busy with all different types of cases.

Tr. 83. Consistent with Ms. Metzkow's testimony, in a letter dated June 18, 2001, Respondent White characterized Respondent O'Lone and Ms. Metzkow as "extremely busy negotiating other related matters concerning Social Security Disability and Child Support issues cases." IG Ex. 18; Tr. 80. As with the other IG witnesses, I found Ms. Metzkow's testimony wholly credible, and fully consistent with the documentary evidence.

In stark contrast to the letters he wrote clients justifying his fees (See IG Exs. 5, 7, 8, 9, 11, 13, 17, 21), Respondent O'Lone now attempts to minimize the services he provided to them. He admits that after the date he told SSA he last worked, he "would still come into the office on occasion to help with variant clients," (O'Lone Closing Brief (O'Lone Br.) at 13), but argues that his activities should not be considered "work" because 1) they did not constitute substantial gainful activity (SGA); 2) he was really engaged in an "unsuccessful work attempt;" and/or 3) White & Associates provided him a sheltered work environment. O'Lone Br. at 15-19. Under such circumstances, he contends, he still qualified for disability benefits. He also claims that when he made his April 1999 statement to SSA, he was not involved in any activity that could have been characterized as work, so the statement "was uncontrovertibly [sic] true when made and only foreknowledge of subsequent events could make such statement knowingly false." O'Lone Br. at 4-5. He elsewhere suggests that his activities should not be characterized as "work" but as "volunteering to wrap up old cases," and attempts to "assuage and appease" certain existing clients of White & Associates. O'Lone Br. at 6, 16.

I reject these arguments. Both the applications and the work activity report form were standard documents. As an experienced advocate for disability claimants, Respondent O'Lone would have been familiar with them. His statements to SSA were unequivocal, not conditional nor nuanced. He said flatly that he had not performed "any services in any business at all." I.G. Ex. 2. He agreed to notify SSA if he returned to work, "whether as an employee or a self-employed person." IG Ex. 1. The work activity form provided him many opportunities to explain his activities, and in each case he overtly or by omission misrepresented what he was doing. When directed to list the months in which he earned more than $75, he left the item blank. When asked if he had worked three months or less, but stopped because of illness or injury (evidence of an unsuccessful work attempt), he left the box blank, and wrote in "I did not return back to my employment. No employment since 8/5/98." When asked specifically about special employment situations, special job duties or other accommodations, he either checked "no" or wrote "N/A" (not applicable). I.G. Ex. 3.

Both Respondents justify their statements to SSA by arguing that, although he performed some work-like activities, Respondent O'Lone was not engaged in SGA. First, whether Respondent O'Lone's activities actually constituted disqualifying SGA is irrelevant to the question of whether he falsely reported his work activities. As both respondents well knew, a disability claimant must describe accurately activities performed, and SSA then determines whether those activities constitute SGA, which would preclude a finding of disability. A claimant is obviously not free to determine on his own whether or not his work activities constitute SGA, reporting only his conclusion to SSA.

Moreover, neither Respondent has come close to establishing that Respondent O'Lone's activities were not substantial and gainful. Work activity is considered "substantial" if it involves significant physical or mental activities, even if performed on a part-time basis and even if the individual is paid less or has less responsibility than before. 20 C.F.R. § 404.1572(a). Work activity is considered "gainful" if it is the "kind of work usually done for pay or profit, whether or not a profit is realized." 20 C.F.R. § 404.1572(b). Under the regulations governing eligibility for SSDI at the time Respondent O'Lone applied for benefits, an individual was presumed to have engaged in SGA if his earnings averaged more than $500 a month. Earnings that averaged less than $300 per month created the opposite presumption - that an individual's activities were not substantial and gainful. If an individual's earnings fell between these two presumptions, SSA looked to other factors, such as whether his work was comparable to that performed by unimpaired people in the community performing the same or similar occupations, taking into account the time, energy, skill, and responsibility involved in the work. Even if the work were "significantly less than that done by unimpaired people," it would have been considered SGA so long as it was "clearly worth" $500 per month. 20 C.F.R. § 404.1574(b)(6)(iii).

The record establishes that, between January 1999 and March 2000 (approximately 14 months), Respondent O'Lone was paid $7,000 for his work on the Tucker child support case. This represents average earnings of $500 per month. Thus, even if he had performed no other work activities and received no other income, the Tucker case alone generated sufficient earnings to create a presumption that he was engaged in SGA. And, of course, he received other fees for work on other cases. See, e.g., IG Ex. 27, at 3.

I also reject Respondent O'Lone's assertion that the $7,000 he received from Katharine Van Meter represented reimbursement for expenses rather than compensation for the work he performed. Bonnie O'Lone, Respondent O'Lone's mother, testified that Ms. Van Meter delivered two checks, one for $5,000 and one for $2,000, but stated that these "only covered everything that had to be paid out." Tr. 189. She then became evasive as to exactly what was "paid out," and, when pressed, said that vocational experts, and "doctors, psychiatrists, psychologists" were paid from these funds. Tr. 190. Inasmuch as the Alaska child support case did not require these experts, I found her testimony not credible. Moreover, the testimony is simply inconsistent with the contemporaneous documentation, including Respondent O'Lone's written accounts and his attorney's letter of March 8, 2000. That letter specifies that "Joseph R. O'Lone's compensation for time ($7,000) is separate from the expenses associated with your case." I.G. Ex. 15; see also IG Exs. 5, 9. In her request for an accounting of the more than $13,000 she paid on Terry Tucker's behalf, Katharine Van Meter states that she does not need a breakdown of the initial $5,000 "1^st retainer fee to Joe," nor the $2,000 "2^nd and final retainer fee to Joe." IG Ex. 14.

Overwhelming evidence thus establishes that Respondent O'Lone continued to work from late 1998 through 1999 and 2000 and beyond. He was paid substantial sums of money for his services. Yet, in applying for disability benefits, he deliberately told SSA that he had not worked in any capacity since August 1998, statements that he knew to be false.

B. Respondent White made statements or representations to SSA that she knew or should have known were false or misleading. In the alternative, she omitted material facts and made statements to SSA with knowing disregard for the truth.

Respondent White complains that she should not be held accountable for the transgressions of Respondent O'Lone. Closing Brief of Respondent Deliece White (White Br.) at 4. I agree. However, Respondent White should be held accountable for her own actions. A preponderance of evidence establishes that she was twice asked for specific information about Respondent O'Lone's work activities, and she twice responded with false and/or misleading statements. She also knowingly withheld material facts from SSA.

SSA sent routine inquiries to Respondent White regarding Respondent O'Lone's income and work activities. On June 17, 1999, she responded to SSA's request that she furnish "the amount of gross wages earned by the employee" for the months July 1998 through June 1999. IG Ex. 25; RW Ex. 1, at 3. She advised SSA that he was paid $4,000 in July 1998, $3,200 per month from August 1998 through October 1998, $8,200 in November 1998, which included his annual bonus, then $3,200 per month from December 1998 through May 1999, and $1,600 in June 1999. IG Ex. 25; RW Ex. 1, at 3. ⁽¹¹⁾ She typed in "unearned wages were paid since this date for accrued sick leave/medical leave since 8/90 - he did not perform substantial services since 8/5/98." SSA also asked her to state the date Mr. O'Lone last worked. She typed in "8/5/98." RW Ex. 1, at 3; IG Ex. 25; Tr. 130.

In a letter dated May 1, 2000, SSA again asked Respondent White for information about Respondent O'Lone's earnings. RW Ex. 1, at 1. In addition to the requested wage information, SSA asked her three questions:

1) Date Joseph last performed services for your company?

Response: 8/5/98;

2) Date sick pay began? Response: 8/8/98 ended? Response: 10/1/99;

3) Any other periods of employment (even if temporary) since date in #1 above?

Response: NO.

RW Ex.1, at 2; IG Ex. 26.

In her testimony, Respondent White provided a number of rationales for her selection of August 5, 1998 as the date Respondent O'Lone last worked. Significantly, she did not include among them the claim that August 5, 1998 was, in fact, the date he had last performed services for White & Associates.

[I]t was difficult for me to determine exactly what onset date would be appropriate. It wasn't my place to determine an onset date. However, I knew after he had a suicide attempt in March 1999, I knew that could very well be an onset date. I also knew that after he had what I call a breakdown in November 1998, that could have been an onset date. I also know that his activity changed so much in April 1998 I could have used an onset date there if I were to determine an onset date.

Tr. 131-32. She also said that August 5, 1998 was the date "I believe he had gone to a doctor to see if he could possibly get some help, some therapy, some medication to see if it could help to put him back into health, and I believe the doctor told him that he needed to take time off to recuperate." Tr. 133. The closest she came to suggesting that he might have stopped working on August 5, 1998, was her later explanation that August 5, 1998 "was the date that he had a break, let's say. He quit coming in." Tr. 140.

Respondent White now concedes that, notwithstanding her statements to SSA, Respondent O'Lone performed work activities in the offices of White & Associates after August 5, 1998 (Tr. 131, 141, 142).

There were a couple of occasions where he would come in after August 5, 1998. They were very brief periods, maybe just hours in duration. He was attempting to work. He was attempting to rally himself and to help bring closure to the cases that were still pending, people that he had started with and were counting on him.

Tr. 141.

As discussed above, the evidence confirms that, after August 5, 1998, Respondent O'Lone continued to work, not only on his old cases, but also new ones, and he continued to bring fees into White & Associates. Respondent White was certainly aware of these activities, and, in fact, profited from them. She personally drove Respondent O'Lone to Dawn Carouthers' apartment on December 14, 1998, so that he could obtain a signed fee agreement, making it possible for White & Associates to collect its fee from SSA. Tr. 160; IG Ex. 4. With respect to issues that arose in Terry Tucker's disability case, Respondent White concedes that, because she found Mr. Tucker "unpredictable" and "a tough character to handle," she asked Respondent O'Lone "to pull himself together so that he could handle whatever issue it was that had come up." Tr. 127-28. On December 24, 1998, Respondent O'Lone met with a claims representative at the Social Security District Office "to clarify the issues and logically establish [Mr. Tucker's] SSI entitlement." IG Ex. 13, at 1. In his January 14, 1999 solicitation for fees in Mr. Tucker's child support case, Respondent O'Lone asked for a $500 check payable to White & Associates. IG Ex. 5, at 4.

Respondent White testified that, by March 1998, ⁽¹²⁾ Respondent O'Lone's attendance had become "sporadic" and "unreliable," but that he stopped coming into the office completely for about a six month period in March 1999. Tr. 125-26, 137. This is consistent with Ms. Metzkow's testimony that he was not coming in when she started working at White & Associates in March 1999 (Tr. 73), and with the testimony of another White & Associates employee, Ruth Rhodes. Ms. Rhodes worked for White & Associates as a paralegal/office manager from March 1998 until July 1999. Tr. 111-12. She testified that about six months after she started (about September 1998), Respondent O'Lone became "very unreliable," disappearing "for weeks at a time." Tr. 112-13. Nevertheless, he would show up occasionally, and was able "to handle a couple [of clients] and then he'd end up going home early." Tr. 114. Both Respondents well knew that Respondent O'Lone's inability to work for six months would not have qualified him for Social Security disability. To qualify for benefits, an individual's disabling impairment must be expected to last for a continuous period of not less than 12 months or to be expected to result in death. Act, section 223(d)(1); 20 C.F.R. § 404.1505(a).

Even more egregious than her June 1999 misrepresentations, were the statements Respondent White made to SSA in May 2000. Respondent White argues that this second response is limited to the period ending December 1999, and suggests that she had no obligation to report to SSA any of Respondent O'Lone's work activities after December 1999. Tr. 119; White Br. at 3. I do not agree. Although the form specifically requested wage information for 1998 and 1999, nothing on the form itself or the accompanying letter suggests that she should not disclose work activity after December 1999. IG Ex. 26; RW Ex. 1. The specific questions posed by SSA were not limited. SSA unambiguously asked when Respondent O'Lone last performed services and asked her to list "any other periods of employment since" then. Respondent White was obliged to answer those questions honestly, which would have included reporting work activities up through the date of her submission. Moreover, section 1129 of the Act forbids both telling a deliberate lie and knowingly omitting a material fact.

By May 2000, Respondent O'Lone was deeply involved in the Tucker child support case, a matter with which Respondent White was apparently assisting. In an October 27, 1999 letter to Mr. Tucker, Respondent O'Lone stated that he was paying Respondent White $500 "for her services in connection with the Internal Revenue Service." IG Ex. 11, at 1. Respondent O'Lone was actively representing Roger Fisher in his Social Security disability case, a matter for which White & Associates was unquestionably responsible, fee agreements having been signed by Mr. Fisher and Respondent White on October 19, 1999. ⁽¹³⁾ IG Ex. 16; Tr. 62-63. White & Associates was paid $4,000 for Respondent O'Lone's representation of Mr. Fisher. Tr. 67. On March 18, 2000, Respondent White signed a fee agreement and prepared an appointment of representation form, indicating that White & Associates was representing Diane Erdmann. IG Ex. 19. The documents plainly establish that Respondent O'Lone then acted as Ms. Erdmann's representative. IG Exs. 21, 22. For example, in a letter dated September 11, 2000, Respondent O'Lone states, "If there is a hearing next month, I will stand with you to present the arguments in your case." IG Ex. 22, at 1.

Respondent White justifies her statements by claiming that Respondent O'Lone was not working as an employee for White & Associates, but came into the office and "was volunteering to help wrap up the cases at that point." Tr. 142. Then, in late 2000, he was doing business on his own account, although she "allowed [him] to utilize office space and allowed him to assist in certain cases." White Br. at 5. Thus, according to Respondent White, Respondent O'Lone was simply a volunteer who, with White & Associates support staff, performed services for the clients of White & Associates, and earned fees for White & Associates, ⁽¹⁴⁾ while White & Associates coincidentally continued to pay his usual salary. Whatever the technical details of their business relationship, Respondent O'Lone was performing work at White & Associates. Respondent White knew it, but she told SSA that he was not. I consider this a false and misleading statement.

Nor do I accept that Respondent White was "confused" by SSA's questions, or that she simply intended to convey that Respondent O'Lone's services were not SGA. As I have explained below, neither respondent has come close to establishing that Respondent O'Lone's activities were not substantial and gainful, and the evidence establishes that they were. Moreover, I consider whether Respondent O'Lone's activities actually constituted SGA irrelevant to the question of whether Respondent White knowingly misrepresented his work activities to SSA.

Respondent White also testified that she thought SSA meant "did I rehire him, did he cease to be employed, and then did I rehire him. [SSA] didn't ask me was there an unsuccessful work attempt. It didn't ask me did he come in for a day here or there. . . . the way I interpreted it was did you hire him back." Tr. 140-41. I do not find this explanation credible. SSA's questions were simple and straightforward. Like Respondent O'Lone, Respondent White was an experienced advocate for disability claimants who well knew what SSA was asking and why. SSA asked her when Respondent O'Lone "last worked for White & Associates." It asked her when Respondent O'Lone "last performed services" for White & Associates. She repeatedly said August 5, 1998, even though she obviously knew that he continued to work/perform services long after that date.

C. Respondents' misrepresentations were material.

The statute defines a material fact as one that "the Commissioner of Social Security may consider in evaluating whether an applicant is entitled to benefits under title II . . . or eligible for benefits or payments under title XVI." Act, section 1129(a)(2). Regulations governing SSDI eligibility are found at 20 C.F.R. Subpart P (§ 404.1500 et seq.). An individual is disabled if he is unable to perform any "substantial gainful activity" because of a "medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months." 20 C.F.R. § 404.1505(a). In determining whether an individual is entitled to SSDI, SSA first considers whether he is working. If he is working and the work is SGA, SSA will find that he is not disabled regardless of his medical condition, age, education, or work experience. 20 C.F.R. § 404.1520(b). So the first question SSA asks in evaluating whether an individual is entitled to benefits is whether the individual is working. The respondents' misrepresentations as to when Respondent O'Lone stopped working must therefore be considered material.

D. The IG proposes a reasonable penalty against Respondent O'Lone.

The statute authorizes imposition of a CMP of "not more than $5,000 for each such statement or misrepresentation," and an "assessment in lieu of damages . . . of not more than twice the amount of benefits or payments paid as a result of such a statement or representation." Act, section 1129(a)(1); 20 C.F.R. §§ 498.103(a); 498.104.

I am specifically authorized to affirm, deny, increase, or reduce the penalties proposed by the IG. 20 C.F.R. § 498.220. In determining the appropriateness of the penalty, I must take into account: 1) the nature of the statements and representations and the circumstances under which they occurred; 2) the degree of culpability of the person committing the offense; 3) the history of prior offenses of the person committing the offense; 4) the financial condition of the person committing the offense; and 5) such other matters as justice may require. 20 C.F.R. § 498.106.

The IG proposes imposing against Respondent O'Lone one $5,000 CMP, plus an assessment in lieu of damages in the amount of $41,810. Inasmuch as Respondent O'Lone made at least three false or misleading statements, and admits receiving $23,966 in disability insurance payments ((IG Ex. 29, at 2; See RO Ex. 6, at 9 (SSA advises Respondent O'Lone that he has been overpaid in the amount of $20,905)), the proposed penalty falls within the statutory maximum. I now apply the regulatory criteria to assess the appropriateness of that penalty.

Respondent O'Lone has no history of prior offenses. He has also presented evidence of his personal bankruptcy. RO Ex. 6. I have considered those factors.

On the other hand, I have considered the nature of his false statements and misrepresentations, the circumstances under which they occurred, and his degree of culpability. Respondent O'Lone was well-versed in the rules governing disability benefits. I find no possibility that his statements could be attributed to simple errors or misunderstandings. I find that he deliberately set out to mislead SSA, and, when the IG noticed his deception, he engaged in even more deceptive behaviors. Indeed, I find the level of deception here staggering for a civil case. Respondent O'Lone's lack of veracity and his refusal to acknowledge the seriousness of his actions justify a significant penalty.

In addition to the misrepresentations that are the subject of these proceedings, Respondent O'Lone sent the IG a letter dated December 22, 2001, in which he not only repeated many of the false statements and misrepresentations discussed above, he added some new ones. Among other misrepresentations, he said that he had not performed any substantial services in any business at all since September 1999, and was not involved with any business ventures for himself or in conjunction with anyone else. He claimed that the IG had seen his name on fee agreements because the company continued to use pre-signed contracts, a claim that he attempted, without any success, to pursue at the hearing. IG Ex. 29, at 1. He flatly denied statements as to his work on a child support matter in Anchorage, Alaska, claiming that he "didn't personally realize [the] stated income." Id.

In his April 22, 2003 hearing request, Respondent O'Lone told the IG, for the first time, that the $7,000 in fees paid in the Tucker child support case were, in fact, paid to his father, Donald Joseph O'Lone. IG Ex. 30. He even presents some evidence of amended tax returns, in which his father supposedly claimed the income. But, as discussed above, the evidence in the record, including the documentary evidence as well as Terry Tucker's testimony and Linda Metzkow's testimony, belie this claim. In a statement dated April 2, 2002, Respondent O'Lone claims that he "obligated" himself to represent Terry Tucker in the child support matter "prior to the date I became disabled (08/05/98)." RO Ex. 10. This is simply not supported by the evidence in the record. He offered to represent Mr. Tucker in January 1999. IG Exs. 5, 15. He had no contractual obligation to Terry Tucker until July 29, 1999, when they executed a written agreement. IG Ex. 7. On April 2, 2002, Respondent O'Lone also told SSA that he "did very little work on the case due to my medical problems." RO Ex. 10, at 2. Contrast this to his earlier statement: in his January 14, 1999 letter, he committed himself to spending "a minimum of fifty hours" on Mr. Tucker's case. IG Ex. 5. In an apparent attempt to justify his fee, on March 8, 2000, his attorneys wrote Mr. Tucker that he had spent "more than 200 hours on the case." IG Ex. 15.

He has also denied that he was an active participant in American Research & Marketing, Inc. (IG Ex. 29, at 2.), ⁽¹⁵⁾ but the record is replete with examples of his participation in that venture.

Respondent O'Lone has to this day continued to make false and misleading statements about his work activities. For this and the reasons discussed above, I conclude that the penalty proposed is reasonable.

E. The I.G. proposes a reasonable penalty against Respondent White.

The IG recommends imposing a $10,000 CMP against Respondent White. She has no history of prior offenses, and has also presented evidence of poor financial circumstances. Although currently an acupuncture physician, she is not practicing, but attempting to set up an office. RW Ex. 5; Tr. 145. I have considered those factors.

On the other hand, the nature of her false statements and misrepresentations, the circumstances under which they occurred, and her degree of culpability compel a significant penalty. Like Respondent O'Lone, Respondent White was well-versed in the rules governing disability benefits. I find no possibility that her statements could be attributed to simple errors or misunderstandings. I find that she, too, deliberately set out to mislead SSA, and, when the IG questioned her about the deception, she engaged in even more deceptive behaviors. Her lack of veracity and refusal to acknowledge the seriousness of her actions justify a significant penalty.

In a December 26, 2001 letter to the IG, Respondent White characterized the meeting with Dawn Carouthers as "an isolated event and . . . nothing more." IG Ex. 32, at 2. As the evidence discussed above shows, this was false.

With respect to the relationship between White & Associates and the Tucker child support case, she certainly withheld information, and created the impression that she had no association with the matter, another assertion that is patently false. IG Ex. 32, at 2. In a letter dated October 3, 2001, responding to another inquiry from SSA, Respondent White had the opportunity to disclose fully Respondent O'Lone's activities. Instead, she wrote that she had reviewed Respondent O'Lone's employee file, and concluded:

[H]e did not perform substantial services for this company after August 1998. According to our records, Mr. O'Lone attempted to resume his employment, however he was never able to complete one work day due to his medical disposition.

RW Ex. 2. She also wrote that he was "never compensated for rendering any services with this company after August of 1998." Id. At the time Respondent White wrote this letter, Respondent O'Lone was actively representing clients for White & Associates, including Mr. Fisher and Ms. Erdmann, for which White & Associates recovered the SSA-approved fees of $4,000, plus the additional charges that it was able to collect ($30 per month plus). ⁽¹⁶⁾

For all of these reasons, I conclude that the penalty proposed against Respondent White is reasonable. ⁽¹⁷⁾

V. Conclusion

Respondent O'Lone violated section 1129 of the Act when he knowingly misrepresented material facts to SSA for its use in determining his eligibility for Title II benefits. I consider reasonable the imposition of a $5,000 CMP plus an assessment in lieu of damages in the amount of $41,810.00.

Respondent White violated section 1129 of the Act when she knowingly misrepresented material facts to SSA for its use in determining Respondent O'Lone's eligibility for Title II benefits. I consider reasonable the imposition of a $10,000 CMP.

Carolyn Cozad Hughes

Administrative Law Judge

1. For reasons not fully explained, on March 30, 1998, Respondent White made Respondent O'Lone a shareholder (35%) in White & Associates. Respondent White retained for herself the majority share, continued to act as director, and continued to serve in all officer positions. Respondent White (RW) Ex. 3.

2. Although the application is date-stamped April 16, 1999, Respondent O'Lone's signature is dated April 10, 1999.

3. The application has a typewritten date of December 1, 1999. Respondent O'Lone's signature is dated December 14, 1999, however.

4. Although Respondent O'Lone, a non-attorney, is representing himself, he is not unfamiliar with administrative processes, having spent many years representing clients before administrative agencies with apparent success.

5. I make findings of fact and conclusions of law to support my decision in this case. I set forth each finding, in italics, as a separate heading.

6. The transcript at page 160, line 16, contains the name "Don Caruthers." This is a misspelling, and the person to whom "Don Caruthers" refers is actually "Dawn Carouthers."

7. In a declaration, Respondent O'Lone states that he earlier worked on the Carouthers disability claim but neglected to have her execute a fee agreement. RO Ex. 16, at 3 (O'Lone Affidavit ¶ 4). According to Respondent White, this client was very dependent on Respondent O'Lone, and insisted on talking with White with O'Lone present before she would conclude her case and render payment. IG Ex. 32, at 2; Tr. 160. I note that along with representation, soliciting clients and obtaining payment from them is a "kind of work usually done for pay or profit."

8. Prior to the hearing, Respondent O'Lone sought to block Mr. Fisher's appearance at the hearing, and he refused to remain in the hearing room while Mr. Fisher testified, claiming that Mr. Fisher had been stalking Respondent O'Lone and his family. Tr.17-18, 60-61. I advised Respondent that he was waiving his right to cross-examine. In fact, Mr. Fisher was plainly aged and infirm, and, although his testimony was certainly damaging to Respondent O'Lone's case, nothing in his demeanor suggested any merit to Respondent O'Lone's accusations.

9. The $4,000 Mr. Fisher paid White & Associates did not include amounts for out-of-pocket expenses and other fees that were collected separately. IG Ex. 16, at 2. I discuss this issue more fully below in footnote 13.

10. In addition to other irregularities, White & Associates and Respondent O'Lone apparently persuaded disability clients to pay them sometimes large sums of money for representation in potential continuing disability reviews (CDRs). See Tr. 89. However, they did so even though their clients were not at all subject to a CDR, and without any indication that the client would be subject to a CDR in the foreseeable future, if ever. See IG Exs. 17, 18, 24, 27. Respondent O'Lone's justification for this practice - that a claimant's substantial earnings during a purported period of disability would trigger the review - simply makes no sense unless his clients were themselves failing to disclose to SSA income received during a period of purported disability. See Tr. 175-76.

11. Throughout her closing brief, Respondent White refers to these as "termination payments," which is puzzling since that characterization appears nowhere in the record. In fact, Respondent White testified that she anticipated Respondent O'Lone's return, and even cited that as a reason for the payments. "I kept paying him at the regular rate because I expected he would improve. I expected that he would get a rest period. He could recuperate and come back to work for me because I needed him in my business." Tr. 136.

12. In what can only be characterized as highly suspicious timing, on March 28, 1998, exactly the time that Respondent White complains Respondent O'Lone became less reliable, they entered into their "shareholders' agreement." Notable among its provisions:

In the event a Shareholder becomes physically or mentally incapable of performing his/her regular duties as determined by a professional medical diagnoses and/or is unable to participate in the business of the Corporation, the Corporation will continue to pay the Shareholder's scheduled salary on the basis of an employee for a minimum period up to six (6) months.

RW Ex. 3, at 4. Respondent White has sometimes pointed to this provision to explain the monthly payments that White & Associates provided Respondent O'Lone from August 1998 through October 1999. Tr. 137; White Br. at 4. She has offered other inconsistent explanations, however. For example, in her testimony, Respondent White characterizes the payments as "a paid vacation outside of the shareholders' agreement". Tr. 138. In a December 26, 2001 letter to the IG, she said, "When Mr. O'Lone became unable to work, the company paid his regular paychecks and annual bonus . . . as it was due to him. He had earned accrued medical and sick leave during nine years of loyal service with the company . . . ." I.G. Ex. 32, at 1. Again, she does not mention any payment pursuant to a shareholders' agreement.

13. SSA requires approval of a fee agreement before it will release a portion of retroactive benefits to a representative to cover the representative's fee. White & Associates apparently required its clients to sign two fee agreements. It submitted one to SSA. The second included additional charges of $30 per month, payable to White & Associates, and this agreement was not submitted to SSA. IG Ex. 16. White & Associates enforced the provisions of this second agreement. Tr. 89; 167-68. Respondent White disingenuously claimed that she did not provide a copy of the second agreement to SSA because no one ever asked to see it. Tr. 168.

Respondent White justifies the $30 per month fee as reimbursement for out-of-pocket expenses, and points out, correctly, that SSA allows representatives to collect such expenses from claimants without SSA approval. White Br. at 11-12. According to Respondent White, itemizing actual expenses was time-consuming and averaged out to $50 per month, so they imposed the flat rate of $30 per month (suggesting, incredibly, that White & Associates actually subsidized its clients). Tr. 169. However, the evidence shows that White & Associates collected this fee in addition to legitimate out-of-pocket expenses. According to the fee agreement, "expenses" included "records charges, consultation/conference fees, legal fees/expenses, or any other reasonable fees." But claimants were charged additional money for faxes and copying. IG Exs. 16, at 2; 23. And compelling evidence suggests that clients paid additional money to Donald O'Lone for their medical records and reports (involving other questionable practices that are beyond the scope of this litigation). Tr. 165-67; IG Exs. 20, 22, 33; RO Ex. 5, at 5. Moreover, the longer a case was pending, the more the claimant was charged, without regard to actual out-of-pocket expenses. Mr. Fisher, for example, understood that he was paying for the office's maintenance and electricity. Tr. 64. He paid the $30 per month fee from 1999 through 2001, and then White & Associates billed him an additional $180, because Respondent White said that "she had missed something in there when my wife and I wrote the original check." Tr. 68, 70; I.G. Ex. 18. Ms. Metzkow testified that the $30 per month covered "administrative expenses," and there was no accounting as to what those expenses were. Everyone just had to pay $30 per month. Tr. 88.

14. The evidence suggests that the respondents argued constantly about how those fees would be divided. Tr. 92, 97-98, 161-62.

15. American Research & Marketing was apparently Donald O'Lone's company, and Respondent White has suggested that Respondent O'Lone earned fees through his association with American Research & Marketing, not White & Associates. The company supposedly "developed" medical evidence for White & Associates' clients. Respondent White was evasive in the extreme when questioned about this practice, claiming she did not know whether Donald took a cut of the payments that were intended for doctors' exams. She testified that he did "additional development," then "I don't know how to explain it. There were different activities. It was a different level of activity." Tr. 165. She first said he handled the Department of Veterans Affairs (VA) benefits, but conceded that VA cases were separate and they would not charge a disability claimant for work performed on a VA case. Tr. 166. Then she said Donald's fees were "for doctor's fees and testing." Id. When pressed, she said that Donald was "[a]cting as a coordinator" who "[f]ocuses the energy, focuses the development together." Tr. 166-67.

16. White & Associates dissolved March 28, 2000 (RW Ex. 4), but Respondent White apparently continued to collect fees in its behalf.

17. Although I do not rely on these factors in setting the amount of the penalty, I found deeply troubling, and worthy of additional investigation, the many questionable practices of White & Associates, American Research & Marketing, these respondents, and Donald O'Lone. These practices include: the use of two fee agreements, one of which was not disclosed to SSA; charging clients $30 per month plus itemized out-of-pocket expenses; persuading clients to pay large sums for representation in phantom CDRs; charging clients additional sums for the "development" of medical evidence and reports, which also suggests that this medical evidence, submitted to SSA to establish disability, might have been created by non-medical sources, i.e., Donald and Joseph O'Lone.