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State v. Gonzalez

Superior Court of Delaware

July 19, 2018

THE STATE OF DELAWARE, Plaintiff,
v.
CINDY GONZALEZ, Defendant.

          Submitted: July 9, 2018

          On Plaintiffs Motion for Judgment on the Pleadings. GRANTED.

          Oliver J. Cleary, Esquire, Deputy Attorney General, Department of Justice, Wilmington, Delaware, Attorney for Plaintiff.

          John S. Whitelaw, Esquire, Community Legal Aid Society, Inc., Wilmington, Delaware, Attorney for Defendant.

          MEMORANDUM OPINION

          Richard R. Cooch, J.

         I. INTRODUCTION

         On January 12, 2018, the State of Delaware filed a Complaint against Defendant Cindy Gonzalez for "fraudulently obtaining government benefits in violation of Delaware common law and the Delaware False Claims and Reporting Acts, 6 Del. C. §§ 1201, et. seq ('DFCRA')."[1] Defendant has acknowledged all allegations against her;[2] however, she asserts an affirmative defense of federal preemption that Plaintiffs claim is "precluded by the provisions of the Food Stamp Act, 7U.S.C. § 2011 et seq."[3]

         This pre-emption claim involves an issue of apparent first impression in this State. Pursuant to Superior Court Civil Rule 12(c), Plaintiff moves for judgment on the pleadings against Defendant. For the following reasons, this Court GRANTS Plaintiffs Motion. Further, pursuant to Del. C. § 512 and Superior Court Civil Rule 132, this matter shall be referred to a Commissioner of the Superior Court for a hearing to determine the amount of fees and/or costs that are statutorily required under the Delaware False Claims and Reporting Act.

         II. FACTS AND PROCEDURAL HISTORY

         This action results from an Administrative Disqualification Hearing Decision issued on August 18, 2017.[4] The Fair Hearing Officer found that "the allegations of fraud were established through clear and convincing evidence."[5] Specifically, the allegations of fraud in the matter below were that Defendant "falsified numerous documents by claiming [Defendant] lived alone and received no income when she lived with other household residents and did receive income."[6] Defendant did not appeal the decision. On January 12, 2018, Plaintiff filed a Complaint in this Court against Defendant alleging that "the Defendant violated the Delaware False Claims and Reporting Act 6 Del. C. §§ 1201 et seq. by using fraud to obtain food benefits from the State."[7]

         Plaintiff is seeking "monetary damages and civil penalties arising from fraudulently obtaining government benefits in violation of Delaware common law and the Delaware False Claims and Reporting Act, 6 Del. C. §§ 1201, et seq. ("DFCRA"). Defendant admitted all factual allegations in the Answer, but raised an affirmative defense that "Plaintiffs claims are barred by federal pre-emption and precluded by the provisions of the Food Stamp Act [ ]."[8] Plaintiff then filed this instant motion for judgment on the pleadings.

         III. THE PARTIES' CONTENTIONS

         A. Plaintiff's Contentions

         Plaintiff asserts that it "is entitled to Judgment on the Pleadings due to the absence of contrary legal rationale and the absence of questions of material fact."[9]Additionally, Plaintiff asserts that "Defendant is without legal basis to challenge the factual findings of the Fair Hearing Officer who issued a decision in this matter on August 18, 2017."[10] Plaintiff points out that Defendant admits the factual claims in the Complaint.[11]

         In response to Defendant's argument regarding implied pre-emption, the Plaintiff asserts "[n]othing contained within the Response shows that the Food Stamp Act precludes the State from using state-level civil fraud remedies against those who commit fraud against the State."[12] Plaintiff argues that the statute is a civil sanction for committing fraud against the State, and that as a consequence, the Department of Justice (DOJ) has jurisdiction. "Federal oversight of a different state agency's welfare benefits distribution does not preclude the DOJ from enforcing civil fraud statutes.''

         B. Defendant's Contentions

         Defendant asserts that "Plaintiff is not entitled to judgment on the pleadings because Plaintiffs civil fraud action is barred under the doctrine of pre-emption."[13]The legal doctrine of pre-emption is grounded in the Supremacy Clause of the U.S. Constitution.[14] Specifically, Defendant contends that Plaintiffs civil fraud action is "prohibited by implied conflict pre-emption, as it creates a direct conflict with federal law and thwarts Congressional purpose."[15] Defendant clarifies and argues that the pre-emption in this matter is implied and not explicit.[16]

         Defendant claims that "food stamp overpayments are federal debts"[17] and that "the federal government sets boundaries within which states may exercise their enforcement authority[;]"[18] however, "a state may not alter the federally-prescribed consequences for [Intentional Program Violations] by imposing greater financial penalties or longer disqualification periods."[19] Last, Defendant claims that "Plaintiff does not have the authority to impose an alternate disqualification period. [Thus], Plaintiffs request for an injunction effectively imposes an additional eligibility requirement in violation of the [Food and Nutrition Service of the U.S. Dept. of Agriculture] and implementing regulations."[20]

         IV. STANDARD OF REVIEW

         "After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings."[21] "On such a motion, the Court must accept all well-pled facts in the complaint as true and construe all reasonable inferences in favor of the non-moving party."[22] "The standard for a motion for judgment on the pleadings is 'almost identical' to the standard for a motion to dismiss."[23] The Court will grant a motion for judgment on the pleadings "when no material issues of fact exist, and the moving party is entitled to judgment as a matter of law."[24]

         V. DISCUSSION

         A. Plaintiff's Motion for Judgment on the Pleadings is Granted due to the Lack of Disputed Material Issues of Fact and the Absence of Conflict Between State and Federal Law.

         Accepting all of the well-pled facts as true and construing all reasonable interferences in favor of Defendant, Plaintiff is entitled to judgment as a matter of law. "Normally factual statements in the pleadings are considered conclusive unless they are amended or withdrawn."[25] After a review of the pleadings, it is apparent to the Court that there are no material issues of fact in dispute.

         Plaintiff asserts that Defendant is without legal basis to challenge the decision made by the Fair Hearing Officer on August 28, 2017.[26] Defendant asserts that Plaintiffs civil fraud action is barred under the doctrine of implied pre-emption, which, Defendant asserts, "creates a direct conflict with federal law and thwarts Congressional purpose."[27] This Court finds that no such implied conflict exists. The Federal Food Stamp Act does not preempt the Delaware False Claims Reporting Act because DCFRA is a statute enforcing civil sanctions.

         Generally, there are two forms of implied conflict preemption: (1) "impossibility conflict" exists "when a party is subjected to two or more sets of regulation and cannot comply with both"[28] and (2) "frustration of federal objective" exists when the application of conflicting state law would "prevent or frustrate the accomplishment of a federal objective."[29] If preemption is meant to prevent frustration of Congressional intent or objection, then the Federal Code section regarding additional civil and criminal penalties belies Defendant's assertion that Congress intended individual states to limit its enforcement of fraud. The relevant code section reads "[s]tate agencies shall also encourage State and local prosecutors to recommend to the courts that a disqualification penalty as provided in section 6(b) of the Food Stamp Act be imposed in addition to any other civil or criminal penalties for such violations."[30] ...


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