Scienter is defined as a mental state embracing intent to deceive, manipulate, or defraud. Scienter means to have guilty knowledge. An act is done knowingly if done voluntarily and intentionally, and not because of mistake or accident or other innocent reason.
Some years ago there was a popular TV show called “To Tell The Truth.” Some of us may remember that panelists tried to deceive others into believing that they were telling the truth about various things. Two recent Appellate FAA enforcement cases brought to mind that show and the difficulty in maintaining a defense in FAA enforcement cases that involve intentional falsification.
There are several areas of the FARs that deal with this issue of scienter or as some may say guilty knowledge. Intentional falsification of data provided to the FAA is a common area of concern.
Pilots are all too familiar with FAR 67.403a1 that deals with intentional falsification of data on the application for medical certificate and other logs, reports, and records that may support the application. If you are a pilot take time to read this section as it has added some important areas of interest. The most common, among others, being failure to report DUI violations or administrative actions. Mechanics are also frequently in violation under FAR 43.12a for placing intentionally false data in aircraft maintenance records. In their haste to complete “paperwork” mechanics will sometimes negligently or mistakenly enter false or misleading data in maintenance records. This may lead to a further inquiry by inspectors involving FAR 43.12a. Flight instructors most commonly will enter erroneous flight times and certifications in pilot logbooks which lead to violations under FAR 61.59a2. All of these violations involve the use of the terms fraudulent or intentionally false in their description of the violation and this gives rise to the discussion of scienter or the issue of the intent of the airman. This is all of some major concern because a finding of a violation of any of these sections always results in the immediate emergency revocation of all certificates held by the violator.
Two recent cases however do shed some light on the issue of the intent required to be found in these cases. It seems to offer some relief to the airman attempting to present a defense, which is difficult at best. In most of these cases the FAA simply makes a motion for summary judgment and it usually prevails as in the first case. Although the cases deal with pilots they have a direct connection to the issue of intent when it comes to cases involving mechanics, flight instructors, or others who may be charged with the similar violations of the FAR.
The first case
The first case deals with an airman who allegedly made an intentionally false statement on his application for a medical certificate. The facts show the airman was pulled over at a driver checkpoint and found to have a blood alcohol level of 0.08 or more. In his state, this results in a civil license revocation and his license was revoked for 30 days. He was not charged with a crime.
Some time later he filled out his application for an aviation medical certificate and under medical history answered “no” to the question involving “… any conviction or history of any administrative action … which resulted in … revocation … of driving privilege …”
A short time later he received a letter from the FAA saying that it had learned of his license revocation and it was investigating whether he had intentionally provided false or fraudulent information in his response to question 18v in that he did not reference his alcohol related civil offense. The airman denied providing intentionally false information. He explained that he had not been convicted of any alcohol-related charges and that he did not look upon the revocation as a revocation due to a conviction but only as part of the civil process. He wished that he had asked FAA for a clarification of administrative action and that he was certain that he was not to answer yes until he had been convicted of DUI.
As expected, the FAA next issued an emergency order revoking his pilot’s license and medical certificate. He then appealed this decision to the NTSB and asked for a hearing before an administrative law judge. FAA sought summary judgment because it maintained there were no material facts in dispute.
The airman filed an objection to this motion alleging that section 18v was confusing to him and that the term administrative action was not defined on the form or in the instructions. He claimed that this lack of knowledge of the meaning of this term was a disputed issue of fact that he should be allowed to argue to an administrative law judge.
The law judge did not buy his argument and granted summary judgment to the FAA. The airman then appealed to the full NTSB. The full board also denied his appeal stating that … “a pilot’s failure to understand a question does not establish a lack of intent to provide false information.” He then petitioned for review before the U.S. DC Circuit Court of Appeals.
The Court of Appeals came up with some strong support for the airman after reviewing the case and the regulation involved. Speaking to the issue of intent to deceive, it quoted the seminal case on the subject which held that an intentionally false statement — unlike a fraudulent statement — did not require an intent to deceive. But it rejected the FAA’s and the NTSB’s contention that not even knowledge of falsity was required, explaining that the regulation explicitly includes an intent requirement and hence requires reference to the mental state of the person who makes the entry.
The Appeals Court agreed with the airman that when the FAA and the Board said that … failure to understand a question does not establish a lack of intent to provide false information …, they were wrong and in error. The court went further to say that under the regulation (67.403a1) proof is required that the airman subjectively understood what the question meant. Here scienter enters the discussion … the intentional falsification regulation includes a scienter requirement that must be construed to require actual knowledge of falsity.
The court went on to say that the statement that he did not understand the revocation to be an administrative action, raised a genuine issue of material fact as to his knowledge of falsity. Therefore summary judgment was inappropriate … and it was arbitrary and capricious for the Board to find otherwise. The airman was therefore granted his opportunity to present evidence at a full blown hearing supporting his position that he did not intentionally falsify. The result was simply the setting aside of the summary judgment decisions by the FAA and the Board; however, it was a huge step forward for the defense of an otherwise difficult case to defend. He could still lose his case when it went back down for a hearing before the law judge or maybe the FAA fearing it might lose again, might cut him a deal. Nonetheless, I believe the points set out in this appellate decision made some new law and clarified some old issues that will apply to the other varieties of falsity cases that come along.
A second case handed the FAA and the Board another similar reversal in favor of the airman’s petition for review before the same DC Circuit Court. The case deals with the airman medical application form again, where he neglected to answer “yes” to a history of a non-traffic conviction, both misdemeanors or felonies. In spite of a conviction for bribery as a felony he failed to note this on the application not once but three times in succession. FAA in due course found out about this and ordered his medical certificate and private pilot license revoked on an emergency basis. It stated that it concluded that he had made a fraudulent or intentionally false statement not once but three times on subsequent applications. He appealed the order and requested a hearing to challenge the FAA assertions.
There was no motion for summary judgment in this case probably because of the time that had passed since the first incident and the FAA presented proof of the bribery conviction and his “no” answers on the three applications. The airman was then allowed to present evidence on his behalf.
The man stated that he always believed that the question dealt only with matters concerning drugs and alcohol. He claimed that an FAA medical examiner had told him this and he relied upon it. He stated further that a second AME told him the same thing when filling out his second and third application.
In light of the man’s testimony the law judge ruled that he had successfully rebutted the Administrator’s case of intentional falsification, concluding that it was clear that the man had no intention to falsify let alone be fraudulent in giving the answers he did on the applications. The law judge reversed the FAA’s emergency order of revocation. The FAA appealed this finding to the Board and it reversed the law judge.
The Board rejected the man’s argument that he did not make an intentionally false statement because he believed the question only concerned drugs and alcohol. Secondly it said that the law judge erred by requiring the Administrator to prove that the man had the specific intent to deceive the FAA rather than the lesser burden of proving an intent to falsify. The Board then reversed the law judge and affirmed the order of revocation.
On appeal again to the DC Circuit Court of Appeals this man argued that the Board diverged from past precedent in two ways: (1) they failed to address the matter of the man’s credibility as determined by the law judge who heard the case; and (2) by applying an improper standard for the intent element of the offense of intentional falsification. The Circuit Court of Appeals again agreed with the airman.
The court in siding with the airman here said that the law judge’s credibility decision in favor of the airman was paramount and that the Board’s decision in reversing the law judge without overturning his credibility determination is arbitrary and capricious. Further, the court said that the Board’s …” failure to give the law judge’s implicit credibility determination the requisite level of deference was contrary to the Board’s precedent and therefore, was arbitrary and capricious.”
In this case it is clear that the impression of the law judge as regards the truthfulness and credibility of the accused is very important since he sees him, listens to him, and therefore is in the best position to decide whether or not he is being truthful in his testimony.
This case is a little different from most because the appellate court focuses its attention on the credibility decision of the law judge and on that issue reverses in favor of the airman.
The basic rule here is that … the appellate court may set aside agency action (FAA) … if it finds it to be arbitrary, capricious, an abuse of discretion, or, where there has been a hearing, the agency action is unsupported by substantial evidence.”
These two new decisions provide a more substantial basis for an accused airman to develop his defense in a more positive and precise way having the support of the appellate court decisions described here. Comments to firstname.lastname@example.org.
Stephen P. Prentice is an attorney with an Airframe and Powerplant certificate, is an ATP rated pilot, and is a USAF veteran. Email: email@example.com