Langenbach v. Commissioner of Social Security

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

KLAUS JOSEF LANGENBACH,

Plaintiff,

v. Case No.: 2:19-cv-586-FtM-MRM

COMMISSIONER OF SOCIAL

SECURITY,

Defendant.

/

OPINION AND ORDER

Plaintiff Klaus Josef Langenbach filed a Complaint on August 20, 2019, (Doc.

1), and an Amended Complaint on August 27, 2019, (Doc. 10). Plaintiff appeals

from the Social Security Administration’s (“SSA”) decision finding that he has been

overpaid Social Security Retirement Insurance Benefits (“RIB”) based upon the

application of the Windfall Elimination Provision (“WEP”). (Docs. 1, 23).

Specifically, Plaintiff argues that the Commissioner improperly concluded that

Plaintiff’s German social security benefits necessitated the application of the WEP to

his United States RIB. (Docs. 23 at 5-7, 24 at 1-2). Plaintiff requests that the Court

remand this matter to the Commissioner for further proceedings. (Id.).

The Commissioner asserts that the Administrative Law Judge (“ALJ”)

evaluated the evidence of record and properly applied the law to determine that the

SSA has overpaid Plaintiff $30,967.60 through application of the WEP to Plaintiff’s

German social security benefits and United States RIB. (Doc. 23 at 7-15).

On December 4, 2019, the Commissioner filed the transcript of the

administrative proceedings (hereinafter referred to as “Tr.” followed by the

appropriate page number) (Doc. 18), and the parties filed a joint memorandum

detailing their respective positions on April 15, 2020. (Doc. 23). Additionally, on

April 16, 2020, Plaintiff filed Plaintiff’s Reply Memorandum – Social Security.

(Doc. 24).

For the reasons set forth herein, the decision of the Commissioner is

REVERSED AND REMANDED pursuant to § 205(g) of the Social Security Act, 42

U.S.C. § 405(g).

I. Background

Plaintiff lived and worked in Germany until roughly 1994 when he came to

the United States. (Tr. at 140). Plaintiff estimates that he paid into the Germain

Social Security system for roughly 23 years. (Id. at 141-42). In 1994, when Plaintiff

moved to the United States, he began paying into the United States Social Security

system. (Id. at 146-47). While working in Germany, Plaintiff paid German social

security taxes; while working in the United States, Plaintiff paid United States social

security taxes. (Id. at 147).

Beginning in January 2006, Plaintiff was awarded monthly RIB of $345.00 by

the United States SSA under Title II (Federal Old-Age, Survivors, and Disability

Insurance) of the Social Security Act. (Id. at 25). Notably, Plaintiff’s work in the

United States was sufficient for him to qualify for United States RIB without the

application of the Totalization Agreement between the United States of America and

the Federal Republic of Germany on Social Security (the “U.S.-German Totalization

Agreement”). (See id. at 18 n.1, 25-27); see also U.S. Soc. Sec. Admin., U.S.-German

Social Security Agreement, https://www.ssa.gov/international/agreement_texts/

germ_agt.html (visited Jan. 29, 2021). In addition to his monthly United States RIB,

Plaintiff began receiving a monthly pension of €493.79 from Germany (the “German

Pension”) in May 2006. (Tr. at 45, 143).

Plaintiff collected both payments until September 2015, when he received a

“Notice of Change in Benefits” letter from the SSA informing him that he had been

overpaid $30,967.60 from May 2006 through August 2015. (Id. at 45). The SSA

determined that Plaintiff’s United States RIB were subject to a reduction based on

the WEP because he was receiving additional benefits through his German Pension.

(Id.).

Plaintiff timely sent a request for reconsideration to the SSA arguing that: (1)

he was not at fault for the $30,967.60 overpayment because the United States SSA

had not informed him that he had to report the German Pension; and (2) the WEP

should not apply in his case because his foreign employer withheld social security

taxes. (Id. at 49). The SSA scheduled a personal conference on November 17, 2015,

and issued a decision on December 5, 2015, finding that Plaintiff was at fault for the

alleged overpayment because he had failed to disclose the German Pension in his

original application for United States RIB. (Id. at 55, 59-60).

Following this, Plaintiff requested a hearing before an ALJ and argued that:

(1) he was not at fault for the overpayment; and (2) the WEP could not apply to the

portion of the German Pension that was awarded pursuant to voluntary payments.

(Id. at 61-62). On March 9, 2017, ALJ Duane Young held a hearing that Plaintiff

attended pro se. (Id. at 15, 133). The ALJ entered an unfavorable decision on

December 13, 2017, finding that: (1) Plaintiff was overpaid RIB in the amount of

$30,967.60 during the period from May 1, 2006, through August 1, 2015; (2) Plaintiff

was at fault for causing the overpayment; (3) the WEP properly applies to Plaintiff’s

German Pension to reduce the United States RIB; and (4) recovery of the

overpayment is not waived by the SSA and Plaintiff is liable for repayment of

$30,967.60. (Id. at 15-19). The Appeals Council subsequently denied Plaintiff’s

request for review on June 26, 2019. (Id. at 1-4, 129-30).

Thereafter, Plaintiff filed a Complaint with this Court. (Doc. 1). The

Commissioner filed an Answer (Doc. 16) and the Transcript (Doc. 18). The parties

consented to proceed before a United States Magistrate Judge for all proceedings.

(Docs. 17, 20). The parties then filed their Joint Memorandum (Doc. 23) and

Plaintiff filed a reply brief to the Joint Memorandum (Doc. 24). The case is, thus,

ripe for review.

II. Calculation of Social Security Benefits

“As a general rule, workers in the United States are taxed to support the

payment of social security benefits to the retired and to individuals with disabilities.”

Eshel v. Comm’r, 831 F.3d 512, 514 (D.C. Cir. 2016). The Social Security Act

distinguishes between “covered” and “noncovered” employment. Martin v. Soc. Sec.

Admin., Comm’r, 903 F.3d 1154, 1156 (11th Cir. 2018) (citing 20 C.F.R. §

404.1001(2018)). “Covered employment” is subject to various social security taxes,

and “noncovered employment” is exempt from social security taxes. Id.; see also

Stroup v. Barnhart, 327 F.3d 1258, 1259 (11th Cir. 2003).

Many noncovered employment positions include a separate annuity or

pension. Id. Similarly, an individual who works in a foreign country and pays into

that country’s social security system may become entitled to a pension or benefit

from that foreign government. Hawrelak v. Colvin, 667 F. App’x 161, 162 (7th Cir.

2016). Moreover, a foreign pension or benefit may be based on a totalization

agreement, or a foreign pension may not be based on a totalization agreement. See

Programs Operation Manual System (POMS) GN 01701.301, GN 01701.310.

A retired worker is entitled to United States RIB based on the number of

calendar quarters during which the person earned wages from employment subject to

social security contribution requirements, “covered employment,” over the course of

the person’s career, provided the person has accrued a minimum number of quarters

of coverage. Beeler v. Berryhill, 381 F. Supp. 3d 991, 995 (S.D. Ind. 2019), aff’d sub

nom. Beeler v. Saul, 977 F.3d 577 (7th Cir. 2020) (citing 42 U.S.C. §§ 402(a), 414(a)).

Based on how the SSA calculates RIB,1 an individual who works in a foreign

country and receives a pension from the individual’s noncovered employment in that

1 To calculate RIB the SSA adjusts benefits payouts so that individuals with lower

average month earnings are entitled to a greater percentage of those earning than an

individual with higher earnings. Martin, 903 F.3d at 1156. Thus, an individual with

covered and noncovered earnings may receive a higher percentage of retirement

benefits because his covered earnings are much lower than his total earnings from his

country may also be awarded a higher percentage of United States RIB than would

generally be awarded. See id.

In 1983, Congress enacted the WEP formula, which applies to social security

benefits “to eliminate the unintended ‘double dipping’ that accrued to workers who

split their careers between employment taxed for social security benefits (‘covered’)

and employment exempt from social security taxes (‘noncovered’).” Stroup, 327 F.3d

at 1259. The WEP, as codified in 42 U.S.C. § 415(a)(7)(A), modifies the default

formula for individuals who receive a monthly payment in whole or in part based

upon earnings for noncovered work. Martin, 903 F.3d at 1157. A pension paid by a

foreign government is an example of a monthly payment that may be based, in part,

on noncovered work. Hawrelak, 667 F. App’x at 162.

The WEP formula, however, has exceptions. The exception relevant to this

case is subsection 415(a)(7)(A)(ii)(II), which provides that any “payment by a social

security system of a foreign country based on [a totalization agreement] concluded

between the United States and such foreign country” will not cause the WEP to

apply. 42 U.S.C. § 415(a)(7)(A)(ii)(II). Generally, totalization agreements allow

individuals who split their careers between two member countries, and who would

otherwise lack sufficient periods of coverage to qualify for each country’s retirement

system, to combine their periods of coverage to establish entitlement to social

security benefits. See 42 U.S.C. § 433; U.S. Soc. Sec. Admin., U.S. International Social

covered and noncovered employment. Id. The WEP acts to eliminate this

discrepancy. Id.

Security Agreements, https://www.ssa.gov/international/agreements_overview.html

(visited Jan. 29, 2021); see also Hawrelak, 667 F. App’x at 163.

The U.S.-German Totalization Agreement falls within the category of

agreements referenced in the above exception to the WEP. See id.; U.S. Soc. Sec.

Admin., U.S.-German Social Security Agreement, https://www.ssa.gov/international/

agreement_texts/germ_agt.html (visited Jan. 29, 2021); see also U.S. Soc. Sec.

Admin., Totalization Agreement with Germany, https://www.ssa.gov/international/

agreement_pamphlets/germany.html (visited Jan. 29, 2021). Accordingly, an

individual can simultaneously be entitled to regular, non-totalization United States

RIB and a foreign pension based on a totalization agreement with the United States

without the WEP applying to reduce the individual’s benefits. See Programs

Operation Manual System (POMS) GN 01701.301C.4, GN 01701.310.

Against this backdrop, the Court turns to the appropriate legal standards.

III. Standard of Review

The scope of this Court’s review is limited to determining whether the ALJ

applied the correct legal standard, McRoberts v. Bowen, 841 F.2d 1077, 1080 (11th Cir.

1988), and whether the findings are supported by substantial evidence, Richardson v.

Perales, 402 U.S. 389, 390 (1971).

The Commissioner’s findings of fact are conclusive if supported by substantial

evidence. 42 U.S.C. §405(g). Substantial evidence is more than a scintilla—i.e., the

evidence must do more than merely create a suspicion of the existence of a fact and

must include such relevant evidence as a reasonable person would accept as adequate

to support the conclusion. Foote v. Chater, 67 F.3d 1553, 1560 (11th Cir. 1995) (citing

Walden v. Schweiker, 672 F.2d 835, 838 (11th Cir. 1982); Richardson, 402 U.S. at 401).

During this Court’s review, it must also determine whether the ALJ applied

the appropriate legal standards. Wiggins v. Schweiker, 679 F.2d 1387, 1389 (11th Cir.

1982). If the ALJ fails to delineate and apply the appropriate legal standards, the

ALJ’s findings must be vacated and the case remanded for clarification. See Cornelius

v. Sullivan, 936 F.2d 1143, 1145-46 (11th Cir. 1991); Wiggins, 679 F.2d at 1389

(“Failure to apply the correct legal standards or to provide the reviewing court with

the sufficient basis to determine that the correct legal principles have been followed is

grounds for reversal.”).

IV. Analysis

On appeal, Plaintiff raises two issues. As stated by Plaintiff, the issues are:

1. The ALJ’s decision is not supported by substantial

evidence and is contrary to law because he did not

address all the issues related to Plaintiff’s overpayment

case that were raised before him; and

2. Plaintiff is entitled to remand based on the Supreme

Court’s decision in Lucia v. SEC; based on this holding

the ALJ in this case was not appointed consistent with

the requirements of the U.S. Constitution, and the case

should be remanded to a different ALJ who has been

correctly appointed.

(Doc. 23 at 4). The Court will address the first issue below.

A. Whether the ALJ Properly Applied the WEP to Plaintiff’s

Social Security Benefits

Plaintiff frames his argument by summarizing the relevant law that an ALJ

dealing with an unrepresented claimant has a heightened obligation to develop the

record and “explore all the relevant facts.” (Id. at 4-5 (citing Cowart v. Schweiker, 662

F.2d 731, 737 (11th Cir. 1981); Pilnick v. Comm’r of Soc. Sec. Admin., No. 07-11789,

2007 WL 3122168, at *1 (11th Cir. Oct. 26, 2007))). Plaintiff goes on to explain that,

in his specific case, the issues before the ALJ were: (1) whether the WEP could be

properly applied to Plaintiff’s RIB to support a finding of overpayment; and (2) if the

WEP could be properly applied, whether overpayment should be waived by the SSA.

(See id. at 5).

Plaintiff argues that, despite his assertion of both issues “at all administrative

levels,” the ALJ only addressed the second issue, whether overpayment could be

waived. (Id. at 6). Plaintiff asserts that both issues are inextricably intertwined, and

therefore, the ALJ’s apparent failure to address the first issue necessitates remand.

(Id. at 5-6).

Moreover, Plaintiff contends that the ALJ’s failure to address the first issue is

clearly harmful. Plaintiff argues that if the ALJ had accurately determined whether

the WEP applies to Plaintiff’s case, he would have found that the WEP does not

apply and no overpayment occurred. (See id. at 6-7). In support, Plaintiff argues that

20 C.F.R. § 404.213(e)(7) states that “[f]or benefits payable for months after

December 1994, payments by the social security system of a foreign country which

are based on a totalization agreement between the United States and that country are

not considered to be a pension from noncovered employment for purposes of this

section.” (Id. at 6 (citing 20 C.F.R. § 404.213(e)(7))). Plaintiff asserts that his

German Pension falls within this rule because it is being paid by Germany based on

a totalization agreement and that he presented evidence to support this argument to

the ALJ and the Appeals Council. (Id. (citing Tr. at 63, 130)).

Finally, Plaintiff asserts that, because he was unrepresented during his

hearing, the ALJ should have developed the record further to obtain any necessary

additional evidence to determine whether Plaintiff’s Germain Pension falls within an

exception to the WEP. (Id.); see also 20 C.F.R. § 404.213(e)(7); 42 U.S.C. §

415(a)(7)(A)(ii)(II); Social Security Administration Program Operation Manual

System (POMS) GN 01701.315 (“The only acceptable evidence that a foreign

pension is based on an agreement with the United States is a document (e.g., award

notice or letter) issued by the foreign agency paying the pension. The document

must indicate that the pension is based on an agreement with the United States.”).

In response, the Commissioner argues that the ALJ properly evaluated the

evidence of record and correctly applied the law to determine that the agency

overpaid Plaintiff $30,967.60. (Doc. 23 at 8). The Commissioner goes on to argue

that Plaintiff was not entitled to a waiver of the overpayment because Plaintiff was

“at fault” for causing the overpayment and recovery of the overpayment would not

defeat the purpose of Title II of the Act. (Id. at 8-11).

The Commissioner also contends that the ALJ considered and addressed the

authority Plaintiff presented to argue that the WEP should not apply in his case. (Id.

at 11 (citing Tr. at 18, 157)). Specifically, the Commissioner argues that POMS GN

01701.320 does not list Germany as a country with a pension that avoids application

of the WEP. (Id.).

Additionally, the Commissioner asserts that the ALJ correctly found that the

U.S.-German Totalization Agreement is irrelevant in Plaintiff’s case. (Id. at 12).

The Commissioner argues that this determination was correct because Plaintiff

worked and paid into the United States retirement system for 10 years and, therefore,

had enough quarters of coverage to be entitled to United States RIB without

application of the U.S.-German Totalization Agreement. (Id. (citing Tr. at 18, 21,

139-140; POMS GN 01701.005)). Accordingly, the Commissioner argues that the

ALJ correctly found Plaintiff was not entitled to a totalization benefit for his United

States RIB and the WEP would apply to Plaintiff’s German Pension and United

States RIB. (Id. (citing POMS GN 01701.200)).

Finally, the Commissioner argues that the ALJ met his “basic obligation to

develop a full and fair record” in light of Plaintiff’s voluntary waiver of his right to

representation during the hearing. (Id. at 13-14 (citing Tr. at 123, 133, 134)).

In his reply brief, Plaintiff reiterates his earlier arguments. He also asserts that

the Commissioner failed to address 20 C.F.R. § 404.213(e)(7), POMS GN

01701.310, and the fact that Plaintiff claims to have submitted evidence that his

German Pension is being paid pursuant to the U.S.-German Totalization

Agreement. (Doc. 24 at 1-2).

As an initial matter, the Court notes that the POMS is an internal Social

Security Administration document outlining, inter alia, various policies of the

Commissioner and while it does not have the force of law, it can be persuasive.

Stroup v. Barnhart, 327 F.3d 1258, 1262 (11th Cir. 2003).

Considering the parties’ arguments and the applicable legal standards, the

Court finds that the ALJ erred by failing to determine whether Plaintiff’s German

Pension is being paid pursuant to the U.S.-German Totalization Agreement. While

the ALJ correctly found that the U.S.-German Totalization Agreement is

inapplicable to Plaintiff’s United States RIB because Plaintiff has 40 quarters of

coverage, (Tr. at 18 n.1; see also 20 U.S.C. § 414(a)), the ALJ erred when he made no

findings regarding whether the German Pension, a payment separate and distinct

from Plaintiff’s United States RIB, is being paid pursuant to the U.S.-German

Totalization Agreement, see POMS GN 01701.310 (“Beginning January 1995, a

foreign pension that is based on a totalization agreement with the United States will

not cause the WEP to apply in the computation of a non-totalization U.S. benefit.”).

Because the ALJ failed to determine whether the German Pension is being

paid pursuant to the U.S.-German Totalization Agreement, he prematurely

concluded that the WEP would apply to Plaintiff’s benefits. See POMS GN

01701.310 (“A foreign pension is not based on [a totalization agreement] if the

beneficiary met the normal entitlement requirements of the other country’s laws and

did not rely on the agreement to establish entitlement.”); see also Hawrelak v. Colvin,

667 F. App’x 161, 163 (7th Cir. 2016) (holding that because the ALJ found Plaintiff’s

foreign pension was not based on a totalization agreement the 42 U.S.C. §

415(a)(7)(A)(ii)[(II)] exception to the WEP does not apply). In a similar situation,

the Seventh Circuit found that:

The WEP does not apply to a payment by a social security

system of a foreign country based on a totalization

agreement under section 233 of the Act. 42 U.S.C. §

415(a)(7)(A)[(ii)](II). Plaintiffs’ [Canadian pension] benefit

payments are not within the exclusion, however, because

Plaintiffs are eligible to receive them independently,

without resort to combination or totalization.

Beeler v. Berryhill, 381 F. Supp. 3d 991, 1006 (S.D. Ind. 2019), aff’d sub nom. Beeler v.

Saul, 977 F.3d 577 (7th Cir. 2020). Because the ALJ in Beeler found that the foreign

pension was not based on a totalization agreement, the WEP properly applied to the

plaintiffs’ benefits. However, where there has been no finding as to whether a

plaintiff’s foreign benefit is being paid under a totalization agreement, as in the

instant case, the Court cannot determine whether the WEP exclusion under 42

U.S.C. § 415(a)(7)(A)(ii)(II) applies to the plaintiff’s benefits.

Although the Court finds that the ALJ erred, as noted above, an incorrect

application of the regulations will result in a harmless error if a correct application of

the regulations would not contradict the ALJ’s ultimate findings. Denomme v.

Comm’r, Soc. Sec. Admin., 518 F. App’x 875, 877-78 (11th Cir. 2013) (citing Diorio v.

Heckler, 721 F.2d 726, 728 (11th Cir. 1983)). In this case, the Court is not a finder of

fact and, thus, does not know what impact Plaintiff’s allegations as to whether his

German Pension was paid under the U.S.-German Totalization Agreement might

have on the ALJ’s decision. Plaintiff alleges that the documentation he submitted

pursuant to POMS GN 01701.315 supports his claim. (Doc. 23 at 7 (citing Tr. at 63,

130)). The ALJ’s decision, however, does not reflect that he considered whether the

German Pension was being paid based on the U.S.-German Totalization Agreement.

A finding that Plaintiff’s German Pension falls within the 42 U.S.C. §

415(a)(7)(A)(ii)(II) exception to the WEP would clearly alter the ALJ’s entire

analysis. The Court cannot find, therefore, that the ALJ’s failure to consider

whether Plaintiff’s German Pension was paid under the U.S.-German Totalization

Agreement was harmless.

Additionally, the Court is unpersuaded by the Commissioner’s argument that

POMS GN 01701.320 indicates that a German pension cannot avoid the application

of the WEP. POMS GN 01701.301C.4 presents a hypothetical example of a

claimant with a regular, non-totalization United States RIB and a pension from

Germany. The POMS GN 01701.301C.4 example states that, beginning January

1995, the WEP would no longer apply to a German pension if it is based on a

totalization agreement with the United States, notwithstanding the hypothetical

claimants entitlement to a regular United States benefit. All of this taken together

suggests that POMS GN 01701.320 does not contain an exhaustive list of foreign

pensions that will not trigger the application of the WEP.

Additionally, the Court finds that, while Plaintiff knowingly and voluntarily

waived his right to representation during the hearing, (Tr. at 123, 133, 134), the ALJ

failed to meet his basic obligation to develop a full record when he failed to analyze

the basis of Plaintiff’s German Pension, an analysis that requires examination of

evidence on whether the foreign pension is based on a totalization agreement.

As a final matter, although the Commissioner argues that the alleged

overpayment cannot be waived because Plaintiff is at fault for causing an

overpayment and recovery of the overpayment would not defeat the purpose of Title

II of the Act, the Court declines to address the argument because remand is

appropriate on other grounds.

In sum, without a finding that Plaintiff’s German Pension is not based on a

totalization agreement, the Court cannot determine whether the WEP properly

applies to reduce Plaintiff’s benefits. The lack of this essential finding on the record

is harmful to Plaintiff and necessitates remand to the ALJ to make a determination

on the issue.

B. Plaintiff’s Remaining Argument

Plaintiff’s remaining argument alleges that the Administrative Law Judge

overseeing Plaintiff’s case was not appointed consistent with the requirements of the

U.S. Constitution. (Doc. 10). The Court declines to address the issue of

administrative exhaustion and its effects on the Appointments Clause because it finds

remand appropriate on other grounds. Additionally, the Court notes that this issue is

currently pending before the Supreme Court of the United States. See Davis v. Saul,

963 F.3d 790 (8th Cir. 2020), cert. granted, No. 20-105, 2020 WL 6551772 (U.S. Nov.

9, 2020); Carr v. Comm’r, 961 F.3d 1267 (10th Cir. 2020), cert. granted, No. 20-105,

2020 WL 6551771 (U.S. Nov. 9, 2020).

V. Conclusion

Upon consideration of the parties’ submissions and the administrative record,

the Court finds that the ALJ erred by failing to determine whether Plaintiff’s German

Pension was being paid based on the U.S.-German Totalization Agreement.

Accordingly, the Court ORDERS that:

1. The decision of the Commissioner is REVERSED AND REMANDED

pursuant to sentence four of 42 U.S.C. § 405(g).

2. On remand, the Commissioner must determine whether Plaintiff’s

German Pension is based on the U.S.-German Totalization Agreement,

qualifying Plaintiff’s benefits for an exception to the WEP under 42

U.S.C. § 415(a)(7)(A)(ii)(II). See also POMS GN 01701.310, GN

01701.315A, GN 01701.301C.4.

3. If Plaintiff prevails on remand, Plaintiff must comply with the

November 14, 2012 Order (Doc. 1) in Case Number 6:12-mc-124-Orl-

22.

4. The Clerk of Court is directed to enter judgment accordingly, to

terminate any pending motions and deadlines, and to close the case.

DONE AND ORDERED in Fort Myers, Florida on March 15, 2021.

Mac R. MA

United States Magistrate Judge

Copies furnished to:

Counsel of Record

Unrepresented Parties