The opinion
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DOMINGO MUSQUIZ, No. 23-8
Railroad
Petitioner, Retirement Board
v. OPINION
UNITED STATES RAILROAD
RETIREMENT BOARD,
Respondent.
On Petition for Review of an Order of the
Railroad Retirement Board
Argued and Submitted April 12, 2024
Pasadena, California
Filed July 3, 2024
Before: Eugene E. Siler, Ronald M. Gould, and Carlos T.
Bea, Circuit Judges. *
Opinion by Judge Gould
*
The Honorable Eugene E. Siler, United States Circuit Judge for the
Court of Appeals, 6th Circuit, sitting by designation.
2 MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD
SUMMARY **
Railroad Retirement Act
The panel granted Domingo Musquiz’s petition for
review of a decision of the U.S. Railroad Retirement Board
(“RRB”) that adopted an RRB hearing officer’s finding that
Musquiz was not without fault in causing an overpayment of
his reduced-age annuity under the Railroad Retirement Act
(“RRA”), and denied his request for a waiver or reduction of
repayment of the overpayment and penalty; vacated the
RRB’s decision; and remanded to the RRB for further
proceedings.
For overpayments under the RRA, the RRB shall not
recover from an individual who is without fault and when
recovery would be contrary to the purpose of the RRA or
would be against equity or good conscience. 20 C.F.R.
§ 255.10.
The panel agreed with the RRB that Musquiz was not
without fault for the overpayment that occurred starting in
August 2012 and up until June 2, 2013. However, it
concluded that Musquiz was without fault for the RRB’s
overpayment of his annuity from June 3, 2013, onward,
because by then the agency had told Musquiz that they had
taken his outside earnings into account and adjusted his
annuity payments.
Because the RRB concluded that Musquiz was not
without fault for the entire overpayment, the RRB never
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD 3
considered the second waiver element. The panel held that
there may be good reason to believe that recovery of the
overpayment from June 3, 2013, onward would be contrary
to the purpose of the RRA, against equity, or against good
conscience. On remand, the RRB should develop a factual
record and make this determination in the first instance.
COUNSEL
Kathryn M. Davis (argued), Law Office of Kathryn M.
Davis, Pasadena, California; Peter R. Afrasiabi. One LLP,
Newport Beach, California; Alfred Hwang and Emily
Lovell, Certified Law Students; University of California
Irvine School of Law, Appellate Litigation Clinic, Irvine,
California; for Petitioner.
Patrick S. Polk (argued), General Attorney; Kelli D.
Johnson, Assistant General Counsel; Ana M. Kocur, General
Counsel; United States Railroad Retirement Board, Office of
the General Counsel, Chicago, Illinois; for Respondent.
4 MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD
OPINION
GOULD, Circuit Judge:
Domingo Musquiz petitions for review of the final
decision of the United States Railroad Retirement Board
(“RRB”). The RRB affirmed and adopted an RRB hearings
officer’s decision that found that Musquiz was “not without
fault” in causing an overpayment of his reduced-age annuity
under the Railroad Retirement Act of 1974 (“RRA”). The
RRB denied Musquiz’s request for a waiver or reduction of
repayment of the overpayment and penalty.
We grant Musquiz’s petition, vacate the RRB’s decision,
and remand for further proceedings.
I. Factual and Procedural History
The RRA, codified at 45 U.S.C. § 231 et seq., “replaces
the Social Security Act for rail industry employers and
employees and provides monthly annuities for employees
based on age and service or on disability.” “The Railroad
Retirement Act,” Attorney’s Guide to the Partition of
Railroad Retirement Annuities (07-20), U.S. Railroad
Retirement Board (last updated Feb. 16, 2024). 1 The RRB
is “an independent agency in the executive branch of the
Federal government” that administers the RRA. Id.
Domingo Musquiz is now seventy-three years old.
Musquiz worked in the rail industry for about twenty-seven
years and eleven months. Musquiz’s last day of rail industry
employment was February 1, 2006. On April 4, 2010,
1
Available at:
https://www.rrb.gov/Resources/LegalInformation/PartitionofRRA/The_
RRA, https://perma.cc/6H3S-Q8KC.
MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD 5
Musquiz started work at Santa Barbara Cottage Hospital
(“SBCH”), a non-rail industry employer.
In the spring of 2012, Musquiz learned that SBCH
planned to let him go in June. On May 22, 2012, Musquiz
applied by telephone to the RRB for a reduced-age annuity.
In his telephone application, Musquiz stated that his last day
of work for SBCH would be June 30, 2012, and that he
expected his 2012 earnings to total less than $14,640.00.
SBCH let Musquiz go on June 30, 2012. SBCH rehired
Musquiz in July 2012. Musquiz did not tell the RRB that he
had been rehired by SBCH or that his expected 2012
earnings had increased. The RRB started to disburse
Musquiz’s annuity on August 1, 2012. The RRB computed
the annuity without any reduction for outside earnings.
On June 3, 2013, the RRB sent Musquiz a letter stating,
“Your monthly annuity payments have been adjusted.
Additional wages that you earned outside the railroad
industry are now available to include in the tier 1 portion of
your annuity.” The letter also told Musquiz, “If you believe
that this rate change is not correct, you may request that the
rate be reconsidered.”
On June 2, 2014, the RRB sent Musquiz another letter
with the same language quoted above.
On June 1, 2015, the RRB sent Musquiz another letter
with the same language quoted above.
On December 3, 2015, an RRB Claims Representative
sent Musquiz a letter memorializing the telephone
conversation that the Representative had with Musquiz on
that same day. The letter explained that the RRB “completed
[its] annual policy match to Social Security Administration
(SSA) earnings record[s]. SSA records show that [Musquiz]
6 MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD
had the following earnings,” and then listed Musquiz’s 2012,
2013, and 2014 earnings at SBCH. The letter also asked
Musquiz to provide additional information and W-2 forms
for the “requested years.” Musquiz provided the requested
information and W-2s on or before December 21, 2015.
On February 27, 2016, the RRB Claims Representative
sent a “reminder notice” that Musquiz provide his 2015 W-
2. However, it is unclear if the RRB had previously
requested the 2015 W-2 in addition to the W-2s that Musquiz
had provided in December 2015. Musquiz provided the
2015 W-2 on or before March 4, 2016.
On April 25, 2016, the RRB sent Musquiz a letter telling
him that he had received annuity overpayments from August
1, 2012, to December 31, 2015, and that the amount Musquiz
owed the RRB, including a penalty deduction required by
law, totaled $67,281.33.
On May 5, 2016, Musquiz requested a waiver and
personal conference. On November 2, 2016, the RRB
District Manager held a personal conference with Musquiz
by telephone. That day, the District Manager sent Musquiz
a letter asking him to complete a financial disclosure
statement and return it with his most recent tax returns within
thirty days. On or before November 24, 2016, Musquiz
returned the financial disclosure statement and his tax
returns. On December 12, 2016, the RRB denied Musquiz’s
request for a waiver of repayment, concluding that because
Musquiz received a booklet of regulations that included
reporting requirements when he applied for his annuity over
the phone, he should have known about his reporting duties,
so he was at fault when he did not report his change in
employment and additional outside income.
MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD 7
Musquiz timely appealed, and on February 17, 2017, an
RRB hearings officer held a hearing by telephone conference
call. Musquiz participated without counsel. On March 22,
2017, the hearings officer concluded that recovery of the
overpayment could not be waived in full or in part, and the
penalty was proper, because Musquiz should have known
about his reporting requirements and had deviated from the
standard of reasonable care in reporting. The hearings
officer did not make any findings as to how the RRB’s 2013,
2014, or 2015 adjustment letters could have impacted
Musquiz’s understanding of his reporting requirements. On
April 25, 2017, Musquiz appealed the hearings officer’s
decision.
Nearly five years later, on January 7, 2022, the RRB
issued its final decision. The majority opinion, with one of
three members dissenting, affirmed and adopted the decision
of the hearings officer. The majority did not consider
whether the RRB’s 2013, 2014, or 2015 letters could have
impacted Musquiz’s understanding of his reporting
requirements. One member dissented.
In his dissent, Labor Member John Bragg explained that
“RRB regulations provide that all circumstance[s]
surrounding an overpayment must be considered when
evaluating whether an individual is without fault in causing
an overpayment.” In Labor Member Bragg’s view, the RRB
did not properly consider all circumstances, especially that
the RRB had actual knowledge of Musquiz’s outside
employment earnings as early as June 2013, that the RRB
had informed Musquiz that it had that actual knowledge, and
that the RRB had implied that it had taken those earnings
into account when recalculating Musquiz’s annuities. Labor
Member Bragg believed that Musquiz was without fault in
causing the overpayment between June 2013 and December
8 MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD
2015, and he would have remanded to develop a current
factual record in order to decide “whether recovery of the
overpayment would be contrary to the RRA or against equity
or good conscience.”
On January 3, 2023, Musquiz timely filed a petition for
review pursuant to 45 U.S.C. §§ 355(f), 231g, which gives
us jurisdiction to review the RRB’s final decision.
II. Analysis
a. Standard of Review
The RRB’s findings of fact are conclusive “if supported
by evidence and in the absence of fraud.” 45 U.S.C.
§ 355(f). We “will not set aside a decision of the [RRB] ‘if
it is supported by substantial evidence, is not arbitrary[,] and
has a reasonable basis in law.’” Calderon v. U.S. R.R. Ret.
Bd., 780 F.2d 812, 813 (9th Cir. 1986) (quoting Akins v. U.S.
R.R. Ret. Bd., 721 F.2d 652, 653 (9th Cir. 1983), and Lowe v.
U.S. R.R. Ret. Bd., 294 F.2d 115, 116 (9th Cir. 1961) (per
curiam)); Estes v. U.S. R.R. Ret. Bd., 776 F.2d 1436, 1437
(9th Cir. 1985). “In this petition for review, the question for
us is whether substantial evidence on the record considered
as a whole supports the Board’s decision . . . .” Cooper v.
U.S. R.R. Ret. Bd., 977 F.2d 647, 650 (D.C. Cir. 1992).
b. Discussion
For overpayments under the RRA, the RRB shall not
recover from an individual when two elements are both
satisfied: “(a) The overpaid individual is without fault, and
(b) [r]ecovery would be contrary to the purpose of the [RRA]
or would be against equity or good conscience.” 20 C.F.R.
§ 255.10. This mandatory waiver is derived directly from
the language of the RRA, which expressly provides: “There
shall be no recovery in any case in which more than the
MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD 9
correct amount of annuities . . . has been paid . . . to an
individual” who “is without fault when . . . recovery would
be contrary to the purpose of” the law “or would be against
equity or good conscience.” 45 U.S.C. § 231i(c).
i. Element 1: Fault
We agree with the RRB that Musquiz was not without
fault for the overpayment that occurred starting in August
2012 and up until June 2, 2013. However, we conclude that
Musquiz was without fault for the RRB’s overpayment of
his annuity from June 3, 2013, onward, because by then the
agency had told Musquiz that they had taken his outside
earnings into account and adjusted his annuity payments.
The RRB defines “fault” as “a defect of judgment or
conduct arising from inattention or bad faith.” 20 C.F.R.
§ 255.11(b). Conduct may include “both action and
inaction,” “does not require a deliberate intent to deceive,”
and “is defective when it deviates from a standard of
reasonable care . . . to comply” with the RRB’s regulations.
Id. When determining “[w]hether an individual is at fault in
causing an overpayment,” the RRB must consider “all
circumstances surrounding the overpayment.” Id.
§ 255.11(c). The RRB has emphasized that it will consider
such factors as: an individual’s ability “to understand
reporting requirements” or “to realize that he or she is being
overpaid,” which includes consideration of “age, education,
comprehension, [and] physical and mental condition”; “the
particular cause of non-entitlement to benefits”; and the
number of times an individual “made erroneous statements.”
Id.
The RRB has enumerated several non-exhaustive
circumstances in which it will find an individual at fault or
not at fault. See id. § 255.11(d)–(f). For example, an
10 MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD
individual is at fault if the individual did not provide the
RRB with “information which the individual knew or should
have known to be material.” Id. § 255.11(d)(1)(i). Notably,
“an error on the part of the agency” cannot per se “extinguish
fault on the part of the individual.” Id. § 255.11(d)(4).
However, an individual is not at fault if “[t]he overpayment
is the result of [RRB] error of which the overpaid individual
was not aware and could not reasonably have been expected
to be aware.” Id. § 255.11(e)(1).
Substantial record evidence confirms the RRB’s
conclusion that Musquiz was not without fault for the first
period of overpayment, beginning August 2012 and ending
June 2, 2013. Musquiz should have known that he was
required to report his re-employment at SBCH. When
Musquiz applied for his annuity, he signed directly
underneath a paragraph where he agreed “to immediately
notify the RRB” upon the occurrence of enumerated events
that would increase his earnings. The list of events included
the following: “if . . . I return to work for SANTA
BARBARA COTTAGE HOSPITAL.” Musquiz signed his
name five lines below this explicit agreement. In
determining whether Musquiz understood these reporting
requirements, the RRB should have explicitly considered his
“age, education, comprehension, [and] physical and mental
condition.” See 20 C.F.R. § 255.11(c). Regardless, there is
substantial evidence in the record to support the RRB’s
implicit finding that Musquiz would have been able to read
and understand the page that he signed and should have
known to report his re-employment at SBCH to the RRB.
We agree with the RRB that Musquiz was initially at fault
for the overpayment and remained at fault up until June 2,
2013.
MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD 11
However, Musquiz was without fault for any
overpayment that occurred on or after June 3, 2013. On that
date, the RRB wrote Musquiz a letter telling him that his
annuity payments had been adjusted, noting explicitly that
the RRB was aware of his additional non-railway industry
wages, and showing him how the RRB calculated his new
monthly rate. The letter stated: “Your monthly annuity
payments have been adjusted. Additional wages that you
earned outside the railroad industry are now available to
include in the tier 1 portion of your annuity. Here’s how we
figured out your new monthly rate.” The letter went on to
show the RRB’s calculations of the annuity. The letter also
stated, “If you believe that this rate change is not correct, you
may request that the rate be reconsidered.” On June 2, 2014,
and June 1, 2015, the RRB sent Musquiz similar letters with
the same quoted language.
While an error on the part of the RRB is not enough to
counteract an individual’s role in causing an overpayment,
here the RRB proactively communicated that the calculation
of Musquiz’s annuity was in order. It is unreasonable for the
RRB to conclude that Musquiz maintained a duty to report
his additional outside earnings after receipt of the first letter,
let alone the second and third letters, saying the RRB was
aware of his additional earnings and that his annuity had
been recalculated. As Labor Member Bragg asked in his
dissent, “after receiving the first letter, why would Mr.
Musquiz think there was any need for him to report his
wages?” The record is clear that Musquiz diligently and
promptly responded to every request the RRB made for
additional information. The record is also clear that, as early
as June 3, 2013, the RRB had the earnings information it
needed to recalculate properly Musquiz’s annuity. And the
12 MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD
record is clear that the RRB told Musquiz it had recalculated
his annuity on his behalf.
What is unclear is why the RRB waited for more than
two and a half years to act on that information. If we are to
believe the RRB’s own communications, the RRB has a
policy to conduct annual matches “to Social Security
Administration (SSA) earnings record[s].” In this case, the
RRB’s June 3, 2013 letter shows that it had conducted the
match process and knew about the additional earnings but
chose to wait an additional two and a half years, allowing
additional overpayments to accrue, while simultaneously
informing Musquiz that his annuity had been recalculated to
account for those additional earnings. We cannot consider
Musquiz to be at fault for any overpayments on or after June
3, 2013, because such overpayments were “the result of
[RRB] error of which [Musquiz] was not aware and could
not reasonably have been expected to be aware.” 20 C.F.R.
§ 255.11(e)(1). It is reasonable for individuals and courts
alike to presume the “regularity” of “the official acts of
public officers.” United States v. Chemical Found.,
272 U.S. 1, 14–15 (1926).
For the foregoing reasons, we conclude that Musquiz
was not without fault for any overpayments between August
1, 2012, and June 2, 2013. However, Musquiz was without
fault for any overpayments on or after June 3, 2013.
ii. Element 2: The Purpose of the RRA, Equity,
or Good Conscience
Because the RRB concluded that Musquiz was not
without fault for the entire overpayment, the RRB never
considered the second waiver element: whether recovery
would be contrary to the purpose of the RRA, against equity,
or against good conscience. We next address that issue. In
MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD 13
our view, there may be good reason to believe that recovery
of the overpayment from June 3, 2013, onward would be
contrary to the purpose of the RRA, against equity, or against
good conscience because the record demonstrates that:
(1) Musquiz is now seventy-three years old; (2) Musquiz has
multiple health conditions that require medication and
treatment; (3) Musquiz was, and likely still is, on a fixed
income; (4) Musquiz was, and likely still is, operating at a
monthly financial deficit; (5) Musquiz was, and likely still
is, struggling to afford his mortgage; and (6) Musquiz was
unable to afford even a haircut. As the RRB has stated, “[i]t
is contrary to the purpose of the [RRA] for an overpayment
to be recovered from income and resources which the
individual requires to meet ordinary and necessary living
expenses.” 20 C.F.R. § 255.12(a). However, the factual
record of Musquiz’s financial situation is not current, and the
RRB never considered this second element. Because such a
determination “is highly fact specific and contextual,” the
“outcome” is not “foreordained,” and we will provide the
RRB “the flexibility” to develop a current factual record and
make the determination in the first instance. Calcutt v. Fed.
Deposit Ins. Corp., 598 U.S. 623, 630 (2023).
If the RRB concludes that recovery of the overpayment
from June 3, 2013, onward would be contrary to the purpose
of the RRA, against equity, or against good conscience, then
the RRB must waive that portion of the repayment and
penalty.
III. Conclusion
In enacting the RRA, Congress created a specialized
benefits system for rail industry employees to ensure their
wellbeing. As the regulations demonstrate, the RRB may
recover an overpayment of benefits when an individual’s
14 MUSQUIZ V. U.S. RAILROAD RETIREMENT BOARD
inaction in reporting causes the overpayment, and even in
some circumstances where the RRB also errs. See 20 C.F.R.
§ 255.11(d). However, when the RRB’s continuous and
repeated errors and communications make an individual’s
inaction in reporting reasonable, the RRB cannot hold that
individual liable for the RRB’s own errors. See id.
§ 255.11(e)(1). Musquiz admitted that, out of ignorance, he
did not meet his reporting requirements. We agree that he
should have to repay some of the overpayment. But once the
RRB knew that it was miscalculating Musquiz’s annuity, did
nothing to correct its calculations, and expressly told
Musquiz that his annuity had been recalculated with
knowledge of his additional outside earnings, no fault may
properly be attributed to Musquiz.
We GRANT Musquiz’s petition for review, VACATE
the RRB’s decision, and REMAND to the RRB for
proceedings consistent with this opinion.