Petition for Writ of Certiorari — McCarthy v. Halter

Supreme Court, U.S.

FILED

001218 JAN 2 4 2001

i - - —)

—

In The

| SUPREME COURT OF THE UNITED STATES

CHARLES M. McCARTHY. JR.,

Petitioner,

KENNETH S. APFEL, Commissioner of

the Social Security Administration,

Respondent.

a. On Petition For Writ of Certiorari

To The United States Court of Appeals

For The Ninth Circuit

| PETITION FOR WRIT OF CERTIORARI

JAMES REYER

ATTORNEY AT LAW

Post Office Box 971

Reno, Nevada 89504

(800) 484-5904 Ext. 6585

4760

vom mee: ssid int eatin nh de

Questions Presented For Review

1. Whether the Commissioner of Social Security, as a

threshold issue of subject matter jurisdiction in cases alleging

past overpayments of Title II benefits to persons who are no

longer receiving or applying for any type of social security

benefit, is required to produce documentation showing that

past Title II benefit payments were actually made to that

person during the period in question, as a prerequisite to

establishing ab initio subject matter jurisdiction by the

Commissioner over that person under the overpayment

provisions of 42 U.S.C. § 404(a) and the Social Security

Act?

2. Whether the district court below, as a court of limited |

jurisdiction, has no statutory authority to remand the case

below under 42 U.S.C. § 405(g), because the case before the

district court is before the disrict court under 28 U.S.C. §

1331 and does not include aa "final decision" under § 405g)

(1) as Petitioner is not presently and was not at the time of the

administrative decision in respect thereof a "Claimant" filing

an application for benefits under 20 C.F.R. § 404.602 and

(2) as the Court of Appeals found in its decision that "the

record in this case is devoid of any documents showing that

payments were actually made to [Petitioner] McCarthy” ?

3. Whether the district court below, as a court of limited

jurisdiction, is presumed to lack jurisdiction in the case

below, and whether the “substantial evidence" standard

contained in § 405(g) of the Social Security Act may be

utilized as an evidentiary standard to determine the application

of the Social Security Act itself to the case below, prior to

establishment by the Commissioner by a "preponderance of

the evidence" of subject matter jurisdiction over Petitioner

under the overpayment provisions of 42 U.S.C. § 404(a) and

the Social Security Act?

Table of Contents

Table of Authorities

Official Reports

Jurisdiction

Statutory Provisions and Regulations

Statement of the Case

Reasons to Grant Writ of Certiorari

Conclusion

Appendix

Table of Authorities

Cases

Abbey v. Sullivan,

978 F.2d 37 (2nd Cir. 1992)

Bowen v. City of New York,

476 U.S. 467 (1986)

Califano v. Yamasaki,

442 U.S. 683 (1979)

Cannuni ex rel Cannuni v. Schweiker,

740 F.2d 260 (3rd Cir. 1984)

Chitwood v. Chater,

928 F.Supp. 874 (E.D. Mo. 1996)

Eliot v. Weinberger,

564 F.2d 1219 (9th Cir. 1977)

Mathews v. Eldridge,

424 U.S. 319 (1976)

Mattern v. Mathews,

582 F.2d 248 (3rd Cir. 1978)

Mattern v. Weinberger,

$19 F.2d 150 (3rd Cir. 1975)

McCarthy v. Apfel,

221 F.3d 1119 (9th Cir. 2000)

Mental Health Association of Minnesota

v. Heckler,

720 F.2d 965 (8th Cir. 1983)

Page

16

16

9,14, 15

13

11

15

16

15

15

Passim

16

Owen Equipment and Friction Co.

v. my ay

437 U.S. 365 (1978) 18

Reed v. Heckler,

756 F.2d 779 (10th Cir. 1985) 16

Shalala v. Illinois Counsil on Long Term

Care, Inc.,

- 2) Se

120 S.Ct. 1084

146 L.Ed 2d 1 (2000) 16, 19

Sims v. Apfel,

330 U.S. ___.

120 S.Ct. 2080

147 L.Ed 2d 80 (2000) 12

United States v. Smith,

482 F.2d 1120 (8th Cir. 1973) 13

Statutes

28 U.S.C. § 1331 19

42 U.S.C. § 402 11

42 U.S.C. § 404(a) 8,14

42 U.S.C. § 40S5(g) 15, 16, 17, 18

42 U.S.C. § 405(h) 19

42 U.S.C. § 41S(a) 11

Regulations

20 C.F.R. § 404.201 11

20 C.F.R. § 404.202 11

20 C.F.R. § 404.S01(a) 7

20 C.F.R. § 404.5S06(d) 9

20 C.F.R. § 404.602 12, 13

20 C.F.R. § 404.950(c) 10

Treatise

Vol. 1, McCormick, Harvey L., Social Security

(Fourth Edition),

§ 104 (1997 Pocket Part) , § 16 12

Official Reports

The Court of Appeals decision that is the subject of

this Petition was published as McCarthy v. Apfel, 221 F.3d

1119 (9th Cir. 2000). The district court decision under

review by the Court of Appeals is an unpublished decision of

the United States District Court, Northern District of

California. The administrative decision of the Commissioner

of Social Security under review by the Court of Appeals

decision is also an unpublished decision.

Jurisdiction

The Court of Appeals decision that is the subject of

this Petition was filed on August 15, 2000. Petitioner filed a

timely Petition for Rehearing and Suggestion for Rehearing

En Banc with the United States Court of Appeals For The

Ninth Circuit, which Petition was denied on October 26,

2000. See Appendix, at Page A-22 to Page A-23 hereof.

This Court has jurisdiction to review the Court of

Appeals decision under the provisions of 28 U.S.C. §

1254(1).

Statutory Provisions and Regulations

28 U.S.C. § 1331. Federal Question.

The district courts shall have original jurisdiction of

all civil actions arising under the Constitution, laws, or

treaties of the United States.

42 U.S.C. § 404(a)

Whenever the Commissioner of Social Security finds

that more or less than the correct amount of payment has been

made to any person under this subchapter, proper adjustment

or recovery shall be made, under regulations prescribed by

the Commissioner of Social Security . . .

42 U.S.C. § 405g)

Any individual, after any final decision of the

Commissioner of Social Security made after a hearing to

which he was a party, irrespective of the amount in

controversy, may obtain a review of such decision by a civil

action commenced within sixty days after mailing to him of

notice of such decision or within such further time as the

Commissioner of Social SEcurity may allow.

20 C.F.R. § 404.501(a)

... As used in this subpart, the term overpayment

includes a payment in excess of the amount due under Title II

of the Act ...

20 C.F.R. § 404.602

Claimant means the person who files an application

for benefits for himself or herself of the person for whom an

application is files.

20 C.F.R. 404.702

Evidence means any record, document, or signed

statement that helps you show whether you are eligible for

benefits or whether you are still entitled to benefits.

20 C.F.R. 404.950(c)

(c) What evidence is admissible at a hearing.

The administrative law judge may receive evidence at the

hearing even though the evidence would not be admissible in

court under the rules of evidence used by a court.

Statement of the Case

A. In the case below in which _ the

Commissioner of Social Security alleges Title II

benefit overpayments to Petitioner during the

period March 1988 to March 1990, _ the

Commissioner produced no dccuments for the

record below that showed that any benefit

payments were made to Petitioner by the Social

Security Administration.

The Commissioner of Social Security (the

"Commissioner") has alleged that Petitioner was overpaid

$10,207 in Title II benefits by the Social Security

Administration during the period March 1988 to March 1990,

and the Court of Appeals decision, filed August 15, 2000 (the

"Court of Appeals decision") has found that the

Commissioner has produced no documentation in this case

showing that payments were actually made to Petitioner.

Court of Appeals decision, at Page A-14 hereof; 221 F.3d

1119, 1125 (9th Cir. 2000).

The Court of Appeals decision expressly states that

"the record is devoid of any documentation showing that

payments were made to [Petitioner] McCarthy . . .” Id.

The Commissioner has issued Regulations at 20

C.F.R. § 404.S501(a) that define an "overpayment" under

Title II as including a payment in excess of the amount due

under Title II of the Social Security Act. See 20 C.F.R. §

404.501(a) ante.

The Court of Appeals decision joined the Third and

Eighth Circuits in concluding that the Commissioner has the

burden of proving both the fact and amount of overpayments.

Court-of Appeals decision, at Page A-12 and A-13 hereof;

221 F.3d, at 1124.

As a consequence of the finding by the Court of

Appeals decision that "the record is devoid of any

documentation showing that payments were made to

[Petitioner] McCarthy," and as a consequence of the

determination by the Court of Appeals decision that the Ninth

Circuit joins the Third and Eighth Circuits in concluding that

the Commissioner has the burden of proof in proving the fact

and amount of overpayment, the Commissioner has failed to

provide the record any document to prove payments were

made to Petitioner in the case below to establish subject

matter jurisdiction over Petitioner under the overpayment

provisions of 42 U.S.C. § 404(a) and the Social Security

Act.

B. The Commissioner had a duty to produce all

original administrative records for review by

Petitioner and his Counsel for them to discover

whether the Social Security Administration made

any benefit payments to Petitioner with their legal m3

source in Title II during the period March 1988 to

March 1990.

"(T]he record is devoid of any documentation

showing that payments were made to [Petitioner] McCarthy,"

and the Commissioner had a duty to produce all original

administrative records for review by Petitioner and his

Counsel for them to discover whether the Social Security

Administration made any benefit payments to Petitioner with

their legal source in Title II during the period March 1988 to _

March 1990.

This duty of the Commissioner was directed by order

of an administrative law judge on February 19, 1994 and is

required by Fifth Amendment Due Process guarantees.

8

ae re

Administrative Law Judge Order, dated February 19, 1994

(Tr. 371-372); Califano v. Yamasaki, 442 U.S. 683, 688,

696-697 (1979). See also 20 C.F.R. § 506(d).

C. The Commissioner produced no documents

showing that payments were made to Petitioner

during the period March 1988 to March 1990 for

review by Petitioner and his Counsel, and

Petitioner and his Counsel were required to rely at

a hearing before an administrative judge only on

the initial determination of the Commissioner for

information on alleged payments to Petitioner - the

April 1, 1990 letter of initial determination of the

Commissioner that the Court of Appeals decision

concludes does not even meet the relaxed standard

of substantial evidence.

The Commissioner failed in his duty to provide

Petitioner and his Counsel with any documents that showed

that payments were made to Petitioner.

A hearing before an administrative law judge may

only produce Evidence, as defined in 20 C.F.R. 404.702.

Evidence means “any record, document, or signed

statement that helps you show whether your are eligible for

benefits or whether your are still entitled to benefits." See 20

C.F.R. 404.702 ante.

Hearings before an administrative law judge under the

Social Security Act are authorized to produce "evidence" only

of continuing eligibility or future eligibility for benefits, and,

accordingly, rules of evidence applicable to a court of law do

not apply. See 20 C.F.R. 404.950(c) ante.

In the void of documents produced by the

Commissioner to show any payments were made to Petitioner

and the availability only of the initial determination of the

Commissioner, dated April 1, 1990, before Petitioner and his

Counsel, the following exchange took place with the

administrative law judge:

"ALJ: And do you know -- do either of you know when the

Title II benefits stopped?

ATTY: I believe (emphasis added) the last payment was in

February or March of 1990 was the last payment.

ALJ: All right. Now, another question, Counsel, that you

probably would have more knowledge about and that is the

files that the District Office had on Title II_and the Title XVI

its at one time were not available. Have you those

files and been able to get information from them (emphasis

added)?

ATTY: The only Title II file that I've seen is the file that's

here today (emphasis added). I have not seen any other Title

II files (emphasis added). I reviewed for the first time on I

believe March 17 in the Range Avenue in Santa Rosa the SSI

file, which is probably about six to eight inches thick. It's a

10

sizable file. I have gone back two times since that to get

through the entire material, and some of the material including

the, as an example, the notification on the SSI overpayments

and the decision of the Bureau in 1982 that we referred to in

Dr. Lerner's testimony, those were all in the SSI file, and

even though that was dealing with Title II, in the last

with Title XVI so that's -- that was the condition of

paragraph

the files. If there's another Title II file some place, I have not

seen it. (emphasis added)." Tr. 161.

The Commissioner attempted to introduce in the

Appendix to the Commissioner's Appellee Brief before the

Court of Appeals Petitioner's Primary Insurance Amount

(PIA) history as a document of payments to Petitioner, but

this document was struck by the Court of Appeals decision.

Court of Appeals decision, at Page A-18 n. 9 hereof; 221

F.3d, at 1126 n. 9.

A PIA history is not a history of payments, but only

demonstrates how a person's benefits would have been

calculated, not that payments were made. See Chitwood v.

Chater, 928 F.Supp. 874, 881 (E.D. Mo. 1996). Every

person who has an account with the Social Security

Adminsitration has a PIA history as the basis upon which

future benefits are based, whether or not that individual is the

recipient of benefits. See 42 U.S.C. § 402; 42 U.S.C. §

41S(a); 20 C.F.R. § 404.201 and § 404.202. Vol. 1,

11

McCormick, Harvey L., Social Security Claims and

Procedures (Fourth Edition), § 104, at 77-78; Id. (1997

Pocket Part), § 16, at 37.

D. The Commissioner's Answer, filed in the

district court, admits that Petitioner at the present

time is not and at the time of the administrative

decision in question was not, a "Claimant" filing

an application for benefits, as defined under

present Commissioner's Regulation, 20 C.F.R. §

404.602.

This Court has established that the Social Security Act

authorizes the Social Security Administration to give meaning

to the term "final decision" through regulations for a

"Claimant" to qualify for review under 42 U.S.C. § 405(g).

Sims v. Apfel, 530 U.S. , 120 S.Ct. 2080, 2083, 147

L.Ed 2d 80, 85 (2000).

The Commissioner admitted in his Answer, filed in

the district court below, that Petitioner in this case is neither a

"Claimant" at the present time nor was he at the time of the

administrative decision under review by the district court a

"Claimant" filing an application for benefits from the Social

Security Administration. Tr. 87. See also First Amended

12

ee ee RT

Complaint, § 7, at Page 4 (Tr. 468), and Commissioner's

admission thereof, at Commissioner's Answer, § 3, at Page 2

(Tr. 550). See 20 C.F.R. § 404.602 ante.

Reasons to Grant Writ of Certiorari

I. The Court of Appeals decision of the Ninth

Circuit adopts the Third Circuit and Eighth Circuit

standards that the Commissioner has the burden of

proof of proving the fact and amount of

overpayment, but does not apply that standard to

the issue of subject matter jurisdiction, despite the

finding of the Court of Appeals decision that the

Commissioner produced for the record in this case

no documents showing that payments were actually

made to Petitioner- "the record in this case is

devoid of any documents showing that payments

were made to [Petitioner] McCarthy."

The Court of Appeals decision purports to join the

Third Circuit and the Eight Circuit by adopting their standard

that the Commissioner has the burden of proving the fact and

amount of overpayment. Court of Appeals decision, at Page

A-12 and A-13 hereof; 221 F.3d, at 1124. See Cannuni ex

rel. Cannuni_v. Schweiker, 740 F.2d 260, 263 (3rd Cir.

1984); United States v. Smith, 482 F.2d 1120, 1124 (8th

Cir. 1973).

13

Cn a

The Court of Appeals decision, however, does not

apply that standard to the issue of subject matter jurisdiction

under 42 U.S.C. § 404(a) and the Social Securty Act, when

the Court of Appeals decision finds that "the record in this

\case is devoid of any documentation showing that payments

were actually made to McCarthy." Court of Appeals decision,

at Page A-14 hereof; 221 F.3d, at 1125.

The Court of Appeals decision does not apply the

standard it purports to adopt - placing the burden of proving

the fact and amount of overpayment on the Commissioner.

The Ninth Circuit Court of Appeals decision is in conflict

with the Third Circuit and the Eighth Circuit standards. Id.

II. The Court of Appeals decision of the Ninth

Circuit conflicts with the decision of this Court in

Califano _v. Yamasaki, where this Court (1)

requires that the fact of overpayment be accurate

and (2) cites Ninth Circuit and Third Circuit case

law that the fact of overpayment involves

straightforward matters of computation, using .

documentary proof, such as cancelled checks. |

|

14

This Court has stated that 42 U.S.C. § 404(a)

requires that the fact of overpayment be accurate. Califano v.

Yamasaki, 442 U.S., at 693.

This Court in that same case has also stated that the

fact of overpayment is subject to written review and,

accordingly, cited cases from the Ninth Circuit and the Third

Circuit that call for questions of whether an overpayment

actually occurred to be resolved by documentary proof,

including cancelled checks, when receipt of payment is in

dispute. Id, citing Elliot v. Weinberger, 564 F.2d 1219, 1231

(9th Cir. 1977) and Mattern v. Mathews, 582 F.2d 248, 255-

256 (3rd Cir. 1978). See also Mattern v. Weinberger, 519

F.2d 150, 165 (3rd Cir. 1975).

III. The Court of Appeals decision of the Ninth

Circuit conflicts with the clear requirement of this

Court and clear precedent in the Second, Eighth

and Tenth Circuits that a "final decision" for the

purpose of judicial review under 42 U.S.C. §

405(g) includes the non-waivable jurisdictional

requirement that the decision of the Commissioner

being reviewed thereunder results in the denial of

a "Claimant's" application for benefits.

15

This Court has been consistently clear in successive

precedent that the requirement of a “final decision" for the

purpose of judicial review under 42 U.S.C. § 405(g)

includes the non-waivable and non-excusable jurisdictional

requirement that the decision of the Commissioner being

reviewed thereunder result in the denial of a "Claimant's"

application for benefits. Shalala v. Illinois Council on Long

Term Care, Inc., 529 U.S. __, 120 S.Ct. 1084, 1094, 146

L.Ed 2d 1, 14-15, 17-18 (2000); Bowen v. City of New

York, 476 U.S. 467, 483 (1986); Mathews v. Eldndge, 424

U.S. 319, 328 (1976).

The Second, Eighth and Tenth Circuits have honored

the precedents of this Court. See Abbey v. Sullivan, 978

F.2d 37, 43 (2nd Cir. 1992); Mental Health Association of

Minnesota v. Heckler, 720 F.2d 965, 969 (8th Cir. 1983);

Reed v. Heckler, 756 F.2d 779, 782-783, 785 n. 8 (10th

Cir. 1985).

Nevertheless, the Court of Appeals decision for the

Ninth Circuit overlooks the consistent precedent of this Court

and that of the Second, Eighth and Tenth Circuits by

concluding:

16

"Nothing in the Social Security Act indicates that an

individual must be requesting or receiving benefits at the time

of the ALJ's decision in order to seek review under §

405(g)."

See Court of Appeals decision, at Page A-10 hereof: 221

F.3d, at 1124.

The Commissioner admitted in his Answer, filed in

the district court below, that Petitioner in this case is neither a

"Claimant" at the present time nor was he at the time of the

administrative decision under review by the Court of Appeals

decision, a "Claimant" filing an application for benefits from

the Social Security Administration. Tr. 87. See also First

Amended Complaint, § 7, at Page 4 (Tr. 468), and

Commissioner's admission thereof, at Commissioner's

Answer, § 3, at Page 2 (Tr. 550).

IV. The district court below, as a court of limited

jurisdiction, is presumed to lack jurisdiction in the

case below until it has been affirmatively

demonstrated that subject matter jurisdiction

exists, and the Court of Appeals decision for the

Ninth Circuit may not use the "substantial

evidence" standard established by 42 U.S.C. §

405(g) to determine whether the district court has

jurisdiction under § 405(g), prior to the

determination that the district court has, in fact,

subject matter jurisdiction under § 405(g).

17

United States District Courts are courts of limited

jurisdiction where it is presumed that the federal court lacks

jurisdiction in a particular case, until it has been affirmatively

demonstrated that subject matter jurisdiction exists. Owen

Equipment and Erection Co. v. Kroger, 437 U.S. 365, 374

(1978).

It is a fundamental principle that federal courts are

courts of limited jurisdiction and that these limits, whether

imposed by the Constituition or by Congress, must neither be

disregarded or evaded. Id.

The Court of Appeals decision seeks to evade the

issue of whether 42 U.S.C. § 405(g) confers subject matter

on the district court in the case below by using the

"substantial evidence" standard authorized by § 405(g) to

prove subject matter jurisdiction under § 405(g) itself. Court

of Appeals decision, at Page A-6 to A-12 hereof; 221 F.3d, at

1122-1124.

Moreover, in so doing the Court of Appeals decision

seeks to dilute even the "substantial evidence" standard itself

by bringing a "tacit admissions" and implicit

acknowledgment" evidentiary analysis in proximity to the

18

ee

"substantial evidence" standard - without citation to any

authority for such an evidentiary analysis. Court of Appeals

decision, at Page A-14 and A-15 hereof; 221 F.3d, at 1125.

This Court has recently held that where the application

of § 405(h) would otherwise preclude judicial review, 28

U.S.C. § 1331 permits district court subject matter

jurisdiction for judicial review. Shalala v. Illinois Council on

Long Term Care, Inc., 120 S.Ct., at 1096-1097, 1099-1100,

146 L.Ed.2d, at 17-18, 20-21 (2000).

Conclusion

Based on the foregoing, Petitioner respectfully

requests that Petitioner's Petition for Writ of Certiorari to the

United States Court of Appeals For The Ninth Circuit be

granted.

Dated: January 24, 2001

Reno, Nevada 89504

Attorney For Petitioner

19

APPENDIX

Charles M. McCARTHY, Jr.,

Plaintiff-Appellant

Vv.

Kenneth S. APFEL, Commissioner of

the Social Security Administration,

Defendant-A ppellee.

No. 98- 15238

United States Court of Appeals,

Ninth Circuit

Argued March 9, 1999

Submission Deferred March 9, 1999

Submitted June 9, 2000

Filed August 15, 2000

Before: O'SCANNLAIN and WARDLAW, Circuit Judges,

and BYRNE, District Judge.

BYRNE, Senior District Judge:

Appellant Charles M. McCarthy, Jr.("McCarthy")

appeals from the district court's decision on summary

judgment (1) upholding the Commissioner of Social Security's

determination that McCarthy was overpaid $ 10,207.00 in

disability insurance benefits pursuant to Title II of the Social

> A-1

ee -

Security Act. 42 U.S.C. § 401 et seq. and (2) remanding the

case to the Commissioner pursuant to 42 U.S.C. § 405(g) for

a determination of whether McCarthy was "without fault" in

connection with the overpayments. The district court had

jurisdiction pursuant to 42 U.S.C. § 405(g), and we have

jurisdiction pursuant to 28 U.S.C. § 1291. We affirm in part,

reverse in part, andremand. —

STATEMENT OF FACTS

McCarthy stopped working in 1980 due to a

psychological disability and began receiving Title II disability

insurance benefits!, as well as Title XVI supplemental security

income, based on application filed on January 8, 1981.

McCarthy returned to work in December 1987, and his Title

XVI supplemental security income ended two months later.

i alan Se so ye om —'

1 Under Title II of the Social Security Act, the

federal government provides disability benefits to

individuals who have contributed to the Social Security

program and who, because of a medically determinable

physical or mental impairment, are unable to engage in

substantial gainful work. 42 U.S.C. §§ 423(a), (d). Title

II is administered in conjunction with state welfare F

agencies and provides benefits only while an individual's .

statutory disability persists. 42 U.S.C. §§ 421(a),

423(a)(1).

ge SE

A-2

iment imieiiiiiimias iii iiaiiaiataaiiiaiitil

McCarthy, however, allegedly continued to receive and cash

Title II disability benefits through March 1990.

By letters dated January 25 and February 12, 1990,

the Social Security Administration ("SSA") notified McCarthy

that he was able to perform substantial gainful activity as of

December 1987, and that his eligibility for Title II disability

benefits had ended in February, 1988. By letter dated April 1,

1990, the SSA notified McCarthy that he had been overpaid $

10,207.00 in Title iI disability benefits for the period from

March 1988 through March 1990. McCarthy's appeal of this

initial determination and request for waiver of the recovery of

the overpayment was partially denied on reconsideration after a

personal conference with the SSA.2 On June 30, 1995,

following an administrative hearing, McCarthy's request for

waiver was denied by an Administrative Law Judge ("ALJ").

The AlJ's decision became the final decision of the

Commissioner when the Appeals Council declined to review it

on November 22, 1996. McCarthy then sought review

pursuant to 28 U.S.C. § 1331 and as “alleged under" 42

2 McCarthy subsequently repaid $350, and another

$539.20 was recovered, leaving a balance of $9,367.80.

A-3

U.S.C. § 405(g). On cross-motions for summary judgment,

the district court found that McCarthy had been overpaid $

10,207.00 in Title II disability benefits during the period from

March 1988 to March 1990. However, the district court

reversed the Commissioner's determination that McCarthy was

at fault for the overpayments and remanded to the

Commissioner for a full and fair hearing on the question of

fault. McCarthy timely appealed.

STANDARD OF REVIEW

"The basis for the district court's jurisdiction and the

grant of summary judgment are reviewed de novo." Sequoia

Orange Co. v. Yeutter, 973 F.2d 752, 755 (9th Cir. 1992),

amended by 985 F.2d 1419 (9th Cir. 1993). The

Commissioner's factual findings are reviewed for substantial

evidence. See 42 U.S.C. § 405(g).

3 In Forney v. Chater, 108 F.3d 228 (9th Cir. 1997),

we held that a remand pursuant to the Social Security Act

is not appealable. After the Supreme Court granted

certiorari in that case, the Commissioner obtained a stay

of proceedings of the present case pending a decision by

the Supreme Court in Forney. The Supreme Court

subsequently reversed our ruling in Forney. see 524 U.S.

266, 118 S.Ct. 1984, 141 L.Ed.2d 269 (1998), thus rendering

the district court's remand order in the present case final

and appealable.

A-t

DISCUSSION

The Social Security Act includes the following

statutory scheme for adjustment or recovery of benefits as a

result of an overpayment:

With respect to payment to a person of more than the correct

amount, the Commissioner of Social Security shall decrease

any payment under this subchapter to which such overpaid

person is entitled, or shall require such overpaid person or his

estate to refund the amount in excess of the correct amount, or

shall decrease any payment under this subchapter payable to

his estate or to any other person on the basis of the wages and

self-employment income which were the basis of the payments

to such overpaid person, or shall obtain recovery by means of

reduction in tax refunds .. ., or shall apply any combination

of the foregoing.

42 U.S.C. § 404(A)(1)(A). However, "there shall be no

adjustment of payments to, or recovery by the United States

from, any person who is without fault if such adjustment or

A-5

~ recovery would defeat the purpose of this subchapter or would

be against equity and good conscience." Id. § 404(b).

Jurisdiction

McCarthy first claims that the district court erred in

basing jurisdiction over his action on 42 U.S.C. § 405(g).

Importantly, McCarthy does not dispute that the district court

had jurisdiction, nor does he dispute that this court's

jurisdiction on appeal. McCarthy instead seeks a ruling that

the district court could not exercise jurisdiction under § 405(g)

until the Commissioner showed that McCarthy had, in fact,

received overpayments of Title II disability benefits between

March 1988 and March 1990, the period for which the

Commissioner seeks recoupment. Absent such a showing,

McCarthy contends, review can only have been proper under

general federal question jurisdiction, 28 U.S.C. § 1331.

A-6

The importance of this jurisdictional determination is

two-fold. First, if, as McCarthy contends, jurisdiction is not

proper until the Commissioner proves the fact of overpayment,

then the Commissioner bears the burden of proving

overpayment by a preponderance of the evidence, rather than

by “substantial evidence" as set out in § 405(g). Second, if

the district court's jurisdiction did not arise under § 4052(g),

then the court may have been without authority to remand the

case to the Commissioner.4

Section 405(g) provides a jurisdictional basis for

review of a final decision of the Commissioner denying a

waiver of recovery of an overpayment of Title II disability

benefits. Section 405(g) states:

Any individual, after any final decision of the Commissioner

of Social Security made after a hearing to which he was a

party, irrespective of the amount in controversy, may obtain a

review of such decision by a civil action commenced within

sixty days .. . . Such action shall be brought in the district

4 Section 405(g) provides in pertinent part that

“[t)he court shall have power to enter, upon the pl

and transcript of the record, a judgment affirming,

modifying, or reversing the decision of the Commissioner of

Social Security, with or without remanding the case for

rehearing.” 42 U.S.C. § 405(g).

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court of the United States for the judicial district in which the

plaintiff resides... .

42 U.S.C. § 405(g).

In Califano v. Yamasaki, 442 U.S. 682, 99 S.Ct.

2545, 61 L.Ed.2d 176 (1979), the Supreme Court described

the general steps a Title II recipient must take to obtain review

of an alleged overpayment:

The [Commissioner's] practice is to make an ex parte

determination under [42 U.S.C. § 404(a)] that an overpayment

has been made, to notify the recipient of that determination,

ang then to shift to the recipient the burden of either (i) seeking

reconsideration to contest the accuracy of the determination, or

(ii) asking the [Commissioner] to forgive the debt and waive

recovery in accordance with [§ 404(b)]. If a recipient files a

written request for reconsideration or waiver, recoupment is

deferred pending action on that request. The papers are sent to

one of seven regional offices where the request is reviewed.

If the regional office decision goes against the recipient . . .

[the recipient is] given an opportunity to present his story in

person to someone with authority to decide his case. That

AS

opportunity takes the form of an on-the-record de novo

evidential hearing before an independent hearing examiner.

The recipient may seek subsequent review by the Appeals

Council and finally by a federal court (under § 405(g)].

Id., at 686-87, 99 S.Ct. 2545 (footnote and citations omitted).

McCarthy went through each of the early steps described in

Yamasaki for seeking reconsideration of the initial

overpayment determination. He filed a request for waiver,

presented his story to an ALJ, and sought subsequent review

by the Appeals Council. McCarthy disputes, however, the

final step - judicial review under § 405(g) - was available in

his case.

[1] Reduced to its essence, McCarthy's argument is

that judicial review is only available under § 405(g) if the

Commissioner first proves that the plaintiff in the district court

action was, at the time of the ALJ's decision, (1) a Social

Security claimant (2) who received overpayments of Title II

disability benefits during the period in question. McCarthy

claims that, because the Commissioner presented no evidence

that he was a Social Security claimant at the time of the ALJ's

decision or that he received overpayments from March 1988 to

March 1990, his actio to enjoin the Commissioner from

recouping the alleged overpayments cannot be construed as an

action for review of a final decision of the Commissioner

pursuant to § 405(g).

[2] McCarthy's first argument, that jurisdiction cannot

have risen under § 405(g), as he was not a Social Security

"claimant" at the time of the ALJ's decision, borders on

frivolous.> Nothing in the Social Security Act indicates that an

individual must be requesting or receiving benefits at the time

of the ALJ's decision in order to seek review under § 405g).

Indeed, § 405(g) provides that "any individual" who is a party

to a Social Security hearing may obtain judicial review of the

Commissioner's ruling.

In any event, McCarthy does not deny he was a

Social Security claimant in 1981 when he filed for Title II

disability benefits, and McCarthy remains a "claimant" with

respect to the Commissioner's efforts to recover alleged

overpayments on that claim. That McCarthy was not asserting

5 “Claimant” is defined as “the person who files an

application for benefits for himself or herself or the

person for whom the application is filed.” 20 C.F.R. §

404.602.

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a continuing right to disability benefits in 1995 did not destroy

his status as a claimant with respect to the Title II disability

benefits for which he applied in 1981 and from which the

Commissioner seeks recoupment of overpayments.

[3] McCarthy's second argument, that jurisdiction

cannot have arisen under § 405(g) unless the Commissioner

first proved by a preponderance of the evidence that McCarthy

received overpayments during the relevant period, also fails.

To recover overpayments, the Commissioner must show that

the claimant actually received benefits beyond the correct

amount. See 42 U.S.C. § 404(a). However, the

Commissioner's alleged failure to make these showings does

not render judicial review under § 404(g) improper. Rather,

the district court, on judicial review, must determine whether

the Commissioner established the fact and amount of

overpayment by substantial evidence. In other words, proof

of an overpayment is a requirement for recovery, not a

prerequisite to judicial review. ©

6 Indeed, it would make little sense for the

Commissioner to prove the fact of overpayments by a

preponderance of the evidence and then, having triggered §

405(g), review the very same factual determination under

the less stringent substantial evidence standard of proof.

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We therefore hold that the district court properly

exercised jurisdiction over McCarthy's action pursuant to 42

U.S.C. § 405(g).

II

Substantial Evidence

In the usual overpayment case, a claimant does not

contest the fact or amount of the overpayments. Rather, the

claimant typically contests only the Commissioner's

determination that he was not "without fault" for receiving the

overpayments and, consequently, that he is not entitled to a

waiver of recovery. Here, however, McCarthy contests both

the fact and amount of the alleged overpayments and claims

that the district court erred in affirming the Commissioner's

finding that he received $ 10,207.00 in overpayments during

the period from March 1988 to March 1990.

~ [4] Although the Social Security Act does not

designate which party bears the burden of establishing the fact

and amount of overpayments, each circuit to consider the issue

has held that the Commissioner has that burden. See Cannuni

ex rel. Cannuni v. Schweiker, 740 F.2d 260, 263 (3d Cir.

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1984); United States v. Smith, 482 F.2d 1120, 1124 (8th Cir.

1973). We join these circuits and hold that the Commissioner

bears the burden of proving the fact and amount of

overpayment. The Commissioner must establish: (1) that

McCarthy received Title II disability benefits from March 1988

to March 1990; (2) that these benefits were in excess of the

amount to which McCarthy was entitled; and (3) that the

overpayment was in the amount of $ 10,207.00.

Because jurisdiction arose under 42 U.S.C. § 405g),

the district court properly reviewed for "substantial evidence"

the Commissioner's determination that McCarthy had been

overpaid benefits in the amount of $ 10,207.00. See 42

U.S.C. § 405(g) ("The findings of the Commissioner of

Social Security as to any fact, if supported by substantial

evidence, shall be conclusive . . . ."). Substantial evidence is

such relevant evidence as a reasonable mind might, upon

consideration of the entire record, accept as adequate to

support a conclusio. See Richarson v. Perales, 402 U.S. 389,

401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971); see also Young

v. Sullivan, 911 F.2d 180, 183 (9th Cir. 1990) ("Substantial

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evidence means 'more than a mere scintilla,' but ‘less than a

preponderance." (citation omitted)).

A. Payment of Title II benefits

[5] Payments of Title II benefits are generally proved

by the Commissioner through computerized SSA payment

records and cancelled checks from the Treasury Department.

Though the record in this case is devoid of any documentation

showing that payments were actually made to McCarthy, the

district court considered other evidence in finding that the

Commissioner proved the payment of benefits after February

1988. The court first noted that McCarthy admitted in April

1995 hearing before the ALJ that he received Title II disability

payments after February 1988. The admission is clear in an

exchange between the ALJ and McCarthy's attorney (the same

attorney who represents McCarthy on appeal):

"ALJ: And do you know -- do either of you know when the

Title II benefits stopped?

ATTY: I believe the last <n was in February of March of

1990 was the last payment.

7 At several points in his briefing, McCarthy

contends that the ALJ never found that he had received

benefits through March 1990. This contention is plainly

refuted by the ALJ's finding that “claimant was overpaid

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McCarthy's admission alone constitutes substantial evidence

of payment.

[6] Additionally, the district court found that

McCarthy had also tacitly admitted that he was paid benefits

after March 1988 by making partial reimbursement of the

overpaid amounts and by filling out a request for a waiver of

recovery.®

The district court did not err in finding that the

payment of Title II disability benefits to McCarthy during the

period from March 1998 to March 1990 was supported by

substantial evidence.

B. Fact of overpayment

benefits ... under Title II of the Social Security Act

fram March 1988 to March 1990.*

8 McCarthy contends that the district court erred in

relying on the above evidence because the hearing before

the ALJ was a non-adversarial proceeding and because the

ALJ improperly admitted evidence, including McCarthy's

partial reimbursement of the overpayment amount due, that

would not have been admissible under the Federal Rules of

Evidence. The ALJ, however, was not bound by the rule of

evidence applicable to court proceedings. 42 U.8.C. §

405(b) provides that “[e)vidence may be received at any

hearing before the Secretary even though inadmissible under

the rules of evidence applicable to court ‘procedure.

Courts have regularly found § 405(b) applicable in actions

to recover overpayments of benefits." See, @.g., Howard v.

Secretary of the Dep't of Health and Suman Servs., 741 F.2d

4, 9 (2a Cir. 1984).

A-15

McCarthy concedes that by March 1988 he was able

to perform substantial gainful activity, and that his benefits

should have ceased at that time. Thus, proof of payment after

1988 and proof of overpayments are one and the same.

C. Amount of overpayment

In addition to establishing that McCarthy received

overpayments, the Commissioner must also prove by

substantial evidence the amount of those overpayments.

The only document in the record that identifies specific

payments from March 1988 through March 1990 is an April 1,

1990 letter from the SSA to McCarthy that provides in

pertinent part:

We have determined that you received $ 10,207.00 more in

Social Security benefits than you were due. This overpayment

occurred because of your substantial gainful work activity.

Benefits for you have terminated effectively March 1988.

Please see chart below:

You received: You should have

received:

$0.00 for 03/88-

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$468.00 prior pt 03/90

$377.00 for 3/88-09/88

$376.80 for 10/88-11/88

$391.90 for 12/88-11/89

$410.90 for 12/89-03/90

Therefore, you are overpaid $ 10,207.00

[7,8] When a claimant challenges the SSA's initial

determination of the amount that he was overpaid, the

Commissioner must present reliable evidence of the particular

overpayments. The Commissioner's unsubstantiated belief

that particular payments were made is not enough. The letter,

standing alone, does not constitute substantial evidence of the

amount of overpayments. The district court erred in relying

exclusively on this letter in rejecting McCarthy's challenge to

the amount of overpayments.

Although cancelled checks may be the best evidence

of the amount of overpayment, see Chitwood v. Chater, 928

F.Supp. 874, 882 (E.D. Mo. 1996), they are not the only

evidence sufficient to satisfy the Commissioner's burden. The

Commissioner could, for instance, subpoena a claimant's bank

records to show the deposit of checks matching the claimed

payments. Or the Commissioner might rely upon the

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claimant's own prior admissions that he received payments in

the claimed amounts.

[9] We do not endeavor to offer an exhaustive list of

the types of evidence by which the Commissioner could

satisfy his burden. We simply hold that production of an

initial determination letter is not enough and that, on remand,

the Commissioner continues to have the burden of establishing

by substantial evidence the amount of overpayments of Title II

benefits to McCarthy.?

Ill

"Without Fault"

McCarthy's final contentions relate to the district

court's decision to remand the case to the Commissioner for

consideration of whether he was "without fault" with respect

to the overpayments and, if so, whether reimbursement should

9 We grant McCarthy's motion to strike from the

Commissioner's brief an addendum containing purported

evidence of the amount of overpayments received by McCarthy

between March 1988 to March 1990. These computerized

records of planned or actual payments were not before

either the ALJ or the district court and will not be

considered by this court. See Fed.R.App.P 10(a); 9th Cir.

Rule 10-2.

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danae

be excused because it would defeat the purpose of Title II or

would be against equity or good conscience. See 42 U.S.C. §

404(b).

[10] The regulations provide that an overpaid

individual may be found at fault if the overpayments resulted

from: (1) an incorrect statement made by the individual that he

knew or should have known to be incorrect: (2) failure to

furnish information that he knew or should have known to be

material; or (3) acceptance of a payment that he either knew or

could have been expected to know was incorrect. See 20

C.F.R. § 404.507. The overpaid individual bears the burden

of proving that he was without fault. See Anderson v.

Sullivan, 914 F.2d 1121, 1122 (9th Cir. 1990).

[11] McCarthy does not challenge the district

court's finding that the Commissioner's determination of fault

was not supported by substantial evidence. Rather, McCarthy

asserts that remand for a further hearing on fault was

improper. He first claims that both the ALJ and the district

court were bound by the SSA's May 25, 1993 determination,

following a personal conference, that McCarthy was without

fault for overpayments made from February 1988 through

A-19

December 1989. McCarthy argues that the ALJ could not

revisit this issue without giving written notice in advance of

the hearing, as required by 20 C.F.R. § 404.946(a).

McCarthy's argument hinges on a misreading of §

404.946(a), which provides:

The issues before the [ALJ] include all the issues brought out

in the initial, reconsidered or revised determination that was

not decided entirely in your favor. However, If evidence

presented before or during the hearing causes the [ALJ] to

question a fully favorable determination, he or she will notify

you and will consider it an issue at the hearing.

20 C.F.R. § 404.946(a). Nothing in this section requires the

ALJ to notify an individual prior to the hearing, or in writing,

that an issue previously decided in his favor will be considered

as an issue at the hearing. Indeed, § 404.946(a) expressly

contemplates notification “at the hearing." 20 C.F.R. §

404.946(a); see also Highfill v. Bowen, 832 F.2d 112, 115

(8th Cir. 1987) ("[Section] 404.946(a) provides that ALJ may

reexamine a favorable determination if evidence presented

during the hearing calls the determination into question.").

[12] McCarthy's second argument also fails.

According to McCarthy, the record demonstrates that his

average monthly expenses exceed his average monthly

income, and, consequently, that reimbursement would defeat

the purpose of Title II or would be against equity or good

conscience. However, the district court remanded the case to

the ALJ for a hearing on the fault issue. There is no reason for

the district court to address whether, in the event McCarthy is

found to be without fault, repayment would defeat the purpose

of Title II or would be against equity or good conscience.1°

CONCLUSION

For the foregoing reasons, we AFFIRM IN PART

and REVERSE IN PART the district court's decision on

summary judgment. The district court's exercise of

jurisdiction is AFFIRMED, as is the finding that there was an

overpayment. The case is REMANDED to the district court.

Consistent with this opinion, the district court is to remand the

10 The Commissioner has not appealed the district

court's decision to vacate the ALJ's fault determination

and to remand for a full and fair hearing to determine

whether McCarthy was without fault.

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case to the Commissioner to determine the amount of Title II

disability benefits that McCarthy was overpaid. If the

Commissioner determines that some amount of overpayment

was shown be substantial evidence, the Commissioner shall

proceed with a hearing concerning whether McCarthy was

without fault with respect to that overpayment and, if he was

without fault, whether reimbursement of the overpaid benefits

should be excused because reimbursement would defeat the

purpose of Title II or would be against equity or good

conscience. Each side will bear it own costs.

AFFIRMED IN PART, REVERSED IN PART,

AND REMANDED

Ninth Circuit Docket Sheet Entry

For Proceedings in Docket No. 98-

15238

10/26/00 Filed order (Diarmuid

F. O'SCANNLAIN, Kim