SSR 64-7: SECTION 204(a) and (b). -- OVERPAYMENTS -- LIABILITY WHERE THERE IS A REPRESENTATIVE PAYEE -- WAIVER OF ADJUSTMENT OR RECOVERY

20 CFR 404.506-404.511

SSR 64-7

A girl became entitled on her deceased father's earnings record to

child's insurance benefits beginning January 1958, when she was 13 years

old. The Social Security Administration designated her uncle as

representative payee to receive and use her benefits in her best interest.

The payee received benefits for all months January 1958 through October

1962. With the latter month the girl's entitlement ended, since she

attained age 18 in November 1962 and was not then under a disability.

The beneficiary, meanwhile, obtained a job in June 1962 and has been

working since that time. Her work and earnings were sufficient, under

section 203 of the Act, to require deductions precluding payment of any

benefits for the months June through October 1962. Though instructed to

notify the Administration promptly of work and earnings requiring

deductions, the payee did not do so in time to prevent an erroneous

requiring deductions, the payee did not do so in time to prevent an

erroneous payment of $280, her monthly benefit for 5 months at the rate of

$56 per month.

Upon being notified of the deductions and the overpayment of $280, the

payee protested, contending that no deductions were applicable and that he

had used the benefits as well as his own resources for the girl's support.

The following facts were established with regard to the overpayment:

Where a representative payee receives an overpayment of benefits on

behalf of a beneficiary, the payee and the beneficiary may, under certain

circumstances, be jointly and individually liable for the overpayment.

However, the payee is not liable if he used the amounts received for the

benefit of the beneficiary and was without fault with regard to the

overpayment. In the present case, the payee met these requirements. The

beneficiary, however, has received the use and benefit of the overpayment,

and a question remains as to whether the overpayment should be recovered

from her.

the overpayment.

However, the payee is not liable if he used the amounts received for the

benefit of the beneficiary and was without fault with regard to the

overpayment. In the present case, the payee met these requirements. The

beneficiary, however, has received the use and benefit of the overpayment,

and a question remains as to whether the overpayment should be recovered

from her.

Section 204(b) of the Social Security Act provides that there shall be no

recovery in any case where an incorrect payment has been made to an

individual who is without fault if adjustment or recovery would either

defeat the purpose of title II of the Act, or be against equity and good

conscience.

Under § 404.508 of Regulations No. 4, recovery would "defeat the purpose

of title II' if such recovery would deprive the beneficiary of resources

required to meet his ordinary and necessary living expenses.

Under § 404.509, recovery will be considered "against equity and good

conscience" if the individual (regardless of his financial circumstances)

has, by reason of the overpayment, relinquished a valuable right or

changed his position for the worse.

Where the benefits of a child are paid to a representative payee, the

responsibility for reporting events which might effect payment of the

child's benefits rests primarily with the payee rather than the child. In

such a situation the child is presumed to be "without fault" as to an

overpayment of such benefits in the absence of evidence to evidence to the

contrary (e.g., evidence that the child knew the payments to be incorrect,

or deliberately concealed or misrepresented material facts contributing to

the overpayment). In the present case, since there was no such evidence,

the beneficiary is considered to be without fault in regard to the

overpayment. However, the beneficiary has income exceeding her "ordinary

and necessary living expenses"; hence, recovery of the overpayment would

not defeat the purpose of title II

liberately concealed or misrepresented material facts contributing to

the overpayment). In the present case, since there was no such evidence,

the beneficiary is considered to be without fault in regard to the

overpayment. However, the beneficiary has income exceeding her "ordinary

and necessary living expenses"; hence, recovery of the overpayment would

not defeat the purpose of title II. Furthermore, recovery would not be

"against equity and good conscience" since there is no evidence indicating

that she has relinquished a valuable right or changed her position for the

worse by reason of the incorrect payments.

Accordingly, it is held that recovery of the overpayment may not be

waived and, therefore, the beneficiary must refund the $280.