SSR 68-7c: Rescinded 1986

SSR 68-7c

20 CFR 404.508, 404.509, 404.510(j), and 404.511

GRANTHAM v. GARDNER U.S.D.C., D.S.C., Civil No. 274 (1966) (CCH, UIR,

Vol. 1, Fed. para 14, 714

An overpayment benefits resulted because the beneficiary did not report

that her earnings for the year would exceed the statutory yearly amount.

The beneficiary has objected to adjustment of the overpaid amount against

current benefits, on the ground that she did not understand the deduction

provisions. Evidence showed her benefits had twice been suspended

previously on the basis of her excess earnings, she had received a full

written explanation of the deduction provisions, showing how deductions

depended on the amount of excess earnings, and she had filed annual

reports of her earnings in prior years. Held, there was

substantial evidence to substantiate the Secretary's decision that

recovery of the overpayment may not be waived since the beneficiary was

not without fault in accepting the payment.

HEMPHILL, District Judge :

Mary Grantham was awarded survivor's insurance benefits under the Social

Security Act in 1959 and her daughter received child's insurance benefits.

In 1963 due to the amount of her earnings it was determined that she

received an overpayment in the amount which has been computed to

be—$534.40. See 42 U.S.C.A. Section 403. She has objected to

having the overpayments deducted from subsequent benefits which may be

paid to her in her own right on the grounds that she is without fault and

that the recovery of the overpayment would defeat the purpose of the Act

and would be against equity and good conscience. Her objection, as a claim

for waiver by the Administration, was denied by a final decision of the

Secretary and this action was brought for judicial review under Section

205(g) of the Act, 42 U.S.C.A. Section 405(g). Under the provision for

judicial review the district court must affirm the decision as to any

matter of material fact if it is supported by substantial evidence.

conscience. Her objection, as a claim

for waiver by the Administration, was denied by a final decision of the

Secretary and this action was brought for judicial review under Section

205(g) of the Act, 42 U.S.C.A. Section 405(g). Under the provision for

judicial review the district court must affirm the decision as to any

matter of material fact if it is supported by substantial evidence.

The burden is on the plaintiff to prove her claim. Bradshaw v.

Celebrezze, 312 F.2d 746 (4th Cir. 1964). Recovery of overpayments may

be foregone under Section 204 of the Act, 42 U.S.C.A. Section 404, which

provides in part:

There shall be no adjustment or recovery by the United States in any case

where incorrect payment has been made to an individual who is without

fault. . ., and where adjustment or recovery would defeat the purpose of

this title or would be against equity and good conscience. 42 U.S.C.A.

§404(b).

The critical qualifications in the above exclusions are defined by

regulation. The qualification "without fault" is a prerequisite finding

which must be found before the possibility of defeat of purpose or

violation of good conscience may become determinative. They are not to be

regarded as alternative excuses but as a two step qualification.

When an Individual is "Without Fault" in a Deduction—

Overpayment . Except as provided in §404.511, or elsewhere in this

Subpart F, an individual will be considered "without fault" in accepting a

payment which is incorrect . . . if it is shown that such failure to

report or acceptance of the overpayment was due to one of the following

circumstances:

* * *

t as a two step qualification.

When an Individual is "Without Fault" in a Deduction—

Overpayment . Except as provided in §404.511, or elsewhere in this

Subpart F, an individual will be considered "without fault" in accepting a

payment which is incorrect . . . if it is shown that such failure to

report or acceptance of the overpayment was due to one of the following

circumstances:

* * *

(j) Reasonable belief that earnings in excess of $1,200 for the taxable

year would subject him to deductions only for months beginning with the

first month in which his earnings exceeded $1,200. However, this provision

is applicable only if he reported timely to the Administration during the

taxable year when his earnings reached $1,200. . . .

Section 404.511 of the same regulation provides as follows:

When an Individual is at "Fault" in a Deduction—

Overpayment.—(a) Degree of Care. —An individual will not be

"without fault" if the Administration has evidence in its possession which

shows either a lack of good faith or failure to exercise a high degree of

care in determining whether circumstances which may cause deductions from

his benefits should be brought to the attention of the Administration by

an immediate report or by return of a benefit check. The high degree of

care expected of an individual may vary with the complexity of the

circumstances giving rise to the overpayment and the capacity of the

particular payee to realize that he is being overpaid. . . .

er circumstances which may cause deductions from

his benefits should be brought to the attention of the Administration by

an immediate report or by return of a benefit check. The high degree of

care expected of an individual may vary with the complexity of the

circumstances giving rise to the overpayment and the capacity of the

particular payee to realize that he is being overpaid. . . .

Defeat the purpose of Title II means defeat the purpose of benefits under

this Title, i.e., to deprive a person of income required for ordinary and

necessary living expenses. This depends upon whether the person had an

income or financial resources sufficient for more than ordinary and

necessary needs, or is dependent upon all of his current benefits for such

needs. Against equity and good conscience means that adjustment or

recovery of an overpayment will be considered inequitable if the

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

or changed his position for the worse. 20 CFR 404.50 and 20 CFR

404.509.

In this instance the court is of the opinion that there is ample evidence

that the plaintiff has not shown she was without fault in accepting the

overpayments. Moreover the circumstances of record do not present any real

possibility of perverting the purpose of the Act or of offending equity

and good conscience.

The evidence need not be assayed in its entirety to show the substance of

the defendant's case.

court is of the opinion that there is ample evidence

that the plaintiff has not shown she was without fault in accepting the

overpayments. Moreover the circumstances of record do not present any real

possibility of perverting the purpose of the Act or of offending equity

and good conscience.

The evidence need not be assayed in its entirety to show the substance of

the defendant's case.

Plaintiff, who is 33 years old, completed the seventh grade in school.

Her daughter is sixteen years old. Survivors insurance benefits, based on

the wage record of her deceased husband, were awarded, beginning January

1959. The payment of plaintiff's benefits was suspended in 1959 and 1960

because she earned over $1,200 each year. In 1962 benefits for March and

April were withheld because of excess earnings in 1960. Plaintiff earned

$2,450.29 in 1963. In September 1963, after she had already earned in

excess of $1,700, she notified the Administration that she anticipated

earnings in excess of $1,200. She filed three annual reports of earnings

in 1960 and 1962, on Social Security forms, headed "Important. Read

Carefully," and which contained detailed explanations of the work

deduction provisions of the Act. Plaintiff, in 1960, also submitted a

"Request for Benefits Payable" on an official Social Security form with

instructions attached showing a detailed schedule of the amounts

deductible for any month, or months, depending on the amount of yearly

earnings and the amount earned during a particular month, as well as an

explanation of the excess earnings provisions. In bold capital letters on

the latter form the plaintiff was told, "If you need assistance in

completing this form consult your Social Security Office."

ched showing a detailed schedule of the amounts

deductible for any month, or months, depending on the amount of yearly

earnings and the amount earned during a particular month, as well as an

explanation of the excess earnings provisions. In bold capital letters on

the latter form the plaintiff was told, "If you need assistance in

completing this form consult your Social Security Office."

Despite the fact her benefits had been stopped twice in the past and she

could not possibly receive over $801.60 in total benefits during any one

year, in March and May 1965 plaintiff stated she thought she could

continue to work, no matter what amount she earned, as long as she did not

receive over $1,200 in social security benefits. Inconsistently, she

testified at the hearing she thought she could earn $1,200 before her

benefits would be suspended, and if she continued to work she would not

receive any further benefits but no other deductions would be assessed.

On the basis of the record the court is constrained to find that there is

substantial evidence to support the decision, and that, therefore, it must

be affirmed.

Defendant's motion for summary judgment is granted.