# SSR 85-9c: SSR 85-9c: SECTIONS 204 AND 207 (42 U.S.C. 404 AND 407) RECOVERY OF ERRONEOUS PAYMENTS MADE AFTER DEATH -- INAPPLICABILITY OF WAIVER PROVISIONS

> Federal · Rulings · In force

URL: https://www.frixlaw.com/law-library/statutes/SSA_SSR_OASI_SSR_85_9c

## Section

- **Citation:** SSR 85-9c
- **Heading:** SSR 85-9c: SECTIONS 204 AND 207 (42 U.S.C. 404 AND 407) RECOVERY OF ERRONEOUS PAYMENTS MADE AFTER DEATH -- INAPPLICABILITY OF WAIVER PROVISIONS
- **Jurisdiction:** Federal
- **Kind:** Rulings
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Social Security Rulings / OASI / Overpayments and Underpayments / SSR 85-9c

## Text

20 CFR 404.501 et seq.

SSR 85-9c

Dockstader v. Miller, 719 F.2d 327 (10th Cir. 1983), rehearing denied,
cert. denied, sub nom., Wayment et al v. Reagan, _____U.S._____, 104 S.Ct. 3546 (6/18/84)

BARRETT, Circuit judge:

Mahala Dockstader, on behalf of herself and all those similarly situated,
brought this class action challenging the procedures by which the Social
Security Administration (SSA) and the Department of the Treasury
(Treasury) reclaimed certain erroneously paid social security benefits.
The district court granted summary judgment in favor of SSA and Treasury
and Mrs. Dockstader brought this appeal.

In 1968, Mahala Dockstader filed for and was found to be entitled to
social security old-age insurance benefits. In 1972,. her husband,
Lawrence Dockstader, filed for and began receiving social security old-age
insurance benefits. Both Mahala and Lawrence continued to receive their
separate benefits through June of 1976. In April of 1976, Lawrence and
Mahala entered into an agreement with the Walker Bank and Trust Company of
Salt Lake City, Utah. The agreement provided that the net amount of their
individual monthly social security benefits would be deposited directly
into their joint account with the Walker
Bank. [1] The reverse side of the
agreement, Treasury Authorization Form 1199, provided that the agreement
would be canceled upon the death of any payee or beneficiary of the
payments. The agreement was in effect and the Dockstaders were receiving
their payments by direct deposit into their joint account in June of
1976.
be deposited directly
into their joint account with the Walker
Bank. [1] The reverse side of the
agreement, Treasury Authorization Form 1199, provided that the agreement
would be canceled upon the death of any payee or beneficiary of the
payments. The agreement was in effect and the Dockstaders were receiving
their payments by direct deposit into their joint account in June of
1976.

On June 25, 1976, Lawrence Dockstader died. On June 30, Mahala notified
the SSA of Lawrence's death and filed an application for widow's benefits.
In August of 1976, Mahala transferred ownership of her bank account to
herself and her son. On October 14, 1976, SSA notified Mahala that she was
entitled to combined widow's and retirement insurance benefits. On
February 8, 1977, SSA first made an entry of termination of Lawrence's
retirement benefits by reason of his death. It is unknown why no entry was
made until this time, but because of the delay, SSA continued to certify
payments to Lawrence through February of 1977. The Walker Bank continued
to credit the erroneously certified payments to Mahala's account, even
after she transferred ownership of the account.

On May 26, 1977, SSA forwarded a standard form to Treasury, requesting it
to reclaim the erroneously certified benefits. Pursuant to 31 C.F.R. parts
209, 210, and 240, Treasury contacted Walker Bank and requested refund of
$1675.10 in erroneous payments. Walker Bank returned to Treasury
$1,435.80, and at the same time debited the account belonging to Mahala
and her son. SSA and Treasury did not give Mahala any notice prior to the
time her account was debited, nor was she given the opportunity to request
waiver of recovery of the erroneous payments.
40, Treasury contacted Walker Bank and requested refund of
$1675.10 in erroneous payments. Walker Bank returned to Treasury
$1,435.80, and at the same time debited the account belonging to Mahala
and her son. SSA and Treasury did not give Mahala any notice prior to the
time her account was debited, nor was she given the opportunity to request
waiver of recovery of the erroneous payments.

Mahala Dockstader commenced this suit on behalf of herself and all other
similarly situated persons. [2] She never contended that she was entitled to the erroneous payments in the
first instance; rather, she argued that the recovery procedures utilized
here violated section 204 of the Social Security Act, 42 U.S.C. § 404, and
its implementing regulations in 20 C.F.R. part 404, Section 207 of the
Social Security Act, 42 U.S.C. § 407, and the Fifth Amendment to the
United States Constitution. Mahala asserted that federal jurisdiction
existed under 42 U.S.C. § 405(g), 28 U.S.C. § 1331 (a), and 28 U.S.C. §
1361. The district court concluded that jurisdiction existed only under 28
U.S.C. § 1361, the mandamus statute. Both parties moved for summary
judgment. The court concluded that a mandamus order was improper since SSA
and Treasury did not owe Mahala a duty under 42 U.S.C. § 404(a).
Accordingly, the court granted their motion for summary judgment. Mahala
then filed a motion to alter judgment, claiming that the court had failed
to consider her claims under the Fifth Amendment and 42 U.S.C. § 407. The
trial court filed a memorandum decision and order in which it addressed
Mahala's contentions. Her motion to alter judgment was denied.

On appeal, Mahala contends that: (1) she was entitled to the procedural
protections provided by 42 U.S.C. § 404 and its implementing regulations;
claiming that the court had failed
to consider her claims under the Fifth Amendment and 42 U.S.C. § 407. The
trial court filed a memorandum decision and order in which it addressed
Mahala's contentions. Her motion to alter judgment was denied.

On appeal, Mahala contends that: (1) she was entitled to the procedural
protections provided by 42 U.S.C. § 404 and its implementing regulations;
(2) the regulations and policies of SSA involved it directly in the
debiting so that the procedural due process clause of the Fifth Amendment
was implicated; and (3) SSA's involvement was sufficient that it violated
the non- alienation of social security benefits provision of 42 U.S.C. §
407. The first issue we must consider, however, is whether the district
court had jurisdiction to hear this case.

I.

In 42 U.S.C. § 405(h), the Social Security Act provides that 42 U.S.C. §
405(g) establishes the exclusive jurisdictional basis for a suit seeking
"to recover on any claim arising under" the Act. The district court
however, based its jurisdiction on the mandamus statute, 28 U.S.C. § 1361.
The Supreme Court has yet to determine whether mandamus jurisdiction is
appropriate to review SSA procedures. See Califano v. Yamasaki , 442 U.S. 682, 698, 99 S.Ct. 2545, 2556, 61 L.Ed.2d 176
(1979); Norton v. Mathews, 427 U.S. 524, 529-30, 96 S.Ct.
2771, 2774-75, 49 L.Ed.2d 672 (1976); Hadley Memorial Hospital,
Inc. v. Schweiker, 689 F.2d 905, 912 (10th Cir. 1982).
Recently, however, the Supreme Court granted certiorari in a case which
presents that issue. Heckler v. Ringer , _____U.S._____, 103 S.Ct.
3535, 77 L.Ed.2d 1386 (1983). In Ringer , the Ninth Circuit ruled
that when the plaintiff is simply asking a court to require SSA to provide
procedural safeguards, without addressing any substantive right to
benefits, mandamus jurisdiction is proper:
Recently, however, the Supreme Court granted certiorari in a case which
presents that issue. Heckler v. Ringer , _____U.S._____, 103 S.Ct.
3535, 77 L.Ed.2d 1386 (1983). In Ringer , the Ninth Circuit ruled
that when the plaintiff is simply asking a court to require SSA to provide
procedural safeguards, without addressing any substantive right to
benefits, mandamus jurisdiction is proper:

Ringer v. Schweiker, 697 F.2d 1291, 1293- 94 (9th Cir.
1982) (quoting Daniel H. Freeman Memorial Hospital v. Schweiker, 656 F2d 473, 476 (9th Cir. 1981)). Accord Powderly v. Schweiker, 704 F.2d 1092, 1095 (9th Cir. 1983); Humana of
South Carolina, Inc. v. Califano, 590 F.2d 1070, 1080 (D.C.
Cir. 1978)); White v. Mathews, 559 F2d 852, 856 (2d Cir.
1977), cert. denied, 435 U.S. 908, 98 S.Ct. 1458, 55 L.Ed.2d 500
(1978).

We are persuaded by the distinction the Ringer court and other courts
have drawn between suits seeking to establish a right to benefits and
suits requesting that SSA provide a procedure through which the right to
benefits can be contested. Here, Mahala Dockstader has never claimed that
she was entitled to the benefits erroneously credited to her bank account;
she contends only that she had statutory and constitutional rights to
notice and a hearing before the benefits were removed from her account.
Accordingly, under the rationale of Ringer, we hold that the district
court had mandamus jurisdiction to hear this case.

II.
Here, Mahala Dockstader has never claimed that
she was entitled to the benefits erroneously credited to her bank account;
she contends only that she had statutory and constitutional rights to
notice and a hearing before the benefits were removed from her account.
Accordingly, under the rationale of Ringer, we hold that the district
court had mandamus jurisdiction to hear this case.

II.

Mahala argues that under 42 U.S.C. § 404 and its implementing regulations
she was entitled to notice and an opportunity to request waiver of
recovery of the erroneous payments. The district court rejected that
argument on the grounds that sections 404(a) and (b) and their regulations
apply only to the named payees of social security benefits. The court
concluded that one who converts to his or her own use benefits intended
for another person is not entitled to the procedural protections of the
statute and regulations, irrespective of the person's good faith. We must
determine, therefore, whether the erroneous payments here were
"overpayments" within the meaning of sections 404(a) and (b).

* * * * * *

42 U.S.C. §§ 404(a)(1) and (b). In defining the methods for recovering
overpayments, the regulations provide that the person against whom
recovery of the overpayment will occur is entitled to notice of his or her
opportunity to request waiver of recovery in accordance with section
404(b). See 20 C.F.R. §§ 404.502(a) and 404.506.

The regulations also define "overpayment":

20 C.F.R. § 404.501(a). Section 5500.3 of the Social Security Claims
Manual provides that "[e]lectronic fund transfer (EFT) payments for the
month of a beneficiary's death and any subsequent months are incorrect
payments subject to reclamation by the Treasury Department and not
overpayments subject to SSA recovery efforts under section 204[402 U.S.C.
§ 404]."
also define "overpayment":

20 C.F.R. § 404.501(a). Section 5500.3 of the Social Security Claims
Manual provides that "[e]lectronic fund transfer (EFT) payments for the
month of a beneficiary's death and any subsequent months are incorrect
payments subject to reclamation by the Treasury Department and not
overpayments subject to SSA recovery efforts under section 204[402 U.S.C.
§ 404]."

SSA contends, and the district court agreed, that the procedural
protections of 42 U.S.C. § 404 apply only to "overpayments" made to the
designated payee. Here, Mahala Dockstader received payments for which
Lawrence Dockstader was the designated payee. While we recognize that
Mahala was not at fault in receiving the erroneous payments, we conclude
that the payments here were not "overpayments" within the meaning of
section 404(a). Our conclusion is influenced by the decision in Powderly v. Schweiker, 704 F.2d 1092 (9th Cir. 1983).

In Powderly, the plaintiff received her deceased husband's social
security benefit check after his death. She claimed that the local office
of the SSA informed her that she could negotiate the check, and she did
so. Plaintiff's bank accepted the check and forwarded it to the Treasury.
When SSA informed the Treasury of the unauthorized endorsement, the
Treasury initiated a recovery action against the bank. After it refunded
the proceeds to the Treasury, the bank exercised its state statutory right
of set-off against the plaintiff's bank account. At the same time, the
plaintiff was attempting to obtain a hearing to determine if recovery
could be waived. SSA, however, informed her that the payment was not an
"overpayment", so she was not entitled to a hearing on waiver.

The Ninth Circuit upheld SSA's interpretation of 42 U.S.C. §§ 404(a) and
bank exercised its state statutory right
of set-off against the plaintiff's bank account. At the same time, the
plaintiff was attempting to obtain a hearing to determine if recovery
could be waived. SSA, however, informed her that the payment was not an
"overpayment", so she was not entitled to a hearing on waiver.

The Ninth Circuit upheld SSA's interpretation of 42 U.S.C. §§ 404(a) and
(b). In holding that the erroneous payment there was not an "overpayment"
within the statute, the court held that "the overpayment" waiver
provisions of § 404(b), supra, are intended to benefit only
designated payees who, through no fault of their own, have received more
benefits than those to which they are entitled." Powderly, supra, 704 F.2d at 1096. That interpretation, the court concluded, comported with
the purposes of the Social Security Act:

Powderly, supra, 704 F.2d at 1096 (footnote omitted). The court,
of course, was influenced in part by the wrongful negotiation of the
check, but we emphasize that plaintiff claimed she negotiated it on the
advice of the local SSA office.

We believe that the reasoning in Powderly applies with equal force
to this case. Here, Mahala did not actually negotiate any checks, and
apparently was unaware that the funds were being placed in her account.
Nevertheless, she did not receive more benefits than those to which she
was entitled; she received benefits to which she had no claim of
entitlement. Since she was not the intended beneficiary of the payments,
the purposes of the social security program would not be defeated by
recovery of the payments, nor would such recovery be against equity and
good conscience. The procedural protections of section 404(b) are
unnecessary and do not apply to this type of erroneous payment. Here, SSA
erroneously certified benefits to Lawrence after his death, and the
benefits were then wrongfully deposited directly into the bank account of
his surviving spouse, Mahala
ed by
recovery of the payments, nor would such recovery be against equity and
good conscience. The procedural protections of section 404(b) are
unnecessary and do not apply to this type of erroneous payment. Here, SSA
erroneously certified benefits to Lawrence after his death, and the
benefits were then wrongfully deposited directly into the bank account of
his surviving spouse, Mahala. We hold that it is consistent with the
purpose of the Social Security Act for the SSA to determine that such
erroneous payments are not "overpayments" within the meaning of 42 U.S.C.
§ 404.

III.

Mahala next contends that SSA's method of reclamation was governmental
action which deprived her of a property interest in violation of her Fifth
Amendment right to procedural due process. The trial court recognized that
the instructions contained in 31 C.F.R. § 210.10(a), Form RO-133, and
section 4 of the Treasury Department's Green Book apparently do direct
financial institutions to debit the accounts of deceased recipients in the
amount erroneously paid. The court concluded, nevertheless, that the
Treasury did not instruct banks to debit any account other than that of
the designated recipient. Since Mahala was not a designated recipient, the
bank's action in debiting her account to return the erroneous payments can
not be attributed to Treasury.

It is true that Treasury does instruct banks to debit the accounts of
recipients who have received credit payments that should have been
returned to the government. Under 31 C.F.R. § 210.7(f)(3), a financial
organization is required to return a credit payment received after the
death of the recipient. When a bank fails to return such credit payments,
it is accountable to the government for the amount of the payments. 31
C.F.R. § 210.9(a). In 31 C.F.R
of
recipients who have received credit payments that should have been
returned to the government. Under 31 C.F.R. § 210.7(f)(3), a financial
organization is required to return a credit payment received after the
death of the recipient. When a bank fails to return such credit payments,
it is accountable to the government for the amount of the payments. 31
C.F.R. § 210.9(a). In 31 C.F.R. § 210.10(a), Treasury instructs banks to
collect the amount owed to the government by returning to Treasury "the
amount remaining in the account up to the total amount of credit payments
listed in the notice." Moreover, if a bank fails to comply, Treasury will
instruct the appropriate Federal Reserve Bank to debit the bank's account
with the Federal Reserve Bank. 31 C.F.R. § 210.10(e). Form RO-133 and
section 4 of Treasury's Green Book similarly instruct the bank to withdraw
the amount from the recipient's account.

We conclude, however, that the trial court correctly interpreted the
regulations and instructions as applying only to the accounts of
"recipients". "Recipient" is defined as " a person entitled to receive
recurring payments from the Government." 31 C.F.R § 210.2(f). When
Treasury becomes aware that a bank wrongfully failed to return credit
payments after the death of a recipient, it is required to send a written
notice to the bank. 31 C.F.R. § 210.10(a). The notice "shall include the
name of the recipient and any beneficiary, the depositor account number,
type of account, type of recurring payment, the date of death . . ., and a
list of credit payments . . . which have not been returned. . . ." 31
C.F.R. § 210.10(a). The next sentence of the regulation quoted in part
above, provides: "[o]n receipt of this notice, the financial organization
shall immediately return to the Treasury Department the amount remaining
in the account up to the total amount of credit payments listed in the
notice." Id.
ath . . ., and a
list of credit payments . . . which have not been returned. . . ." 31
C.F.R. § 210.10(a). The next sentence of the regulation quoted in part
above, provides: "[o]n receipt of this notice, the financial organization
shall immediately return to the Treasury Department the amount remaining
in the account up to the total amount of credit payments listed in the
notice." Id.

The regulation directs the bank to withdraw the funds only from the
account listed in the notice. That account is one belonging to the
recipient or in which the recipient has an interest. No regulation or
instruction directs banks to withdraw funds from the account of anyone
other than the intended recipient. Here, the account belonged to Mahala
and her son, neither of whom were entitled to the recurring payments and
therefore were not the "recipients" of the payments. Accordingly, Mahala
can not claim that Treasury authorized or directed the bank to withdraw
the funds. Treasury determined that Walker Bank was accountable to it for
the funds, but that was the extent of federal involvement. The bank,
without authorization from Treasury, debited Mahala's account. Walker
Bank's action may not "fairly be attributed" to Treasury. Flagg Bros.,
Inc. v. Brooks, 436 U.S. 149, 157, 98 S.Ct. 1729, 1734, 56
L.Ed.2d 185 (1978). In the absence of any federal involvement, there was
no violation of Mahala's Fifth Amendment right to due process. Id. See
also Powderly, supra, 704 F.2d at 1099 (Fletcher, J.,
concurring).

IV.

Mahala's final argument is that the actions of SSA and Treasury violate
the nonalienation provision of the Social Security Act:
s, 436 U.S. 149, 157, 98 S.Ct. 1729, 1734, 56
L.Ed.2d 185 (1978). In the absence of any federal involvement, there was
no violation of Mahala's Fifth Amendment right to due process. Id. See
also Powderly, supra, 704 F.2d at 1099 (Fletcher, J.,
concurring).

IV.

Mahala's final argument is that the actions of SSA and Treasury violate
the nonalienation provision of the Social Security Act:

42 U.S.C. § 407. Whatever the merit of this argument with respect to the
actions of the bank, the above discussion establishes that Treasury and
SSA took no action to recover the funds from Mahala, nor did they
authorize the bank's set-off against her account. In this case, Treasury
and SSA simply have not taken any action in violation of section 407.

We hold that there was no "plainly defined and preemptory duty on the
part of" SSA and Treasury to provide notice and a hearing to Mahala. Haley Memorial Hospital, Inc. v. Schweiker, 689 F.2d 905,
912 (10th Cir. 1982). Accordingly, the trial court properly refused to
issue a mandamus order. Id.

The judgment of the district court is affirmed.

[1] Direct deposit of social
security benefits occurs by either a check being sent to the bank, which
then credits the beneficiary's account, or a credit payment being made to
the bank, which then credits the beneficiary's account (electronic fund
transfer). The payments here in question were deposited by both
methods.

[2] As originally certified, the
class was much broader. The district court limited the class in its
memorandum decision and order denying Mahala's motion to alter
judgment.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/SSA_SSR_OASI_SSR_85_9c. Check the current official text before relying on it. Not legal advice.