# SSR 88-12c: SSR 88-12c: SECTIONS 203(b) AND (f) AND 204(a) AND 205(d) OF THE SOCIAL SECURITY ACT (42 U.S.C. 403(b) AND (f) AND 404(a) AND 405(d)) WORK DEDUCTIONS -- QUESTIONABLE RETIREMENT -- EXTENT AND VALUE OF SERVICES

> Federal · Rulings · In force

URL: https://www.frixlaw.com/law-library/statutes/SSA_SSR_OASI_SSR_88_12c

## Section

- **Citation:** SSR 88-12c
- **Heading:** SSR 88-12c: SECTIONS 203(b) AND (f) AND 204(a) AND 205(d) OF THE SOCIAL SECURITY ACT (42 U.S.C. 403(b) AND (f) AND 404(a) AND 405(d)) WORK DEDUCTIONS -- QUESTIONABLE RETIREMENT -- EXTENT AND VALUE OF SERVICES
- **Jurisdiction:** Federal
- **Kind:** Rulings
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Social Security Rulings / OASI / Reduction of Insurance Benefits / SSR 88-12c

## Text

SSR 88-12c

EFFECTIVE/PUBLICATION DATE: 07/29/88

20 CFR 404.415(a), 404.430, and 404.950(d)

Berger v. Secretary of Health and Human Services, 835 F.2d 635 (6th
Cir. 1987)

BOGGS, Circuit Judge:

Florence Berger appeals the order of a magistrate affirming the
Secretary's final decision that she owes the Social Security
Administration (SSA) $29,458.90 for retirement benefits that were
improperly paid to her because she understated her earnings income. Upon
consideration of the parties' briefs and the record of the administrative
proceedings, we find that the amount of overpayment is supported by
substantial evidence and accordingly affirm the magistrate's order.

I

Mrs. Berger was awarded retirement benefits in August 1978, after working
full time for her husband in their family-owned jewelry store for over
twenty-five years. At the time she applied for benefits, she claimed she
had worked only on weekends during the prior six months and would continue
to do so in the future.

In August 1984, Mrs. Berger went with her husband to the local social
security office seeking an increase in her benefits. She completed and
signed a standard information form on which she stated:

On the basis of this form, SSA investigated Mrs. Berger's retirement
status and concluded that she continued to devote all of her working time
to the family business. SSA also determined that although the jewelry
store records showed she had been paid a nominal salary of $50 a week
since her alleged retirement, the actual value of the services she
performed at the store was substantially more.
basis of this form, SSA investigated Mrs. Berger's retirement
status and concluded that she continued to devote all of her working time
to the family business. SSA also determined that although the jewelry
store records showed she had been paid a nominal salary of $50 a week
since her alleged retirement, the actual value of the services she
performed at the store was substantially more.

On December 6, 1984, the regional office of SSA notified Mrs. Berger that
the true value of her work at the jewelry store from 1978 through 1983
ranged from $20,000 in 1978 to $27,300 in 1983. SSA based its valuation of
her work on the fact that she had earned approximately $21,000 in the
years immediately preceeding her supposed retirement and than adjusted
that figure for specific yearly factors such as inflation, salary
increases and varying profits at the store. SSA deducted the amount of
exempt earnings for each year from its valuation of Mrs. Berger's services
for that year and then calculated the amount of benefits that should have
been withheld for each dollar Mrs. Berger earned over the exempt
amount. [1] The calculations
revealed that Mrs. Berger was ineligible for all the retirement benefits
she had received since 1978 and, consequently, that Mrs. Berger owed SSA
$29,458.90 for overpaid
benefits. [2]

II

Mrs. Berger requested a hearing before an administrative law judge to
determine whether the amount of overpayment was correct. She did not
contest the fact that she had been overpaid benefits or that she was not
entitled to a waiver of the overpayment. However, she did challenge the
amount of overpayment, claiming that she owes only $5854.02 because the
true value of her work was far lower than calculated by SSA. This figure
is based on her contention that she worked only twenty hours a week at the
store at a salesworker's value of approximately $5.25 an hour.
erpaid benefits or that she was not
entitled to a waiver of the overpayment. However, she did challenge the
amount of overpayment, claiming that she owes only $5854.02 because the
true value of her work was far lower than calculated by SSA. This figure
is based on her contention that she worked only twenty hours a week at the
store at a salesworker's value of approximately $5.25 an hour.

The ALJ rejected Mrs. Berger's measure of the overpayment amount largely
on the basis of the information form she signed in 1984 admitting that she
performed a variety of services at the store other than sales and that she
devoted far more than twenty hours a week to the store. The ALJ also
relied on testimony from the store bookkeeper corroborating Mrs. Berger's
statements on the form, as well as the store sales records which indicated
that Mrs. Berger had significant sales activities during the time she
supposedly was working only part
time. [3]

Finding that Mrs. Berger "clearly continued working on a substantial
basis" after her retirement, the ALJ attempted to determine the value of
her services during that time. He noted that the relation of Mr. and Mrs.
Berger's salaries had changed radically in the years since Mrs. Berger's
retirement. In the few years prior to her retirement, both Bergers had
been paid approximately $20,800 a year. After the alleged retirement, Mr.
Berger's salary immediately increased to $80,000 or more while Mrs.
Berger's decreased to $2600, despite the fact that they both continued to
perform the same type and amount of services that they had before Mrs.
Berger retired. The ALJ decided that the salary discrepancy, as well as
the fact that Mrs. Berger, as an officer and half owner, had a significant
interest in the store, supported a finding that Mrs. Berger earned half of
the combined wages paid to her and her husband from 1978 through 1983. The
ALJ then divided their combined yearly salaries in half, and found that
the value of Mrs
s.
Berger retired. The ALJ decided that the salary discrepancy, as well as
the fact that Mrs. Berger, as an officer and half owner, had a significant
interest in the store, supported a finding that Mrs. Berger earned half of
the combined wages paid to her and her husband from 1978 through 1983. The
ALJ then divided their combined yearly salaries in half, and found that
the value of Mrs. Berger's services was $51,600 in 1978, $41,600 in 1979,
$41,600 in 1980, $50,000 in 1981, $52,900 in 1982 and $55,400 in 1983.
Finding that these figures eliminated Mrs. Berger's eligibility for
retirement benefits during those years, the ALJ determined that Mrs.
Berger had been overpaid $29,458.90 in benefits and, because she was not
without fault in creating the
overpayment, [4] that she could
not have the overpayment waived.

III

Mrs. Berger renews her contention that the amount of overpayment she owes
is only $5854.02. She also claims the administrative proceedings were
unfair because the 1984 information form the ALJ relied on was obtained
surreptitiously since she was not told at the time she completed the form
that the information could be used to deny her benefits, and because she
was deprived of the opportunity to examine the agency employee who
initially determined that she had been overpaid benefits.

"Our role as a reviewing court is not to retry the case de novo. " Holden v. Califano, 641 F.2d 405, 409 (6th Cir. 1981). We must
uphold the Secretary's determination that Mrs. Berger owes the
administration $29,458.90 if that figure is supported by substantial
evidence in the record. 42 U.S.C. § 405(g). Substantial evidence is "such
relevant evidence as a reasonable mind might accept as adequate to support
a conclusion." Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct.
1420, 1427, 28 L.Ed.2d 842 (1971). "Even if the court might arrive at a
different conclusion, the decision must be affirmed if supported by
substantial evidence." Siterlet v
evidence in the record. 42 U.S.C. § 405(g). Substantial evidence is "such
relevant evidence as a reasonable mind might accept as adequate to support
a conclusion." Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct.
1420, 1427, 28 L.Ed.2d 842 (1971). "Even if the court might arrive at a
different conclusion, the decision must be affirmed if supported by
substantial evidence." Siterlet v. Secretary of Health and Human
Services, 823 F.2d 918, 920 (6th Cir. 1987) (citation omitted).

The Secretary is authorized to examine the substance of business
transactions and relationships in order to determine if a retired
individual actually rendered substantial services while supposedly
retired. 42 U.S.C. § 403(f)(4)(A) & (B); accord Heer v. Secretary
of Health and Human Services, 670 F.2d 653, 655 (6th Cir. 1982)
(citing Holden, 641 F.2d at 409; and Skalet v. Finch, 431
F.2d 452, 454 (6th Cir. 1970)). By regulation, the Secretary has stated
that:

20 C.F.R. § 404.446(a); see also 20 C.F.R. § 404.447 (elaborating
on the factors considered).

We agree with the Secretary's determination that Mrs. Berger provided
substantial services to the family business during the years she
supposedly was retired. Testimony from Mr. and Mrs. Berger and the store
bookkeeper, as well as the store sales records and the personal and
corporate tax returns of the Bergers, supports the ALJ's finding that Mrs.
Berger worked full time at the jewelry store from 1978 through 1983 and
that she performed a variety of services during that time, including sales
work, buying, and personnel.
upposedly was retired. Testimony from Mr. and Mrs. Berger and the store
bookkeeper, as well as the store sales records and the personal and
corporate tax returns of the Bergers, supports the ALJ's finding that Mrs.
Berger worked full time at the jewelry store from 1978 through 1983 and
that she performed a variety of services during that time, including sales
work, buying, and personnel.

However, there is not substantial evidence in the record to support the
ALJ's finding that the value of Mrs. Berger's services was half of the
combined wages she and her husband earned during each year in issue. While
we agree with the ALJ's conclusions that Mrs. Berger, as an active part
owner and officer of the business, significantly contributed to the
store's profits, and that those profits were reflected in the salaries
paid to her and her husband, we cannot conclude, on the basis of those
facts alone, that the yearly value of Mrs. Berger's services was
approximately $50,000.

Mr. Berger was clearly the head of the store and the driving force of the
business. SSA cannot lightly assume that all family members contribute
equally, even if equal salaries have been paid in the past. SSA must also
take care not to attribute as salary monies that are actually returns to
the capital invested in a business.

Despite these caveats, there was still substantial evidence to support
the ultimate amount found to have been overpaid. Corporate profits and
dividends were segregated from the salaries paid to the Bergers, according
to the tax returns introduced at the hearing. The salaries paid to the
Bergers jointly were large enough that if Mrs. Berger was worth even
one-fourth of the combined efforts of the couple, her earnings would have
precluded payment of benefits at all times considered here. Her efforts in
sales, supervision and management amply justify such a conclusion.
ies paid to the Bergers, according
to the tax returns introduced at the hearing. The salaries paid to the
Bergers jointly were large enough that if Mrs. Berger was worth even
one-fourth of the combined efforts of the couple, her earnings would have
precluded payment of benefits at all times considered here. Her efforts in
sales, supervision and management amply justify such a conclusion.

In 1978, Mrs. Berger received $1717 in
benefits [5] and could have
earned $3240 before her benefits would begin to be diminished. In order
for her to owe the entire amount of benefits she received that year, she
would had to have performed services with a value of twice the amount of
benefits she received plus the amount of exempt wages she was entitled to
claim under the Social Security Act. This amounts to $6674 ((2 x $1717) +
$3240). Upon reviewing the record, we find there is substantial evidence
to support the finding that she performed of at least that value from
August to December 1978.

Applying the same analysis to the remaining years in issue, we find that
substantial evidence supports the following conclusions: that in 1979, the
value of Mrs. Berger's services was at least
$12,426.20 [6] ; that in 1980 the
value of her services was at least
$13,890.40 [7] ; that in 1981, the
value of her services was at least
$19,030.80 [8] ; that in 1982, the
value of her services was at least
$21,489.60 [9] ; and that in 1983,
the value of her services was at least
$22,750 [10] . Because Mrs.
Berger could not perform services with these values and receive retirement
benefits, the Secretary's determination that Mrs. Berger must repay the
retirement benefits she received is correct.

IV
ces was at least
$19,030.80 [8] ; that in 1982, the
value of her services was at least
$21,489.60 [9] ; and that in 1983,
the value of her services was at least
$22,750 [10] . Because Mrs.
Berger could not perform services with these values and receive retirement
benefits, the Secretary's determination that Mrs. Berger must repay the
retirement benefits she received is correct.

IV

We also hold without merit Mrs. Berger's contention that the
administrative proceedings were unfair because the 1984 information form
was used against her interest, and because the ALJ refused to allow her to
examine the SSA employee who initially determined that she was overpaid
benefits.

Mrs. Berger voluntarily entered her local social security office in
August 1984 seeking an increase in her benefits. SSA acted within its
delegated authority when it asked Mrs. Berger to complete a standard
information form in order to process her request. SSA was under no
obligation to warn Mrs. Berger that her admissions might be used to
determine that she was not retired during the years she claimed she
was.

Mrs. Berger also was not deprived of due process by the ALJ's refusal of
her request to subpoena the SSA employee who initially determined that she
was not entitled to retirement benefits. The Secretary may, on his own
initiative or at the request of a party, issue subpoenas for witnesses to
appear at administrative hearings "when it is reasonably necessary for the
full presentation of a case." 20 C.F.R. § 404.950(d)(1). However, the
agency's regulations afford it discretion to deny the request. Ibid. A party requesting the issuance of a subpoena must "state the
important facts that the witness is expected to prove; and indicate why
these facts could not be proven without issuing a subpoena." 20 C.F.R. §
404.950(d)(2).
reasonably necessary for the
full presentation of a case." 20 C.F.R. § 404.950(d)(1). However, the
agency's regulations afford it discretion to deny the request. Ibid. A party requesting the issuance of a subpoena must "state the
important facts that the witness is expected to prove; and indicate why
these facts could not be proven without issuing a subpoena." 20 C.F.R. §
404.950(d)(2).

Mrs. Berger requested a subpoena for the SSA employee on the ground that
she could not adequately defend against SSA's valuation unless she knew
who wrote the decision, whether that individual was experienced in wage
and salary administration, whether the individual was a vocational expert
and whether the individual valued her services within the context of the
Cleveland market for jewelry salespeople. The ALJ determined that the
subpoena was not reasonably necessary for the full presentation of her
case, and consequently, denied her request. Presumably, the ALJ did so
because Mrs. Berger possessed all the documents that the SSA employee
relied on to determine that she was not entitled to benefits, her
husband's and her own tax returns and the store sales and wage records. In
addition, the grounds Mrs. Berger specified as requiring the subpoena's
issuance in order for her adequately to challenge SSA's valuation were
grounds that she clearly was able to present at the hearing without the
subpoena's issuance, as she was allowed to present the report of a
vocational expert valuing jewelry sales clerks' wages in the Cleveland
area. The absence of the SSA employee could weaken only SSA's case, not
Mrs. Berger's.
iring the subpoena's
issuance in order for her adequately to challenge SSA's valuation were
grounds that she clearly was able to present at the hearing without the
subpoena's issuance, as she was allowed to present the report of a
vocational expert valuing jewelry sales clerks' wages in the Cleveland
area. The absence of the SSA employee could weaken only SSA's case, not
Mrs. Berger's.

Because the ALJ reviewed Mrs. Berger's case de novo, he was not
bound by the prior SSA valuation. Moreover, the ALJ did not rely on the
prior SSA valuation and instead substituted his own, higher, valuation for
her services after considering all the evidence presented at the hearing.
Accordingly, the ALJ's denial of Mrs. Berger's subpoena request did not
prevent her from receiving a fair and full hearing before the ALJ. Cf.
Urban v. Heckler , No. 86-541, slip op. (D.N.J. April 21, 1987)
[Available on WESTLAW, 1987 WL 11,475] (abuse of discretion for ALJ to
deny subpoena request from disability benefits claimant seeking to
cross-examine authors of medical and vocational reports when ALJ later
relied on the reports to deny her benefits.)

For the foregoing reasons, the decision of the district court magistrate
upholding the Secretary's determination that Mrs. Berger owes SSA
$29,458.90 for overpaid retirement benefits from 1978 through 1983 is
AFFIRMED.

[1] Retired individuals may
engage in some employment activity without losing their retirement
benefits. See 42 U.S.C. § 403(b) & (f). However, once they earn
wages above the exempt amount, half of their excess earnings is deducted
from their benefits and, if they earn enough money, the deductions can
eliminate their eligibility for benefits entirely. Ibid. The yearly
exempt earnings amounts applicable to Mrs. Berger are: for 1978, $3240;
for 1979, $3480; for 1980, $3720; for 1981, $5500; for 1982, $6000; and
for 1983, $6600.
once they earn
wages above the exempt amount, half of their excess earnings is deducted
from their benefits and, if they earn enough money, the deductions can
eliminate their eligibility for benefits entirely. Ibid. The yearly
exempt earnings amounts applicable to Mrs. Berger are: for 1978, $3240;
for 1979, $3480; for 1980, $3720; for 1981, $5500; for 1982, $6000; and
for 1983, $6600.

[2] The Social Security Act
requires the Secretary to recover erroneous overpayments of benefits. 42
U.S.C. § 404(a)(1)(A). However, the Secretary may, in his discretion,
waive the overpayment if the individual was without fault in creating the
overpayment and if recovery would defeat the purpose of the Social
Security Act or be "against equity and good conscience." 42 U.S.C. §
404(b); See also 20 C.F.R. §§ 404.511(a), 404.508, 404.509
(defining the statutory terms).

[3] In 1983, Mrs. Berger made
sales of $119,723.83, which was about 11% of the total sales made that
year by the store's five employees; in 1982, her sales were $127,255.45,
about 13% of the total sales that year; in 1981, they were $186,685.30,
almost 18% of the total sales that year, and in 1980, they were
$175,212.25, about 17% of the total sales for that year.

[4] The ALJ found that at the
time Mrs. Berger applied for retirement benefits, she "made incorrect
statements with respect to her participation in the business and actual
value to the corporation which she obviously knew or should have known to
be incorrect." In addition, she "failed to report that she was actually
working on a . . . substantial basis . . . [and] she accepted [benefit]
payment[s] which she knew or could be expected to know were incorrect."
enefits, she "made incorrect
statements with respect to her participation in the business and actual
value to the corporation which she obviously knew or should have known to
be incorrect." In addition, she "failed to report that she was actually
working on a . . . substantial basis . . . [and] she accepted [benefit]
payment[s] which she knew or could be expected to know were incorrect."

[5] This figure is calculated
from the statement of monthly benefit amounts contained in the December 6,
1984, notice of overpayment. Elsewhere in that notice, SSA states that it
should have held back $1697.50. There are similar slight variations
between the stated figure and the calculated figure for each subsequent
year. (The lower stated amount is given in parentheses in notes 6-10, infra. ) From an abundance of caution, we have examined the record
from the perspective of the higher benefit figure to determine if her
earnings were enough to compel repayment of all benefits under all
circumstances. The higher figure is used in the text.

[6] In 1979, Mrs. Berger's
benefits totaled $4473.10 ($4403.60) and the exempt earnings amount was
$3480.

[7] In 1980, Mrs. Berger's
benefits totaled $5085.20 ($5035.40) and the exempt earnings amount was
$3720.

[8] In 1981, Mrs. Berger's
benefits totaled $6765.40 ($5804.70) and the exempt earnings amount was
$5500.

[9] In 1982, Mrs. Berger's
benefits totaled $7744.80 ($6334.90) and the exempt earnings amount was
$6000.

[10] In 1983, Mrs. Berger's
benefits totaled $8075 ($6537.80) and the exempt earnings amount was
$6600.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/SSA_SSR_OASI_SSR_88_12c. Check the current official text before relying on it. Not legal advice.