SSR 88-6c: SECTIONS 204(a) AND (b) OF THE SOCIAL SECURITY ACT (42 U.S.C. 404(a) AND (b)) OVERPAYMENT -- WITHOUT FAULT -- WAIVER OF RECOVERY AND ADJUSTMENT

SSR 88-6c

EFFECTIVE/PUBLICATION DATE: 04/29/88

20 CFR 404.506, 404.507, 404,510, and 404.511

Tarvin v. Bowen, [1986] 1A Unempl. Ins. Rep. (CCH) ¶ 17,556 (S.D.

Ind., New Albany Div.)

Entry

Sandra J. Tarvin commenced this action by timely filing her Complaint on

September 23, 1985, against Margaret M. Heckler, Secretary of the

Department of Health and Human Services. The Honorable Otis R. Bowen,

M.D., the current Secretary, has been substituted as party defendant

herein pursuant to Fed.R.Civ.P. 25(d)(1) and 42 U.S.C. § 405(g).

Plaintiff brings this action pursuant to 42 U.S.C. § 405(g) for review of

an adverse decision by the Appeals Council of the Department which denied

plaintiff's request for review of the Administrative Law Judge's

("A.L.J.") decision denying her request to waive an overpayment of Six

Thousand Eight Hundred Seventy-Two Dollars and Fifty Cents ($6,872.50).

The issues were joined by the defendant's answer, filed December 20, 1985,

together with a certified copy of the transcript of the record, including

the evidence upon which the findings and decision complained of are

based.

The Court having reviewed the pleadings, the briefs of the parties, the

transcript of the record, and being duly advised, AFFIRMS the decision of

the defendant Secretary for the reasons set forth below.

History

Plaintiff requested a waiver of her overpayments which was denied. A

personal conference was held before an operations supervisor on March 21,

1984. On April 24, 1984, the decision to deny plaintiff's waiver was

determined correct. Ms. Tarvin then requested a hearing before an

A.L.J.

The A.L.J. conducted a statutory hearing on August 8, 1984, in Madison,

Indiana. Plaintiff, who was represented by her attorney Michael L. Rogers,

appeared and testified. Subsequently, the A.L.J. found that Ms. Tarvin was

not entitled to a waiver of the overpayment.

After considering the evidence, the A.L.J. made the following findings,

dated February 27, 1985:

hearing before an

A.L.J.

The A.L.J. conducted a statutory hearing on August 8, 1984, in Madison,

Indiana. Plaintiff, who was represented by her attorney Michael L. Rogers,

appeared and testified. Subsequently, the A.L.J. found that Ms. Tarvin was

not entitled to a waiver of the overpayment.

After considering the evidence, the A.L.J. made the following findings,

dated February 27, 1985:

The plaintiff then timely perfected her appeal. The A.L.J.'s decision

became the final decision of the Secretary on September 3, 1985, when the

Appeals Council denied plaintiff's request for review of the A.L.J.'s

decision. This action followed.

Issues Before the Court

The sole issue before the Court is whether the record contains

substantial evidence to support the decision of the Secretary, 42 U.S.C. §

405(g). The phrase "substantial evidence" is defined as:

Strunk v. Heckler, 732 F.2d 1357, 1359 (7th Cir. 1984)

(citations omitted).

Review of Record

Plaintiff filed an application for Social Security mother's insurance

benefits on October 26, 1970. The application form explained the effect of

yearly earnings on social security benefits. Plaintiff agreed on the form

to report her annual earnings to the Social Security Administration.

Ms. Tarvin was first notified of overpayment problems in 1971 with

respect to her 1970 and 1971 benefits checks. On March 18, 1972, plaintiff

received notice of overpayments in 1970, 1971 and 1972 totaling $509.00.

The overpayments occurred because Ms. Tarvin failed to provide accurate

earnings estimates and to timely report changes in her yearly earnings.

After 1976, plaintiff consistently underestimated her steadily increasing

income. However, she did not report changes in her estimates except for

the years 1971 and 1980 when she lowered her estimates. Her earnings for

those two years exceeded the lowered estimates resulting in even greater

overpayments.

e accurate

earnings estimates and to timely report changes in her yearly earnings.

After 1976, plaintiff consistently underestimated her steadily increasing

income. However, she did not report changes in her estimates except for

the years 1971 and 1980 when she lowered her estimates. Her earnings for

those two years exceeded the lowered estimates resulting in even greater

overpayments.

Plaintiff received frequent notices from the Social Security

Administration regarding the overpayments and the adjustments to benefit

amounts necessary to recover the overpayments. Meanwhile, the overpayments

continued to be made based upon plaintiff's yearly underestimates of her

earnings. On May 17, 1976, plaintiff requested that the 1974 overpayment

be withheld at the rate of $50 per month. When notified of the 1977

overpayment, plaintiff again requested that only $50.00 be withheld each

month.

Plaintiff was frequently notified of the importance of reporting

significant changes in her income. In a statement made on May 19,1980, Ms.

Tarvin said "I understand now when I make an estimate, that any time I see

I will earn more -- that I am to contact social security right away."

Plaintiff was also frequently notified of her right to apply for a

waiver.

As the yearly overpayments continued, plaintiff's benefits were

constantly adjusted for overpayments in prior years. By 1982, $6,872.50 in

overpayments had accumulated because overpayments from previous years were

recovered at the rate of only $50 per month. On November 25, 1983,

plaintiff requested waiver of the overpayment.

Applicable Law

The Social Security Act Provides:

In any case in which more than the correct amount of payment has been

made, 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

recovery would defeat the purpose of this subchapter or would be against

equity and good conscience.

42 U.S.C. § 404(b)

ment.

Applicable Law

The Social Security Act Provides:

In any case in which more than the correct amount of payment has been

made, 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

recovery would defeat the purpose of this subchapter or would be against

equity and good conscience.

42 U.S.C. § 404(b)

The regulations state in part:

Sections 204(b) and 1870(c) of the Act provide that there shall be no

adjustment or recovery in any case where an incorrect payment . . . has

been made . . . with respect to an individual:

Under 20 C.F.R. § 404.507, "fault" is defined, in part, as:

"Fault" as used in "without fault" (see § 404.506 and 42 CFR 405.355)

applies only to the individual. Although the Administration may have been

at fault in making the overpayment, that fact does not relieve the

overpaid individual or any other individual from whom the Administration

seeks to recover the overpayment from liability for repayment if such

individual is not without fault. In determining whether an individual is

at fault, the Administration will consider all pertinent circumstances,

including his age, intelligence, education, and physical and mental

condition. What constitutes fault (except for "deduction overpayments" --

see § 404.510) on the part of the overpaid individual or on the part of

any other individual from whom the Administration seeks to recover the

overpayment depends upon whether the fact show that the incorrect payment

to the individual or to a provider of services or other person, or an

incorrect payment made under section 1814(e) of the Act, resulted from:

In a deduction-overpayment case such as this, the regulations provide an

even higher degree of care for an individual to be "without fault." 20

C.F.R. § 404.511 provides:

Discussion

ment depends upon whether the fact show that the incorrect payment

to the individual or to a provider of services or other person, or an

incorrect payment made under section 1814(e) of the Act, resulted from:

In a deduction-overpayment case such as this, the regulations provide an

even higher degree of care for an individual to be "without fault." 20

C.F.R. § 404.511 provides:

Discussion

An examination of the record demonstrates there is substantial evidence

to support the Secretary's decision and that plaintiff is not entitled to

a waiver. When Ms. Tarvin completed her application for mother's insurance

benefits on October 26, 1970, she agreed to make timely reports of any

changes in her income to the Social Security Administration ("SSA"). As

early as April 1, 1971, plaintiff indicated in a letter that she was aware

of the overpayment problem. On April 18, 1972, she again acknowledged

awareness of an overpayment problem and the necessity to pay back what she

had been overpaid.

On March 16, 1972, plaintiff received notification that an overpayment

resulted because of her work and estimated earnings for 1971 and 1972. Ms.

Arvin was again notified of overpayments which were the result of her

yearly underestimates on May 23, 1975, October 1, 1975, January 16, 1976,

April 22, 1976, April 13, 1977, June 14, 1978, September 22, 1978, March

6, 1979, July 6, 1979, April 28, 1980, May 23, 1980, June 25, 1981,

November 17, 1982, and September 13, 1983. Nearly all of these notices

reminded plaintiff of the requirement to promptly report any changes in

income which would affect her payments. However, from 1970 to 1983, Ms.

Tarvin not only underestimated her earnings in nine (9) out of thirteen

, 1978, September 22, 1978, March

6, 1979, July 6, 1979, April 28, 1980, May 23, 1980, June 25, 1981,

November 17, 1982, and September 13, 1983. Nearly all of these notices

reminded plaintiff of the requirement to promptly report any changes in

income which would affect her payments. However, from 1970 to 1983, Ms.

Tarvin not only underestimated her earnings in nine (9) out of thirteen

(13) years, she also failed to promptly notify the SSA of her income

changes in order to avoid overpayment.

The record also establishes that plaintiff possessed a good working

knowledge of the SSA requirements in 1971 and 1980 because she promptly

changed her estimated earnings for those years to a lower amount. In

addition, even though plaintiff stated on May 19, 1980, "I understand now

that when I make an estimate, that any time I see I will earn more -- that

I am to contact Social Security right away." She did not adjust her

earnings estimates upward in order to reflect her higher income.

In addition, the evidence establishes that although Ms. Tarvin was

frequently notified of her right to apply for a waiver, she never

requested a waiver until November 25, 1983, when her benefits had ceased

and it was no longer possible to adjust her benefits to recover the

overpayments. Thus the documentation in the record establishes that

plaintiff was aware of SSA requirements and aware of the fact that she

repeatedly underestimated her earnings throughout the years she received

benefits.

y for a waiver, she never

requested a waiver until November 25, 1983, when her benefits had ceased

and it was no longer possible to adjust her benefits to recover the

overpayments. Thus the documentation in the record establishes that

plaintiff was aware of SSA requirements and aware of the fact that she

repeatedly underestimated her earnings throughout the years she received

benefits.

During hearing, Ms. Tarvin stated that she had attempted to return the

checks with the overpayments but had been assured by Mr. James Kelly, an

SSA employee, that it was all right to cash them. A person may be "without

fault" if he or she relies on erroneous information from an official

source within the SSA which caused an acceptance of an overpayment. 20

C.F.R. § 404.510(b). In this case, plaintiff's contacts with Mr. Kelly

related to her overpayments in the early 1970's. Plaintiff could not

remember when she last talked with Mr. Kelly, but believed it might be in

1972 or 1973. When the A.L.J. inquired on Mr. Kelly regarding plaintiff's

allegations, Mr. Kelly responded that he had retired in about 1978 and had

no memory of plaintiff's case.

The record therefore establishes that any information Mr. Kelly related

to Ms. Tarvin was with regard to her overpayments prior to 1978. Because

the overpayments at issue in the present case occurred from 1978 through

1982, Mr. Kelly could not have erroneously informed Ms. Tarvin as to her

payments during these years. Furthermore, it is not reasonable to assume

that plaintiff continued to rely upon Mr. Kelly's alleged statements in

the early 1970's and believe all subsequent checks were proper in light of

the continuing notices to the contrary from SSA in the late 1970's and

1980's. Finally, even assuming that Mr. Kelly did say in the early or

middle 1970's that it was not illegal to "cash" the checks, there is no

evidence in the record that he ever communicated that it was proper to

continually underreport earnings.

e early 1970's and believe all subsequent checks were proper in light of

the continuing notices to the contrary from SSA in the late 1970's and

1980's. Finally, even assuming that Mr. Kelly did say in the early or

middle 1970's that it was not illegal to "cash" the checks, there is no

evidence in the record that he ever communicated that it was proper to

continually underreport earnings.

Because there is substantial evidence to support the decision of the

Secretary that plaintiff is not without fault, the Court need not reach

the issue of whether recovery would defeat the purpose of the Act or would

be against equity and good conscience. See 20 C.F.F. § 404.506.

After careful review and consideration of the record as contained in the

transcript and pleadings, the Court finds that there is substantial

evidence to support the findings made by the A.L.J. The totality of the

evidence supports the Secretary's determination that the plaintiff was not

without fault in causing the overpayments and not entitled to a waiver.

Accordingly, the Court finds that the Secretary correctly applied the

applicable regulations and finds against the plaintiff herein and AFFIRMS

the decision of the Secretary with costs assessed against plaintiff.

The undersigned United States Magistrate recommends the adoption of the

above entry by the United States District Judge.

Adoption of Entry and Judgment

Barker, District Judge: The Magistrate, having submitted his Report of

Review and Recommendation which reads as follows:

(H.I.)

and counsel having been afforded due opportunity pursuant to statute and

the Rules of this Court to file objections thereto, the Court having

considered the Magistrate's Report and being duly advised, the

Magistrate's Report and Recommended Entry are hereby approved and adopted

by the Court.

strate, having submitted his Report of

Review and Recommendation which reads as follows:

(H.I.)

and counsel having been afforded due opportunity pursuant to statute and

the Rules of this Court to file objections thereto, the Court having

considered the Magistrate's Report and being duly advised, the

Magistrate's Report and Recommended Entry are hereby approved and adopted

by the Court.

IT IS, THEREFORE, ORDERED, ADJUDGED AND DECREED by the Court that the

Plaintiff take nothing by way of her complaint and that the decision of

the defendant, Secretary of the Department of Health and Human Services,

be AFFIRMED. Costs versus plaintiff.