EFFECTIVE/PUBLICATION DATE: 06/22/92
ACQUIESCENCE RULING 92-5(9)
Whether the Secretary may find that recovery of an overpayment is "against equity and good conscience" only under the specific circumstances set forth in the regulations.
Sections 204(b) and 1631(b)(1)(B) of the Social Security Act (42 U.S.C. 404(b) and 1383(b)(1)(B)), 20 CFR 404.506, 404.509, 410.561a, 410.561d, 416.550, and 416.554; Section 413(b) of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 923(b)).
Ninth (Alaska, Arizona, California, Guam, Hawaii (including American Samoa), Idaho, Montana, Nevada, Northern Mariana Islands, Oregon, Washington)
Quinlivan v. Sullivan, 916 F.2d 524 (9th Cir. 1990)
The plaintiff, Mr. Quinlivan, was incarcerated from 1963 to 1985 for a felony conviction. He received disability insurance benefits while in prison.
In 1980, the Social Security Act was amended to prohibit payment of disability benefits to certain incarcerated felons. Mr. Quinlivan continued to be paid benefits from 1980 to 1982, resulting in erroneous payments. He was unaware of the change in the law and was without fault in receiving these payments.
After receiving a booklet from the Social Security Administration (SSA) in early 1982, Mr. Quinlivan wrote a letter to SSA informing it of his situation. SSA then sent him a notice stating that he had been overpaid for two years and requested repayment. He requested reconsideration and a waiver of recovery of the overpayment. Apparently this request was not processed and another notice of overpayment was sent in 1984. The plaintiff again sought waiver of recovery of the overpayment. A personal conference with an SSA representative was held in 1984, but no decision was issued at that time.
Mr. Quinlivan was released from prison in 1985. He spent his accumulated savings, including the overpayment. In 1987, SSA denied his request for reconsideration and Mr. Quinlivan thereafter requested a hearing. In 1988, an Administrative Law Judge denied the request for waiver of the recovery of the overpayment and this decision became the final decision of the Secretary when the Appeals Council denied review. Mr. Quinlivan then sought judicial review in the district court. The district court affirmed the Secretary's decision and Mr. Quinlivan filed an appeal with the United States Court of Appeals for the Ninth Circuit.
The Ninth Circuit Court of Appeals held that requiring Mr. Quinlivan to repay the overpayment would be against equity and good conscience.
The court indicated that although the Social Security Act does not define the phrase "against equity and good conscience," the Secretary has interpreted it in 20 CFR 404.509(a) to be limited to situations where the claimant changed his or her position for the worse, relinquished a valuable right, or lived in a separate household from the overpaid person at the time of the overpayment and did not receive the overpayment. In making its decision on this case, the court stated that the question before it was "whether the agency's interpretation is based on a reasonable construction of the statute."
The court held that the legislative history of section 204(b) of the Social Security Act demonstrates that Congress intended to broaden the availability of waiver and that the Secretary's interpretation of the phrase "against equity and good conscience" was too narrow. Accordingly, the court concluded that:
In applying this standard, the court noted that Mr. Quinlivan had no material goods, no means of transportation, no income and he had only worked sporadically in a few temporary jobs. Additionally, the court pointed to the presence of a psychological impairment as a factor in favor of waiver of recovery of the overpayment. Given these circumstances, the court found it would be against "equity and good conscience" to have Mr. Quinlivan repay the funds.
Under 20 CFR 404.509(a), 410.516d, and 416.554, recovery of an overpayment is "against equity and good conscience" if the individual has changed his or her position for the worse or relinquished a valuable right because of reliance upon a notice that a payment would be made or because of the overpayment itself. In addition, recovery is considered to be "against equity and good conscience" under title II and title XVI, if the individual was living in a separate household from the overpaid person (title II) or his or her eligible spouse (title XVI) and did not receive the overpayment. These specific circumstances are the only ones which permit a waiver of recovery of an overpayment on the basis that recovery is "against equity and good conscience" under SSA policy.
As stated above, the Ninth Circuit has held that the phrase, "against equity and good conscience," cannot be limited to the three specific definitions set forth in the regulations, but rather a broad concept of fairness is to be applied under which all the facts and circumstances of the case must be taken into account. The court emphasized that its interpretation of the equity and good conscience standard does not mean that, whenever an individual is found to be without fault in creating the overpayment, it necessarily follows that waiver is appropriate. The court noted that the standard must be cautiously applied to the circumstances of each case.
This Ruling applies only to cases involving claimants who reside in Alaska, Arizona, California, Guam, Hawaii (including American Samoa), Idaho, Montana, Nevada, Northern Mariana Islands, Oregon, or Washington at the time of the determination or decision at the initial, reconsideration, Administrative Law Judge or Appeals Council levels.
If it is determined that a claimant is "without fault" in causing or accepting an overpayment, it may need to be determined whether adjustment or recovery of the overpayment would be "against equity and good conscience." In determining whether recovery of an overpayment would be "against equity and good conscience," the adjudicator will not limit his or her inquiry to the three specific circumstances set forth in the regulations. The decision must take into account all of the facts and circumstances of the case and be based on a broad concept of fairness. Factors such as, but not limited to, the nature of the claimant's impairment, the amount and steadiness of the claimant's income, and the claimant's assets and material resources should all be considered in the decision as to whether recovery of an overpayment should be waived on the basis that recovery would be "against equity and good conscience."
 Although Quinlivan was a title II case, the phrase "against equity and good conscience" is similarly defined in regulations governing the title XVI Supplemental Security Income program and in the Secretary's regulations concerning benefits under the Federal Mine Safety and Health Act of 1977. Therefore, this Ruling extends to title II and title XVI claims under the Social Security Act and to claims for Black Lung benefits.
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