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.
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:
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(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. . . .
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.
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."
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.
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