20 CFR 404.321(b)(3) and 404.507
Dew v. Richardson, U.S.D.C., D.S.C., Charleston Div., Civ. No. 71-601 (3/29/72) (CCH U.I.R. Fed. Par. 16, 641)
A disabled child beneficiary failed to report his marriage in November 1966, resulting in overpayment of $1,645 in benefits to him. Held, where beneficiary had agreed to report his marriage in his 1958 application he was not "without fault", and recovery of overpayment may not be waived since he failed to furnish information which he knew or should have known to be material, and accepted payments which he knew or could have been expected to know were incorrect.
HEMPHILL, District Judge: This action was brought under Section 205(g) of the Social security Act, as amended (42 U.S.C.A. §405(g)), for judicial review of a final decision of the Secretary of Health, Education, and Welfare finding that plaintiff had received an overpayment, the recovery of which could not be waived under Section 204 of the Social Security Act (42 U.S.C.A. §404(b)).
In July 1958, Jasper E. Dew, hereinafter referred to as the wage earner, filed an application for old-age insurance benefits. Thereafter, on August 20, 1958, the wage earner field an application for disabled child's insurance benefits on behalf of his son, William A. Dew, hereinafter referred to as plaintiff. On the same day, plaintiff filed an application for disabled child's insurance benefits, based upon the earnings record of the wage earner. Based upon these applications and the evidence in support thereof, the plaintiff was found to be entitled to child's insurance benefits as a disabled child, beginning August 1957.
On January 14, 1969, plaintiff was notified that, beginning with the month of November, 1966, he was no longer entitled to receive benefit payments because of marriage. By letter dated July 25, 1969, plaintiff was advised that he had been overpaid benefits for the months of November 1966 through December 1968, in the amount of $2,245.80, and was requested to refund the overpayment. In a subsequent letter, dated January 28, 1970, he was notified that the overpayment had been recomputed and found to be $1,645.80; that it could not be established that he was without fault in accepting incorrect payments and waiver of recovery of the overpayment was not possible. Plaintiff requested reconsideration and was subsequently advised, on August 13, 1970, that it had been determined he was not without fault in failing to timely report his marriage and waiver of overpayment was not applicable. Plaintiff then requested a de novo hearing before a hearing examiner. The "final decision" of the Secretary, rendered by a hearing examiner on December 28, 1970, holds that plaintiff's entitlement to disabled child's insurance benefits was terminated because of his marriage in November 1966; that plaintiff received an overpayment of $1,645.80; that recovery of the overpayment could not be waived because the plaintiff was not without fault, non-waiver of the overpayment would not defeat the purpose of Title II of the Social Security Act nor be against equity and good conscience.
The issue in this case is whether there is substantial evidence of record to support the Secretary's determination that plaintiff was not entitled to the benefits of $1,645.80, pursuant to the provisions of Section 202 of the Social Security Act (42 U.S.C.A. Section 402); and that the adjustment or recovery of the 41,645.80 overpayment could not be waived under the provisions of Section 204(b) of the Act (42 U.S.C.A. Section 404(b)).
Applying the statutory requirements and applicable regulations to the evidence of record, it is clear that the hearing examiner properly determined that plaintiff's entitled [sic] to disabled child's insurance benefits was terminated because of his marriage in November 1966; that plaintiff received an overpayment of $1,645.80; and that recovery of the overpayment could not be waived because the plaintiff was not without fault.
For waiver of an overpayment pursuant to Section 204(b) of the Social Security Act (42 U.S.C.A. Section 404(b)), the plaintiff must first prove that he is "without fault" in receiving the overpayment. Social Security Administration regulations No. 4, Section 404.507 (20 C.F.R. 507, Morgan v. Finch, 423 F.2d 51 (6th Cir. 1970); Weaver v. Gardner, 394 F.2d 110 (6th Cir. 1968); Grantham v. Gardner, CCH UIR Fed. Para. 14, 714 (D.S.C. 1967); Barone v. Cohen, 296 F.Supp. 524 (D.N.J. 1969); Knapezyk v. Ribicoff, 201 F.Supp. 283 (N.D. Ill. 1962); and Lightbody v. Flemming, 197 F. Supp. (E.D. Mich. 1961).
The plaintiff contends that he was "without fault" because he did not know that he was required to report his marriage, but was only told to report income. However, as pointed out by the hearing examiner, the plaintiff signed an application which clearly stated that entitlement to child's insurance benefits would end upon marriage and that in checking the "yes" block in Item 14 of the application, plaintiff agreed to report such event. Thus, it is clear that plaintiff failed to furnish information which "he knew or should have known to be material" and accepted an overpayment which "he either knew or could have been expected to know was incorrect." (Social Security Administration Regulations No. 4, §404.507(b) and (c)).
In Knapezyk v. Ribicoff, supra, a case also concerned with the "without fault" provision, the court stated:
In this connection plaintiff contends that she was "without fault" in accepting the monthly disability insurance benefits for the period involved. But this argument is weakened by the answers plaintiff gave on her application for these benefits. On that application she agreed to notify the Social Security Administration promptly if she were to receive a payment from another federal agency or under a Federal or State workmen's compensation law or plan. [Emphasis added.]
In the case at hand the plaintiff agreed pursuant to the application for benefits to report his marriage to the Social Security Administration. Applicants should abide by their agreement to notify and the Administration should be able to rely on the requirement to do the same.
Plaintiff's failure to satisfy the requirement of the statute and regulations that he be "without fault" disposes of the case and means that overpayments cannot be waived. As pointed out in Grantham v. Gardner, supra, a finding of "without fault" is a prerequisite to a further determination of whether non-waiver would defeat the purpose of Title II of the Act or be against equity and good conscience. The decision of the Secretary is supported by substantial evidence insofar as his finding that the plaintiff was not "without fault" and that recovery of the overpayment should not be waived. The decision of the Secretary is affirmed.
42 U.S.C. A. §404(b) states: 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 record would defeat the purpose of this subchapter or would be against equity and good conscience.
Section 404.507, Social Security Administration Regulations No. 4 (20 C.F.R. §404.507) reads as follows:
"Fault—'Fault' as used in 'without fault' . . . 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 . . . from liability for repayment if such individual is not without fault. In determining where 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 . . . on the part of the overpaid individual . . . depends upon whether the facts show that the incorrect payment to the individual . . . resulted from:
"(a) An incorrect statement made by the individual which he knew or should have known to be incorrect; or
"(b) Failure to furnish information which he knew or should have known to be material; or
"(c) with respect to the overpaid individual only, acceptance of a payment which he either knew or could have been expected to know was incorrect."
Back to Table of Contents