SSR 87-15c: 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

20 CFR 404.506 and 404.507

SSR 87-15c

Cook v. Secretary of HHS, [Jan. 1986-Aug. 1986 Transfer Binder] Unempl. Ins. Rep. (CCH) І 16,834 (N.D. Ohio, Feb. 26, 1986)

: A beneficiary receiving disability insurance benefits (DIB) informed the Social Security Administration (SSA) that his worker's compensation (WC) benefits had been terminated, and his DIB payments were subsequently increased. Since he was appealing the termination of his WC benefits, the beneficiary signed several statements in which he agreed to reimburse SSA for any DIB overpayments he might incur if he succeeded in his WC dispute with his former employer. He also promised to notify SSA promptly of any decision on his WC claim, but he failed to do so. SSA eventually learned that the beneficiary had been successful in his WC appeal and that he had again received WC benefits. When SSA determined that he had been overpaid DIB, the beneficiary did not challenge the existence or amount of the overpayment, but he did argue that he was entitled to a waiver of the overpayment under section 204(b) of the Social Security Act, 42 U.S.C. 404(b). That section provides that, "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 title or would be against equity and good conscience." The Secretary decided, however, that the overpayment could not be waived because the beneficiary was not "without fault," as the term "fault" is defined in 20 CFR 404.507. On appeal, the district court found that, since the beneficiary had not informed SSA when his WC claim had been ultimately settled, he had failed to furnish information that he knew or should have know to be material. The court further found that, since the beneficiary had testified that he realized that he had been receiving the same amount of DIB after the settlement of his WC claim as he had been before, he had accepted a payment which he knew was incorrect. Under 20 CFR 404.507(b) and (c), these actions of the beneficiary constitute "fault." Accordingly, the district court held that the Secretary's decision that the overpayment could not be waived because the beneficiary had not been "without fault" was supported by substantial evidence.

ALDRICH, District Judge:

John H. Cook has appealed the conclusion of the Secretary of Health and Human Services ("Secretary") that the recovery of an overpayment of benefits has not been waived. The magistrate's report and recommendation urges that judgment be entered in favor of the Secretary. Cook has filed objections, and this Court has conducted a de novo review of the objected-to portion of the report and recommendation pursuant to 28 U.S.C. ї 636(b)(1)(C) (1982).^[1] See Brown v. Wesley's Quaker Maid, 771 F.2d 952, 954 (6th Cir. 1985). For the reasons set forth below, the objections are overruled, and the report and recommendation is adopted.

I.

Cook was receiving worker's compensation benefits in July, 1976, when he was awarded disability benefits pursuant to Title II of the Social Security Act, 42 U.S.C. її 401-433 (1982) ("disability benefits"). In March, 1977, he informed the Social Security Administration that his worker's compensation had been terminated, and he subsequently received an increase in his disability benefits. From his initial receipt of benefits through the point at which the Secretary began action to recapture an overpayment, Cook received several letters and signed several forms stating that the Social Security Administration would be notified of any change in his worker's compensation status.

Since it was aware that Cook was appealing his denial of worker's compensation benefits, the Social Security Administration took steps to monitor the progress of that action. On September 21, 1977, the agency procured a statement signed by Cook indicating his understanding that he would reimburse it for overpayments if successful with his dispute with his former employer, and that he would promptly notify the agency of any decision on this claim. On February 12, 1980, Cook signed another statement containing similar assurances, and on November 29, 1980, he granted permission to the Social Security authorities to request information from the Industrial Commission regarding his claim. From contact with the Commission, the agency determined that a District Hearing Officer had ruled in Cook's favor on October 29, 1980. Although the decision was reversed by the Cleveland Regional Board of Review of the Industrial Commission, the record indicates that Cook eventually received worker's compensation benefits accruing during the period between 1977 and 1980 by settling his dispute.

The Secretary subsequently determined that Cook had received an overpayment of disability benefits of $8,298.70 for the period between March, 1977, and November, 1980. Cook does not challenge the amount or the existence of the overpayment. Rather, he argues that he is entitled to a waiver of the overpayment under Title 42 U.S.C. ї 404(b) (1982), which 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.

"Fault" as used in this statute is defined in terms of whether the facts of the case establish any of three situations:

: (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.

20 C.F.R. ї 404.507 (1985). The Administrative Law Judge ("ALJ"), whose decision constitutes the final decision of the Secretary following the denial of review by the Appeals Council, held that Cook had both failed to furnish information he knew was material and accepted payment he knew was incorrect. Cook appeals these findings, and this Court must determine whether the ALJ's decision is supported by substantial evidence. Richardson v. Perales, 402 U.S. 389 (1971).

II.

In his objections to the report and recommendation of the magistrate, Cook argues that the evidence shows that he timely informed the Social Security Administration of his receipt of worker's compensation benefits, and that he was entitled to expect that he was receiving proper disability benefits when he obtained his checks following his notification of the agency. See Title 20 C.F.R. ї 404.510(g) (1985). He relies upon his response to a letter received from the agency in 1978; the signed statement submitted in February, 1980 indicating that his appeal was still pending; and his statement granting the agency permission to check on his appeal with the Industrial Commission, signed on November 26, 1980. However, the evidence does not permit the Court to draw the inferences proffered by Cook.

Cook's correspondence with the Social Security Administration apply supports the ALJ's conclusion that cook knew he would be required to repay some of his disability benefits if he prevailed in his claim against his former employer. His application for additional benefits in 1977 when his worker's compensation payments were discontinued establishes his understanding of the relationship between the amount of disability benefits and the receipt of worker's compensation. Furthermore, his September 21, 1977 statement clearly demonstrates his notice of these facts. His response to the 1978 letter requesting a report on his appeal and his February, 1980 statement both indicate his knowledge of the relevancy of the success of his pending appeal. Nevertheless, Cook did not notify the agency after the District Hearing Officer found in his favor, and he did not inform the agency of the result when it procured his permission to communication about his case with the Industrial Commission. More importantly, he did not inform the agency when his claim was ultimately settled. Since he did not take these steps so clearly required of him by the Social Security Administration, he failed to furnish information that he knew or should have known to be material. Moreover, since he testified that he realized that he was receiving the same amount of benefits after he settled his worker's compensation claim as he had before, Cook accepted a payment which he knew was incorrect. Since none of the three documents relied upon by Cook in his objections were submitted to the agency after the settlement of his worker's compensation claim -- indeed, none of them even communicate his success at the district hearing level -- he cannot maintain that he was without fault in the overpayment of benefits.

III.

The award of increased disability benefits for Cook was conditioned on his obligation to repay the difference if he received worker's compensation for the same period. He cannot now escape that agreement by arguing that he is without fault in the failure to promptly correct his overpayment. Thus, the Court finds that the ALJ's decision is supported by substantial evidence. The report recommendation is adopted, judgment is entered for the defendant, and the complaint is dismissed, with prejudice.

It is so ordered.

^[1] 28 U.S.C. ї 636(b)(1)(C) provides:

. . . [T]he magistrate shall file his proposed findings and recommendations under sub-paragraph (B) with the court and a copy shall forthwith be mailed to all parties.

Within ten days after being served with a copy, any party may serve and file written objections to such proposed findings and recommendations as provided by rules of court. A judge of the court shall make a de novo determination of those portions of the report of specified proposed findings or recommendations to which objection is made. A judge of the court may accept, reject, or modify, in whole or in part, the findings and recommendations made by the magistrate. The judge may also receive further evidence or recommit the matter to the magistrate with instructions.

Back to Table of Contents