Opinion
Civil No. 01-1422 (JRT/AJB)
September 30, 2002
Kevin Leroy Quast, Barnum, MN, plaintiff pro se.
Lonnie F. Bryan, Assistant United States Attorney, Minneapolis, MN, for defendant.
MEMORDUM OPINION AND ORDER ADOPTING THE REPORT AND RECOMMENDATION OF THE MAGISTRATE JUDGE
Plaintiff Kevin Quast brings this action against the Commissioner of Social Security seeking judicial review of the denial of plaintiff's request for waiver of recovery of an overpayment of disability insurance benefits. In a Report and Recommendation dated June 5, 2002, United States Magistrate Judge Arthur J. Boylan recommended that the Court grant defendant's motion for summary judgment and deny plaintiff's motion for summary judgment. This matter is before the Court on plaintiff's objections to the report and recommendation.
The Court has conducted a de novo review of plaintiff's objections pursuant to 28 U.S.C. § 636(b)(1)(C) and D. Minn. L.R. 72.1(c)(2). For the reasons set forth below, the Court adopts the report and recommendation of the Magistrate Judge, grants defendant's motion for summary judgment, and denies plaintiff's motion for summary judgment.
BACKGROUND I. Procedural History
Plaintiff's history with the Social Security Administration ("SSA" or "agency") began in July 1992, when he applied for and was granted disability insurance benefits based on mental impairments including paranoid schizophrenia and other functional psychotic disorders. Plaintiff was able to begin working again in November of 1992, but did not report to the SSA that he was working until August 1993. During the period from November 1992 to August 1993, plaintiff was eligible for and continued to receive disability benefits under the trial work period provisions of 42 U.S.C. § 422(c) and 20 C.F.R. § 404.1592(a). In August 1994 plaintiff was informed that since he had been able to perform substantial gainful activity, defined as earning greater than $500 per month, in September 1993, the last month for which he had been eligible to receive benefits was November 1993.
42 U.S.C. § 422(c) and 20 C.F.R. § 404.1592(a) provide an incentive for returning to work by allowing a person to continue receiving benefits for up to nine months regardless of earnings from work activities.
From September 1993 to September 1996 plaintiff was in a "period of re-entitlement" under by 42 U.S.C. § 423(a)(1)(D) and 20 C.F.R. § 404.1592a. During this time he was eligible to receive disability benefits without filing a new application in any month during which he did not perform substantial gainful activity. Plaintiff stopped working again in October 1995 and filed a new application for benefits in November 1995. The new application was denied initially and on reconsideration. However, in April 1996, an agency representative informed plaintiff that since plaintiff was still in his reentitlement period, his benefits would be reinstated as of October 1995. The representative explained to plaintiff that if he performed substantial gainful activity in any month he was obligated to contact the agency in order to avoid overpayment of benefits.
Plaintiff began working again in December 1996 and notified the agency that he was working in January 1997. However, he continued to receive disability benefits. Plaintiff obtained a job as an accounting technician in February 1997. He again notified the agency that he was working and clearly stated that he was being overpaid. Nevertheless, benefits continued to be deposited directly into plaintiff's bank account until June 1998. Plaintiff made no further attempts to inform the administration that the payments were incorrect, nor did he attempt to return the payments.
At some point after plaintiff's benefits were discontinued, plaintiff was advised that he had been overpaid $14,253.00 and that pursuant to 42 U.S.C. § 404(a)(1)(A), he must repay that amount. The amount was later amended to $15,915.00. Plaintiff requested a waiver of repayment, which the agency denied. In March 1999, plaintiff attended a personal conference with an agency representative; who also denied plaintiff's request. Plaintiff next requested a hearing with an Administrative Law Judge (ALJ). A hearing took place before ALJ James Geyer in September 1999. The ALJ denied plaintiff's request for waiver of recovery. Plaintiff's request for review by the Appeals Council was subsequently denied, making the ALJ's decision the final decision of the Commissioner.
42 U.S.C. § 404(a)(1)(A) authorizes the Commissioner of Social Security to recover overpaid amounts either by decreasing payments to which the overpaid person or his estate is entitled or by requiring the overpaid person or his estate to refund the excess amount.
II. Findings of the Administrative Law Judge
At the administrative hearing before the ALJ, plaintiff made a single argument: he asserted that he should not be required to repay the overpaid benefits because he twice informed the agency that he was working and had exceeded the maximum allowable amount. Plaintiff claimed that since he properly reported his substantial gainful activity he was not at fault in the overpayment. Plaintiff did not argue that he had not been overpaid or that the amount given by the agency was incorrect. Therefore, in his decision dated September 23, 1999, the ALJ found that plaintiff had in fact been overpaid in the amount of $15,915.00.
42 U.S.C. § 404(b) provides that "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." 42 U.S.C. § 404(b). With respect to the first criteria, lack of fault, the ALJ acknowledged that the agency had the responsibility to discontinue benefits, and that plaintiff had been reasonable in expecting the SSA to do so. However, the ALJ concluded that the fact that plaintiff informed the SSA that he was being overpaid did not relieve plaintiff of fault. The ALJ noted that, according to 20 C.F.R. § 404.507, the fact that the SSA was at fault in making the overpayment does not relieve the individual of fault. 20 C.F.R. § 404.507. Additionally, the ALJ noted that an individual is at fault if he accepts payments which he knew or could have been expected to know were incorrect. 20 C.F.R. § 404.507(c). The ALJ found that the evidence showed that plaintiff knew or should have known that the payments were incorrect. This evidence included the fact that an agency representative had informed plaintiff that he would be overpaid in any month during which he earned $500.00 or more while receiving benefits, that plaintiff had called the agency and told them he was being overpaid, and plaintiff's testimony at the hearing, which showed an understanding that he had not been entitled to benefits after December 1996. The ALJ also considered plaintiff's mental abilities and stated that there was no evidence that plaintiff's mental impairment had made him incapable of understanding his responsibility to return overpayments. Therefore, the ALJ concluded that plaintiff was not without fault and did not waive recovery of the overpayment of benefits.
III. The Magistrate Judge's Report and Recommendation
Plaintiff challenged the ALJ's decision on the grounds that he was without fault in the overpayment of benefits and that recovery of the overpayment would defeat the purpose of the Social Security Act and be against equity and good conscience. Plaintiff did not challenge the finding that he had been overpaid in the amount of $15,915.00. The Magistrate Judge rejected plaintiff's arguments, concluding that there was substantial evidence in the record to support the ALJ's determination that plaintiff had not been without fault. The Magistrate Judge also noted that because plaintiff was not without fault, he need not determine whether repayment would defeat the purpose of the Social Security Act or be against equity and good conscience. See 42 U.S.C. § 404(b); Watson v. Sullivan, 940 F.2d 168, 171 (6th Cir. 1991). Accordingly, the Magistrate Judge recommended that the Court deny plaintiff's motion for summary judgment and grant defendant's motion for summary judgment.
ANALYSIS I. Standard of Review
The Court's review of the agency decision is directed towards a determination whether the ALJ's decision on "fault" is supported by substantial evidence. Watson v. Sullivan, 940 F.2d 168, 171 (6th Cir. 1991); Coulston v. Apfel, 224 F.3d 897, 901 (8th Cir. 2000). Substantial evidence is that evidence which a reasonable person would believe adequate to support the ALJ's conclusion. Woolf v. Shalala, 3 F.3d 1210, 1213 (8th Cir. 1993). The Court gives great deference to the findings and conclusions of the ALJ. Howard v. Massanari, 255 F.3d 577, 581 (8th Cir. 2001). It is not the district court's role to reevaluate and reweigh the facts or to substitute its judgment for the ALJ's decision. Buenos v. Apfel, 165 F.3d 1166, 1169 (7th Cir. 1999). Nevertheless, the Court must consider the weight of the evidence in the record and balance the evidence that is contradictory. Gavin v. Heckler, 811 F.2d 1195, 1199 (8th Cir. 1987).
II. Plaintiff's Objections
Plaintiff raises five objections to the report and recommendation. Specifically, plaintiff claims that: 1) he was not overpaid because he was eligible for disability benefits; 2) that the amount of $15,915.00 is incorrect; 3) that the agency, not plaintiff, was to blame for the overpayment; 4) that plaintiff was without fault in the overpayment; and 5) that denying plaintiff a waiver of recovery will defeat the purposes of the Social Security Act. The Court addresses each objection in turn.
A. Eligibility for Benefits
Plaintiff objects that the $15,915.00 in question was not an overpayment because he was in fact entitled to these benefits. Notwithstanding the fact that plaintiff failed to properly raise this argument below, the Court finds no support for this contention in the record. On the contrary, during his hearing with the ALJ, plaintiff agreed that the agency's factual statement of the case was accurate. The record also contains work activity reports that show plaintiff was gainfully employed during the time in which the overpayment occurred. On these facts, it is clear that plaintiff was not eligible for benefits following December 1996 and therefore this objection is overruled.
B. Amount of Overpayment
Plaintiff claims that the amount the agency seeks to recover, $15,915.00, is incorrect. Specifically, he claims that he never received benefits for October and November of 1995 when he was eligible for benefits and that these unreceived payments should offset the amount he was paid after November 1996.
Although this argument may have some merit, plaintiff did not previously raise this argument with the ALJ, the Appeals Council, or the Magistrate Judge. A party may not raise new factual issues in a judicial action challenging an agency decision. Johnson v. Chater, 108 F.3d 942, 946 (8th Cir. 1997) (rejecting plaintiff's argument to denial of Social Security benefits because the argument raised new factual issues not previously presented to the ALJ and Appeals Council); Weikert v. Sullivan, 977 F.2d 1249, 1254 (8th Cir. 1992). Therefore, there is no record on this issue for the Court to review, and the Court must overrule petitioner's objection.
C. Social Security Administration's Fault in Overpaying Petitioner
Plaintiff next contends that it was the agency who was at fault in failing to stop plaintiff's benefits. However, agency regulations provide that even though "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." 20 C.F.R. § 404.507. Therefore, the fact that the agency was also at fault does not relieve plaintiff of fault. Id. This objection is thus overruled.
D. ALJ Determination that Plaintiff Was Not Without Fault
Plaintiff objects that he was not at fault in the overpayment of benefits for several reasons. He claims that he was not clearly advised about when he would be overpaid after his reentitlement period ended, that his mental condition impaired his judgment and he thought there might be "some new law" entitling him to benefits, and that he did not know how to stop the direct deposit of funds into his bank account. These are essentially the same arguments plaintiff raised to both the ALJ and the Magistrate Judge. The Court's review of the ALJ's findings is highly deferential. See 42 U.S.C. § 405(g). In his decision, the ALJ gave persuasive, factual reasons for finding that plaintiff was not without fault. On review of the ALJ decision, the Magistrate Judge concluded that "substantial evidence supports [the] ALJ's decision that the claimant . . . was not without fault in receiving and accepting the incorrect payments. . . ." The Court agrees with the Magistrate Judge that the ALJ's decision is supported by substantial evidence on the record as a whole, and therefore this objection is overruled.
E. Whether Recovery Would Defeat the Purposes of Social Security
Plaintiff's final objection is that requiring him to repay the overpaid amount will deprive him of the income he needs for necessities, thus defeating the purposes of the Social Security Act. The Court regrets that plaintiff may experience hardship in repaying the amount owed. However, as the Magistrate Judge correctly noted, plaintiff must first be without fault before the Court can consider whether recovery would defeat the purposes of the Social Security Act or be against equity and good conscience. See 42 U.S.C. § 404(b); Watson v. Sullivan, 940 F.2d 168,171 (6th Cir. 1991). Because plaintiff was not without fault in the overpayment, this analysis is unnecessary. Therefore, petitioner's final objection is also overruled.
ORDER
Based on the foregoing, the submissions of the parties, and all of the files, records, and proceedings herein, the Court OVERRULES plaintiff's objections [Docket No. 12], and ADOPTS the Report and Recommendation of the Magistrate Judge [Docket No. 11]. Accordingly, IT IS HEREBY ORDERED that:
1. Plaintiff's Motion for Summary Judgment [Docket No. 8] is DENIED.
2. Defendant's Motion for Summary Judgment [Docket No. 9] is GRANTED.