TANYA WALTON PRATT, District Judge.
Plaintiff LaToya R.,
On August 27, 2014, the Social Security Administration ("SSA") sent notice to LaToya R. informing her that she was solely liable for repayment of an overpayment totaling $8,388.00 that occurred when TR was not living with her during the months between February 2012 and January 2013, but continued to receive Supplemental Security Income ("SSI") benefits while also getting Title 4E funds from the State of Indiana to assist in paying for his living expenses. (Filing No. 14-2 at 146-47.) On October 4, 2014, LaToya R. was informed that SSA intended to reduce her own SSI benefits by ten percent, beginning November 1, 2014, to get back the money she was overpaid. (Filing No. 14-2 at 152-55.) LaToya R. timely requested reconsideration, (Filing No. 14-2 at 156), which was denied on November 20, 2014 (Filing No. 14-2 at 160). On January 1, 2014, she requested a hearing concerning the matter. (Filing No. 14-2 at 163.) Administrative Law Judge Albert Velasquez (the "ALJ") held a hearing on January 7, 2016, at which LaToya R., unrepresented by counsel, appeared and testified. (Filing No. 36-22 at 4-22.) The ALJ issued a decision on March 22, 2016, concluding that LaToya R. was liable for the overpayment. (Filing No. 14-2 at 13.) The Appeals Council denied review on July 25, 2017. (Filing No. 14-2 at 6.) On August 9, 2017, she timely filed this civil action, asking the Court pursuant to 42 U.S.C. § 405(g) to review the final decision of the Deputy Commissioner. (Filing No. 1.)
Under the Social Security Act (the "Act"), the "findings of the [Deputy] Commissioner of Social Security as to any fact, if supported by substantial evidence, shall be conclusive . . ." 42 U.S.C. § 405(g). Substantial evidence is "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401 (1971). The standard of review applies to overpayment determinations. Banuelos v. Apfel, 165 F.3d 1166, 1169 (7th Cir. 1999) (overturned on other grounds by Johnson v. Apfel, 189 F.3d 561 (7th Cir. 1999)). The United States Supreme Court has recognized that judicial review of Social Security decisions is limited to matters for which the plaintiff has exhausted administrative review under the Act. Mathews v. Eldridge, 424 U.S. 319, 327 (1976) (citing 42 U.S.C. § 405(g)-(h)). "It is clear from [42 U.S.C. § 405(g)] that a district court may not consider evidence outside the certified record." Papendick v. Sullivan, 969 F.2d 298, 302 (7th Cir. 1992) (overturned on other grounds by Johnson v. Apfel, 189 F.3d 561 (7th Cir. 1999)). Moreover, the Commissioner is responsible for weighing the evidence, resolving conflicts and making independent findings of fact, the court may not decide the facts anew, reweigh the evidence or substitute its own judgment. Powers v. Apfel, 207 F.3d 431, 434-35 (7th Cir. 2000).
On September 16, 1996, LaToya R. completed and signed a representative payee application/agreement (the "1996 agreement") to become the payee for TR's SSI benefits.
On January 26, 2012, the Marion Superior Court, Juvenile Division, issued an Order Regarding Children in Need of Services, after a permanency hearing, which included the appearance of LaToya R. (Filing No. 14-2 at 60.) The order concerning TR described that he had been temporarily placed at Damar Services, Inc., ("Damar"), but was spending weekends with LaToya R., and that neither LaToya R. nor the Department of Child Services ("DCS") wished to change the plan. (Filing No. 14-2 at 61; see Damar, https://www.damar.org/children/residential (last visited August 27, 2018) (Damar is an organization funded by the State of Indiana that provides residential care services for children with developmental and behavioral disabilities).) The hearing resulted in a permanency plan whereby the court ordered continued current placement at Damar and the "responsibility for placement and care is granted to the Department of Child Services." (Filing No. 14-2 at 62-63.) On January 17, 2013, an order of the court following a periodic review hearing indicated that TR was still placed at Damar. (Filing No. 14-2 at 104.) DCS retained custody of TR until he was released to ResCare, an adult services provider, on May 23, 2013. (Filing No. 14-2 at 107.)
In the interim on November 23, 2012, LaToya R. completed a representative payee report, under penalty of perjury, reporting that TR had lived with her from August 1, 2011 through July 31, 2012. (Filing No. 14-2 at 65-66.)
On January 11, 2013, LaToya R., again under penalty of perjury, completed a redetermination summary for the purpose of determining continuing eligibility for TR's SSI payments. (Filing No. 14-2 at 67-70.) LaToya R. endorsed that TR "has not spent a calendar month in a hospital, nursing home, correctional facility, or any type of institution since March 1, 2012." (Filing No. 14-2 at 68.) LaToya R. was asked to describe TR's living arrangements as of May 27, 2011, March 2, 2012, and April 2, 2012, and provided only her own address for each requested date. Id. She endorsed that as of April 2, 2012, TR "does not get help or money from any person not living with him or any agency to pay for food, rent, mortgage payments, property insurance, property taxes, heating fuel, gas, electricity, garbage removal, water or sewerage." Id. She further endorsed, "There have not been any other changes in his living arrangements." Id.
However, on January 15, 2013, SSA contacted DCS stating that, "One of our claims reps did a redetermination interview with this child's mom yesterday, and she reported the child has been at Damar since 2/04/12. She says DCS pays for his stay there." (Filing No. 14-2 at 110.) DCS responded that TR had been at Damar since January 26, 2012 and had received Title 4E funds from the State of Indiana against placement costs up until he had become an adult. Id.
After the hearing, the ALJ issued a written decision explaining his findings of fact and conclusions of law. The ALJ found that LaToya R. was the sole representative payee for TR from at least February 2012 through January 2013. (Filing No. 14-2 at 17.) The ALJ noted that LaToya R. had agreed to notify SSA in the 1996 agreement if TR "leaves her custody or otherwise changes his living arrangements or when she no longer has responsibility to [sic] his care and welfare." Id. The ALJ further summarized the custody and living arrangement changes during the relevant period, including that DCS "was granted responsibility for the placement and care of" TR on January 26, 2012. Id. The ALJ noted that despite TR's removal, LaToya R. had failed to report his change of living arrangement and in fact continued to report to SSA, as noted above, that TR "lived with her and was under her care." Id. The ALJ found that LaToya R. "should not have received benefits as the representative payee for [TR] during this period because DCS was responsible for the care and placement of [TR] during this period. As a result, the claimant was overpaid supplemental security income benefits as a representative payee of $8,338.00 from February 2012 to January 2013." Id. The ALJ further found that LaToya R. was liable for paying back the "misused" benefits she received as a representative payee. (Filing No. 14-2 at 18 (citing 20 C.F.R. §§ 416.635, 416.640, and 416.641(a)).)
LaToya R. has made various claims on her own behalf. When she requested reconsideration she simply stated, "this is not my overpayment." (Filing No. 14-2 at 156.) When she requested a hearing, she stated, "I do not owe [an] overpayment," and "everyone in this office has lied and took my children for [their] own needs." (Filing No. 14-2 at 163.)
LaToya R. testified at the hearing regarding the overpayment:
(Filing No. 36-22 at 10.) LaToya R. testified that TR continued to come home on the weekends after being placed at Damar. (Filing No. 36-22 at 12.) She also testified either mistakenly or falsely that TR's benefits checks were reduced because she only had him part-time.
(Filing No. 36-22 at 13.) She further testified that she had proven that she did not owe the money, but that SSA had never paid her back the money that was withheld from her benefits. (Filing No. 36-22 at 15.) LaToya R. also continued to maintain that she had reported that TR was at Damar and that the court was also supposed to notify SSA of the arrangement. (Filing No. 36-22 at 17-19.) The ALJ asked, "Well, okay, but we don't have that record. There's no — no evidence of that. So let's just say for the — that the government accidentally paid you too much money, and you should've known that was too much money because they weren't staying with you any more, right?" (Filing No. 36-22 at 19.) LaToya R. did not answer the question directly, stating, "And I reported it." Id. When again asked what she did with the money after TR was no longer living there, LaToya R. answered:
(Filing No. 36-22 at 20.) In a previous portion of the hearing, it was established that when LaToya R. referred to her own check being "cut" that she meant it had been reduced (to pay back the overpayment). (Filing No. 36-22 at 8.) LaToya R. testified that she continued to spend the money on TR's needs while he was at home and also took him supplies while he was at Damar. (Filing No. 36-22 at 20.)
In her initial brief, LaToya R. provided little argument directly related to the decision under review, except that, "I'm [TR's] payee and they should not have his money or information." (Filing No. 18 at 3.) When asked by the Court to provide a clearer statement of her case, LaToya R. filed largely the same brief, again including what appears to be part of a notice from SSA to her dated November 10, 2014, stating that ten percent of her benefits, totaling $72.10, should not have been withheld, with the following statement, "An unintentional overpayment was not your fault. Your income and resources are barely enough to pay for basic expenses. You can ask the agency or judge to waive repayment under `equitable estoppel.' A waiver means you will not have to pay. . .". (Filing No. 23 at 1-2.) In her third brief, LaToya R. argues, "Clear evidence supports that I did not falsely state [anything] and [TR] was still coming home part[-]time." (Filing No. 38 at 1.) LaToya R. further argues that she had proven her case and received the November 10, 2014 notice because it was "their mistake not mine." (Filing No. 38 at 2.)
The Court finds that substantial evidence supports the ALJ's determination that an overpayment occurred. "As used in this subpart, the term overpayment means payment of more than the amount due for any period, including an amount of State supplementary payments which are due and administered by the Social Security Administration." 20 C.F.R. § 416.537(a) (emphasis in original). "For purposes of this section, payment has been made when certified by the Social Security Administration to the Department of the Treasury, except that payment has not been by the designated payee, or when payment was returned." Id. LaToya R. does not appear to dispute that an overpayment occurred, allege that she returned any of the benefits that were paid, or that she otherwise did not receive them.
The Court also finds that LaToya R. is liable for any overpayment. LaToya R. agreed as a condition of being selected as TR's representative payee in the 1996 agreement, "I may be held personally liable for repayment if I misuse the payments or if I am at fault for any overpayment of benefits." (Filing No. 35-2 at 3.) The Court finds the 1996 agreement to be enforceable, inclusive of the term whereby LaToya R. agreed to be held personally liable for any overpayment, so long as she either 1) misused the payments or 2) was at fault for the overpayment.
The ALJ's decision fails to explain how the actual amount of the overpayment was determined. "The amount of an underpayment or overpayment is the difference between the amount paid to a recipient and the amount of payment actually due such a recipient for a given period." 20 C.F.R. § 416.538(a). The record contains evidence that the SSA determined that the entire amount paid to LaToya R. during the period was considered to be the total amount of overpayment, inclusive of the finding that the amount actually due to the recipient was zero dollars for each applicable month. (Filing No. 14-2 at 136 (overpayment totaling $6,968.00).) The SSA ultimately determined that the total amount was $8,388.00. (Filing No. 14-2 at 147 (the $6,968.00 plus an additional $1,400.00 that had been refunded by another payee whom the SSA had determined would need to be reimbursed out of the recovery from LaToya R. (whom is actually liable for the overpayment)).) The record contains evidence that establishes that TR's benefits should have been reduced. DCS paid for TR's stay at Damar and DCS was receiving Title 4E funds from the State of Indiana to cover placement costs. (Filing No. 14-2 at 110.) Although the ALJ's written decision does not provide detailed analysis on how he determined the amount of benefits that would have been actually due to TR during the period in question, he does note that DCS was granted responsibility for the placement and care of TR and DCS placed TR in a group home with Damar. The ALJ further explains that "State funds for [TR's] placement with Damar Services were: $229.00 per day from January 29, 2012 to February 29, 2012; $270.67 per day from March 1, 2012 to December 31, 2012; and $334.42 per day from January 1, 2013 to May 14, 2013." (Filing No. 14 at 17).
Along with her administrative request for review of the ALJ's decision, LaToya R. argued, "I proved that it was not my [fault] for the overpayment. The court had reported that he had went back to Damar. They owed me over-payment." (Filing No. 14-2 at 196.) However, there is no evidence in the record to support this testimony. The record reflects that LaToya R. falsely certified that she did not get help or money from any agency to pay for TR's "food, rent, mortgage payments, property insurance, property taxes, heating fuel, gas, electricity, garbage removal, water or sewerage" (Filing No. 14-2 at 68), when in fact, the State of Indiana, through Damar, was providing food, shelter and other assistance for TR at a daily rate fluctuating from $229.00 to $334.42 during the relevant time period. Regarding the amount of overpayment, because the Court is not allowed to consider evidence outside the certified record and may not reweigh the evidence or substitute its own judgment, the Court finds sufficient evidence in the record that $8,338.00 is the amount of overpayment.
However, the Court does not find substantial support for the ALJ's conclusion that LaToya R. is liable because she misused the payments. The limited explanation provided in the written decision on the issue of liability, in response to LaToya R.'s claim the overpayment was not hers, was as follows:
(Filing No. 14 at 18.)
While the ALJ is accurate in pointing out that the regulations specify that a representative payee is liable for any misused benefits, the Court does not find any evidence referenced in the decision, nor in the record generally, that LaToya R. actually misused the benefits as that term is defined. The ALJ cites to two regulations for authority. The first authority lists the responsibilities of a representative payee (written from the perspective of the beneficiary), which does describe a relevant responsibility to "[u]se the benefits received on your behalf only for your use and benefit in a manner and for the purposes he or she determines under the guidelines in this subpart, to be in your best interest." 20 C.F.R. § 416.635(a).
42 U.S.C. § 405(j)(9). There is no evidence that LaToya R. used the payments or any portion thereof for anyone else's purposes other than for TR's. She was steadfast in her testimony that she provided TR food and shelter on the weekends and took him personal comfort items when visiting him at Damar. There is no independent factual evidence rebutting her testimony on the issue either. While the ALJ may have assumed that some of the benefits were used for another's benefit, the Court cannot uphold a determination that does not rest on any evidence of record. At the very least, the ALJ has failed to explain what evidence supports his determination that benefits were misused by LaToya R.
Nonetheless, under the terms of the 1996 agreement, the Court finds that LaToya R. is alternatively liable because she was at fault for the overpayment. LaToya R. advanced several excuses for her failure to report the change in custody and responsibility for placement and care of TR, including that either she did notify the SSA or that the court that determined the placement of TR was supposed to have notified the SSA. However, neither theory relieves her of fault under the regulations. In a regulation that describes the situations in which the SSA may waive recovery from an individual that is "without fault," it makes clear that the inquiry as to fault is limited to the conduct of that individual:
20 C.F.R. § 416.552 (emphasis in original).
Id. LaToya R. admitted at the hearing that she was aware that TR's benefits should have been reduced when he was placed at Damar, in part because it had happened previously. However, she did not return the payment or otherwise ensure that the payment was properly reduced. While the regulation makes clear that the full circumstances of the case are to be considered, including "the individual's understanding of the reporting requirements, the agreement to report events affecting payments, knowledge of the occurrence of events that should have been reported, efforts to comply with the reporting requirements, [and] opportunities to comply with the reporting requirements" etc., id., the Court does not find the circumstances of this particular case to excuse LaToya R.'s conduct. She specifically agreed in the 1996 agreement to report any change in custody or responsibility for the placement and care of TR. She was a party in attendance for the permanency hearing which altered the existing status of both. She had multiple opportunities to provide written notice to the SSA in response to their requests for updated information, but failed to report in any of the written notices the change in circumstances. While she alleged that she did provide oral notice to the SSA at some point, there is no evidence that she did so until the period of overpayment in question had already occurred. And as previously stated, the written documentary evidence regarding her disclosures to the SSA do not show that she provided the material information that she had agreed to provide.
Accordingly, the Court finds this error harmless. The Court can say with great confidence that remanding the case for further proceedings would result in an alternative finding that LaToya R. was at fault for the overpayment, and moreover agreed to be liable in the 1996 agreement for any overpayment that resulted from her fault. See McKinzey v. Astrue, 641 F.3d 884, 892 (7th Cir. 2011) ("administrative error may be harmless: we will not remand a case to the ALJ for further specification where we are convinced that the ALJ will reach the same result"; the inquiry is prospective where error has already been identified (citing Spiva v. Astrue, 628 F.3d 346, 353 (7th Cir. 2010)). LaToya R. is responsible for paying back the overpayment because she was clearly at fault for any overpayment. The decision of the Deputy Commissioner is therefore
For the reasons stated above, the final decision of the Deputy Commissioner is
