W. CARLETON METCALF, Magistrate Judge.
This matter is before the Court on the parties' cross motions for summary judgment. Docs. 10 & 14.
This case involves attempts by the Social Security Administration (the "Administration") to recover certain disability insurance overpayments from Plaintiff. The information of record, including testimony given by Plaintiff during a hearing on February 17, 2017 before an administrative law judge ("ALJ"), provides the following background.
In 1989, Plaintiff broke his leg in a motorcycle accident and subsequently received disability insurance benefits. Transcript of administrative record ("AR"), pp. 246-247; 123.
Plaintiff was able to return to work eventually. The record does not reveal the specific date Plaintiff began working again but he posted wages of $14,846.88 in 1991, $19,067.76 in 1992, $26,673.27 in 1993, and $26,917.25 in 1994. AR pp. 14 & 112.
Plaintiff testified that at some point he received correspondence from the Administration stating that he had been overpaid disability insurance benefits. He stated that he was told initially that the amount of the alleged overpayment was $17,000 but was later advised that he owed $3,000.00 or $9,000.00. AR p. 250. Copies of this correspondence are not included in the administrative record.
Plaintiff did not send any written correspondence or make any filings in response to the initial overpayment notifications but instead "talked to the man from Alabama to straighten this out." Plaintiff testified that the man in Alabama told Plaintiff "he would take care of it." AR pp. 250-251. Plaintiff stated that based on his conversation with "the man," he believed he did not owe any money. AR p. 251.
Plaintiff later received a "Notice of Change in Benefits" letter dated June 20, 1994 (the "June 1994 Letter"). In that correspondence, the Administration advised that it was writing to tell Plaintiff "how we paid you $.00 too much in benefits" and what he could do if he thought the Administration was wrong about the overpayment. AR p. 26.
Plaintiff did not respond to the June 1994 Letter. He put the June 1994 Letter "in the bottom of [his] toolbox" and "just didn't pay [the Administration] no attention." AR p. 251.
In subsequent correspondence dated September 1994 (the "September 1994 Letter"), the Administration notified Plaintiff that he was no longer considered disabled as of that month. AR p. 120;
Thereafter, the Administration deducted certain amounts from Plaintiff's income tax refunds. Specifically, according to an internal Administration fact sheet, an overpayment amount of $16,626.00 was certified to the Internal Revenue Service on December 21, 1995, and the following amounts were deducted from Plaintiff's federal tax refunds:
Administration records reference communications with Plaintiff during this time period, including that Plaintiff called the Administration in 2002 to assert that he did not owe any overpayment and subsequent calls by him in 2003 and 2004 to state that he wanted amounts to continue to be withheld from his tax refunds and for the "TOPs [treasury offset program] offset to continue." AR p. 143.
Following these offsets, the Administration sent billing statements to Plaintiff reflecting the adjusted overpayment balance.
By letter dated June 19, 2013 (the "June 2013 Letter"), the Administration advised Plaintiff that he had been overpaid by $10,233.00.
Approximately 11 months later, in correspondence dated May 19, 2014 (the "May 2014 Letter"), the Administration again advised Plaintiff that he had been overpaid by $10,233.00. AR pp. 187-190. The May 2014 Letter listed monthly payments made to Plaintiff through January 1994, the amounts Plaintiff should have been paid, and the amounts of the tax refund offsets. AR p. 187. It also advised Plaintiff that he had "certain rights with respect to this overpayment;" specifically, the right to appeal the overpayment determination within 60 days and the right to request a waiver of the need to repay the overpayment. AR p. 188.
On June 16, 2014, the Administration received a request from Plaintiff for reconsideration and a separate request from him for a waiver of overpayment recovery. AR pp. 86; 87-94.
On November 11, 2014, the Administration responded as follows:
Plaintiff attended a personal conference regarding his waiver request in January 2015.
On January 20, 2015 (the "January 2015 Letter"), the Administration wrote to Plaintiff "about your request that we reconsider and waive the collection of your Social Security overpayment." AR p. 199. The correspondence went on to state that "[b]ased on the facts we have, our decision that you are overpaid is correct and we cannot waive the collection of your overpayment...." AR p. 199. The January 2015 Letter, however, stated that the amount of overpayment was $12,195.38. AR p. 199.
On March 16, 2015, Plaintiff requested a hearing before an ALJ based on "inadequate consideration of the evidence." AR p. 102. A hearing was held on February 17, 2017 at which Plaintiff, represented by counsel, testified. AR pp. 242-268.
On August 24, 2017, the ALJ issued an unfavorable decision. AR pp. 10-18. The ALJ found that Plaintiff was overpaid benefits amounting to $16,269.00
Plaintiff requested review by the Appeals Council on September 20, 2017; his request was denied on August 23, 2018. AR pp. 240; 4-6. Accordingly, the ALJ's August 24, 2017 decision is the final administrative decision.
On October 22, 2018, Plaintiff filed the instant action. Doc. 1.
Under 42 U.S.C. § 405(g), judicial review of a final decision of the Commissioner is limited to two inquiries: (1) whether substantial evidence exists in the record as a whole to support the Commissioner's findings, and (2) whether the Commissioner's final decision applies the proper legal standards.
When a federal district court reviews the Commissioner's decision, it does not "re-weigh conflicting evidence, make credibility determinations, or substitute [its] judgment for that of the [Commissioner]."
Plaintiff concedes that he "owes the defendant some money for an overpayment" but argues that substantial evidence does not support the ALJ's finding that the balance due at the time of the ALJ's decision was $10,233.00. Doc. 11, pp. 7 & 4.
42 U.S.C. § 405(g) provides, in part, that "[a]ny individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a party...may obtain a review of such decision by a civil action" in the United States District Court for the judicial district in which the plaintiff resides. "In order to obtain a judicially reviewable `final decision,' the Plaintiff must complete an administrative review process within a specific time."
Under the regulations, the administrative process has four steps which must be taken in order: (1) initial determination; (2) reconsideration; (3) a hearing before an ALJ; and (4) review by the Appeals Council. 20 C.F.R. § 404.900(a)(1)-(4). "Proceeding through these stages exhausts the claimant's administrative remedies. Only upon completion of these steps may the claimant then seek judicial review by filing an action in a federal district court."
If the Administration determines that an overpayment has occurred, it must send written notice to the individual it believes was overpaid. 20 C.F.R. § 404.502a. The notice must include both an explanation of the individual's right to request a waiver of the Administration's recovery of the overpaid amount and the individual's right to request reconsideration of the fact and/or amount of the overpayment determination. 20 C.F.R. § 404.502a(e) & (f).
Here, the Commissioner accepts that Plaintiff exhausted his administrative remedies as to his request for a waiver but argues that Plaintiff failed to exhaust his administrative remedies with respect to the amount of the overpayment and therefore that this Court "should decline to address the merits of Plaintiff's challenge to the overpayment." Doc. 15, p. 9. (citing
The administrative record does not contain documentation indicating that Plaintiff sought reconsideration or waiver of the initial overpayment notifications he received, and Plaintiff testified that the only thing he did following receipt of that information was to call a "man" in Alabama. AR p. 250. Plaintiff, though, did request review following his receipt of the May 2014 Letter, which identified an overpayment amount of $10,233.00 (
Significantly, in the May 2014 Letter, the Administration advised Plaintiff of his right to seek reconsideration of the fact and amount of the overpayment determination as well as to request a waiver. AR p. 188.
In June 2014, Plaintiff timely submitted a Request for Reconsideration and a separate Request for Waiver of Overpayment Recovery. AR pp. 86; 87-94.
By letter dated November 11, 2014, and notwithstanding the appeal rights referenced in the May 2014 Letter, the Administration informed Plaintiff that his reconsideration request was too late. AR p. 194 ("Your overpayment is due to work and earnings for the years 1992 through 1994. Your reconsideration rights for work and earnings have expired.").
However, a January 2015 Letter, which Plaintiff received following his personal conference, seemed to pertain to both Plaintiff's reconsideration request and his request for waiver.
On March 16, 2015, Plaintiff requested a hearing before an ALJ. AR p. 102. While the ALJ stated in her August 24, 2017 decision that "[t]he issue" was "whether the claimant qualifies for waiver of the overpayment," AR p. 13, the ALJ also found that the outstanding balance remaining as of the date of her decision was $10,233.00. AR pp. 14-15. This finding necessarily implicated the overpayment issue, not just Plaintiff's request for a waiver.
Plaintiff requested review by the Appeals Council within 60 days of the ALJ's decision, AR pp. 239 & 10, and filed the instant action within 60 days of the Appeals Council's denial of Plaintiff's request. AR pp. 4-6; Doc. 1.
In sum, while Plaintiff did not object when he was initially advised that an overpayment had been made, Plaintiff did proceed, following the May 2014 Letter, through the necessary administrative steps to seek reconsideration of the amount of overpayment. Because the balance of $10,233.00 was calculated from and is based on $16,626.00, which the Administration apparently determined to be the original overpayment amount, Plaintiff properly exhausted his administrative remedies as to the total amount of the overpayment.
Accordingly, the Court finds that, under these circumstances, Plaintiff timely proceeded through the four-step administrative review process, and that the Court may properly consider Plaintiff's challenge to the ALJ's determination regarding the amount of the overpayment.
The Social Security Act does not set forth which party, as between the Plaintiff and the Commissioner, bears the burden of proving the amount of an alleged overpayment in a social security appeal. Although the Fourth Circuit has not yet spoken on this issue, other circuits have placed the burden of proving the amount of the overpayment on the Commissioner.
Courts have held that the Commissioner fails to meet its burden when it relies on an "unsubstantiated belief that particular payments were made...."
In
In contrast, where additional evidence supports the Administration's determination regarding the amount of overpayment, courts have found that the Commissioner sustained its burden.
To support the Administration's position regarding the amount of overpayment in this case, the Commissioner relies on letters addressed to Plaintiff that listed the purported overpayments and tax refund offsets.
The Court, however, finds that these internal records are insufficient to sustain the Commissioner's burden of proving the amount of the alleged overpayment considering the numerous ambiguities and gaps that exist in the record. First, the evidence is conflicting regarding the amount the Administration originally assessed as being the total overpayment. Plaintiff testified that prior to receiving the June 1994 Letter he was notified that he owed various amounts ($17,000; $3,000; and $9,000). The June 1994 Letter (which is the earliest correspondence in the administrative record regarding the amount of overpayment) stated that Plaintiff had been overpaid "$.00 too much in benefits" and told him that if he could not "refund the full $.00 now," he could submit a partial payment along with an explanation of his financial circumstances and a definite plan for repaying "the balance." AR pp. 26-27.
Subsequent communications created additional ambiguity regarding the original amount of the assessed overpayment. In the September 1994 Letter, the Administration stated that it would write Plaintiff later "if...you are overpaid." AR p. 120. However, additional correspondence did not come until June 2013, though the Administration apparently continued to collect amounts from Plaintiff by deducting sums from his tax refunds.
Second, other portions of the record are incomplete. The administrative record includes some billing statements that were sent to Plaintiff following tax refund offsets, but others are missing. AR pp. 145-179.
Third, confusion regarding the handling of the assessed overpayment is evident from other documents. Notwithstanding that the May 2014 Letter had advised Plaintiff that his overpayment balance was $10,233.00, later information sent to Plaintiff referenced a total overpayment of $12,195.38.
There appears to be no dispute that Plaintiff owes some amount to the Administration for an overpayment.
