E. CLIFTON KNOWLES, Magistrate Judge.
This is an overpayment case. The Social Security Administration ("SSA") is requesting that Plaintiff, a previously designated representative payee, repay the SSA $121,048.00 that was overpaid to beneficiary Daniel Cartwright, and $60,507.00 that was overpaid to Mr. Cartwright's daughter, Hannah Cartwright. Docket No. 8 at 1.
Daniel Cartwright applied for Title II Disability Insurance Benefits ("DIB") in 1994, was determined to be disabled, and began receiving DIB on approximately March 1, 1995. See Docket No. 6, attachment ("TR") at 22-24.
In 2008, it came to the SSA's attention that Mr. Cartwright had earned income in 1997, 2001, 2002, 2003, and 2005. TR 34-35. The SSA determined that Mr. Cartwright and Plaintiff had been divorced for a few years, that Mr. Cartwright had self-employment income, that this income had not been reported to the SSA, and that benefits may have been overpaid. TR 36. The SSA ultimately determined, based on earnings in the SSA's earnings record system, that Mr. Cartwright was not entitled to benefits after April 2002, and the SSA ceased Mr. Cartwright's payments. TR 42-44.
In August 2008, the local Murfreesboro office of the SSA began sending letters to Mr. Cartwright and to Plaintiff requesting that they contact their office because the SSA had discovered that they had divorced and that there was evidence that Mr. Cartwright had earnings. TR 34-35, 36. Regarding Plaintiff specifically, they informed her of the proposed decision that there had been an overpayment and they instructed her to have Mr. Cartwright respond to certain inquiries. TR 37-40. In October 2008, the SSA sent Plaintiff a letter informing her of its decision that Mr. Cartwright's disability had ended and that he was not entitled to payments beginning April 2002. TR 42-44. Plaintiff forwarded the letters to Mr. Cartwright's attorney, who wrote the local SSA office providing information and raising questions about the cessation period. TR 45. The SSA reviewed the materials and sent Plaintiff a letter dated October 23, 2008 notifying her that it had reconsidered its previous decision and again decided that Mr. Cartwright's disability had ended and that he was not entitled to payments beginning April 2002. TR 46-48.
In December 2008, the SSA wrote Plaintiff a letter: (1) informing her of its determination that it had overpaid Mr. Cartwright $121,048.00; (2) explaining to her how that overpayment was calculated; (3) providing to her repayment information; and (4) providing to her appeal information. TR 53-60. In February 2009, Plaintiff's attorney filed a timely request for reconsideration (TR 61), while Plaintiff, alleging that the overpayment was not her fault and that she could not afford to pay the money back to the SSA, timely requested a redetermination of the overpayment and a waiver of the overpayment (TR 109-116). Plaintiff's request for waiver was denied on reconsideration. TR 65-67.
The local SSA office also notified Mr. Cartwright of their decision to uphold their overpayment claim. TR 62. On November 23, 2010, the SSA wrote Mr. Cartwright a letter notifying him that the SSA would not approve his request for a waiver, but would schedule a personal conference with him for December 15, 2010. TR 68. Mr. Cartwright and his attorney met with SSA representative Teresa Terrell for his personal conference, wherein Ms. Terrell interviewed Mr. Cartwright and determined that responsibility for overpayment should be directed to Plaintiff. TR 71.
Plaintiff again requested a waiver of the overpayment, which was denied in a March 29, 2011 letter from the SSA. TR 72-73. The SSA denied that request, but scheduled a personal conference with Plaintiff for April 12, 2011. Id. On April 12, 2011, Plaintiff, her attorney, and her friend Tom Reed, met with SSA representative Carolyn Poss for her personal conference, and Plaintiff was interviewed. TR 75-77. Plaintiff argued that she was not without fault but that the burden of repayment should be shared equally with Mr. Cartwright. Id. Ultimately, Ms. Poss determined that recovery of the overpayment should not be waived. TR 75. In her notes regarding Plaintiff's personal conference, Ms. Poss stated in part:
TR 75.
Ms. Poss determined that waiver was not warranted, explaining:
In making this determination, the following rationale was used:
TR 76-77.
After her personal conference and Ms. Poss' report thereon, the SSA sent letters to Plaintiff explaining the denial of her requests for waiver for the overpayments regarding Mr. Cartwright and Hannah Cartwright. TR 78-79, 80-83. Plaintiff subsequently timely filed a written request for a hearing before an Administrative Law Judge ("ALJ"). TR 87-88.
In January 2012, Plaintiff's counsel wrote to Chief ALJ Clair Strong, requesting that a subpoena be issued to Mr. Cartwright. TR 132-133. In April 2012, having received no response to that request, Plaintiff's counsel renewed the request to have a subpoena be issued to Mr. Cartwright; that request was denied. TR 134.
Plaintiff's hearing took place on April 26, 2012, before ALJ Scott Shimer. TR 383-406. At the hearing, the ALJ was reminded that Plaintiff had requested that a subpoena be issued for Mr. Cartwright to appear at the hearing. Id. Believing that the issues before him were: (1) the state of mind of Plaintiff (not Mr. Cartwright); (2) whether Plaintiff as the representative payee was at fault; and (3) whether the amount overpaid should be repaid to the SSA, the ALJ stated that he did not believe that Mr. Cartwright's presence and testimony were relevant or that he had the authority to make a determination as to fault. Id. Plaintiff was the only person to testify, and she was questioned by both the ALJ and her attorney. Id.
On May 9, 2012, the ALJ issued a decision which ultimately found Plaintiff wholly at fault and responsible for the full overpayment pursuant to Section 204(a)(1)(A) of the Act. TR 11-15. Specifically, the ALJ made the following findings of fact and conclusions of law:
TR 13-15.
Plaintiff timely filed a request for review of the hearing decision, but on January 23, 2014, the Appeals Council issued a letter declining to review the case (TR 4-7), thereby rendering the decision of the ALJ the final decision of the Commissioner. This civil action was thereafter timely filed, and the Court has jurisdiction. 42 U.S.C. § 405(g). If the Commissioner's findings are supported by substantial evidence, based upon the record as a whole, then these findings are conclusive. Id.
Plaintiff asks this Court to remand this action to the administrative hearing level so that she may have another hearing which includes testimony from Daniel Cartwright and so that a "determination as to fault and joint and several liability" can be reached. Docket No. 8 at 2. For the reasons discussed below, the undersigned recommends that Plaintiff's Motion for Judgment on the Administrative Record (Docket No. 8) be DENIED, and that the decision of the Commissioner be AFFIRMED.
The Court must affirm the Commissioner's determination regarding overpayment of disability benefits unless the SSA failed to apply the correct legal standards or made findings of fact unsupported by substantial evidence. 42 U.S.C. § 405(g); Salamalekis v. Commissioner, 221 F.3d 828, 829-30 (6th Cir. 2000). "Substantial evidence is more than a scintilla of evidence but less than a preponderance; it is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Cutlip v. Secretary of HHS, 25 F.3d 284, 286 (6th Cir. 1994). A determination of substantiality of the evidence must be based upon the record as a whole. Young v. Secretary of HHS, 925 F.2d 146 (6
The scope of review is limited to an examination of the record only; this Court does not make credibility determinations or weigh the evidence. Brainard v. Secretary of HHS, 889 F.2d 679, 681 (6th Cir. 1989). The fact that the record also contains evidence which could have supported a different conclusion does not undermine the Commissioner's decision so long as there is substantial support for that decision in the record. Willbanks v. Secretary of HHS, 847 F.2d 301, 303 (6th Cir. 1988). Even if the reviewing court would resolve the dispute differently, the Commissioner's decision must stand if it is supported by substantial evidence. Young, 925 F.2d at 147.
As noted, the present case involves an overpayment of benefits. Under the SSA, "[w]henever the Commissioner of Social Security finds that more or less than the correct amount of payment has been made under this subchapter, proper adjustment or recovery shall be made, under regulations prescribed by the Commissioner of Social Security." 42 U.S.C. § 404(a)(1). An exception for the repayment of overpayments exists under 42 U.S.C. § 404(b), which provides in pertinent part:
42 U.S.C. § 404(b). See also, Valley v. Commissioner, 427 F.3d 388, 391 (6th Cir. 2005) ("The Social Security Act mandates repayment of overpayments except where an individual `is without fault' and `such adjustment or recovery would defeat the purpose of [Title II of the Social Security Act] or would be against equity and good conscience.'")(quoting 42 U.S.C. § 404(b)).
In cases involving the recovery of overpayments, the plaintiff has the burden of establishing the "negative prerequisite" (i.e. that she was without fault) before the overpayment can be waived. Watson v. Sullivan, 940 F.2d 168, 171 (6th Cir. 1991). "The question of fault is one of fact and as such is subject to the substantial evidence standard of review." Doan v. Secretary of HHS, No. 86-5956, 1987 WL 36143 at *1 (6th Cir. July 7, 1987), citing Morgan v. Finch, 423 F.2d 551 (6th Cir. 1970). "Fault" can include such things as, "(a) An incorrect statement made by the individual which he knew or should have known to be incorrect; (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. § 404.507 (2013). An ALJ's finding of "fault" in the context of an overpayment does not imply a finding of bad faith, but can be the result of an honest mistake. Morgan, 423 F.2d at 553.
Whether or not the claimant is without fault is a threshold issue. If there is substantial evidence to support a finding that the plaintiff is "not without fault," then the court does not need to determine whether recovery would be against equity and good conscience or would defeat the purposes of the Act. Id. If the plaintiff has established that she is without fault, the plaintiff must then demonstrate that: (1) the recovery of the overpayment would defeat the purposes of Title II [42 U.S.C. §§ 401-403]; or, (2) that recovery of the overpayment would be against equity and good conscience. Watson, 940 F.2d at 171; Pliley v. Sullivan, 892 F.2d 35, 39 (6th Cir. 1989).
"Defeating the purpose of Title II means `depriving a person of income required for ordinary and necessary living expenses.'" 20 C.F.R. § 404.508(a); Valley, 427 F.3d at 391. Recovery of an overpayment "will defeat the purposes of Title II in (but is not limited to) situations where the person from whom recovery is sought needs substantially all of his current income (including social security monthly benefits) to meet current ordinary and necessary living expenses." 20 C.F.R. § 404.508(b). "In making this determination, the Administration may look to the individual's financial resources in addition to her or his income." Valley, 427 F.3d at 391, citing 20 C.F.R. § 404.508(a).
"Recovery of an overpayment is against equity and good conscience where the individual `changed his or her position for the worse . . . or relinquished a valuable right . . . because of reliance upon a notice that a payment would be made or because of the overpayment itself. . . .'" Id. at 392, quoting 20 C.F.R. § 404.509(a)(1). In addition, a claimant may demonstrate that recovery of an overpayment is against equity and good conscience where the individual "accepts such overpayment because of reliance on erroneous information from an official source within the Social Security Administration . . . with respect to the interpretation of a pertinent provision of the Social Security Act or regulations pertaining thereto. . . .'" Id. at 392-93, quoting 20 C.F.R. §§ 404.510a, 404.512. The claimant's individual financial circumstances, however, "are not material to a finding of against equity and good conscience." Id. at 393, quoting 20 C.F.R. § 404.509(b).
Plaintiff has raised two arguments on appeal. First, that the ALJ erred by not allowing her to subpoena Daniel Cartwright to her hearing "thus depriving her of her due process rights"; and second, that the ALJ's "ruling was not supported by substantial evidence." Docket No. 8 at 2. Although not enumerated as issues in her statement of errors, Plaintiff also states:
Id. at 1.
Plaintiff's first contention is that the ALJ's denial of her request to issue a subpoena to Mr. Cartwright deprived her of her due process rights of confrontation and cross-examination. Docket No. 8 at 6. Plaintiff asserts that Mr. Cartwright lied in his personal conference, resulting in a determination that he was not at fault for the overpayment, and argues that her attorney should have been permitted to question Mr. Cartwight about what he knew or did not know and about his testimony during his personal conference because the ALJ may have found Mr. Cartwright and Plaintiff jointly and severally liable or reached a different decision on the issue of Plaintiff's fault. Id. at 3, 5-7.
As initial matter, Plaintiff has cited no binding authority for the proposition that an ALJ in a Social Security action must subpoena a person to testify. To the contrary, Plaintiff does not have an absolute right to compel a witness to appear or testify in a Social Security action (see, e.g, Flatford v. Chater, 93 F.3d 1296, 1305-07 (6th Cir. 1996)); rather, discretion to do so lies with the ALJ, who may issue a subpoena when he feels it is "necessary for the full presentation of a case" (20 C.F.R. § 404.950(d) (emphasis added)).
In the instant action, the ALJ explained that Mr. Cartwight's testimony was not necessary because it was not relevant, as: (1) whether Mr. Cartwright was at fault was not an issue before him (since Mr. Cartwright was not a party to the case); (2) the issue before him was Plaintiff's state of mind; (3) he did not have "the authority to split it up and say 50/50"; (4) Mr. Cartwright's potential liability is separate and distinct from Plaintiff's potential liability; and (5) only Plaintiff's potential liability was before him (again, because Mr. Cartwright was not a party to the case). TR 384-385, 403-404.
Although Plaintiff seeks remand for a new hearing where Mr. Cartwright would be subpoenaed to testify and where the ALJ would make a determination regarding the issue of joint and several liability, Plaintiff cites no authority that would allow the ALJ to impose liability on Mr. Cartwright, as a non-party to this action, and no such Sixth Circuit or Supreme Court authority so permits. Plaintiff's contention that, "Had the judge heard the testimony of Daniel Cartwright, the judge could have found joint and several liability or individual liability" (Docket No. 8 at 6) is simply incorrect. Plaintiff is the only Plaintiff in this action, and therefore the only person for whom the ALJ has the power to determine fault or impose liability.
Because the issue before him was solely whether Plaintiff was at "fault" as that relates to the overpayment, and because, as will be discussed in greater detail below, the record contained substantial evidence on this point allowing the ALJ to reach a "fault" determination without subpoenaing Mr. Cartwright, the ALJ's denial of Plaintiff's subpoena request does not constitute grounds for remand in the case at bar; Plaintiff's contention on this point fails.
Plaintiff argues that, by not subpoenaing Mr. Cartwright to testify, the ALJ did not consider all available evidence, and therefore, the ALJ's "fault" determination was not supported by substantial evidence. Docket No. 8 at 6-7. As noted above, Plaintiff contends that, "Had the judge heard the testimony of Daniel Cartwright, the judge could have found joint and several liability or individual liability." Id. at 6. Plaintiff also contends that, "Had Mr. Cartwright been present at the hearing, [Plaintiff] would have expected that he would have testified that the benefit payments were exclusively being used for the minor children," and "This sort of evidence would have lead to a different conclusion" by the ALJ. Id. at 7.
As discussed above, Mr. Cartwright is not a party to this lawsuit, nor was his case before the ALJ. Accordingly, the ALJ simply could not have found that Mr. Cartwright was jointly and severally liable or individually liable. As to Plaintiff's contention that Mr. Cartwright would have testified that she used his benefits to care for their minor children, what she used the money for was not relevant since the determination had already been made (and was not being challenged) that Mr. Cartwright's disability ceased in 2002 and that benefits beyond April 2002 should not have been paid in the first place. Plaintiff's arguments on this point fail.
Turning to the ALJ's "fault" determination and supporting evidence therefor, the ALJ explained in relevant part as follows:
TR 14-15.
As can be seen, the ALJ discussed Plaintiff's hearing testimony and the evidence of record, and explained his rationale for determining that Plaintiff was "not `without fault'" in causing the overpayment. Id. Interestingly, other than denying the subpoena request for Mr. Cartwright and not soliciting testimony therefrom, Plaintiff has not contended that the ALJ either failed to consider, or erroneously considered, the evidence of record, nor has Plaintiff contested the fact that she acknowledged that she was "not `without fault'" in causing the overpayment.
The ALJ properly considered the evidence of record, reached a reasoned decision that was supported by substantial evidence, explained the rationale for his decision, and properly determined that Plaintiff was "not `without fault'" in causing the overpayment. As discussed above, because "fault" is a threshold issue, the ALJ in the instant action did not need to proceed and determine whether recovery of the overpayment would defeat the purpose of Title II of the Act as defined in 20 C.F.R. § 404.507, or would be against equity and good conscience as defined in 20 C.F.R. § 404.509. As also discussed above, because Mr. Cartwright is not a party to this action, nor was his case before the ALJ, the ALJ cannot make Plaintiff's requested "fault" determination regarding Mr. Cartwright, hold him jointly and severally liable for the overpayment, or find him solely responsible for the full overpayment. Remand can neither provide Plaintiff with the relief she seeks, nor is it warranted. Plaintiff's arguments fail.
For the reasons discussed above, the undersigned recommends that Plaintiff's Motion for Judgment on the Administrative Record (Docket No. 8) be DENIED, and that the decision of the Commissioner be AFFIRMED.
Under Rule 72(b) of the Federal Rules of Civil Procedure, any party has fourteen (14) days after service of this Report and Recommendation in which to file any written objections to this Recommendation with the District Court. Any party opposing said objections shall have fourteen (14) days after service of any objections filed to this Report in which to file any response to said objections. Failure to file specific objections within fourteen (14) days of service of this Report and Recommendation can constitute a waiver of further appeal of this Recommendation. See Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L. Ed. 2d 435 (1985), reh'g denied, 474 U.S. 1111 (1986); 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72.
