MEMORANDUM

ALETA A. TRAUGER, District Judge.

I. INTRODUCTION

Plaintiff Susan Unice brought this action in the district court pursuant to 42 U.S.C. § 405(g) and 1383(c) seeking judicial review of the decision of the Social Security Administration (SSA) through its Commissioner (the Commissioner) that plaintiff and her daughter were overpaid disability benefits under Title II of the Social Security Act (the Act), 42 U.S.C. §§ 416(I) and 423(d), and that recovery of the overpayment would not be waived.

Presently before the court are plaintiff's objections (Doc. 30) to the Magistrate Judge's July 12, 2017 Report and Recommendation (R&R) (Doc. 29) that recommended plaintiff's motion for judgment on the administrative record (Doc. 18) be GRANTED IN PART and DENIED IN PART, the Commissioner's decision be AFFIRMED IN PART and REVERSED IN PART, and this action be REMANDED for further consideration and explanation regarding the overpayment of benefits to plaintiff and her daughter. The commissioner did not reply to plaintiff's objections.

II. STANDARD OF REVIEW

When a magistrate judge enters a R&R regarding a dispositive matter, the district court must review de novo any portion, proposed findings, or recommendations in the R&R to which a proper objection is made. 28 U.S.C. § 636(b)(1); Rule 72(b)(3), Fed. R. Civ. P.. In conducting its review, the district court may accept, reject, modify the recommended disposition in whole or in part, receive further evidence, or return the matter to the magistrate judge with instructions. 28 U.S.C. § 636(b)(1); Rule 72(b)(3), Fed. R. Civ. P..

The district court's review of the Commissioner's final decision in a Social Security case is limited to determining whether the Commissioner's decision is supported by substantial evidence in the record, and whether the decision was made pursuant to proper legal standards. 42 U.S.C. §§ 405(g) and 1381(c); Gayheart v. Comm'r of Soc. Sec., 710 F.3d 365, 374 (6th Cir. 2014). Substantial evidence is less than a preponderance but more than a scintilla; it refers to relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389, 401 (1971); see Gentry v. Comm'r of Soc. Sec., 741 F.3d 708, 722 (6th Cir. 2003). The Commissioner's decision must stand if substantial evidence supports the conclusion reached, even if the evidence supports a different conclusion. Gayheart, 710 F.3d at 374.

III. PROCEDURAL HISTORY

The procedural history set forth in the R&R (Doc. 29, pp. 1-2) has been reviewed, deemed factually correct, and is incorporated herein by reference.

IV. FACTUAL BACKGROUND

Plaintiff asks the court "to carefully review all of the facts and testimony contained in the record and to minimally rely on [the Magistrate Judge's] recitation of the facts in the R&R" (Doc. 30, p. 4) because, according to plaintiff, the Magistrate Judge misrepresented the facts, including portions of plaintiff's testimony at the February 20, 2014 hearing (the hearing) before Administrative Law Judge (ALJ) Joan Knight (Doc. 16, pp. 405-44). (Doc. 30, pp. 2-4) Plaintiff's claims of misrepresentation are addressed below.

Plaintiff asserts first that the Magistrate Judge "misquoted" "the phrase `everything that's done' out of context" (Doc. 30, p. 2) in her testimony at the hearing when he wrote:

(Doc. 29, p. 3)(bold and underline added) Plaintiff maintains that the text in bold above "overstates [plaintiff's] efforts and abilities" because she also testified that she "just overs[aw] the expenses." (Doc. 30, p. 2)(bold omitted)

Plaintiff's testimony at the hearing that is relevant to the portion of the R&R quoted above is as follows:

(Doc. 16, pp. 420-23)(bold added) Upon subsequent questioning by counsel, plaintiff testified that her "day-to-day" participation in the business was "overseeing the financial end and . . . sometimes the legal end of things." (Doc. 16, p. 437)

As shown above, the Magistrate Judge did not "misquote" plaintiff statement, "[e]verything that's done." Moreover, read in its entirety, the portion of the R&R quoted above at p. 3 accurately reflects plaintiff's complete testimony, and does not "overstate[]" her participation in the activities of the company.

Plaintiff asserts next that the Magistrate Judge "removed critical context" from plaintiff's testimony "regarding overseeing the financial and sometimes legal end of things" by omitting plaintiff's clarification of what she meant by "overseeing." (Doc. 30, pp. 2-3) The term "overseeing" refers to the underlined text in the excerpt from the R&R quoted above at page 3. Plaintiff asserts that, "[b]y overseeing . . . [she] . . . meant protecting her financial interest only, but not working for the company overseeing operations as the judge implies." (Doc. 30, pp. 2-3)

Plaintiff fails to explain the "critical" difference between working to oversee the financial and legal matters of the company and working to protect one's financial interest, or how the absence of reference to the latter calls the accuracy of the Magistrate Judge's recitation of the facts into question. Working is working. In any event, referring to the transcript of the hearing, the Magistrate Judge did in fact note that plaintiff's "activity in the business was primarily to protect her interest in the company. (Id. 434, 437)." (Doc. 29, p. 4) Again, read in its entirety, the R&R accurately reflects plaintiff's testimony at the hearing.

Next, plaintiff asserts that the Magistrate Judge's "comments about activities performed by [plaintiff] as if they were extensive, though in reality, these activities were minimal," noting as examples such activities as: making bank deposits, signing contracts, paying bills, drafting documents, preparing taxes, and writing checks. (Doc. 30, p. 3) The Magistrate Judge wrote in the R&R that plaintiff and her husband "advertised available job openings online," but that plaintiff "was responsible for preparing and signing . . . contracts . . . mak[ing] bank deposits . . . and . . . paying business expenses with checks." (Doc. 29, p. 4) The Magistrate Judge also noted plaintiff's testimony that "[p]ayroll, monthly expenses, taxes, and employee hour schedules were performed by another individual." (Doc. 29, p. 4)

Plaintiff does not dispute whether plaintiff actually performed the activities identified by the Magistrate Judge, only that the tenor of the R&R misleads the reader into believing that those activities were "extensive." A plain reading of the R&R shows that the Magistrate Judge addressed these activities without adjectives, adverbs, or descriptive expressions that would lead a reasonable person to interpret them as "extensive." Once again, the R&R accurately reflects the facts.

Plaintiff asserts next that she "never used the terminology `erased' in reference to the overpayment" that is at the heart of this matter. (Doc. 30, p. 3) The Magistrate Judge did not attribute the word "erased" to plaintiff when he wrote: "Because Plaintiff has amended her tax returns for years 2009 and 2010 to claim her business earnings as passive income and not subject to the social security tax, Plaintiff argues that any potential overpayment has been erased." (Doc. 29, p. 9) He did, however, refer to Doc. 18-1, pp. 12-14 — plaintiff's December 30, 2016 brief in the District Court of Arizona — in which plaintiff made the following argument: "Ms. Unice provided her amended tax returns effectively erasing the alleged `self-employment' income and rendering it not subject to social security tax." (Doc. 18-1, p. 14)(bold added) Apart from tense, the verb "erased" is the same as the verb "erasing." This argument is frivolous.

Finally, plaintiff challenges the Magistrate Judge's statement: "`Plaintiff has introduced nothing to suggest that self-employment income considered for SGA [substantial gainful activity] must be subject to the self-employment income tax or otherwise entitle the employee to a credit.'" (Doc. 30, pp. 3-4) The statement that plaintiff objects to is found in ¶ IV.A.2 in the R&R. (Doc. 29, p. 9) Plaintiff asserts that she "has produced evidence showing payment of self-employment tax due to the self-employment income that was incorrectly characterized as non-passive. (AR[2] at 205) (line 56), 215, 250 (line 56) and 256.)" (Doc. 30, p. 4) The foregoing references to the administrative record are copies of plaintiff's 2009 and 2010 federal income tax returns which, as discussed below at pp. 7-8, were amended following the hearing. Plaintiff misconstrues the R&R. The Magistrate Judge meant that plaintiff has not provided any argument, references to the record, or citation to relevant authority to support her argument, not that she failed to file any documents that showed she amended her tax returns. The R&R again does not misstate or misconstrue the facts.

As shown above, plaintiff's request that the "Court . . . carefully review all of the facts and testimony in the record and to minimally rely on [the Magistrate Judge's] recitation of the facts" is groundless. As plaintiff makes no other claims of defect as to the Magistrate Judge's recitation of the facts, and as no other defects have come to light in this review, the Magistrate Judge's recitation of the facts is deemed correct and incorporated herein by reference.

V. PLAINTIFF'S OBJECTIONS TO THE R&R

A. Whether the Magistrate Judge Erred in Determining That Plaintiff's Amended 2009 and 2010 Tax Returns Precluded a Finding of SGA3,4

(Doc. 30, pp. 4-5)

Plaintiff argues that the Magistrate Judge erred in characterizing the reclassification of her 2009 and 2010 earnings from self-employment income to investment activity as a "red herring." (Doc. 30, pp. 4-5) The "red herring" reference is found in the Magistrate Judge's analysis of whether plaintiff's amended returns for tax years 2009 and 2010 precluded a finding of SGA, and his ultimate conclusion that they did not. (Doc. 29, pp. 9-10)

Citing 20 C.F.R. § 404.1572(b), plaintiff acknowledges that "`[a] self-employed individual may be engaged in SGA regardless of whether she has an income,' and `[w]ork may be `gainful' regardless of whether a profit is received.'" (Doc. 30, p. 5) Plaintiff argues, however, that § 404.1572(b)5 "does not and should not apply because [her] earnings were due to a return from investment; not compensation for any work activity."6 (Doc. 30, p. 5)

Plaintiff asserts that her "income from . . . investment activity is known as unearned or passive income, which is not subject to self-employment tax." (Doc. 30, p. 5) Plaintiff cites 42 U.S.C. §§ 411, 1382a, 26 U.S.C. §§ 469, 1401 and 1402 in support of her underlying argument that this recharacterization of income precludes a finding of SGA. However, plaintiff makes no effort to explain how these statutory references show that her amended tax returns preclude a finding of SGA, nor has the court's own review of these statutory references yielded such a conclusion. Consequently, this claim of error is without merit.

B. Whether the Magistrate Judge Erred in Determining That the Sedentary Nature of Plaintiff's Work Is Irrelevant and That Plaintiff's Residual Functional Capacity Has No Bearing on Whether She Participated in SGA

(Doc. 30, pp. 5-8)

Plaintiff asserts that the "sedentary nature of [her] alleged work activities is highly relevant," and that the Magistrate Judge's determination to the contrary is "clearly erroneous." (Doc. 30, p. 5) This argument pertains to the Magistrate Judge's analysis in paragraph IV.A.3 at p. 10 of the R&R, the relevant portion of which is quoted below for convenience of reference:

(Doc. 29, p. 10) Title 40 U.S.C. § 423(f), the standard of review for terminating disability benefits, provides that benefits may be terminated whether, or not, the claimant has improved medically if the claimant is engaged in SGA. Katz held that "[I]t is not necessary to show medical improvement 2010 federal income tax returns to avoid having to repay benefits improperly received after the administrative hearing. where SGA is the issue." Katz, 972 F.2d at 293. Geschke repeated the holding in Katz that "medical improvement is irrelevant where SGA is at issue." Geschke, 393 Fed.Appx. at 472-73.

Plaintiff argues first that the Magistrate Judge "misapplied" § 423(f). However, following a discussion of the background surrounding her initial award of benefits, plaintiff summarizes her argument as follows: "The Secretary has not presented any evidence that [plaintiff] no longer qualifies under the Medical-Vocational Guidelines." (Doc. 30, p. 6) Whether the Secretary has or has not presented any evidence that plaintiff no longer qualifies for benefits under the Medical-Vocational Guidelines is not relevant to whether plaintiff is engaged in SGA. In other words, the issue does not turn on whether or not plaintiff is qualified medically for benefits; it turns on whether plaintiff engaged in SGA. Plaintiff's first argument is without merit.

Plaintiff argues next that the Magistrate Judge erred in relying on Katz arguing that Katz "is distinguishable because the court determined that earnings beyond a certain guideline created a rebuttable presumption of SGA." (Doc. 30, p. 7) Plaintiff argues further that she "has rebutted the presumption of SGA by a showing with substantial evidence that her income was passive." (Doc. 30, p. 7)

Plaintiff is correct that Katz provides that the SGA "earnings presumption can be rebutted" by considering various factors, e.g., "the amount earned, time spent working, quality of the claimant's performance, special working conditions, and the possibility of self-employment." Katz, 972 F.2d at 293. However, as noted above, plaintiff argues that she "has rebutted the presumption of SGA by showing with substantial evidence that her income was passive." The nature of one's income is not one of the factors considered under Katz. Consequently, plaintiff's second argument is without merit.

Finally, plaintiff asserts that the "Medical-Vocational Rules were . . . overhauled to the extent that may render some of the Court's decision in Katz inapplicable." (Doc. 30, pp. 7-8) Plaintiff provides no factual allegations, references to the record, or citations to relevant authority in support of this apparent argument.

Assuming that plaintiff's reference to an overhaul of the "Medical-Vocation Rules" is intended as an argument, plaintiff has provided no factual allegations, references to the record, or citations to relevant authority in support of such an argument. The district court is not obligated on judicial review to supply factual allegations in support of claims where no facts are alleged. See Hollon ex rel. Hollon v. Comm'r of Soc. Sec., 447 F.3d 477, 491 (6th Cir. 2006)("[W]e decline to formulate arguments on [appellant's] behalf"). Consequently, this argument is waived. See Moore v. Comm'r of Soc. Sec., 573 Fed.Appx. 540, 543 (6th Cir. 2014)(citing United States v. Stewart, 628 F.3d 246, 256 (6th Cir. 2010)("Issues averted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived. It is not sufficient for a party to mention a possible argument in the most skeletal way, leaving the court to . . . put flesh on its bones.").

Plaintiff's second claim of error is without merit for the reasons explained above.

C. Whether the Magistrate Judge Erred in Finding That Substantial Evidence Supports the ALJ's Conclusion That Repayment Would Not Be Against Equity and Good Conscience

(Doc. 30, pp. 8-12)

Plaintiff asserts that the Magistrate Judge's determination that "substantial evidence supports the ALJ's conclusion that over payment would not be against equity and conscience'" was "clearly erroneous." (Doc. 30, pp. 8-12) More particularly, plaintiff asserts that the ALJ "did not apply `a broad concept of fairness' to [her] waiver request,'" and that the ALJ misapplied Quinlivan, as did the Magistrate Judge. (Doc. 30, p. 10)

Plaintiff argues first that the Magistrate Judge erred in relying on Heiss v. Colvin, No. 1:14-cv-01595-PA, 2015 WL 9165895 (D. Or. Dec. 16, 2015) and Redfern v. Berryhill, No. 15-cv-03883-JSC, 2017 WL 818856 (N.D. Ca. Mar. 2, 2017) because neither case constitutes "binding authority, and because both cases "apply the same narrow exceptions that "the Ninth Circuit discouraged in Quinlivan v. Sullivan, 916 F.2d 524, 527 (9th Cir. 1990)"7 to which plaintiff cites with approval. (Doc. 30, pp. 8-9) As shown below at n. 7, the Ninth Circuit's holding in Quinlivan was — in essence — that the "broad language" in 20 C.F.R. § 404.509(a) "`against equity and good conscience'" "requires the trier of fact to draw upon precepts of justice and morality, rather than the comparatively rigid and specific rules found in the regulation." Quinlivan, 916 F.2d 526.

The Magistrate Judge correctly stated the holding in Quinlivan, and applied that holding correctly throughout his analysis in the R&R, using Heiss and Redfern as examples. (Doc. 29, pp. 13-15) Although plaintiff argues — correctly — that neither Heiss nor Redfern constitutes binding authority, they are instructive and, as such, constitute persuasive authority on this issue. More particularly, Heiss demonstrates the application of Quinlivan to a case that is factually similar to plaintiff's in the context of the strength of a claimant's ability to repay the overpayment of benefits, and Redfern demonstrates the application of Quinlivan in a case where the claimant was not required to repay because he barely was "making ends meet." Both cases demonstrate the application of the notions of equity, good conscience, and fairness articulated in Quinlivan. Plaintiff's argument that the Magistrate Judge erred in relying on Heiss and Redfern is without merit.

As noted above, plaintiff's overarching argument is that the ALJ did "not apply `a broad concept of fairness'" to her waiver of repayment request, that the ALJ misapplied Quinlivan, and that the Magistrate Judge erred in determining the "ALJ's conclusion that repayment would not be against equity and good conscience." (Doc. 30, pp. 8, 10-11)

The ALJ wrote the following in determining that overpayment would not defeat the purpose of Title II and would not be against equity and good conscience:

(Doc. 16, p. 27)(bold added)

Apart from asserting that the ALJ did not apply a broad concept of fairness in her decision, plaintiff does not specify what else the ALJ should have considered that would have made a difference and why.8 Apart from asserting that the ALJ misapplied Quinlivan, plaintiff does not explain that either, nor is the alleged misapplication apparent from the excerpt of the decision quoted above at p. 12. Plaintiff simply asserts that the ALJ misapplied the holding. Assuming for the sake of argument that plaintiff's position is that the apparent focus in the decision on the strength of plaintiff's ability to repay was improper under Quinlivan, plaintiff provides no argument or citation to relevant authority that Quinlivan trumps the requirement to repay in situations where, as here, the claimant can afford to repay without violating the notions of equity, good conscience, or the broad concept of fairness. Neither has plaintiff shown that reference to "equity and good conscience" in the context of statutory authority governing repayment violates Quinlivan.

As shown in the excerpt from the ALJ's decision quoted above at p. 12, the ALJ applied the standard under Quinlivan and — although not determinative — even went so far as citing Quinlivan in her decision. Plaintiff also has failed to show that the ALJ misapplied Quinlivan. Accordingly, the Magistrate Judge did not err in concluding that repayment would not be against equity and good conscience. This argument is without merit.

Finally, plaintiff argues that the Magistrate Judge erred in concluding that plaintiff raised this issue for the first time in her reply to defendant's response and, as such, it is procedurally waived. (Doc. 30, p. 12) The issue here turns on whether the ALJ's decision, as quoted above at p. 12, was supported by substantial evidence, and whether the Magistrate Judge was correct in his analysis of the ALJ's decision on this point — not whether the Magistrate Judge misstated the procedural rule on waiver. In any event, the Magistrate Judge addressed this issue in the R&R. (Doc. 29, pp. 15-16) Consequently, this argument is frivolous.

VI. CONCLUSION

For the reasons explained above, the Court will: 1) OVERRULE plaintiff's objections to the R&R (Doc. 30); 2) ACCEPT and ADOPT the R&R (Doc. 29) as the court's's findings of fact and conclusions of law; 3) GRANT IN PART and DENY IN PART plaintiff's motion for judgment on the administrative record; 4) AFFIRM IN PART and DENY IN PART the Commissioner's decision; 5) and this action be REMANDED for further consideration and explanation regarding the overpayment of benefits to plaintiff and her daughter. An appropriate order is entered herewith.