Nadeau v. SSA 05-CV-020-SM 01/19/06 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Leon Nadeau, Claimant
v. Civil No. 05-CV-20-SM Opinion No. 2006 DNH 006 Jo Anne Barnhart, Commissioner, Social Security Administration, Respondent
O R D E R
Pursuant to 42 U.S.C. § 405(g), claimant, Leon Nadeau, moves
to reverse and remand the Commissioner's decision that he
received an overpayment of Social Security disability insurance
benefits and that he is not entitled to a waiver of recovery of
that overpayment because he was not without fault in procuring
it. The Commissioner, in turn, moves for an order affirming her
decision. For the reasons given below, the decision of the
Administrative Law Judge ("ALJ") is affirmed.
Standard of Review
The applicable standard of review in this case provides, in
pertinent part: The [district] court shall have power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Commissioner of Social Security, with or without remanding the cause for a rehearing. The findings of the Commissioner of Social Security as to any fact, if supported by substantial evidence, shall be conclusive
42 U.S.C. § 4 0 5 (g).
The Commissioner's findings of fact be supported by
substantial evidence. "The substantial evidence test applies not
only to findings of basic evidentiary facts, but also to
inferences and conclusions drawn from such facts." Alexandrou v.
Sullivan. 764 F. Supp. 916, 917-18 (S.D.N.Y. 1991) (citing Levine
v. Gardner. 360 F.2d 727, 730 (2d Cir. 1966)). In turn,
"[s ]ubstantial evidence is 'more than [a] mere scintilla. It
means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.'" Currier v. Sec'v of H EW. 612
F.2d 594, 597 (1st Cir. 1980) (quoting Richardson v. Perales. 402
U.S. 389, 401 (1971)). Finally, when determining whether a
decision of the Commissioner is supported by substantial
evidence, the court must "review[] the evidence in the record as
a whole." Irlanda Ortiz v. Sec'v of H HS. 955 F.2d 765, 769 (1st
2 Cir. 1991) (quoting Rodriquez v. Sec'v of H HS. 647 F.2d 218, 222
(1st Cir. 1981) ) .
Background
The following summary of the factual background of this case
is drawn from the Joint Statement of Material Facts (document no.
15, hereinafter "Jt. Statement") and the Administrative
Transcript (hereinafter "Tr.").
On January 28, 1997, Nadeau was sent an award letter,
informing him that he was found to be disabled as of November 8,
1995, and was entitled to benefits starting in May 1996. He also
received workers's compensation benefits, which ended with the
payment of a lump-sum settlement on March 17, 2000. (Tr. at 46-
47 .)
During the time periods relevant to the matter before the
court, Nadeau was paid the following disability benefits: $109
per month from July through November 1999, $135 per month for
December 1999 and March 2000, $1091 per month from April 2000
through November 2000, and $1129 per month from December of 2000
3 through January 2001. (Jt. Statement at 3.) (Nadeau's benefit
history is complicated somewhat by a retroactive payment of $5736
in October 2000, but based on the Joint Statement of Material
Facts, all agree the effect of the retroactive payment was to
increase Nadeau's effective monthly benefit to $1091 from April
through October 2000.) Nadeau's last regular benefit check was
for January 2001.
Nadeau returned to work in July 1998, and earned $2154.50
that month, $1616.10 in August, $1582.35 in September, $2091.70
in October, $1641.65 in November, and $2052.43 in December. He
also worked in each month of 1999, earning between $794
(December) and $2336.42 (July) per month. (Jt. Statement at 4.)
According to claimant's own testimony, he worked from March 2000
through the date of his March 13, 2003, hearing (Tr. at 37), but
his earnings during that period are not included in the Joint
Statement of Material Facts.1
1 In his decision, the ALJ referred to "Administrative electronic records indicat[ing] that the claimant received from G.V. Moore Lumber Co., Inc. earnings of $22,432.10 in 2000, $30,254.31 in 2001, and $32,879.24 in 2002." (Tr. at 12.) Copies of the "Administrative electronic records" on which the ALJ relied are not included in the Administrative Transcript. Claimant criticizes the Commissioner and the ALJ for failing to subpoena his 2000, 2001, and 2002 pay stubs, but, when he had the
4 By letter dated February 24, 2002, the Social Security
Administration ("SSA") informed Nadeau that he had been paid
$11,808 in benefits to which he was not entitled. That letter
stated, in relevant part:
Earlier, we wrote to tell you that we had information about your work and earnings that could affect your Social Security disability payments. We also told you that we planned to decide that your disability ended because of your substantial work. We are now writing to tell you our decision.
We have decided that your disability has ended and that you are not entitled to Social Security disability payments for July 1999 through December 1999 and beginning March 2000.
Information About Your Payments
Your payments continued during your period of 9 trial work months while you tested your ability to work. Your trial work period ended March 1999.
You are entitled to payments for January 2000 through February 2000 because your work was not substantial for that time. However, you are not entitled to payments beginning March 2000 because you returned to substantial work.
chance, he did not introduce those pay stubs into evidence at his hearing, and he does not now assert that they demonstrate earnings below the level necessary to establish substantial gainful activity.
5 (Tr. at 82.) Nadeau filed a Request for Reconsideration in which
he stated:
I disagree with the alleged amount of the overpayment. I was not overpaid $11,808.00. An earlier notice told [me] I was overpaid July 1999 to December 1999. That does not equal $11,808.00. I also did not receive any disability benefits in 2002. I notified Social Security when I went back to work.
Please provide me with a month by month breakdown of this alleged overpayment and proof that I received benefits in 2002.
(T r . at 52, 54 .)
In response, Nadeau received the following special
determination dated May 10, 2002:
You received $64.00 for the month of 07/99. Because of increases paid in a check for $315.00 in 08/99, your effective [payment] for 07/99 was $109.00.
You were paid $109.00 for 8/99 through 11/99 and $135.00 for 12/99 through 03/00.
Even though your checks for the period 04/00 through 10/00 were $135.00 per month, the effective [payment] was increased by a retroactive amount paid in 10/00. The retroactive check of $5736.00 you received in 10/00 effectively increased your monthly benefit amount to $1091.00 effective 04/00. Thus, you were paid $1091.00 per month for the period 04/00 through 09/00.
6 Your actual payments for 10/00 and 11/00 were $1091.00 per month.
You were also paid $1129.00 for 12/00 and 01/01.
No Social Security payments were made after the 02/03/01 check.
Based on your work and earnings, no benefits are payable for 07/99 through 12/99 and 03/00 and thereafter.
Thus, the overpayment is calculated as follows:
$109.00 per month for 07/99 through 11/99= $545.00 $135.00 for 12/99= $135.00 $135.00 for 03/00= $135.00 $1091.00 per month for 04/00-11/00= $8728.00 $1129.00 per month for 12/00 and 01/01= $2258.00
This totals $11801.00
You received a retroactive check in 2001 because of a cost of living correction. Because of your work $7.00 was not due.
Thus the total overpayment is correct as is- $11808.00
(Tr. at 55). Nadeau responded by filing a Request for Hearing by
Administrative Law Judge, dated June 26, 2000, in which he
stated: "I think I am without fault in creating the overpayment.
It would be against equity and good conscience to try and collect
this overpayment. No explanation was given for alleged increases
in checks for 8/99 or 10/00. The whole explanation is very
confusing." (Tr. at 65.)
7 In the notice of hearing the ALJ sent Nadeau, the issues to
be addressed were set out as follows:
The general issues are whether you were overpaid benefits within the meaning of section 1631 of the Social Security Act and, if so, whether recovery of the overpayment may be waived.
The specific issues are whether you were "without fault" as defined in Social Security regulation 416.552 in causing the overpayment and, if so, whether recovery of the overpayment would (1) defeat the purpose of Title XVI of the Act, as defined in Social Security regulation 416.553, (2) be against equity and good conscien[c]e as defined in Social Security regulation 416.554.
(Tr. at 70.) By letter dated February 26, 2003, Nadeau's counsel
disputed inclusion of the waiver issue, noting that Nadeau had
"not yet requested a waiver [of recovery], as [he was]
challenging the amount and circumstances surrounding these lump
sum payments in 2000, as well as whether Social Security properly
calculated [his] trial work period from July 1998 to March 1999."
(T r . at 7 7.)
ALJ Frederick Harap held a hearing on March 13, 2003, after
which Nadeau's counsel filed a letter/memorandum arguing that
"claimant's overpayment claim should be dismissed . . . for a failure by SSA to provide [him] with the necessary information to
adequately respond to a claimed overpayment of $11,808.00."
(Tr. at 79.) Counsel went on to identify several specific types
of information that were not provided: (1) copies of all Social
Security checks Nadeau endorsed during the relevant time period;
(2) an explanation of how Nadeau's trial work period was applied
against the period of alleged overpayment; and (3) a workers'
compensation offset worksheet. (Tr. at 79-80.)
ALJ Harap's decision includes the following relevant
findings of fact:
1. The claimant completed his nine-month trial work period in March 1999.
2. The claimant began a 36-month reentitlement period in April 1999 which continued through March 2002.
3. The claimant continued working at a substantial gainful activity level in April 1999; his disability therefore ceased as of that month with benefits continuing through June 1999.
4. The claimant continued to engage in substantial gainful activity during the reentitlement period in the months of July 1999 through December 1999 and March 2000 through March 2002.
5. The claimant was not entitled to receive benefits during th[o]se months in which he engaged in
9 substantial gainful activity during the reentitlement period.
6. The claimant received a total of $11,808.00 paid in months in which he engaged in substantial gainful activity during the reentitlement period to which he was not entitled; this total of $11,808.00 constitutes an overpayment.
7. The claimant failed to report his work activity to the Administration, constituting a failure to provide information which he knew or reasonably should have known t[o] be material.
8. The claimant was not without fault in procuring the overpayment (20 CFR § 404.507).
9. Recovery of the overpayment totaling $11,808.00 is not waived (20 CFR § 404.506).
(Tr. at 15-16.)
Discussion
Claimant advances two arguments. First, he contends that
the Commissioner failed to properly develop the record before
issuing a notice of overpayment. In particular, he points to the
Commissioner's failure to provide copies of the benefit checks he
is alleged to have received and to SSA's failure to explain the
operation of the trial work provisions and the extended-period-
of-eligibility program. Second, he argues that the ALJ's
determination that he was not without fault in procuring the
10 overpayment is not supported by substantial evidence because of
the SSA's failure to: (1) promptly adjust his monthly benefit
upon settlement of his workers compensation claim; and
(2) explain to him the nature of the payments he received in 1999
and 2000. Based upon the foregoing, claimant asks the court to:
(1) remand the Commissioner's decision to deny reconsideration
regarding the amount of overpayment for further factfinding and
development; and (2) reverse or remand the Commissioner's
decision denying waiver of recovery, because that issue was not
properly before the ALJ and because the ALJ's decision was not
supported by substantial evidence. Respondent objects,
categorically, and also points out that claimant does not deny
receiving the benefits at issue here, nor does he deny working
from March 2000 through March 2002, as found by the ALJ.
A. The Relevant Law
The Social Security Act provides, in pertinent part:
With respect to payment to a person of more than the correct amount, the Commissioner of Social Security shall . . . require such overpaid person or his estate to refund the amount in excess of the correct amount
11 42 U.S.C. § 404(a)(1)(A). The statute further provides:
In any case in which more than the correct amount of payment has been made, 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 subchapter or would be against equity and good conscience. In making for purposes of this subsection any determination of whether any individual is without fault, the Commissioner of Social Security shall specifically take into account any physical, mental, educational, or linguistic limitation such individual may have (including any lack of facility with the English language).
42 U.S.C. § 404(b). A Social Security recipient who has been
overpaid may take advantage of the foregoing provision by
requesting a waiver of adjustment or recovery, under procedures
described in 29 C.F.R. § 404.501 et sea.
While the Social Security Act does not indicate which party
bears the burden of proving the fact and amount of overpayment,
the three circuits that have addressed the issue "held that the
Commissioner has this burden." McCarthy v. Apfel, 221 F.3d 1119,
1124 (9th Cir. 2000) (citing Cannuni ex rel. Cannuni v.
Schweiker, 740 F.2d 260, 263 (3d Cir. 1984); United States v.
Smith. 482 F.2d 1120, 1124 (8th Cir. 1973)). On the other hand.
12 "the individual [seeking waiver of recovery] bears the burden of
establishing that he has met the requirements of § 404(b) of the
Social Security Act." Banuelos v. Apfel. 165 F.3d 1166, 1170
(7th Cir. 1999), overruled on other grounds, (citation omitted);
see also Valente v. Sec'v. H HS. 733 F.2d 1037, 1042 (2d Cir.
1984); Sierakowski v. Weinberger. 504 F.2d 831, 836 (6th Cir.
1974) .
B. Overpayment
Claimant asks the court to remand for further factfinding on
the issue of overpayment, arguing that the ALJ's decision was
either not supported by substantial evidence or rested on
information not made part of the record. There is no cause for
remand.
The Joint Statement of Material Facts lists the benefits
claimant received from July 1999 through January 2001, and also
lists his earnings from July 1998 through December 1999. Those
stipulated facts establish: (1) a trial work period running from
July 1998 through March 1999, see 42 U.S.C. § 422(c); 20 C.F.R.
§ 1592; (2) ineligibility for benefits from July through December
13 1999, see 20 C.F.R. § 1592a; and, consequently, (3) an
overpayment for that period. At issue is the ALJ's determination
that claimant was overpaid from March 2000 through January 2001,
due to his substantial gainful employment.2
While claimant's employment history from March 2000 onward
is not documented by a Form SSA-L725, as is his employment from
July 1998 through December 1999, claimant testified at his
hearing that he had been employed, continuously from March 2000
onward, by J.B. Morria's Lumber. In addition to that testimony,
the ALJ relied upon certain "Administration electronic records"
that he described in his decision but did not include in the
Administrative Transcript. Claimant contends that the
Commissioner is at fault for not interviewing him concerning his
earnings at J.B. Morria, or asking him to produce his pay stubs.
But claimant did not testify at his hearing (nor does he now
claim) that his earnings at J.B. Morria fell below the threshold
for establishing substantial gainful employment. Because
2 While claimant argues at some length, in his brief, that he challenges the sufficiency of the evidence on which the ALJ based his findings concerning the amount of benefits claimant was paid, that argument would seem to be mooted by the Joint Statement of Material Facts.
14 claimant does not now contend that he was not gainfully employed,
had the opportunity to testify regarding his earnings, and could
have placed his pay stubs into evidence at his hearing but did
not do so, there is little reason to think that remand would
result in the presentation of evidence favorable to claimant with
regard to his gainful employment status. Moreover, claimant's
testimony about his continuous employment, coupled with his
failure to testify that he earned less than the threshold amount
for substantial gainful employment, constitutes substantial
evidence that claimant was engaged in substantial gainful
employment from March 2000 through March 2002, the end of his
reentitlement period. Accordingly, the Commissioner's decision
regarding overpayment is affirmed.
C. Waiver of Recovery
The ALJ determined that claimant did not qualify for a
waiver of recovery. Claimant advances two arguments in
opposition: 1) that the decision should be reversed because the
question of waiver was never properly before the ALJ; and 2) that
the issue should be remanded for further factfinding. Both
arguments lack merit.
15 Claimant's argument that the ALJ should not have considered
the waiver issue is not well-founded, given that claimant
introduced that issue into the case in the first place. In his
April 18, 2002, Request for Reconsideration, claimant challenged
the amount SSA said he had been overpaid. (Tr. at 52.) In his
June 26, 2002, Request for Hearing by Administrative Law Judge,
claimant stated he wanted a hearing because: "I think I am
without fault in creating the overpayment. It would be against
equity and good conscience to try and collect this overpayment."
(Tr. at 65.) Not coincidentally, claimant's statement of the
issues precisely tracked the statutory criteria for granting a
waiver of recovery. Given that claimant's request for a hearing
plainly raised the recovery waiver issue, it is difficult to see
how he can now argue that the issue of waiver was not properly
before the ALJ. Moreover, Nadeau did not assert, in his Request
for Hearing, that SSA wrongly determined that he had been
overpaid or wrongly calculated the amount of overpayment, leaving
waiver of recovery the only issue squarely raised for the ALJ's
consideration. Resolution of that issue by the ALJ denied
claimant the opportunity to take advantage of the procedures
16 described in 29 C.F.R. § 404.501 et se a ., but bypassing those
procedures was claimant's own choice.
Claimant's substantive argument that the ALJ wrongly
determined he was not eligible for a waiver of recovery rests on
the confusing history of his benefit payments which includes,
among other things, increases in benefits that were not explained
to him, confusion surrounding the interplay between his workers'
compensation benefits and his Social Security benefits, and a
large retroactive benefit payment he received in October 2000.
Claimant may well have been confused about the payments he
received, but the fact remains that he engaged in substantial
gainful employment for eighteen consecutive months, beginning in
July, 1998, thus completing a nine-month trial work period in
March 1999. Moreover, whether he was confused at the time or
not, claimant offers no legal theory or facts that would support
a reasonable belief that he was entitled to Social Security
benefits from July through December 1999, or from March 2000
onward.3 Yet, he continued to collect checks from SSA.
3 Claimant's counsel suggests he believed claimant was entitled to a trial work period from April 2000 through the end of that year, but any such belief is clearly erroneous based upon the undisputed factual record of claimant's earnings from July
17 At the hearing before the ALJ, claimant's counsel stated
that he and/or claimant had notified the Nashua SSA office that
claimant had returned to work. (Tr. at 23.) That claim appears,
in conclusory fashion, in Nadeau's April 18, 2002, Request for
Reconsideration (Tr. at 54), and is repeated in claimant's brief
(Pl.'s Mem. at 3), but claimant never testified to that fact at
the hearing; no evidence to support it was introduced at the
hearing; and it does not appear in the Joint Statement of
Material Facts. Thus, considering the record as a whole, and
claimant's burden of proving otherwise, substantial evidence
supports the ALJ's determination that claimant was not without
fault for the overpayment because he "failed to furnish
information to the Administration related to his work activity
. . . that he knew or should have known . . . was material."
(T r . at 15 .)
Based upon the record before the ALJ, there was also
substantial evidence to support a conclusion that claimant was
not without fault because he accepted "payment[s] which he either
knew or should have been expected to have known [were]
1988 through December 1999.
18 incorrect." 20 C.F.R. § 404.507. Starting in July 1998,
claimant engaged in substantial gainful activity for
approximately fifty-four of the next fifty-six months (July 1998
through December 1999, and March 2000 through March 2003). No
matter how confusing his SSA payments may have been to him, no
plausible argument can be constructed under which claimant cannot
be charged with knowing that his payments from July 1999 onward
were incorrect.
Finally, in light of the foregoing, coupled with claimant's
failure to identify any statutory mitigating factor (i.e..
physical, mental, educational, or linguistic limitations) that he
might be able to prove at a rehearing, or any argument based upon
the purposes of the Social Security Act or equity and good
conscience, there is simply no basis for remanding this case for
further factual development on the issue of waiver of recovery.
Conclusion
For the reasons given, claimant's motion for an order
reversing the order of the Commissioner (document no. 13) is
denied and, necessarily, the Commissioner's motion for an order
19 affirming her decision (document no. 14) is granted. The clerk
of the court shall enter judgment in accordance with this order
and close the case.
SO ORDERED.
xeven j/ McAuliffe
January 19, 2006
cc: Raymond J. Kelly, Esq. David L. Broderick, Esq.