Perez Guzman v. Bisignano

• Court: District Court, E.D. Washington
• Decided: June 12, 2025
• Docket: 1:24-cv-03133
• Status: Unknown

Opinion

1 Jun 12, 2025 2 3 SEAN F. MCAVOY, CLERK 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF WASHINGTON 8 9 10 ERNESTO PEREZ G., No. 1:24-CV-03133-SAB 11 Plaintiff, 12 v. 13 COMMISSIONER OF SOCIAL ORDER REVERSING THE 14 SECURITY ADMINISTRATION, DECISION OF COMMISSIONER 15 Defendant. 16 17 18 Plaintiff brings this action seeking judicial review of the Commissioner of 19 Social Security’s final decision upholding the Social Security Administration’s 20 (SSA) decision to reduce his disability insurance benefits to account for the 21 permanent partial disability award that he received from workers’ compensation. 22 Plaintiff is represented by Kathryn Higgs. The Commissioner is represented by 23 Zachary Berkoff-Cane and Brian M. Donovan. Pending before the Court are 24 Plaintiff’s Opening Brief, ECF No. 15, the Commissioner’s Brief, ECF No. 19, and 25 Plaintiff’s Reply Brief, ECF No. 20. 26 After reviewing the administrative record, briefs filed by the parties, and 27 applicable case law, the Court is fully informed. For the reasons set forth below, 28 the Court reverses the Commissioner’s decision. 1 I. Jurisdiction 2 Plaintiff is receiving disability insurance benefits from SSA. On November 3 7, 2018, Plaintiff received a lump sum award of $12,989.74 from Washington state 4 for workers’ compensation benefits. On October 31, 2020, the SSA notified 5 Plaintiff that it would reduce his Social Security disability benefit by $463.68 a 6 week because of the lump sum payment. Plaintiff filed a request for 7 reconsideration, which was denied. Plaintiff then requested a hearing before the 8 ALJ, which was held on January 11, 2024. Plaintiff appeared and testified with the 9 assistance of a Spanish interpreter. He was assisted by his attorney, Kathryn Higgs. 10 On January 24, 2024, the ALJ issued an opinion finding the SSA correctly 11 reduced Plaintiff’s disability insurance benefits to account for his permanent partial 12 disability award from workers’ compensation. 13 Plaintiff requested review by the Appeals Council; the Appeals Council 14 denied the request on July 25, 2024. The Appeals Council’s denial of review 15 makes the ALJ’s decision the “final decision” of the Commissioner of Social 16 Security, which this Court is permitted to review. 42 U.S.C. §§ 405(g), 17 1383(c)(1)(3). 18 Plaintiff filed a timely appeal on Augus 8, 2024. ECF No. 1. The matter is 19 before this Court pursuant to 42 U.S.C. § 405(g). 20 II. Legal Framework 21 Pursuant to 42 U.S.C. 424a, if an individual is under the age of 65 and is 22 entitled to Social Security disability benefits as well as workers’ compensation 23 benefits on account of their total or partial disability, the amount of their Social 24 Security benefits is reduced if both the workers’ compensation benefits and the 25 disability insurance benefits exceed eighty percent of the recipients “average 26 current earnings” at the time of disability. See 42 U.S.C. § 424a(a). Certain 27 benefits, such as medical, legal, or related expenses in connection with the 28 disability claim or injury, are not subject to the federal offset provision. 20 C.F.R. 1 404.408(d). The Commissioner “bears the burden of proving the fact and amount 2 of overpayment.” McCarthy v. Apfel, 221 F.3d 1119, 1124 (9th Cir. 2000). 3 In Hodge v. Shalala, the Ninth Circuit interpreted the federal offset law as 4 applying when a state benefit was issued, either as a periodic payment or as a 5 lumpsum payment, to compensate the recipient for an economic loss of earning 6 power. 27 F.3d 430, 432-34 (9th Cir. 1994). At issue in Hodge was the Oregon 7 workers’ compensation program. The Ninth Circuit determined that Oregon’s 8 lumpsum scheduled benefit payment constituted a benefit intending to compensate 9 the injured worker for the economic loss of earning capacity and ruled the Oregon 10 scheduled payment must be offset from federal disability benefits. Id. 11 Courts in the Eastern District of Washington have consistently held that 12 because Washington PPD payments are calculated based on a body part’s loss of 13 existence or function, regardless of the impact on earning capacity, the PPD 14 payment does not compensate the recipient for wage loss. Thus, the recipient’s 15 social security benefits should not be offset by the PPD award. See Mathew S. v. 16 Saul, 2021 WL 9816442 (E.D. Wash. June 10, 2021); Wheatley v. Colvin, 2016 17 WL 447610 (E.D. Wash. Feb. 4, 2016); Olson v. Colvin, 31 F.Supp.3d 1176 (E.D. 18 Wash. 2014). Courts in the Western District of Washington have recently adopted 19 this reasoning as well. See Mary C. v. Comm’n, 2022 WL 1598080 (May 30, 20 2022); Tina C. v. Comm’n, 2020 WL 104321 (W.D. Wash. January 9, 2020). 21 Also, in an unpublished opinion, the Ninth Circuit held that a Washington 22 PPD payment was not a benefit subject to federal disability offset because it was 23 not intended to cover the recipient’s lost earning capacity. See Sutton v. Berryhill, 24 677 Fed. Appx. 341 (9th Cir. Feb. 9, 2017). In reaching this ruling, the Circuit 25 noted: 26 • Washington case law has recognized that Washington's PPD payments 27 compensate for loss of bodily function, regardless of whether that loss of 28 bodily function has an effect on the recipient’s wage-earning capacity. 1 • the statutory purpose for PPD payments does not include considering 2 wage earning power. 3 • a Washington regulation provides that PPD payments are based solely on 4 the impaired body part/function without consideration of economic factors. 5 Id. at 341-42. 6 III. The ALJ’s Findings 7 The ALJ issued an opinion affirming the reduction of Plaintiff’s disability 8 insurance benefits to account for his permanent partial disability award from 9 workers’ compensation, but instructing the payment center to recalculate the offset 10 to ensure that all excludable expenses had been properly deducted before SSA 11 applied the offset. AR 25. 12 VI. Issues 13 1. Whether SSA correctly reduced Plaintiff’s disability insurance 14 benefits to account for the permanent partial disability award that he 15 received from workers’ compensation. 16 VII. Discussion 17 The ALJ erred in upholding the SSA’s reduction of Plaintiff’s disability 18 insurance benefits based on his lump sum payment for permanent partial disability 19 as determined by the state of Washington. On the contrary, case law is clear. 20 Washington PPD payments are calculated based on a body part’s loss of existence 21 or function, regardless of the impact on earning capacity, and as such, does not 22 compensate the recipient for wage loss. 23 Accordingly, IT IS HEREBY ORDERED: 24 1. For docket purposes, Plaintiff’s Opening Brief, ECF No. 15 and Reply 25 Brief, ECF No. 20, are GRANTED. 26 2. For docket purposes, the Commissioner’s Response Brief, ECF No. 27 19, is DENIED. 28 // 1 3. The decision of the Commissioner is REVERSED and REMANDED. The SSA may not reduce his disability insurance benefits by the lump sum award of $12,989.74 from Washington state for workers’ compensation benefits. 5 4. Judgment shall be entered in favor of Plaintiff and against Defendant. IT IS SO ORDERED. The District Court Executive is hereby directed to file this Order, provide copies to counsel, and close the file. 8 DATED this 11th day of June 2025. 9

Se a GZ ee in 12 Stan Bastian 3 Chief United States District Judge

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER REVERSING THE DECISION OF COMMISSIONER ~5