United States District Court, M.D. Tennessee, Nashville Division
REPORT AND RECOMMENDATION
E. CLIFTON KNOWLES, Magistrate Judge.
I. Introduction and Background
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. Plaintiff applied to be Mr. Cartwright's representative payee in February 1995, and also requested to be the payee for Mr. Cartwright's minor daughter, Hannah Cartwright. TR 25-26, 30-31. Mr. Cartwright and Plaintiff each signed SSA documents stating in part that they agreed to notify the SSA of any change in Mr. Cartwright's condition, employment status, or circumstances. TR 24, 25-26, 30-31. At the time, Mr. Cartwright and Plaintiff were married, but they were divorced in June 2004. TR 33.
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:
Although Mr. Cartwright was found "not liable" by the Chattanooga Office, I am not convinced that he was unaware of the receipt of these benefits, nor that there was not an agreement between the two parties. It is reasonable to believe that Mrs. Cartwright agreed to no child support in their divorce because she and Mr. Cartwright had an agreement about the use of the Social Security funds....
Mrs. Cartwright's waiver indicates her expenses do exceed her income; however, she has currently married and her new spouse's income is not listed on the waiver. Additionally, her initial waiver dated 1/28/09 indicates that she has an IRA valued at $180, 000. Since she has assets that would allow repayment of most, if not all of the overpayment, defeat the purpose nor against equity and good conscience cannot be found [ sic ].
Ms. Poss determined that waiver was not warranted, explaining:
Mr. Cartwright purchased farm property in 2000 in order to commercially develop the property. At that time, he was still married to Rhonda Cartwright (his payee). In Mrs. Cartwright's statement, she indicated that she knew of the purchase and was hoping he would be able to make a go of the venture and earn money to help support the family.
Neither Mr. Cartwright, nor his payee reported that he had started working as a self-employed real estate developer. Mr. Cartwright's taxes he filed indicate no profit for 2000, 2001, 2004, and 2006. Tax returns for 2003 and 2005 indicated a profit. We do not have full copies of these tax returns, only the Schedule "C".
Schedule C for 2000 thru 2005 indicate the address for Mr. Cartwright's business is in Murfreesboro, TN. Mr. Cartwright's address is the same address listed as Mrs. Cartwright's. The fact that the address [ sic ] are the same might indicate that Mr. and Mrs. Cartwright were living in the same house or at least had contact with each other. The assumption for taxable year 2003 is that the tax return was filed as "Married, filing Jointly", since the addresses were the same and Mr. and Mrs. Cartwright were not yet divorced. It would be necessary to see the entire tax returns for the years 2000 through 2006 in order to determine how the returns were filed (e.g. Married filing jointly).
In addition, in April 2008, Mrs. Cartwright completed and signed over penalty or purjury [ sic ] an SSA 623-OCR stating that she had spent Mr. Cartwright's entire benefit of $19, 273, paid between March 1, 2007 and March 31, 2008 for Mr. Cartwright's food and housing.
In her statement at the personal conference, Mrs. Cartwright and her attorney stated that they felt the liability of the overpayment should be joint and several between Mrs. Cartwright and Mr. Cartwright. Mrs. Cartwright also agreed to repay one-half of the overpayment; but only if equal liability for repayment of the overpayment could be assessed.
Although I believe, Mr. Cartwright was probably as much at fault and liable for the overpayment as Mrs. Cartwright, I believe he did prosper from the use of the overpayment funds (e.g. funds were used to support his children in lieu of child support), per GN02205.007 regarding the "Joint and Several Liability - Overpayment Recovery Title II" issue, liability would fall ...