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Carsley v. Commissioner of Social Security

United States District Court, W.D. Tennessee, Eastern Division

June 16, 2017





         The complaint in this action was filed on May 1, 2012, by the pro se Plaintiff, William T. Carsley. On February 3, 2017, the matter was referred to United States Magistrate Judge Charmiane G. Claxton for a report and recommendation. (Docket Entry (“D.E.”) 18.) On March 3, 2017, Judge Claxton recommended that the final decision of the Commissioner be reversed, the Plaintiff's waiver of overpayment of benefits be granted, benefits withheld from the claimant as a result of recoupment of overpayments be reimbursed, and judgment be entered pursuant to Sentence Three of 42 U.S.C. § 405(g) modifying the Commissioner's decision. (D.E. 19.) On March 16, 2017, the Commissioner filed timely objections to the magistrate judge's report and recommendation. (D.E. 20.) As no response to the Commissioner's objections has been filed and the time therefor has expired, this matter is ripe for decision.


         When objections have been filed with respect to a report and recommendation of the magistrate judge, the district judge “shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1); see also Fed. R. Civ. P. 72(b)(3). He “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1); see also Fed. R. Civ. P. 72(b)(3). The district judge may not “simply concur” in the magistrate judge's findings, but must “conduct [his] own review in order to adopt the recommendations.” Fharmacy Records v. Nassar, 465 F. App'x 448, 456 (6th Cir. 2012) (per curiam) (internal quotation marks omitted). “[T]he filing of an objection does not oblige the district court to ignore the report and recommendation; it requires the court to give fresh consideration to the finding objected to insofar as the objection impugns the integrity of the finding.” Id.


         The Plaintiff began receiving disability insurance benefits (“DIB”) on March 1, 1991.[1]On December 21, 2009, the Social Security Administration (“SSA”) issued a notice informing him that he was overpaid in the amount of $27, 135 for the period from March 2008 to November 2009. (Administrative Record (“AR”) 74-77.) The claimant sought a waiver of the overpayment and, after a hearing before the Administrative Law Judge (“ALJ”) on July 14, 2011, at which Carsley represented himself, the waiver was granted. (AR 22-26.) The ALJ concluded that, while the claimant was overpaid, he was not at fault in causing the overpayment and recovery of the payment defeated the purpose of Title II of the Social Security Act, 42 U.S.C. § 401, et seq. On November 17, 2011, the Appeals Council decided, sua sponte, to review the determination of the ALJ and agreed that Carsley had been overpaid, but found he was not without fault in the overpayment and denied the waiver. The instant appeal of the Appeals Council's determination followed.

         IV. ANALYSIS

         Where, as here, the Appeals Council grants review of a claim, its determination becomes the Commissioner's final decision. See Sims v. Apfel, 530 U.S. 103, 106-07 (2000); Snell v. Apfel, 177 F.3d 128, 132 (2d Cir. 1999); Walker v. Sec. of Health & Human Servs., 884 F.2d 241, 244 (6th Cir. 1989). The determination of the Commissioner must be affirmed if the correct legal standards were used and the decision is supported by substantial evidence. Bowman v. Comm'r of Soc. Sec.___, F. App'x ___, 2017 WL 1065553, at *3 (6th Cir. Mar. 21, 2017). “Substantial evidence exists if a reasonable mind might accept the relevant evidence as adequate to support” the decision. Mueller v. Comm'r of Soc. Sec., ___ F. App'x ___, 2017 WL 1065550, at *1 (6th Cir. Mar 21, 2017) (per curiam). “The substantial-evidence standard presupposes that there is a zone of choice within which the decisionmakers can go either way, without interference by the courts.” Blakley v. Comm'r of Soc. Sec., 581 F.3d 399, 406 (6th Cir. 2009) (quoting Mullen v. Bowen, 800 F.2d 535, 545 (6th Cir. 1986)). “Therefore, if substantial evidence supports the [Commissioner's] decision, th[e] [c]ourt defers to that finding even if there is substantial evidence in the record that would have supported an opposite conclusion.” Id. (internal quotation marks omitted). When considering whether substantial evidence supports the Commissioner's decision, the district courts “do not try the case de novo, resolve conflicts in evidence, or decide questions of credibility.” Bass v. McMahon, 499 F.3d 506, 509 (6th Cir. 2007).

         Section 404 of the Social Security Act permits the Commissioner to recover from persons to whom Social Security benefits have been overpaid those monies in excess of the correct amount. 42 U.S.C. § 404(a)(1). The statute further provides, however, that recovery may not be had from “any person who is without fault if such . . . recovery would defeat the purpose of [the statute] or would be against equity and good conscience.” 42 U.S.C. § 404(b)(1); see also 20 C.F.R. § 404.506(a).

         The threshold inquiry in determining whether an overpayment of benefits should be waived is the “fault” of the beneficiary. Watson v. Sullivan, 940 F.2d 168, 171 (6th Cir. 1991) (per curiam); Chavez v. Comm'r of Soc. Sec., No. 1:14-cv-532, 2015 WL 1730371, at *2 (S.D. Ohio Apr. 14, 2015), report & recommendation adopted 2015 WL 4540138 (S.D. Ohio July 27, 2015). “Although the [SSA] may have been at fault in making the overpayment, that fact does not relieve the overpaid individual . . . from whom the [SSA] seeks to recover the overpayment from liability for repayment if such individual is not without fault.” 20 C.F.R. § 404.507. As explained in the regulation, fault depends “upon whether the facts show that the incorrect payment to the individual . . . resulted from . . . [a]n incorrect statement made by the individual which he knew or should have known to be incorrect”; “[f]ailure to furnish information which he knew or should have known to be material”; or “acceptance of a payment which he either knew or could have been expected to know was incorrect.” Id. Section 404(b) provides that “[i]n making for purposes of [analyzing fault] 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[.]” 42 U.S.C. § 404(b)(2); see also 20 C.F.R. § 404.507 (the Commissioner “will consider all pertinent circumstances, including the individual's age and intelligence, and any physical, mental, educational, or linguistic limitations . . . the individual has”).

         A conclusion that the claimant was not without fault does not require a finding of bad faith; instead, an overpayment may arise from an honest mistake. Morgan v. Finch, 423 F.2d 551, 553 (6th Cir. 1970); Quaynor v. Comm'r of Soc. Sec., Civil Action No. 14-12258, 2015 WL 9487846, at *4 (E.D. Mich. Dec. 9, 2015), report & recommendation adopted 2015 WL 9478026 (E.D. Mich. Dec. 29, 2015). It is the burden of the claimant to demonstrate that he is without fault before a benefits overpayment can be considered waived. Watson, 940 F.2d at 171. “The question of fault is one of fact and as such is subject to the substantial evidence standard of review.” Doan v. Sec. of Health & Human Servs., No. 86-5956, 1987 WL 36143, at *1 (6th Cir. July 7, 1987) (per curiam); Hassett v. Comm'r of Soc. Sec., No. 1:12cv419, 2013 WL 3834372, at *4 (W.D. Mich. July 24, 2013).

         “The decision which must be reached in a fault determination is highly subjective, highly dependent on the interaction between the intentions and state of mind of the claimant and the peculiar circumstances of his situation.” Piskorek v. Colvin, No. 13 CV 3831, 2014 WL 5152565, at *7 (N.D. Ill. Oct. 7, 2014). The determination of fault requires the ALJ, or the Appeals Council in this case, to evaluate whether a reasonable person in the claimant's own circumstances, and with whatever limitations he may have, could believe he was entitled to continued benefits. Harrison v. Heckler, 746 F.2d 480, 482 (9th Cir. 1984); Ducharme v. Astrue, Civil Action No. PWG-08-2698, 2012 WL 907777, at *3 (D. Md. Mar. 15, 2012).

         Further, “[w]here an 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, . . . such individual, in accepting such overpayment, will be deemed to be without fault.” 20 C.F.R. § 404.510a. “[W]here an individual demonstrates satisfaction of 20 C.F.R. § 404.510a, the individual has also satisfied the ‘without fault' requirement of 42 U.S.C. § 404(b).” Valley v. Comm'r of Soc. Sec., 427 F.3d 388, 393 n.2 (6th Cir. 2005). Adjustment or recovery is waived in the situation described in § 404.510a “since it will be deemed such adjustment or recovery is against equity and good conscience.” 20 C.F.R. § 404.512(a). Nonetheless, the claimant may be determined to be at fault for accepting overpayment after receiving ...

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