United States District Court, M.D. Tennessee, Nashville Division
SUSAN K. UNICE, Plaintiff,
NANCY A. BERRYHILL, Acting Commissioner of Social Security, Defendant.
REPORT AND RECOMMENDATION
BROWN UNITED STATES MAGISTRATE JUDGE
Honorable Aleta A. Trauger, United States District Judge
to 42 U.S.C. § 405(g), Plaintiff seeks judicial review
of the Social Security Commissioner's decision that (1)
Plaintiff and her daughter were overpaid disability benefits
under Title II of the Social Security Act and (2) recovery of
the overpayment would not be waived. For the following
reasons, the Magistrate Judge RECOMMENDS that
Plaintiff's Motion for Judgment Based Upon the
Administrative Record (Doc. 18) be GRANTED IN PART and
DENIED IN PART and the Commissioner's decision be
AFFIRMED IN PART, REVERSED IN PART, and REMANDED for further
consideration and explanation as to whether Plaintiff and her
daughter were overpaid.
receiving a fully favorable disability decision from an
administrative law judge (“ALJ”) in 2010,
Plaintiff and her daughter were awarded Title II disability
benefits beginning March 2008. (AR, pp. 44-62). Payment continued
through July 2012. (Id. at 116-117).
Commissioner notified Plaintiff in July 2011 and again in
August 2012 that her disability ended in October 2009 because
she was engaged in substantial gainful activity
(“SGA”). (Id. at 67-69, 74-76, 81-86).
In the August 2012 correspondence, the Commissioner explained
that Plaintiff's SGA made her and her daughter ineligible
for benefits as of January 2010. (Id. at 74-76,
81-86). Shortly thereafter, the Commissioner sent Plaintiff
invoices requesting repayment of $56, 097.20, the amount paid
to Plaintiff and her daughter from January 2010 to July 2012.
(Id. at 91-98).
requested a waiver of the overpayment in January 2013.
(Id. at 28-35). The Commissioner denied
Plaintiff's request on initial review and after a
personal conference. (Id. at 100-101, 109-115).
After a hearing before an ALJ, Plaintiff's request for
waiver of the overpayment was again denied. (Id. at
20-27, 405A-444). Specifically, the ALJ found Plaintiff was
overpaid $56, 097.20 in benefits between January 1, 2010 and
July 1, 2012; Plaintiff was not at fault for causing the
overpayment; recovery of the overpayment would not defeat the
purpose of Title II of the Social Security Act and would not
be against equity and good conscience; and recovery of the
overpayment would not be waived. (Id. at 25-27). The
Appeals Council declined to review the ALJ's decision.
(Id. at 3-7).
appealed the Commissioner's decision to this Court. (Doc.
1). The matter was referred to the Magistrate Judge. (Doc.
9). Presently pending is the fully briefed
Plaintiff's Motion for Judgment Based Upon the
Administrative Record. (Docs. 18, 18-1, 22, 23, 26, 27).
REVIEW OF THE RECORD
has an associate degree in business administration and a
paralegal certification. (AR, p. 440). In 2008, Plaintiff and
her husband formed a South Carolina limited liability company
that provides private security services, Advanced Protection
Services, LLC (the “company”). (Id. at
379-381, 421). The company now has a license to operate in
Arizona as well as South Carolina. (Id. at 421).
Plaintiff owns 51% of the company, and her husband owns the
remaining 49%. (Id. at 409). Plaintiff is the
company's agent for service of process, and she holds the
titles of President and Chief Financial Officer
(“CFO”). (Id. at 379, 420). She states
these positions are nothing more than titles. (Id.
correspondence with the Commissioner in June 2011, Plaintiff
said the company is overseen by her husband in South Carolina
and she spends between six and ten hours a week paying bills
and processing licenses on behalf of the company.
(Id. at 396). Plaintiff later told the Commissioner
in May 2012 that she spends approximately 25 hours each month
performing managerial duties for the company. (Id.
at 390). As of May 2012, Plaintiff lived in Arizona where she
oversaw the company's financial, licensing, insurance,
and human resources matters. (Id.).
the administrative hearing, Plaintiff testified as to her
involvement in the company. From 2008 to 2012, Plaintiff
oversaw the expenses and startup of the business and
otherwise oversaw “[e]verything that's done.”
(Id. at 420-421). Asked if she materially
participated in the day-to-day operations of the company,
Plaintiff said she did to the extent of overseeing the
financial and sometimes the legal end of things.
(Id. at 436-437). Between 2008 and 2011, Plaintiff
stated she spent between 8 to 12 hours a week doing
business-related activities, later clarifying she spent more
time when the company was founded. (Id. at 424-425,
lived in South Carolina from 2008 to 2011. (Id. at
421). Part of her home was used for the company.
(Id. at 424). She sat in on some of the employment
interviews, and the ultimate hiring decision was made by her
husband and other officers. (Id. at 421-422). She
and her husband advertised available job openings online.
(Id. at 422-423). When a new client would come
onboard, Plaintiff was responsible for preparing and signing
the contracts with them. (Id. at 423). She made bank
deposits for the company, and before the company started
using an online bill paying service, Plaintiff was
responsible for paying business expenses with checks.
(Id. at 423-424, 441). Payroll, monthly expenses,
taxes, and employee hour schedules were performed by another
individual. (Id. at 421, 423-424).
2011, Plaintiff moved to Arizona and assisted the Arizona
office. (Id. at 421, 425). The Arizona business had
two employees and had contracts with national companies that
called Plaintiff from time to time. (Id. at 426).
Plaintiff's husband performed the interviews in the
Arizona office, though she participated in one interview.
(Id.). As with the South Carolina office, Plaintiff
made bank deposits for the Arizona office. (Id. at
agreed with counsel's statement that her activity in the
business was primarily to protect her interest in the
company. (Id. at 434, 437). She testified she was
not aware she had income because she did not receive W-2s or
checks. (Id. at 436). However, she received annual
payments from the company: $12, 720.05 in 2009 and $12, 841
in 2010. (Id. at 121).
reported that after the award of Title II benefits, she lost
her home and both she and her husband declared Chapter 7
bankruptcy. (Id. at 34).
2009, Plaintiff's company had a total income of $249,
836. (Id. at 182). Plaintiff received $12, 720.05
from the company 2009 and $12, 841 in 2010. (Id. at
121). Though these payments were originally reported as
self-employment income, after the administrative hearing
Plaintiff amended her tax returns to recharacterize her
earnings as passive income. (Id. at 215, 256,
January 15, 2013, Plaintiff reported her family had $330, 000
in readily available funds. (Id. at 31). Of this
amount, $31, 663 was in her daughter's savings account,
$300, 000 was in Plaintiff's inherited individual
retirement account (“IRA”), and $400 was in a
joint checking account shared by Plaintiff and her husband.
(Id.). Plaintiff reported monthly household expenses
as $4, 232, which included payment of a business loan.
(Id. at 33-34).
Venue and Choice of Law
application for judicial review of the Commissioner's
final decision must be brought in the judicial district where
the claimant resides. 42 U.S.C. § 405(g). As Plaintiff
presently resides in Williamson County, Tennessee (Doc. 1-1),
her appeal to the Middle District of Tennessee is
appropriate. The merits of the ALJ's decision, however,
shall be reviewed under Ninth Circuit precedent because the
ALJ's decision was rendered in the District of Arizona.
See Shaw v. Colvin, No. 1:14-CV-00081-FDW, 2014 WL
6680412, at *1 (W.D. N.C. Nov. 25, 2014) (applying the law
where the administrative proceedings occurred); Pierce v.
Colvin, No. 7:12-CV-129-D, 2013 WL 3326716, at *3 (E.D.
N.C. July 1, 2013) (same); Mannella v. Astrue, No.
CIV06-469-TUC-CKJ BP, 2008 WL 2428869, at *1 (D. Ariz. June
12, 2008) (same).