Mccarthy v. Apfel, 98-15238

Citation221 F.3d 1119
Decision Date15 August 2000
Docket NumberNo. 98-15238,98-15238
Parties(9th Cir. 2000) CHARLES M. MCCARTHY, JR., Plaintiff-Appellant, v. KENNETH S. APFEL, Commissioner of the Social Security Administration, <A HREF="#fr1-*" name="fn1-*">* Defendant-Appellee
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Appeal from the United States District Court for the Northern District of California; Bernard Zimmerman, District Judge, Presiding D.C. No. CV 97-00272-BZ

Before: Diarmuid F. O'Scannlain and Kim McLane Wardlaw, Circuit Judges, and Wm. Matthew Byrne, Jr., District Judge**

BYRNE, Senior District Judge:

Appellant Charles M. McCarthy, Jr. ("McCarthy") appeals from the district court's decision on summary judgment (1) upholding the Commissioner of Social Security's determination that McCarthy was overpaid $10,207.00 in disability insurance benefits pursuant to Title II of the Social Security Act, 42 U.S.C. S 401 et seq., and (2) remanding the case to the Commissioner pursuant to 42 U.S.C. S 405(g) for a determination of whether McCarthy was "without fault " in connection with the overpayments. The district court had jurisdiction pursuant to 42 U.S.C. S 405(g), and we have jurisdiction pursuant to 28 U.S.C. S 1291. We affirm in part, reverse in part, and remand.

STATEMENT OF FACTS

McCarthy stopped working in 1980 due to a psychological disability and began receiving Title II disability insurance benefits,1 as well as Title XVI supplemental security income, based on an application filed on January 8, 1981. McCarthy returned to work in December 1987, and his Title XVI supplemental security income ended two months later. McCarthy, however, allegedly continued to receive and cash Title II disability benefits through March 1990.

By letters dated January 25 and February 12, 1990, the Social Security Administration ("SSA") notified McCarthy that he was able to perform substantial gainful activity as of December 1987, and that his eligibility for Title II disability benefits had ended in February 1988. By letter dated April 1, 1990, the SSA notified McCarthy that he had been overpaid $10,207.00 in Title II disability benefits for the period from March 1988 through March 1990. McCarthy's appeal of this initial determination and request for a waiver of recovery of the overpayment was partially denied on reconsideration after a personal conference with the SSA.2 On June 30, 1995, following an administrative hearing, McCarthy's request for waiver of recovery was denied by an Administrative Law Judge ("ALJ").

The ALJ's decision became the final decision of the Commissioner when the Appeals Council declined to review it on November 22, 1996. McCarthy then sought judicial review pursuant to 28 U.S.C. S 1331 and as "alleged under" 42 U.S.C. S 405(g). On cross-motions for summary judgment, the district court found that McCarthy had been overpaid $10,207.00 in Title II disability benefits during the period from March 1988 through March 1990. However, the district court reversed the Commissioner's determination that McCarthy was at fault for the overpayments and remanded to the Commissioner for a full and fair hearing on the question of fault. McCarthy timely appealed.3

STANDARD OF REVIEW

"The basis for the district court's jurisdiction and the grant of summary judgment are reviewed de novo." Sequoia Orange Co. v. Yeutter, 973 F.2d 752, 755 (9th Cir. 1992), amended by 985 F.2d 1419 (9th Cir. 1993). The Commissioner's factual findings are reviewed for substantial evidence. See 42 U.S.C. S 405(g).

DISCUSSION

The Social Security Act includes the following statutory scheme for adjustment or recovery of benefits as a result of an overpayment:

With respect to payment to a person of more than the correct amount, the Commissioner of Social Security shall decrease any payment under this subchapter to which such overpaid person is entitled, or shall require such overpaid person or his estate to refund the amount in excess of the correct amount, or shall decrease any payment under this subchapter payable to his estate or to any other person on the basis of the wages and self-employment income which were the basis of the payments to such overpaid person, or shall obtain recovery by means of reduction in tax refunds . . ., or shall apply any combination of the foregoing.

42 U.S.C. S 404(a)(1)(A). However, "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." Id.S 404(b).

I Jurisdiction

McCarthy first claims that the district court erred in basing its jurisdiction over his action on 42 U.S.C. S 405(g). Importantly, McCarthy does not dispute that the district court had jurisdiction, nor does he dispute this court's jurisdiction on appeal. McCarthy instead seeks a ruling that the district court could not exercise jurisdiction under S 405(g) until the Commissioner showed that McCarthy had, in fact received overpayments of Title II disability benefits between March 1988 and March 1990, the period for which the Commissioner seeks recoupment. Absent such a showing, McCarthy contends, review can only have been proper under general federal question jurisdiction, 28 U.S.C. S 1331.

The importance of this jurisdictional determination is twofold. First, if, as McCarthy contends, jurisdiction under S 405(g) is not proper until the Commissioner proves the fact of overpayment, then the Commissioner bears the burden of proving overpayment by a preponderance of the evidence, rather than by "substantial evidence" as set out in S 405(g). Second, if the district court's jurisdiction did not arise under S 405(g), then the court may have been without authority to remand the case to the Commissioner.4

Section 405(g) provides a jurisdictional basis for review of a final decision of the Commissioner denying a waiver of recovery of an overpayment of Title II disability benefits. Section 405(g) states:

Any individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days . . . . Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff resides . . . .

42 U.S.C. S 405(g).

In Califano v. Yamasaki, 442 U.S. 682 (1979), the Supreme Court described the general steps a Title II recipient must take to obtain review of an alleged overpayment:

The [Commissioner's] practice is to make an ex parte determination under [42 U.S.C. S 404(a)] that an overpayment has been made, to notify the recipient of that determination, and then to shift to the recipient the burden of either (i) seeking reconsideration to contest the accuracy of the determination, or (ii) asking the [Commissioner] to forgive the debt and waive recovery in accordance with [S 404(b)]. If a recipient files a written request for reconsideration or waiver, recoupment is deferred pending action on that request. The papers are sent to one of seven regional offices where the request is reviewed.

If the regional office decision goes against the recipient . . . [the recipient is] given an opportunity to present his story in person to someone with authority to decide his case. That opportunity takes the form of an on-the-record de novo evidential hearing before an independent hearing examiner. The recipient may seek subsequent review by the Appeals Council, and finally by a federal court [under S 405(g)].

Id. at 686-87 (footnote and citations omitted). McCarthy went through each of the early steps described in Yamasaki for seeking reconsideration of the initial overpayment determination. He filed a request for waiver, presented his story to an ALJ, and sought subsequent review by the Appeals Council. McCarthy disputes, however, that the final step -judicial review under S 405(g) -was available in his case.

Reduced to its essence, McCarthy's argument is that judicial review is only available under S 405(g) if the Commissioner first proves that the plaintiff in the district court action was, at the time of the ALJ's decision, (1) a Social Security claimant (2) who received overpayments of Title II disability benefits during the period in question. McCarthy claims that, because the Commissioner presented no evidence that he was a Social Security claimant at the time of the ALJ's decision or that he received overpayments from March 1988 to March 1990, his action to enjoin the Commissioner from recouping the alleged overpayments cannot be construed as an action for review of a final decision of the Commissioner pursuant to S 405(g).

McCarthy's first argument, that jurisdiction cannot have arisen under S 405(g) as he was not a Social Security "claimant" at the time of the ALJ's decision, borders on frivolous.5 Nothing in the Social Security Act indicates that an individual must be requesting or receiving benefits at the time of the ALJ's decision in order to seek judicial review under S 405(g). Indeed, S 405(g) provides that "any individual" who is party to a Social Security hearing may obtain judicial review of the Commissioner's ruling.

In any event, McCarthy does not deny that he was a Social Security claimant in 1981 when he filed for Title II disability benefits, and McCarthy remains a "claimant" with respect to the Commissioner's efforts to recover alleged overpayments on that claim. That McCarthy was not asserting a continuing right to disability benefits in 1995 did not destroy his status as a "claimant" with respect to the Title II disability benefits for which he applied in 1981 and from which the Commissioner seeks recoupment of overpayments.

McCarthy's second argument, that jurisdiction cannot have...

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