564 F.2d 1219 (9th Cir. 1977), 74-1611, Elliott v. Weinberger

Docket Nº:74-1611, 74-3118.
Citation:564 F.2d 1219
Party Name:Evelyn ELLIOTT and Benito Molina, Individually and on behalf of all others similarly situated, Plaintiffs-Appellees, v. Caspar W. WEINBERGER, Individually and in his capacity as Secretary, United States Department of Health, Education and Welfare, and Sung Dai Seu, Individually and in his capacity as Pacific Area Manager, Social Security Administra
Case Date:July 01, 1977
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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564 F.2d 1219 (9th Cir. 1977)

Evelyn ELLIOTT and Benito Molina, Individually and on behalf

of all others similarly situated, Plaintiffs-Appellees,


Caspar W. WEINBERGER, Individually and in his capacity as

Secretary, United States Department of Health, Education and

Welfare, and Sung Dai Seu, Individually and in his capacity

as Pacific Area Manager, Social Security Administration,

Department of Health, Education and Welfare, Defendants-Appellants.

Fannie BUFFINGTON and Frances Biner, Individually and on

behalf of all others similarly situated,



Caspar W. WEINBERGER, Individually and in his capacity as

Secretary of the Department of Health, Education

and Welfare, Defendants-Appellants.

Nos. 74-1611, 74-3118.

United States Court of Appeals, Ninth Circuit

July 1, 1977

Rehearing and Rehearing In Banc Denied Dec. 15, 1977.

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Robert E. Kopp and Robert S. Greenspan, argued, Civil Div., Dept. of Justice, Washington, D. C., for defendants-appellants.

Stanley E. Levin, argued, Paul D. Alston, Legal Aid Society of Hawaii, Honolulu, Hawaii, for Evelyn Elliott et al.

Jeff Spence, argued, Evergreen Legal Services, Seattle, Wash., for Fannie Buffington et al.

Before BROWNING and TRASK, Circuit Judges, and WILLIAMS [*], District Judge.


These consolidated appeals by the Secretary of the Department of Health, Education and Welfare (hereinafter referred to as the "Secretary") challenge the judgments of two district courts requiring, inter alia, the Secretary to provide old-age and disabled social security beneficiaries the right to a hearing prior to the initiation of procedures to recoup monies paid to such beneficiaries allegedly in excess of their legal monthly entitlements. In both these class action suits plaintiffs-appellees assert that the procedures utilized by the Secretary in recouping excess payments denied them due process of law under the fifth amendment because their benefits were reduced or suspended without adequate notice of the reason for the recoupment, without adequate notice of their right to reconsideration, waiver, or partial adjustment of the Secretary's recoupment decision, and without affording them the opportunity to have a pre-recoupment hearing. Elliott v. Weinberger, 371 F.Supp. 960, 964 (D.Haw.1974); Buffington v. Weinberger, Civil No. 734-73C2 (W.D.Wash., Oct. 22, 1974). The district courts held that mandamus jurisdiction was established under 28 U.S.C. § 1361 1, and that the recoupment procedures violated the due process rights of the complaining recipients. In addition, the courts ordered that prior to recoupment the Secretary must give the recipients adequate notice of their right to request and be afforded a hearing. We are in substantial agreement with the rulings of the courts below that a prior oral hearing ought to be afforded recipients prior to recoupment of their monthly benefits when they claim a waiver. However, we do not believe that such a hearing is constitutionally compelled in straight reconsideration cases, in light of Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), unless the issues raised in a recipient's request for reconsideration of the Secretary's initial overpayment and recoupment determination are incapable of resolution upon written submission and/or documentary proof.

The Statutory and Procedural Background

The Social Security Act vests the Secretary with the power to recover lost funds in the event overpayments are made to recipients of old-age or disability benefits. 42 U.S.C. § 404 provides in pertinent part:

(a) Whenever the Secretary finds that more or less than the correct amount of payment has been made to any person under this subchapter, proper adjustment or recovery shall be made, under regulations prescribed by the Secretary, as follows:

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(1) With respect to payment to a person of more than the correct amount, the Secretary 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 apply any combination of the foregoing. . . .

(b) In any case in which more than the correct amount of payment has been made, 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.

The challenged government procedures are as follows: As of January 1, 1974 2, all recipients subject to recoupment receive form letters which set forth the reasons for the proposed recoupment, the availability of reconsideration (when a recipient asks for reconsideration, the correctness of the overpayment determination itself is being challenged), the condition for waiver (when a beneficiary requests that his overpayment be waived, he is, in effect, conceding the debt but asking that it be forgiven or reduced 3), and the need to consult the local Administration office within thirty days if they wish to complain. 4

The initial overpayment and recoupment notice sent to beneficiaries makes no mention of the forms needed for reconsideration or waiver, nor sets forth information about how to complete them. However, the beneficiary may obtain review of his case by sending a letter stating his reasons for opposing the overpayment determination or seeking a waiver.

It is the Secretary's policy to immediately defer recoupment action upon receipt of a request for reconsideration or waiver. Claims Manual § 5503.5. Deferral of recoupment beyond thirty days after the date of initial notice, however, lies completely within the discretion of the Administration.

If, after review of the information supplied by the beneficiary, the Secretary adheres to his initial determination that recoupment is appropriate, he notifies the beneficiary to this effect and resumes the withholding of benefits to satisfy the overpayment. If dissatisfied with this decision, the beneficiary may request an administrative hearing de novo, in which the beneficiary is provided an opportunity to present oral testimony and to cross-examine witnesses before an independent hearing examiner. 20 C.F.R. § 404.928-.929. However, recoupment is not suspended pending the outcome of this de novo hearing. The beneficiary is further entitled to appeal the hearing examiner's determination to the Appeals Council of the Social Security Administration

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(20 C.F.R. § 404.945), and to judicial review of the Appeals Council's decision pursuant to 42 U.S.C. § 405(g).

The Facts

In Elliott, plaintiffs Silva, Ortiz and Vaquilar (subclass one) were determined to have been overpaid by the Secretary based upon their own annual earnings reports. They all received the form letter indicating the reasons for the overpayment determination, the specific amount overpaid and the amount by which the recipient's subsequent benefit checks would be reduced or suspended altogether. These plaintiffs were additionally apprised of the possibility of reconsideration and the conditions of waiver. All of them contacted the Administration's local offices within thirty days of receipt of the letter. At the time the Elliott court rendered its decision, the Secretary had completed recoupment against two of these plaintiffs, but as to the other had deferred recoupment pending disposition of the suit.

Plaintiffs Elliott, Gaines and Yamasaki (subclass two) received notices more than thirty days before recoupment was to begin, which disclosed information similar to that contained in the notices sent to subclass one plaintiffs. 5 Plaintiff Elliott was notified that the overpayment determination was predicated upon "her receipt of both retirement and disability benefits when she was entitled to only disability benefits." Elliott, supra at 965. "Duplicate payments" was the reason given Gaines for his overpayment. Plaintiff Yamasaki was told that "a processing error" caused an overpayment to be sent to her. All subclass two plaintiffs contacted their district office within thirty days after receipt of the overpayment notice. Recoupment against Elliott and Gaines was deferred pending resolution of this case, whereas recoupment against Yamasaki has been completed. Elliott, supra at 965-66.

The Buffington plaintiffs resemble subclass one in Elliott. Both Buffington and Biner are recipients of Social Security old-age benefits. Based on "annual earnings reports" submitted by plaintiffs, the Secretary determined that they had received overpayments of benefits, and consequently sought to recoup the overpayments from future benefits. 6

In 1973 Mrs. Buffington was entitled in her own right to old-age Social Security benefits of $80.50 per month. Based upon her husband's earnings record, she was also entitled to wife's benefits of $15.70 a month, resulting in total monthly benefits of $96.20 (she actually was receiving $89.90 per month due to monthly Medicare deductions of $6.30). In September 1973, plaintiff's husband filed an annual earnings report which showed that he had received earnings in 1972 which exceeded the statutory limit. Accordingly, the Secretary determined Mrs. Buffington to have been in receipt of a total overpayment of $78.60. Notice of the overpayment was sent to Mrs. Buffington on October 3, 1973, indicating that the...

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