Albalos v. Sullivan

Decision Date01 October 1990
Docket NumberNo. 89-15334,89-15334
Citation907 F.2d 871
Parties, Unempl.Ins.Rep. CCH 15549A Leonard ALBALOS, Plaintiff-Appellant, v. Louis S. SULLIVAN, M.D., * Secretary of Health and Human Services, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Carole F. Grossman and Gary F. Smith, Legal Services of Northern California, Woodland, Cal., for plaintiff-appellant.

Joseph Stein, Asst. Regional Counsel, Dept. of Health and Human Services, San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of California.

Before SNEED, FARRIS and FERNANDEZ, Circuit Judges.

ORDER

The memorandum disposition filed April 24, 1990, is redesignated as a per curiam opinion.

OPINION

PER CURIAM:

Plaintiff, Leonard Albalos, appeals the district court's judgment for the Secretary of Health and Human Services ("Secretary"). The Secretary refused to waive a deduction overpayment because Albalos failed to show he was "without fault" in failing to file excess earnings reports. The Secretary also imposed a penalty upon Albalos for these failures. We reverse.

FACTS

Leonard Albalos was born in the Philippines in 1909 and speaks a Philippine dialect as his native language. He completed six grades of formal education in the Philippines before immigrating to the United States. For fifty-seven years, he has performed various unskilled jobs.

In 1972, Albalos applied for Social Security benefits. Albalos was required to file annual earnings reports if he received earnings in excess of an exempt amount. 42 U.S.C. Sec. 403(b). If these earnings create an overpayment of benefits, the Secretary is to make deductions from monthly benefits. 42 U.S.C. Sec. 403(b).

In 1978, Albalos was advised of his failure to file a report for 1976. He suffered a deduction overpayment after failing to respond to the advisory notice.

Albalos also failed to file reports for 1978 and 1980. On April 26, 1984, he received a notice advising him of these failures and informing him that he would be subject to a deduction overpayment of $868.60 and a penalty of $295.50. Upon Albalos' request for reconsideration of the penalty, the penalty was doubled after a Social Security Administration representative discovered the penalty imposed for the 1976 failure.

Upon request for a hearing, the Administrative Law Judge ("ALJ") denied Albalos' claims as to the deduction overpayment and penalties for the 1978 and 1980 failures. The Appeals Council denied review. Albalos filed his complaint in the district court, pursuant to 42 U.S.C. Sec. 405(g). The district court granted the Secretary's motion for summary judgment. Albalos filed timely notice of appeal. We have jurisdiction over the appeal. 28 U.S.C. Sec. 1291.

DISCUSSION

The court reviews the grant of summary judgment by the district court de novo. Harrison v. Heckler, 746 F.2d 480 (9th Cir.1984). The court must affirm if the Secretary's findings of fact are supported by "substantial evidence," 42 U.S.C. Sec. 405(g), and if the Secretary applied the proper legal standard. Harrison, 746 F.2d at 481.

The ALJ refused to waive the deduction overpayment because Albalos was "not without fault." Under 42 U.S.C. Sec. 404(b), being "without fault" is one of the requirements for waiver. The ALJ applied 20 C.F.R. Sec. 404.507 in finding that Albalos was "not without fault." The ALJ applied this standard, even though 20 C.F.R. Sec. 404.507 refers to 20 C.F.R. Sec. 404.510 as the applicable standard for deduction overpayments. Since the ALJ did apply the 20 C.F.R. Sec. 404.507 standard, at least in part, we will first consider whether he took the proper factors into consideration.

That standard requires consideration of "all pertinent circumstances," including "age, intelligence, education, and physical and mental condition." This determination is "highly subjective, highly individualized, and highly dependent on the interaction between the intentions and state of mind of the claimant and the peculiar circumstances of his situation." Elliott v. Weinberger, 564 F.2d 1219, 1233 (9th Cir.1977), aff'd in part and rev'd in part sub nom. Califano v. Yamasaki, 442 U.S. 682, 99 S.Ct. 2545, 61 L.Ed.2d 176 (1979).

Although Albalos produced evidence on each of the factors described in 20 C.F.R. Sec. 404.507, the ALJ failed to make findings on these factors. Those findings are mandated not only by 20 C.F.R. Sec. 404.507, but also by 20 C.F.R. Sec. 404.511. The latter regulation requires a finding of whether a "high degree of care" has been exercised before a "without fault" determination will be made. In turn, "high degree of care" depends on a consideration of the individual's circumstances. It does appear that 20 C.F.R. Sec. 404.511 sets a higher standard than that set by 20 C.F.R. Sec. 404.507, but both regulations require attention to the individual characteristics of the individual. That is reasonable, since it is difficult to assess fault in the subjective sense without knowing something about the subject. Because the ALJ did not make findings regarding those circumstances, we reverse.

Furthermore, we must reverse because no explicit finding as to Albalos' credibility was made. Lewin v. Schwieker, 654 F.2d 631, 635 (9th Cir.1981). Albalos' credibility was critical to the "without fault" determination. As Lewin stated:

The circuit courts have consistently recognized the need for full and detailed findings of fact essential to the Secretary's conclusion.

....

The rule has been applied to credibility determinations and the courts have consistently required that there be an explicit finding whether the Secretary believed or disbelieved the claimant whenever the claimant's credibility is a critical factor in the Secretary's decision.

....

Because the ALJ's decision neither expressly discredits [the claimant's] testimony nor articulates any reasons for questioning her credibility, and fails to indicate the amount of weight given to various items of evidence, it cannot stand.

654 F.2d at 634-35. An "implicit"...

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