Beeler v. Berryhill

• Decision Date: 22 April 2019
• Docket Number: No. 1:15-cv-01481-SEB-MJD,1:15-cv-01481-SEB-MJD
• Citation: 381 F.Supp.3d 991
• Parties: Lorraine BEELER, et al., Plaintiffs, v. Nancy A. BERRYHILL, in her official capacity as Acting Commissioner, Social Security Administration, and Social Security Administration, Defendants.
• Court: U.S. District Court — Southern District of Indiana

381 F.Supp.3d 991

Lorraine BEELER, et al., Plaintiffs,

v.Nancy A. BERRYHILL, in her official capacity as Acting Commissioner, Social Security Administration, and Social Security Administration, Defendants.

No. 1:15-cv-01481-SEB-MJD

United States District Court, S.D. Indiana, Indianapolis Division.

Signed April 22, 2019

Aaron M. Bernay, Pro Hac Vice, Joseph J. Dehner, Pro Hac Vice, Frost Brown Todd LLC, Cincinnati, OH, Darren Andrew Craig, Frost Brown Todd LLC, Indianapolis, IN, Jonathan Mark Bruce, Law Office of Jonathan Bruce, LLC, Olathe, KS, for Plaintiffs.

Kathryn E. Olivier, United States Attorney's Office, Indianapolis, IN, for Defendants.

ORDER ON MOTIONS FOR SUMMARY JUDGMENT (DKTS. 92, 94)

SARAH EVANS BARKER, JUDGE United States District Court

The Social Security Administration (SSA) and its acting Commissioner Nancy A. Berryhill, Defendants here, enforce a policy by which the amounts of Plaintiffs' Social Security retirement benefits are reduced because they also receive benefits from two Canadian social security plans, the Canada Pension Plan (CPP) and the Québec Pension Plan (QPP). Plaintiffs object to those reductions, which is the gist of this litigation. By crossmotions for summary judgment, see Fed. R. Civ. P. 56(a), the parties respectively seek judgment in their favor based on our determination of a single issue: Are those reductions lawful?

We conclude that they are.

Background

The material facts are few and undisputed. The twelve named Plaintiffs are each dual citizens of the United States and Canada. They instituted this action on their own behalf and on behalf of the class of all persons whose Social Security retirement benefits are reduced because of their or their spouses' receipt of CPP/QPP benefits. Dkt. 129 (certifying Fed. R. Civ. P. 23 class). Plaintiffs or their spouses spent part of their working careers in Canada and part in the United States. While working in Canada, they paid social security taxes to Canada and not to the United States; while working in the United States, they paid social security taxes to the United States and not to Canada. (Both parties acknowledge this fact but neither has included it in their fact statements under S.D. Ind. L.R. 56-1(a). We take it from the operative complaint. Dkt. 65. ¶¶ 47–48, 57–58, 65–66, 71–72, 78, 84–85, 90–91, 95, 100–02, 105–08, 111–14, 120–22. A plaintiff is bound by her complaint allegations as judicial admissions, even at summary judgment. Soo Line R.R. Co. v. St. Louis Sw. Ry. Co. , 125 F.3d 481, 483 (7th Cir. 1997) (citations omitted). And a judicially admitted fact is "withdraw[n] ... from contention." Keller v. United States , 58 F.3d 1194, 1198 n.8 (7th Cir. 1995) (internal quotation marks and citation omitted).) Plaintiffs' or their spouses' work stints in each country were sufficient to qualify them to receive retirement benefits from each country's social security system independently. SSA reduces Plaintiffs' U.S. benefit payments based on their receipt of benefit payments from Canada.

This is an action for judicial review of SSA's adverse benefit decisions. See 42 U.S.C. § 405(g). Exhaustion of administrative remedies has been judicially waived. Dkt. 82. Each side has moved for summary judgment in its favor. Dkt. 92 (Plaintiffs), Dkt. 94 (Defendants). We resolve these motions below.

Standard of Decision

Summary judgment is appropriate when there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). Questions of statutory interpretation upon undisputed facts are particularly suited for summary judgment. See, e.g., LTV Steel Co. v. Nw. Eng'g & Constr., Inc. , 41 F.3d 332, 334 (7th Cir. 1994) ; Shefts v. Petrakis , 954 F.Supp.2d 769, 773–74 (C.D. Ill. 2013).

Analysis

"As a general rule, workers in the United States are taxed to support the payment of social security benefits to the retired and to individuals with disabilities." Eshel v. Comm'r , 831 F.3d 512, 514 (D.C. Cir. 2016). Employment taxed to support Social Security is "covered" employment; employment exempt from Social Security taxes (or "contributions," as they are often called) is "noncovered" employment. Stroup v. Barnhart , 327 F.3d 1258, 1259 (11th Cir. 2003) (Cudahy, J.). See I.R.C. § 3101(a) (imposing Federal Insurance Contributions Act (FICA) tax on "wages" from "employment"); id. § 3121(a) (defining "wages" for purposes of FICA); 42 U.S.C. § 409(a) (defining "wages" identically in relevant respects for purposes of Social Security); I.R.C. § 3121(b) (defining "employment" for purposes of FICA); 42 U.S.C. § 410(a) (defining "employment" identically for purposes of Social Security). A retired worker is entitled to Social Security retirement benefits based on the number of calendar quarters during which she earned wages from employment subject to Social Security contribution requirements over the course of her career, provided she has accrued a minimum number of quarters of coverage. See 42 U.S.C. §§ 402(a), 414(a).

"[T]o preserve the progressive nature of the Social Security system by ensuring that the formula [SSA] uses to calculate benefits does not advantage high-income workers who split their careers between covered and non-covered employment over those who paid Social Security taxes for their entire careers[,]" Congress wrote into the Social Security Act ("the Act"), 42 U.S.C. ch. 7, a "windfall elimination provision" (WEP), "which reduces the benefits received by certain individuals who also receive pensions for work that did not require them to pay [S]ocial [S]ecurity taxes." Hawrelak v. Colvin , 667 F. App'x 161, 162 (7th Cir. 2016) (mem.) (citing inter alia Stroup , 327 F.3d at 1259 ). As explained in the conference report of the Social Security Amendments of 1983, Pub. L. No. 98-21, sec. 113, 97 Stat. 65, 76–79, the statute which added the WEP,

Social security benefits are determined through a formula based on average lifetime earnings in jobs covered by Social Security. The benefit formula is weighted so that persons with low average life-time earnings receive a proportionally higher rate of return on their contributions to Social Security than workers with relatively high average lifetime earnings.

Workers with short periods of covered work also receive this advantage, because their few years of earnings are averaged over a 35-year period to determine their average monthly covered earnings on which the benefit is based.

This high rate of return for persons who have spent a short period of time in covered employment is what is often characterized as a "windfall" benefit.

H.R. Rep. No. 98-47, at 120 (1983) (Conf. Rep.) (capitalization regularized), as reprinted in 1983 U.S.C.C.A.N. 404, 409.

The WEP provides that a worker's Social Security retirement benefits are to be reduced according to a certain formula if the worker "becomes eligible ... for a monthly periodic payment ... which is based in whole or in part upon his earnings for service which did not constitute ‘employment’ as defined in section 410 of this title for purposes of this subchapter [ 42 U.S.C. §§ 401 – 434, title II of the Act] (hereafter ... referred to as ‘noncovered service’)[.]" 42 U.S.C. § 415(a)(7)(A). The WEP contains three exclusions, one of which is relevant here: the WEP does not apply to "a payment by a social security system of a foreign country based on an agreement concluded between the United States and such foreign country pursuant to section 433 of this title[.]" Id. § 415(a)(7)(A)(II).

There are two questions presented in this case: Does the WEP generally reach Plaintiffs' CPP/QPP benefits and, if so, are Plaintiffs' CPP/QPP benefits specifically excluded from its reach? In other words, (1) Does SSA err in holding that Plaintiffs' CPP/QPP benefits are payments "based in whole or in part upon ... earnings for service which did not constitute ‘employment’ as defined in section 410," 42 U.S.C., section 210 of the Act? And, if not, (2) Does the SSA err in holding that Plaintiffs' CPP/QPP benefits are not payments "by a social security system of a foreign country based on an agreement concluded between the United States and such foreign country pursuant to section 433," 42 U.S.C., section 233 of the Act?

In discerning Congress's intent behind the cited provisions of the Act, "[t]he starting point is the existing statutory text[.]" Lamie v. U.S. Tr. , 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004). To support and confirm our reading of that text, we rely in part on the conference report of section 210(a)(C) "because it is the most persuasive evidence of congressional intent besides the statute itself." Resolution Tr. Corp. v. Gallagher , 10 F.3d 416, 421 (7th Cir. 1993). Similarly, the goal of treaty interpretation is " ‘to ascertain the intent of the parties’ by looking to the document's text and context." Lozano v. Montoya Alvarez , 572 U.S. 1, 11, 134 S.Ct. 1224, 188 L.Ed.2d 200 (2014) (quoting United States v. Choctaw Nation , 179 U.S. 494, 535, 21 S.Ct. 149, 45 L.Ed. 291 (1900) ). Agreements established under section 233 of the Act are interpreted along the same lines. Eshel , 831 F.3d at 518.

I. Does SSA err in holding that Plaintiffs' CPP/QPP benefits are payments "based in whole or in part upon ... earnings for service which did not constitute ‘employment’ as defined in" section 210 of the Act?

Section 210 of the Act sets forth the definition of "employment" for the purposes of title II of the Act, that is, the definition of covered employment. 42 U.S.C. § 410(a). That point bears repeating. Section 210 does not define "employment" as an abstract concept or a dictionary entry, detached from coverage by Social Security taxes, compare id. with I.R.C. § 3121(b) (identical definitions of "employment"), elsewhere divided into the species "covered employment" and "noncovered employment." Recall that the WEP glosses "service which did not constitute ‘employment’ " within the meaning of ...