Breault v. Heckler

Decision Date29 June 1984
Docket NumberCiv. No. N-79-304 (PCD).
Citation591 F. Supp. 308
CourtU.S. District Court — District of Connecticut
PartiesAlphena BREAULT, Eleanor Wade, on their own behalf and on behalf of all others similarly situated v. Margaret M. HECKLER, in her capacity as Secretary of Health and Human Services, Donald T. Regan, in his capacity as Secretary of the Treasury.

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Judith I. Solomon, Legal Aid Soc., Hartford, Conn., Carolyn Kone, Bridgeport Legal Aid, Bridgeport, Conn., for plaintiffs.

Ellen J. Sazzman, Andrea Newmark, Dept. of Justice, Civ. Div., Washington, D.C., for defendants.

RULING ON OBJECTION TO MAGISTRATE'S RECOMMENDED RULING

DORSEY, District Judge.

Plaintiffs are elderly widows who purport to represent a provisionally certified statewide class of similarly situated surviving spouses. Social Security payments, to and for the benefit of plaintiffs' husbands, were erroneously continued after the husbands' deaths and deposited directly or after indorsement into bank accounts on which plaintiffs and their husbands had been jointly named. The government recovered the erroneous payments, without notice, a hearing, or an opportunity to request a waiver of recoupment. Plaintiffs — social security beneficiaries in their own right — challenge such procedures. Plaintiffs do not claim entitlement to the erroneous payments, but claim that, in attempting to recover them, defendants, the Secretaries of Health and Human Services and the Treasury, violated Title II of the Social Security Act and denied them due process. The magistrate has recommended that defendants' alternative motion to dismiss or for summary judgment be denied and that plaintiffs' motin for summary judgment be granted. For the reasons below, the recommended ruling is not accepted and summary judgment shall enter for defendants.

Facts
A. Plaintiff Breault

Prior to the death of her husband on December 8, 1975, Alphena Breault and her husband each received a monthly Social Security check at their residence. About December 12, 1975, Mrs. Breault notified the Social Security Administration (SSA) of Mr. Breault's death and applied for funeral expenses and widow's benefits.

SSA erroneously certified to the Treasury Mr. Breault's benefit entitlement for the months of December 1975, and January, February and March, 1976.1 Treasury issued and mailed four monthly checks to Paul Breault in the amount of $310.40 each. Under applicable regulations,2 a government check issued to a deceased payee may not be negotiated after his/her death, but must be returned to the issuing agency for determination whether payment is due and to whom. Mrs. Breault contends that she was told by a local employee of SSA that the check could be negotiated if necessary to meet her living expenses,3 and that her own benefits would be adjusted at a later date to reflect her receipt of her husband's benefits. Mrs. Breault indorsed the checks "for deposit only" and deposited them in the joint account at Connecticut National Bank (CNB). In May 1976, Mrs. Breault began receiving combined monthly widow's and retirement benefits. She also received a lump sum check for widow's benefits retroactive to Mr. Breault's death.

In August 1976, SSA informed Treasury of Paul Breault's death on December 8, 1975, and requested recovery of the four erroneous monthly payments. Treasury instituted an administrative recovery procedure from CNB, the presenting bank, in the amount of the four checks as negotiated without the indorsement of the payee, Mr. Breault. Such negotiation constituted a breach of the bank's warranty as to the genuineness of prior indorsements.4 In July 1978, CNB, pursuant to a right of setoff under Connecticut law,5 debited Mrs. Breault's accounts $1,239.99, the appropriate total of the four erroneous payments and remitted to the Treasury $1,241.60.6 Treasury in turn transferred $1,241.60 to SSA.

Mrs. Breault received no notice that defendants intended to reclaim the four payments nor that her accounts would be debited, at one fell swoop or otherwise.7 She learned of the debiting when, her account having been reduced, CNB refused to honor a check she issued.8 In August 1978, Mrs. Breault requested reconsideration of the "decision" that she had been "overpaid,"9 and that SSA waive recovery of any overpayments. In March 1979, SSA informed Mrs. Breault that her requests would not be processed because checks negotiated after the death of the beneficiary were not considered "overpayments" under the Social Security Act and regulations.

B. Plaintiff Wade

During 1976, the husband of Eleanor Wade was a recipient of disability benefits and she was a recipient of separate auxiliary benefits based on her husband's disability. Pursuant to an agreement between the Connecticut Bank & Trust Company (CBT) and the Wades, their two monthly benefit checks were deposited directly10 into their joint checking account. The agreement provided that it would be canceled upon the death of either payee or beneficiary of the payments. On June 29, 1976, Robert Wade died. Shortly thereafter, Mrs. Wade notified SSA of the death and applied for widow's benefits. SSA continued to authorize Treasury to issue six monthly payments to Mr. Wade of $311.20 each. Three payments were deposited directly and three payments were electronically transferred into the CBT account.11

In August 1976, based on a bank statement, Mrs. Wade notified the local SSA office that her husband's benefits were still being deposited into the checking account. She states she was advised by an SSA employee that "the problem would adjust itself."12 In December 1976, Mrs. Wade began to receive monthly widow's benefits and also received a lump-sum widow's benefits retroactive to her husband's death, and a lump-sum death benefit, all of which were deposited directly into her account.13 In or before October 1976, Mr. Wade's name was removed from that account.

In December 1976 and again in January 1977, SSA requested recoupment by Treasury of the six payments made after Mr. Wade's death. Treasury reclaimed, of CBT, the total of the three direct deposits under 31 C.F.R. Part 209 and the three electronic fund transfers under 31 C.F.R. Part 210. In February and March 1977, CBT debited Mrs. Wade's account $1,556.00, which equals the total of five of the six erroneous credits to the Wade account. CBT refunded to Treasury all or substantially all of these amounts.14

Like Mrs. Breault, Mrs. Wade received no notice that defendants intended to reclaim the monies nor that her account would be debited, particularly at one fell swoop. Neither was she permitted to request waiver of recovery. She learned of the debiting when it was reflected in her account statements.15 In April and again in June 1977, Mrs. Wade, who apparently did not question $933.60 of the debits, requested the local SSA office to clarify the withdrawals in excess of $933.60. Her request forms reflect SSA notations that she was in "dire need."16 On June 17, 1978, Mrs. Wade was advised by SSA to contact her bank if she believed her account had been charged improperly inasmuch as the erroneous payments were not considered "overpayments" under the Social Security Act and regulations.

C. This Action

Alphena Breault and Eleanor Wade brought this action on behalf of themselves and all others similarly situated,17 contending that the recovery procedures violated rights secured to plaintiffs under Section 204 of the Social Security Act, 42 U.S.C. § 404 (the Act), its implementing regulations in 20 C.F.R. Part 404 Subparts F and J, the Administrative Procedures Act (APA), 5 U.S.C. §§ 551, et seq., the Freedom of Information Act (FOIA), 5 U.S.C. § 552, and the fifth amendment. Plaintiffs seek invalidation and enjoinder of defendants' practices and an order that plaintiffs be given notice and an opportunity to request waiver of recovery of the erroneous payments and a hearing. Jurisdiction is asserted under 42 U.S.C. § 405(g) (the Act), 28 U.S.C. § 1331 (federal question), and 28 U.S.C. § 1361 (mandamus).

The magistrate found mandamus jurisdiction under 28 U.S.C. § 1361 and recommended denial of defendants' motion to dismiss. On the merits, the magistrate concluded that mandamus was proper and would order a notice and a hearing. He thus recommended the granting of plaintiffs' motion for summary judgment and the denial of defendants' motion for summary judgment on the statutory claim. He found it unnecessary and improvident to consider the constitutional claim.

The court has reviewed de novo, 28 U.S.C. § 636(b), the magistrate's proposed decision and the voluminous record, memoranda, post-argument filings and various letter submissions on file on which the pending motions are based.

Discussion
I. Jurisdiction

Three statutes are relevant to the question of jurisdiction.

(1) 42 U.S.C. § 405(g), establishes jurisdiction to review claims arising under the Act after the secretary renders a "final decision;"
(2) 28 U.S.C. § 1331, establishes federal question jurisdiction; and
(3) 28 U.S.C. § 1361, establishes mandamus jurisdiction.18
A. Title 28 U.S.C. § 1331 (federal question)

A "veritable jurisdictional nightmare" here "stems primarily from the broad reading given the last sentence of 42 U.S.C. § 405(h) in Weinberger v. Salfi, 422 U.S. 749 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975)." Ellis v. Blum, 643 F.2d 68, 70, 73 (2d Cir.1981). Section 405(h) reads, in pertinent part:

The findings and decision of the Board ... shall be binding upon all ... parties .... No findings of fact or decision of the Board shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Board or any officer or employee thereof shall be brought under section 1331 or 1346 of Title 28 to recover on any claim arising under this title.

In Salfi, the Court noted that a "claim arising under" the Act included all claims as to which the Act provi...

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