Burrow v. Finch, 19802.

• Decision Date: 14 September 1970
• Docket Number: No. 19802.,19802.
• Citation: 431 F.2d 486
• Parties: Ruby J. BURROW, Plaintiff-Appellee, v. Robert H. FINCH, Secretary of Health, Education and Welfare, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

431 F.2d 486 (1970)

Ruby J. BURROW, Plaintiff-Appellee, v. Robert H. FINCH, Secretary of Health, Education and Welfare, Defendant-Appellant.

No. 19802.

United States Court of Appeals, Eighth Circuit.

September 14, 1970.

COPYRIGHT MATERIAL OMITTED

Thomas J. Press, Atty., Dept. of Justice, Washington, D. C., for appellant, William D. Ruckelshaus, Asst. Atty. Gen., Washington, D. C., Calvin D. Hamilton, U. S. Atty. (former), Kansas City, Mo., and Kathryn H. Baldwin and Robert M. Heier, Attys., Dept. of Justice, Washington, D. C., on the brief.

Sol M. Yarowksy, Kansas City, Mo., for appellee, and filed brief.

Before BLACKMUN,^* GIBSON and LAY, Circuit Judges.

LAY, Circuit Judge.

The Secretary of H.E.W. has filed an appeal from the judgment of the district court which awarded retroactive social security benefits to late filing claimants. The effect of the judgment is to exceed the maximum amount, based upon the decedent's wage earning record, allotted under the Act to the deceased wage earner's "family." The benefits had already been totally (for some months) and partially (for other months) depleted by payments to prior "family" claimants. We reverse.

The facts are fully set forth in the district court's opinion, 299 F.Supp. 807, and only the essential data needed to understand the legal issues are repeated here. In 1949 the deceased wage earner, Robert L. Hall, married the plaintiff (now Ruby Burrow). Their union produced two sons. In May 1953 the decedent abandoned his first family and Ruby never heard of him again. In August 1953 Robert Hall married Erma J. Hall (now Erma Cozad). The second marriage took place prior to the final decree of divorce, which Ruby obtained in December 1953. In May 1964 the wage earner died, still married to Erma, leaving her with two minor children born of their union. In July of 1964 Erma applied for benefits for herself¹ and on behalf of her two children. Erma and the two children received $66.40 each for a total of $199.20, the maximum benefits allowable against the wage earner's record under the Act. 42 U.S.C.A. §§ 403(a) and 415(a) (Table-Column V).

In January 1965 Erma remarried which, pursuant to § 402(e) of the statute, divested her of entitlement to benefits. At the same time the statutory family maximum on the wage earner's record was amended and increased to $213.20 a month. Each of Erma's children thereafter received $75.50 leaving an unused portion of the new benefits at $62.20 per month.

In June 1965 Ruby Burrow first learned of the wage earner's death. She then filed an application for benefits on behalf of her two sons, also claiming against the wage earner's account. The Secretary determined that hers was a valid claim, and since June 1965 Ruby's sons have shared equally with Erma's children. The four children are currently each receiving $53.30. These payments are not in question here.

Under § 402(j) (1) the Secretary is authorized, subject to certain conditions, to award benefits retroactively for twelve months from the date of application. The benefits from June 1964 through May 1965 are the subject matter of the present litigation.

The Secretary initially denied benefits to Ruby's sons for the period of June 1964 through December 1964 on the ground that the family maximum in effect at that time had already been depleted. The last sentence of § 402(j) (3) provides: "An individual shall be deemed to have waived such entitlement to retroactive benefits for any such month for which such benefit would, under the second sentence of paragraph (1), be reduced to zero."

From the period of January 1965 through May 1965 the Secretary awarded $31.10 to each of Ruby's sons, which was the amount remaining in the family maximum not previously paid out to Erma's children. In doing so the Secretary relied upon the second sentence of 42 U.S.C.A. § 402(j) (1) which provides that any retroactive benefit under the Act must be reduced "to any extent that may be necessary, so that it will not render erroneous any benefit which, before the filing of such application, the Secretary has certified for payment * * *"

Mrs. Burrow requested an administrative rehearing on the retroactive benefits. She contended, as she does here, that her sons are entitled to 2/5ths of the family maximum from June 1964 to December 1964. She also contends that they are entitled to their full share of one-half of the maximum from January through May 1965. Her contention is based upon the language of 42 U.S.C.A. § 404(b) which provided at the time this case arose:

"There shall be no adjustment or recovery by the United States in any case where incorrect payment has been made to an individual who is without fault (including payments made prior to January 1, 1940), and where adjustment or recovery would defeat the purpose of this subchapter or would be against equity and good conscience."²

The hearing examiner reopened the proceedings and held evidentiary hearings to determine whether or not Erma was at "fault" in receiving the overpayments. On the basis of these hearings he determined that there had been overpayments to Erma under § 404(b) and therefore Ruby's sons should be granted full retroactive payments. The examiner also found, however, that Erma received these overpayments "without fault" and to recover them would defeat the purpose of the Act.³ He therefore ordered that no retroactive reduction be made in the award to Erma or her children. The effect of this decision was to authorize benefit payments in execess of the family maximum benefits set by statute. The Appeals Council⁴ reversed the decision, sua sponte, and reinstated the Secretary's original award.

Ruby filed suit to review the Secretary's final decision and the district court reversed the Appeals Council. In doing so the district court held that the procedure and the standard of law applied at the evidentiary hearings conducted by the examiner were incorrect. The court further held that the findings of the examiner violated other legal standards.

The district court concluded that it was the duty of the Secretary to first determine whether a prior claimant was without fault (under § 404(b)) before subsequently refusing benefits to a late-filing rightful claimant (under § 402 (j)). The district court held, however, that even should it be subsequently found, in a properly conducted evidentiary hearing, that Erma was without fault and not required to return the overpayment, Ruby is nevertheless a rightful claimant and cannot be denied recovery of her benefits. The district court reached this result, even though the resulting benefits paid would be in excess of the family maximum, since the Secretary failed to prove that Erma was not "without fault." It is this holding with which we disagree.

We think it clear that the maximum family allowance available to beneficiaries under the tables of § 415 constitutes the limit against which all claimants may file. Although we reject the Secretary's contention that § 402(j) and § 404(b) are not to be interpreted in conjunction with one another, nevertheless the two sections of the Act should not be so construed as to violate the maximum family benefits authorized. A claimant has no right to social security benefits apart from those authorized by statute. Flemming v. Nestor, 363 U.S. 603, 80 S.Ct. 1367, 4 L.Ed.2d 1435 (1960). All rights depend solely upon the statutory scheme. Guarino v. Celebrezze, 336 F.2d 336, 338 (3 Cir. 1964). See also 20 C.F.R. §§ 404.403, 404.406. Equitable principles cannot increase benefits not otherwise provided within the Act itself. Congressional intent is clear that no more than the maximum benefit authorized can be paid out. Section 402(j) (3), previously set forth, additionally provides that an individual shall be deemed to have waived any entitlement for any such month where a prior benefit has been paid out so as to reduce the claimed benefit to zero.

It is upon the latter basis, and the second sentence of § 402(j) (1), that the Secretary urges that a late filing claimant is estopped from any readjustment of previous benefits paid. As set forth, infra, § 402(j) (1) requires that any retroactive benefit to a late filing claimant be reduced "to any extent that may be necessary, so that it will not render erroneous" any benefit previously paid for such prior month. We agree that readjustment of prior benefits cannot be rendered erroneous by the fact alone that an additional claimant later becomes entitled to benefits. The statute clearly so provides. The legislative history of the Act enunciates the design of the provision "to eliminate unnecessary work in adjusting payments which were correct when made * * *". H. Rept. No. 2526, 79th Cong., 2d Sess., p. 24; S. Rept. No. 1862, 79th Cong., 2d Sess., p. 32; U.S.Code Cong.Serv. 1946, p. 1542. (Emphasis ours.) There is nothing in these provisions that requires the Secretary to prove that the prior claimant was "without fault" in the overpayment (as provided under § 404 (b)) when dealing with the application of late filing claimants. The examiner and the district court construed § 402(j) and § 404(b) so as to place on the Secretary the burden of proving the prior claimant to be "without fault" when entertaining the application of the late filing claimant. The essential difficulty with this construction is that it may inevitably lead to a result not authorized by the Act, as it did here, in the award of more than the family maximum to all claimants. This interpretation places the Secretary in the unenviable position of proving nonfault of the earlier claimant in one proceeding, and then in a separate proceeding to recover the overpayment, proving the "fault" of the same claimant under § 404(b).⁵ In the event the Secretary fails in both proceedings, as the district court recognizes to be possible here, the benefits would clearly exceed the maximum authorized by statute. There is nothing in the Act or its history...