Elliott v. Weinberger

• Decision Date: 04 February 1974
• Docket Number: Civ. No. 72-3629.
• Citation: 371 F. Supp. 960
• Parties: Evelyn ELLIOTT and Benito Molina, Individually and on behalf of all others similarly situated, Plaintiffs, v. Caspar 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.
• Court: U.S. District Court — District of Hawaii

371 F. Supp. 960

Evelyn ELLIOTT and Benito Molina, Individually and on behalf of all others similarly situated, Plaintiffs, v. Caspar 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.

Civ. No. 72-3629.

United States District Court, D. Hawaii.

February 4, 1974.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Stanley E. Levin, Legal Aid Society of Hawaii, Comprehensive Legal Services, Waianae, Hawaii, Peter A. Lee, Hawaii Legal Services Project, Legal Aid Society of Hawaii, Honolulu, Hawaii, for plaintiffs.

Harold M. Fong, U. S. Atty., Honolulu, Hawaii, Irving Jaffe, Acting Asst. Atty. Gen., Harland F. Leathers, Bruce E. Titus, Civil Div., Dept. of Justice, for defendants; Frank L. Dell'Acqua, Chief of Litigation, Henry Eigles, Atty., Social Security Administration, Dept. of Health, Education, and Welfare, of counsel.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

SAMUEL P. KING, District Judge.

Under 42 U.S.C. § 404(a) and (b),¹ the Secretary of the Social Security Administration (hereinafter the "Administration") may effect or waive recoupment of overpayments made to social security recipients. The Administration has promulgated procedures and regulations governing recoupment and waiver in its Claims Manual § 5503² and in the Code of Federal Regulations, 20 C.F.R. § 404.901 et seq. (1973).³ The Plaintiffs in this class action claim that these procedures and regulations deny them due process of law under the Fifth Amendment because their benefits are reduced or suspended without adequate notice of the reasons for the recoupment, without adequate notice of their right to reconsideration, waiver, or partial adjustment,⁴ and without a hearing prior to the recoupment. Defendants contest the Plaintiffs' constitutional and jurisdictional claims.

Facts:

This court has divided the Plaintiff class into two subclasses. Represented by Plaintiffs Silva, Ortiz, and Vaquilar, the first subclass consists of all social security old-age beneficiaries, resident in the State of Hawaii, whose exposure to recoupment is based upon their own annual earnings reports.⁵ Represented by Plaintiffs Elliott, Gaines, and Yamasaki, the second subclass consists of all social security old-age and disability benefit recipients, resident in the State of Hawaii, whose exposure to recoupment is based upon evidence other than annual earnings reports.⁶

Named Plaintiffs of subclass one all received an Administration form letter indicating that based upon their annual earnings reports for the preceding year, a specified overpayment had occurred and that their subsequent benefit payments would be reduced or totally suspended over a specified period. There was some notice of the right to reconsideration and waiver.⁷ Plaintiffs believed themselves to be not liable for any overpayment, not at fault in causing the overpayment, and unable to repay the amount due; they personally contacted local Social Security Administration offices within thirty days of receipt of the form letter. At that time, none were advised that appropriate forms requesting waiver, reconsideration, and partial adjustment were available to initiate administrative action, and none actually filed the requisite forms within thirty days.⁸ Currently, the Administration has completed recoupment against two of these Plaintiffs while deferring recoupment against the other pending the disposition of this case. Plaintiffs of subclass one have done all that reasonably could be expected of them to exhaust their administrative remedies.⁹

Named Plaintiffs of subclass two received overpayment notices more than thirty days before recoupment was to begin. The notice to Plaintiff Elliott set forth that the overpayment determination was based upon her receipt of both retirement and disability benefits when she was entitled to only disability benefits.¹⁰ The notice to Plaintiff Gaines indicated that "duplicate payments" over specified dates was the reason for the overpayment finding.¹¹ The notice to Plaintiff Yamasaki specified "a processing error" as the cause of the overpayment.¹² All three named Plaintiffs received some notice of the right to reconsideration and waiver.¹³ The Plaintiffs believed themselves to be not liable for any overpayment, not at fault in causing the overpayment, and unable to repay the amount claimed; they contacted local Administration offices within thirty days after receipt of the overpayment notice. At that time, none were advised that appropriate forms requesting waiver, reconsideration, and partial adjustment were available to instigate administrative action, and none actually filed the requisite forms within thirty days.¹⁴ Presently, recoupment against Elliott and Gaines has been deferred pending a final disposition of this case, while recoupment against Plaintiff Yamasaki has been completed. Plaintiffs of subclass two have done all that reasonably could be expected of them to exhaust their administrative remedies.

In summary, the Administration's regulations and procedures, and the Plaintiffs' histories in this case, show that recipients in both subclasses subject to recoupment receive recoupment notices which set out the basic reason for the recoupment, the possibility of reconsideration, the conditions for waiver, and the need to consult the local Administration office within thirty days if they wish to complain. For subclass one Plaintiffs (at least until January, 1975), recoupment begins immediately after the initial overpayment decision is made. For subclass two Plaintiffs, the notice is sent thirty days before actual recoupment begins. In practice, actual adjustment may, at the discretion of the Payment Center, be extended beyond 30 days when more time is needed to consider and process the matter. After the first determination is made, if reconsideration or waiver is requested, recoupment is further deferred until those issues are determined on the basis of any documentary evidence submitted. Finally, a post-recoupment hearing is possible should the claimant wish to seek additional review.¹⁵

The initial overpayment and recoupment notice sent to beneficiaries does not set forth the forms needed for reconsideration and waiver, or information about how to complete them. The information and forms missing in the initial notice are not generally made available when the claimant consults his local Administration office. When reconsideration or waiver consideration is requested, the Administration's decision is based upon a claimant's ex parte presentation of documentary evidence on an issue which he may understand only nebulously. Many of these claimants are elderly and disabled people whose capacities may frustrate an effective documentary presentation of their case. No oral hearing is given prior to the beginning of recoupment, and any deferral of recoupment beyond 30 days after the date of the initial notice lies completely within the discretion of the Administration. Should a claimant convince the Administration to reverse itself ex parte on the overpayment issue, a reduced or suspended payment may ensue with a refund coming a month or more later.

Statistics provided by the Defendant¹⁶ in this case indicate the following:

(a) In 1970 there were overpayments in approximately 1,250,000 cases.

(b) Of these 1,250,000 overpayments, there were requests for reconsideration in approximately 12,000 cases.

(c) Of the 12,000 reconsideration determinations with respect to overpayments, there were approximately 8,250 reversals and approximately 3,750 affirmances.

(d) Of the 3,750 reconsideration affirmances with respect to overpayments, there were requests for hearing in approximately 1,600 cases.

(e) Of the 1,600 cases that went to hearing with respect to overpayments, there were reversals in approximately 560 cases and affirmances in 1,040 cases.

Stated another way, these statistics mean:

(a) less than one per cent of the beneficiaries in overpayment status contest the matter.

(b) of those who do contest the initial overpayment determination, about sixty-nine per cent succeed in getting the Administration to reverse itself.

(c) about forty-three per cent of those whose overpayment status is affirmed upon reconsideration seek on oral (post-recoupment) hearing.

(d) of those who get an oral hearing, more than one-third succeed in getting the Administration to reverse itself.

(e) overall, of that small percentage of claimants questioning the overpayment determination, about seventy-three per cent (8,250 + 560 out of 12,000) finally succeed in obtaining relief.

It is quite clear from the above that when the claimant feels he has a strong enough case to question the Administration's initial overpayment determination, there is a very substantial chance that the Administration will eventually reverse itself. What is saddest and perhaps most important about this fact is that many social security recipients, like the Plaintiffs here, depend upon their full monthly benefit payments for subsistence.¹⁷ Erroneous recoupments often cause the aged and infirm drastic hardship.¹⁸

Jurisdiction:

The Defendants have moved for dismissal for lack of subject-matter jurisdiction. Plaintiffs assert that federal jurisdiction exists under 28 U.S.C. § 1331(a) (1966), 28 U.S.C. § 1361 (Supp. I, 1972), and 5 U.S.C. § 701 et seq. (1967) (hereinafter the "A.P.A."). While § 1361¹⁹ may have been intended to increase the availability of mandamus jurisdiction beyond that under common law,²⁰ even under the traditional rules for mandamus writs, § 1361 applies to this case.²¹ At common law, mandamus would issue when three elements coexisted, namely, 1) a clear right in the plaintiff to the relief sought; 2) a clear duty on the part of the defendant to do the act in...