Lugo v. Schweiker
| Decision Date | 28 December 1984 |
| Docket Number | Civ. A. No. 81-3797. |
| Citation | 599 F. Supp. 948 |
| Parties | LUGO, Angel and Luna, Maria by her guardian ad litem Lugo, Angel on behalf of themselves and on behalf of all others similarly Pickels, Sarah M., on behalf of Pickels, Edward and Terebieniec, Edward F., indiv. & on behalf of all others similarly situated, Intervenors, v. SCHWEIKER, Richard S., Secretary, United States Department of Health and Human Services. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Henry J. Sommer, David L. Hill, Community Legal Services, Inc., Philadelphia, Pa., for plaintiffs.
Steven J. Engelmyer, Asst. U.S. Atty., Philadelphia, Pa., Randolph W. Gaines, Deputy Asst. Gen. Counsel, John B. Watson, Chief, Assistance Payments, Litigation Branch, Baltimore, Md., for defendants.
The Social Security Administration ("SSA" or "agency"), along with the Secretary of Health and Human Services ("Secretary") is charged with implementing the provisions of the Social Security Act, 42 U.S.C. §§ 301-1396 (1980), as amended ("Act"). Under the Act, Supplemental Security Income ("SSI") benefits are paid to eligible recipients. Also available under the Act are Social Security Disability Insurance ("SSDI") benefits for recipients qualifying for that program.
Like any large government bureaucracy, SSA sometimes makes mistakes. Frequently, these mistakes result in the agency paying an eligible recipient an amount less than what is statutorily required under the Act. When a recipient is not paid all that is due him or her under the Act, the missed payments are termed an underpayment. An underpayment commonly results in cases where a recipient's benefits have been terminated due to SSA's erroneous assertion that the recipient was no longer disabled. Once it has been determined that a recipient has been underpaid, the Secretary must pay the amount of the underpayment to the recipient. See e.g. Drummond v. Heckler, 569 F.Supp. 304 (E.D.Pa.1983).
Also prevalent among SSA's mistakes are situations where the agency has paid a recipient an amount more than what is statutorily required by the Act. Where a recipient is paid more than that due to him or her under the Act, the excess payments are termed an overpayment. Overpayments generally result from inaccurate estimates of a recipient's future income, administrative computer errors, recipient errors or retroactive changes in the law. See Note, Supplemental Security Income Overpayments: Judicial Response to Administrative Decisions Which Deny Waiver of Recovery, 18 New Eng.L.Rev. 899, 901-02 (1983).
By statute, the Secretary is directed to recover overpayments of SSDI benefits. See 42 U.S.C. § 404(a)(1) (1980). Such a recovery is termed recoupment. Recoupment of an overpayment is waived, however, if the recipient is "without fault" and "the recovery would defeat the purpose of the Act or would be against equity and good conscience." 42 U.S.C. § 404(b) (1980).
The Supreme Court has held that section 204(b) of the Act, 42 U.S.C. § 404(b), prohibits the Secretary from recouping an overpayment without first giving the overpaid recipient an opportunity for a hearing on the issue of whether the overpayment should be waived. Califano v. Yamasaki, 442 U.S. 682, 698, 99 S.Ct. 2545, 2556, 61 L.Ed.2d 176 (1979). See also Bonner v. Califano, 516 F.Supp. 310 (E.D.Pa.1981).
Similarly, the Secretary is statutorily directed to recoup overpayments of SSI benefits. See 42 U.S.C. § 1383(b)(1) (Supp. V. 1981). Here too, waiver is appropriate if the recipient is "without fault in connection with the overpayment," and the "recovery ... would defeat the purpose of the Act, or be against equity or good conscience." Id. This provision has also been interpreted to prohibit the Secretary from recouping an overpayment without first giving the overpaid recipient an opportunity for a hearing on the issue of whether the overpayment should be waived. See Page v. Schweiker, 571 F.Supp. 872, 879 (M.D.Pa. 1983). See also Schwingel v. Harris, 631 F.2d 192, 196-97 (2d Cir.1980).
The Secretary, by regulation defines overpayments and underpayments, not by an amount over or underpaid in a given month, but by an amount over or underpaid within a period. See 20 C.F.R. § 416.538 quoted infra. If the Secretary finds that during a period a recipient has been overpaid in a given month or number of months and underpaid in another month or number of months, she sets off the amounts to come up with an "adjusted" over or underpayment figure. The period varies with each recipient and can stretch over several years.1 The secretary makes this within period "adjustment" without providing the recipient an opportunity for a waiver of recoupment of the overpaid amounts.
This action was commenced as a class action against the Secretary by plaintiffs Angel Lugo and Maria Luna, on behalf of themselves and other persons who have been adversely affected by the Secretary's regular policy which is challenged herein. Plaintiffs' amended complaint seeks declaratory and injunctive relief, alleging that the Secretary's failure to provide an opportunity for a hearing to determine whether a waiver of overpayment recoupment was warranted, prior to the adjustment of benefits, violated their rights under the Act and the Due Process Clause of the Fifth Amendment of the United States Constitution.
After permitting other plaintiffs to intervene, this court certified a class represented by Angel Lugo, Maria Luna, Sarah H. Pickels, on behalf of Edward Pickels, and Edward F. Terebieniec,2 consisting of all persons who:
(1) have been, are, or will be served by the Philadelphia regional office of the United States Department of Health and Human Services;
(2) have been or will be determined eligible for social security or SSI benefits;
(3) have been or will be entitled to payment of benefits due for prior months;
(4) have had or will have all or part of retroactive benefits withheld from prompt payment or adjusted by defendant in order to recoup previous overpayment of benefits without receiving notice and an opportunity for a hearing on the issue of waiver of said recoupment or adjustment prior to such withholding or adjusting by defendant; and (5) have made or will make a claim to defendant requesting the release of benefits withheld or adjusted. The class includes all persons who received notice of the adjusted/recouped amount of benefits within the four years prior to September 21, 1981, the date this action was commenced. The class does not include any person as to whom a court has already rendered a decision on the issues presented in this case.
Now pending before this court are cross-motions for summary judgment. On September 20, 1984, argument was heard on the motions. Plaintiffs argue that the overpayment-underpayment accounting procedure set forth in the Secretary's regulations violates sections 204(b) and 1631(b)(1) of the Act, 42 U.S.C. §§ 404(b) and 1383(b)(1). Pursuant to the challenged procedure, the Secretary recoups any overpayment made to a recipient during a period from any sum owing to such a recipient as a result of an underpayment during the same period without first providing a waiver hearing with regard to the overpayment. Plaintiffs also assert that, in addition to violating the Act, the procedure outlined above violates the Due Process Clause of the Fifth Amendment of the United States Constitution. For the reasons set forth below plaintiffs' motion will be granted; and defendant's motion will be denied.
The Supreme Court has repeatedly cautioned that where a case may be decided on either constitutional or statutory grounds, the lower courts should decide the case on statutory grounds. See Califano v. Yamasaki, 442 U.S. 682, 692, 99 S.Ct. 2545, 2553, 61 L.Ed.2d 176 (1979). New York City Transit Authority v. Beazer, 440 U.S. 568, 582-83 and n. 22, 99 S.Ct. 1355, 1364 n. 22, 59 L.Ed.2d 587 (1979); Ashwander v. T.V.A., 297 U.S. 288, 347, 56 S.Ct. 466, 483, 80 L.Ed. 688 (1936) (concurring opinion). Since I conclude that the Secretary's procedures exceed her statutory authority there is no need to reach plaintiffs' constitutional claims.
I note here the limited standard of review presented to a court when regulations promulgated by the Secretary are challenged. Courts are generally required to give great deference to agency regulations implementing a statute; and, can only set them aside if "the Secretary exceeded her statutory authority or if the regulation is `arbitrary, capricious, or an abuse of discretion, or otherwise not in accordance with the law.'" Batterton v. Francis, 432 U.S. 416, 425-26, 97 S.Ct. 2399, 2405-06, 53 L.Ed.2d 448 (1977) (citations and footnotes omitted). See also Schweiker v. Gray Panthers, 453 U.S. 34, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981); Santise v. Schweiker, 676 F.2d 925 (3d Cir.1982); Jackson v. Heckler, 580 F.Supp. 1077 (E.D.Pa.1984). With this principle in mind, I turn now to the Secretary's action in this case.
The Secretary is given authority to establish social security benefits regulations and procedures by section 205(a) of the Act, 42 U.S.C. § 405(a) (1980). This section provides: "the Secretary shall have full power and authority to make rules and regulations and to establish procedures not inconsistent with the provisions of the Act...." 42 U.S.C. § 405(a) (emphasis added). The foregoing authority is incorporated into the SSI program. See 42 U.S.C. § 1383(d)(1) (Supp. V. 1981). Thus, the Secretary has the power to promulgate regulations and establish policies regarding the recoupment of overpayments under both the social security and SSI programs, as long as those regulations and policies are not inconsistent with the Act.
Pursuant to the above authority the Secretary, by regulation, has defined underpayment and overpayment. See 20 C.F.R. §§ 416.436, 416.437 (1984). She has also established, by regulation, the way in which...
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Lugo v. Schweiker
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