McDaniels v. Heckler, Civ. A. No. M-82-3293.

• Decision Date: 06 September 1983
• Docket Number: Civ. A. No. M-82-3293.
• Citation: McDaniels v. Heckler, 571 F.Supp. 880 (D. Md. 1983)
• Parties: Katie McDANIELS, Individually and on behalf of all others similarly situated v. Margaret M. HECKLER, Secretary, Department of Health and Human Services.
• Court: U.S. District Court — District of Maryland

571 F. Supp. 880

Katie McDANIELS, Individually and on behalf of all others similarly situated v.Margaret M. HECKLER,¹Secretary, Department of Health and Human Services.

Civ. A. No. M-82-3293.

United States District Court, D. Maryland.

September 6, 1983.

Ethel Zelenske and Dennis W. Carroll, Legal Aid Bureau, Inc., Baltimore, Md., for plaintiffs.

J. Frederick Motz, U.S. Atty. for Maryland, and Glenda G. Gordon, Asst. U.S. Atty., John W. Wojciechowski, Dept. of Health and Human Services, Baltimore, Md., for defendant.

MEMORANDUM AND ORDER

JAMES R. MILLER, Jr., District Judge.

The plaintiff initiated this action on November 10, 1982.She sought a preliminary injunction to enjoin the defendant, then Richard Schweiker, Secretary of Health and Human Services, from recovering overpayments of Supplemental Security Income (SSI) benefits, paid under Title XVI of the Social Security Act from individuals currently entitled to benefits under Title II of the Act, Old Age, Survivors, and Disability Insurance (OASDI), by adjustment of their current OASDI benefit (hereinafter referred to as cross-program recovery).Alternatively, the plaintiff sought to enjoin the Secretary from seeking such recovery without first advising overpaid individuals (1) that section 207 of the Social Security Act, 42 U.S.C. § 407, precludes OASDI benefits from assignment and legal process, (2) that they have a right to seek waiver of the overpayment or request reconsideration of the overpayment determination, and (3) that recovery of the overpayment may be barred by a statute of limitations.

On December 2, 1982, the parties entered into an "Agreement in Lieu of Preliminary Relief"(Paper 6) which was approved by the court.Pursuant to the Agreement, the defendant has temporarily ceased all efforts to include additional individuals in Maryland in cross-program recovery and restored the benefits of the plaintiff and putative class members as of January, 1983.If not enjoined, it is the intention of the defendant to continue cross-program recovery with revised notices.

The case is currently before the court on cross-motions for summary judgment.The factual record consists of stipulations of fact entered into by the parties(Paper 8).The court has considered the memoranda furnished by counsel and the arguments of counsel presented at oral argument on February 4, 1983.

I.STATEMENT OF FACTS

This action is brought as a class action pursuant to Rule 23(a) and (b)(1)(A) and (b)(2), Fed.R.Civ.P.It is brought on behalf of the named plaintiff and all persons in Maryland who (1) are currently entitled to receive monthly benefits under the OASDI, (2) are former recipients of SSI benefits, (3) have been or will have been paid in the past more in SSI benefits than those to which they are entitled, (4) have signed or at the request of the defendant will sign an agreement to assign all or a portion of their monthly OASDI benefits to the Social Security Administration in order to repay their SSI overpayment, (5) have had or will have their OASDI monthly benefits reduced, suspended or terminated by the Social Security Administration for the purposes of recovering an SSI overpayment; and (6) have had or will have their OASDI benefits reduced, terminated or suspended (a) without having been fully advised by the Social Security Administration of their rights to possible exemption, waiver, or appeal of the Administration's action or (b) that their benefits are exempt from legal process or (c) that any claim to reimbursements may be precluded by the statute of limitations on these claims.(Paper 2at 3-4).

The named plaintiff, Katie McDaniels, is a 68 year old widow who resides in Baltimore City.She is illiterate and entirely dependent on the $272.00 per month she receives as benefits under the OASDI program.Mrs. McDaniels never applied for SSI, but received the benefits from January, 1974 to May, 1975 when she was automatically transferred into the program when it replaced the State program for aid to the aged, blind and disabled in January, 1974.In April, 1974, Mrs. McDaniels began receiving monthly OASDI benefits as a widow of a deceased wage earner.Mrs. McDaniels believed she was entitled to both the OASDI and SSI benefits, and there are no allegations by the defendant that she obtained the two checks by fraud.She received her last SSI check in May, 1975 and received no notice that she had been overpaid until March 24, 1982, when she received notice (Paper 2, Exh. 1) that an outstanding balance of $1,836.00 existed on an alleged overpayment of SSI benefits.The notice is alleged by the plaintiff to be inadequate for failing to advise her of her rights under the Constitution and Title 42.

After receiving the SSI notice of overpayment, Mrs. McDaniels signed the form authorizing the defendant to withhold $51.00 per month from her OASDI check until the alleged overpayment was repaid.Withholding began in May, 1982, and continued until the parties entered into the "Agreement in Lieu of Preliminary Relief."Mrs. McDaniels did not understand at the time she agreed to the withholding that she could refuse to do so without penalty.She believed if she didn't agree to the monthly reduction, her entire check would be withheld until the overpayment was reimbursed.SeeStipulation of Factat ¶ 15, Paper 8;Exh. 6 to Plaintiff's Memorandum in Support of Motion for Preliminary Injunction.

II.JURISDICTION AND CLASS CERTIFICATION

The plaintiff has alleged that this court has jurisdiction pursuant to section 205(g) of the Social Security Act, 42 U.S.C. § 405(g), and alternatively, the Mandamus Act, 28 U.S.C. § 1361.The Secretary has not challenged subject matter jurisdiction.Nevertheless, the court is compelled to examine the basis of its own jurisdiction.

Section 405(g) reads in pertinent part:

"Any individual, after any final decision of the Secretary made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Secretary may allow.Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff resides...."

Weinberger v. Salfi,422 U.S. 749, 95 S.Ct. 2457, 45 L.Ed.2d 522(1975), andMathews v. Eldridge,424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18(1976), hold that there are two essential elements to jurisdiction under section 405(g): (1) a claim must have been presented to the Secretary; and (2) all administrative remedies must have been exhausted.The exhaustion requirement may be waived by the Secretary, or the court may find that the Secretary has made a final decision.However, the requirement that an individual must present a claim to the Secretary may not be waived.

The second prerequisite to bringing a case under section 405(g) is not in question here.The Secretary has acquiesced to this court's exercise of jurisdiction and this, alone, constitutes a waiver of the exhaustion requirement.Additionally, her stipulation to facts constitutes a waiver.SeeMathews v. Diaz,426 U.S. 67, 96 S.Ct. 1883, 48 L.Ed.2d 478(1976).See alsoAdams v. Califano,474 F.Supp. 974(D.Md.1979)(Northrop, J.).

Satisfaction of the first prerequisite, presentation of the claim to the Secretary, is more problematical.The Fourth Circuit in Lowther v. Montgomery County,561 F.2d 1120(4th Cir.1977), has strictly interpreted Salfi and Eldridge.

"Salfi, supra,andEldridge, supra, make it clear that only individuals who themselves have presented their claims to the Secretary are entitled to judicial review under section 405(g)."

Id. at 1122.

The named plaintiff, Katie McDaniels, has presented her claim to the Secretary.She, through her counsel, requested that recoupment cease and that she be granted a waiver, but recoupment continued until entry of the "Agreement in Lieu of Preliminary Relief" filed in this suit.SeeStipulation of Factat ¶ 13;Exh. 3 to Plaintiff's Complaint.

The position of the unnamed plaintiffs, however, is very different.There is no stipulation that they filed a claim, formally or informally, with the Secretary, and, although such action may have appeared futile, futility will not excuse failure to file a claim, seeLowther, supra at 1122.In Califano v. Yamasaki,442 U.S. 682, 698-701, 99 S.Ct. 2545, 2556-2557, 61 L.Ed.2d 176(1979), the Court limited class relief, in a case in which the plaintiffs claimed entitlement to an oral hearing prior to recoupment under section 204(a)(1) of the Social Security Act, to those class members who met the requirements of section 205(g) of the Act, 42 U.S.C. § 405(g).

This court, therefore, is constrained to find that it does not have jurisdiction pursuant to 42 U.S.C. § 405(g) to consider claims of class members where it has not been demonstrated that they filed a claim with the Secretary.The court's consideration in the present case is limited to the claim of the named plaintiff, Katie McDaniels, unless there is some independent ground for jurisdiction.

The plaintiffs have alleged jurisdiction pursuant to 28 U.S.C. § 1361, the Mandamus Act.The exercise of jurisdiction under the Mandamus Act is appropriate only when no other administrative or judicial remedy is available.SeeCook v. Arentzen,582 F.2d 870(4th Cir.1978).In the present action, the unnamed class members have an adequate judicial remedy under section 405(g).They, however, have not satisfied the requirements under section 405(g) so their claims cannot be considered.The motion for class certification will be denied, therefore, and the claim of Katie McDaniels only will be resolved on the merits.

III.LEGAL DISCUSSION

The plaintiff argues that section 407 of Title 42 prevents any cross-program recovery, voluntary or otherwise.Section 407 provides:

"The right of any person to any

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