McDonald v. Schweiker, Civ. A. No. S 81-153.

• Decision Date: 05 October 1981
• Docket Number: Civ. A. No. S 81-153.
• Citation: 537 F. Supp. 47
• Parties: Sarah L. McDONALD, Social Security Number XXX-XX-XXXX, Plaintiff, v. Richard SCHWEIKER, Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — Northern District of Indiana

537 F. Supp. 47

Sarah L. McDONALD, Social Security Number XXX-XX-XXXX, Plaintiff, v. Richard SCHWEIKER, Secretary of Health and Human Services, Defendant.

Civ. A. No. S 81-153.

United States District Court, N. D. Indiana, South Bend Division.

October 5, 1981.

Gregory S. French, Legal Services Program of Northern Indiana, South Bend, Ind., for plaintiff.

Donald Moroz, Asst. U. S. Atty., South Bend, Ind., for defendant.

MEMORANDUM AND ORDER

SHARP, Chief Judge.

Plaintiff brings this action pursuant to § 205(g) of the Social Security Act, as amended, 42 U.S.C. § 405(g), to obtain judicial review of a final decision of the Secretary of Health and Human Services as to when Plaintiff first became entitled to old-age insurance benefits.

The issue before this Court is whether Plaintiff is entitled to old-age insurance benefits beginning with the first month she was eligible for them, November 1978.

In 1975, at age 58, Plaintiff inquired at the district Social Security office about her eligibility for retirement insurance benefits when she reached age 62. On January 27, 1975, she received a written response from the Social Security Administration (SSA) stating that she would be ineligible for early retirement benefits since she only had 21 calendar quarters of work and needed, according to SSA computations, 27 quarters. (Exhibit 3).

SSA's computations were incorrect. Plaintiff actually had 33 calendar work quarters and was eligible for benefits when she reached age 62 in November 1978. However, relying upon the SSA computation of her work quarters, Plaintiff did not apply for early retirement benefits when she reached age 62.

In August 1979, Plaintiff took her husband to the Social Security office to apply for his disability benefits. During her husband's interview, SSA routinely reviewed its file on Plaintiff and this time computed that Plaintiff had sufficient quarters to entitle her to early retirement benefits on her own earnings record. Based upon this revised SSA computation of her quarters, Plaintiff filed an application for old-age insurance benefits on August 31, 1979.

Plaintiff was awarded benefits from the month of her application, August 1979, rather than the month of her eligibility, November 1978. She timely requested reconsideration of SSA's determination of the date of her entitlement. SSA, on November 15, 1979, notified Plaintiff that upon reconsideration it upheld its original determination to award Plaintiff benefits beginning in August 1979, rather than November 1978.

On May 6, 1980, the Administrative Law Judge held, after a full evidentiary hearing, that Plaintiff was deemed to have filed her application on the date she attained age 62, November 4, 1978, and was entitled to old-age insurance benefits beginning in that month (Exhibit 1). By its own motion, the SSA Appeals Council reopened the Administrative Law Judge's decision but denied Plaintiff's request for oral argument (Exhibit 4). On March 11, 1981, the Appeals Council notified Plaintiff that it reversed the Administrative Law Judge, that therefore, Plaintiff was first entitled to old-age insurance benefits in August 1979 rather than November 1978, and that this was the final decision of the Secretary (Exhibit 2).

A number of cases have considered the Department of Health and Human Services' regulations requiring written applications, namely, Cheers v. Sec. of H.E.W., 610 F.2d 463 (7th Cir. 1979); Leimbach v. Califano, 596 F.2d 300 (8th Cir. 1979); Holmes v. Weinberger, 423 F.Supp. 149 (D.C.E.D.N.Y. 1976). In Holmes, the claimant, soon after her husband's death in 1967, telephoned the Social Security office for information regarding surviving children's insurance benefits. She was incorrectly advised by an SSA employee not to file a written application until a Social Security number was established for her deceased husband. Relying on this advice, the claimant did not file until February 1973. At that time, she requested retroactive benefits from 1967, the date she first contacted SSA and received incorrect information. The court in Holmes held that, under the facts presented, SSA could not require the claimant to have made a written application in 1967 in order to receive benefits retroactive to 1967 without conflicting with the liberal construction to be given the Social Security Act. Because the claimant met all applicable eligibility requirements except completing the prescribed application, and because the application was not submitted due to erroneous information received from SSA, Holmes found the claimant entitled to benefits retroactive to 1967.

The Seventh Circuit in Cheers, supra, limited the Holmes holding. However, Cheers permits an exception to its limitation of Holmes, stating, that to the extent that Holmes is distinguishable from the facts in Cheers, it remains undisturbed as law. Cheers, at 467. The Seventh Circuit carefully examined the major distinction between Cheers and Holmes:

The most important distinguishing feature between these two cases, of course, is that in Holmes the ALJ specifically stated that he had `listened to and observed the claimant's testimony and had no reason to doubt that she made the inquiries alleged,' 423 F.Supp. at 150. In addition the record in Holmes contained copies of two letters mailed to the claimant by the Administration in 1967 which referred to the claimant's `inquiries' about the relevant social security account. In the present case, on the other hand, the ALJ specifically found that there was no persuasive evidence to support the appellant's claim that he had actually inquired about his benefits prior to 1976.

Cheers, at 468. Thus, for cases similar to Holmes, those where the record clearly establishes to the Administrative Law Judge's satisfaction that an earlier inquiry for benefits was made, Cheers permits retroactive benefits without the prescribed written application.

The present case meets the distinguishing feature discussed by Cheers in that after carefully listening to and observing Plaintiff, the Administrative Law Judge specifically found:

1. The claimant inquired in 1975 about whether she would be eligible for retirement insurance benefits when she attained age 62.

2. An employee of the Social Security Administration made a misrepresentation of fact which caused the claimant to fail to apply for benefits in November 1978; the claimant would have applied in 1978 except for such misrepresentation of fact.

(Exhibit 1, page 8). As in Holmes, the record in the present case contains a copy of a letter (Exhibit 3) mailed to Plaintiff by SSA in 1975 which referred to her "inquiry for benefits." Because the record indisputably establishes that an inquiry for benefits was made in 1975, both Cheers and Holmes, despite the absence of the prescribed application form, entitle Plaintiff to benefits as of November 1978.

Recent case law suggests that to apply the doctrine of estoppel against the federal government, the claimant must show affirmative misconduct or misrepresentations as well as the four traditional elements of estoppel. National Treasury Employees Union v. Reagan, 509 F.Supp. 1337 (D.C.D.C.1981). The present case clearly satisfies the traditional estoppel requirements of:

(1) The party to be estopped must know the facts;

(2) he must intend that his conduct shall be acted on or must so act that the party asserting the estoppel has a right to believe it is so intended;

(3) the latter must be ignorant of the true facts; and

(4) he must rely on the former's conduct to his injury.

U. S. v. Georgia Pacific Co., 421 F.2d 92, 96 (9th Cir. 1970) (citations omitted). SSA not only is the sole entity with the expertise to compute whether an individual has sufficient quarters of covered work to receive old-age insurance benefits, it is also the only entity possessing the records to make these computations. In the present case, after telling Plaintiff in writing that "our records show that you have not yet worked long enough under Social Security to receive retirement benefits," SSA instructed Plaintiff to apply for benefits "if you earn the additional credits" (Exhibit 3). Plaintiff neither knew nor had any way of knowing her actual number of quarters of covered work. As found by the Administrative Law Judge,

An employee of the Social Security Administration made a misrepresentation of fact which caused the claimant to fail to apply for benefits in November 1978; the claimant would have applied in 1978 except for such misrepresentation of fact.

(Exhibit 1, page 8). Further, Plaintiff's reliance resulted in financial injury, since she did not receive the benefits to which she was entitled at a time when such benefits were needed to meet household expenses and necessities.

Because the four traditional elements of estoppel are present, the final question is whether affirmative misconduct is likewise present. The Supreme Court first mentioned this standard in INS v. Hibi, 414 U.S. 5, 94 S.Ct. 19, 38 L.Ed.2d 7 (1973). The term, however, was not defined in Hibi nor has it been defined in subsequent cases. In the most recent Supreme Court case on this issue, Schweicker v. Hansen, 450 U.S. 785, 101 S.Ct. 1468, 67 L.Ed.2d 685 (1981), the claimant contended that she inquired orally in June 1974 of an SSA representative whether she was eligible for "mother's insurance benefits" under § 202(g) of the Social Security Act, 42 U.S.C. § 402(g). Allegedly, the field representative erroneously told her that she was ineligible. After learning in May 1975 that she was eligible for these benefits, the claimant filed an application and received benefits retroactive from the date she applied. However, the claimant contended that she should instead receive retroactive benefits from the month of her initial inquiry, June 1974. In holding that the field representative's error did not warrant applying estoppel against SSA, the Supreme Court stated that it had "never decided what type of...