Powderly v. Schweiker

• Decision Date: 26 April 1983
• Docket Number: No. 82-3092,82-3092
• Citation: 704 F.2d 1092
• Parties: Emma POWDERLY, et al., Plaintiff-Appellant, v. Richard S. SCHWEIKER, Secretary of the Department of Health and Human Services, and Donald T. Regan, Secretary of the Treasury, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1092

704 F.2d 1092

1 Soc.Sec.Rep.Ser. 373

Emma POWDERLY, et al., Plaintiff-Appellant, v. Richard S. SCHWEIKER, Secretary of the Department of Health and Human Services, and Donald T. Regan, Secretary of the Treasury, Defendants-Appellees.

No. 82-3092.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 8, 1982.

Decided April 26, 1983.

Terrence Sawyer, Richard Smith, Spokane, Wash., for plaintiff-appellant.

A. George Lowe, Ellen J. Sazzman, Dept. of Justice, Washington, D.C., for defendants-appellees.

Appeal from the United States District Court Eastern District of Washington.

Before KILKENNY, CHOY and FLETCHER, Circuit Judges.

KILKENNY, Circuit Judge:

Appellant appeals from an order of the district court granting the defendants' motion for summary judgment and dismissing her complaint. She alleges that the government's method of recovering the proceeds of benefit checks erroneously sent to deceased beneficiaries violates the Social Security Act (Act), 42 U.S.C.A. Sec. 404, the Administrative Procedure Act (APA), 5 U.S.C. Sec. 551 et seq., the Freedom of Information Act (FOIA), 5 U.S.C. Sec. 552, and the Fifth Amendment. We affirm.

FACTS

Appellant's husband died on August 24, 1978. Prior to his death, each received a social security benefit in the form of separate checks drawn in each of their names. Shortly after his death, appellant began receiving the statutory widow's benefits. On September 3, 1978, however, she also received her deceased husband's August social security check in the amount of $243.30. ¹ She contends that the local office of the Social Security Administration (SSA) informed her that the check could be negotiated. Thereafter, she deposited the check in her account at Seattle-First National Bank (Sea-First), with the following endorsement: "Hugh C. Powderly by Emma L. Powderly for deposit only."

Sometime in January or early February, 1979, appellant was informed by the local office of the SSA that the $243.30 would have to be returned. To assist her in repayment, the SSA offered to make a $10.00 per month deduction from future benefits payments until the balance was fully paid. Appellant refused to authorize these deductions. Evidently, she was informed by her attorney that this erroneous payment constituted an "overpayment" under the Act and that she was entitled to a hearing to determine if recoupment could be waived. On February 16, 1979, she requested a "Notice of Overpayment" from the SSA. The SSA replied that this payment did not constitute an overpayment and, thus, she was not entitled to a hearing on waiver. The parties continued to dispute the overpayment issue for some time.

In the meantime, Sea-First forwarded the check to the Treasury and received payment. However, when the Treasury learned of the unauthorized endorsement, it initiated a recovery action against Sea-First. ² Sea-First was liable to the Treasury

                for accepting an unauthorized endorsement. 3   After refunding the proceeds to the Treasury, Sea-First exercised its Washington State statutory right of set-off against the appellant's bank account. 4
                

ISSUES

1. Whether the district court had jurisdiction under the mandamus statute, 28 U.S.C. Sec. 1361.

2. Whether the benefits payment in question constitutes an "overpayment" under the Act and regulations promulgated thereunder.

3. Whether the method of recoupment utilized by the appellees violated the appellant's Fifth Amendment right to due process.

4. Whether the Social Security Claims Manual ⁵ (claims manual) provisions relating to "overpayments" were required to be published in the Federal Register pursuant to the APA or the FOIA.

DISCUSSION

Jurisdiction

We are convinced that the procedural claims raised by the appellant are properly brought under the mandamus statute. While the Supreme Court has yet to address the appropriateness of mandamus jurisdiction to review SSA procedures, see Califano v. Yamasaki, 442 U.S. 682, 698, 99 S.Ct. 2545, 2556, 61 L.Ed.2d 176 (1979); Norton v. Mathews, 427 U.S. 524, 529-30, 96 S.Ct. 2771, 2774, 49 L.Ed.2d 672 (1976); Mathews v. Eldridge, 424 U.S. 319, 332 n. 12, 96 S.Ct. 893, 901 n. 12, 47 L.Ed.2d 18 (1976), this court recently addressed the issue in Ringer v. Schweiker, 697 F.2d 1291 (CA9 1982).

In Ringer, the court ruled that mandamus jurisdiction is proper to vindicate an interest in procedural regularity. Id. 697 F.2d at 1293. Citing Daniel Freeman Memorial Hospital v. Schweiker, 656 F.2d 473, 476 (CA9 1981), we stated that

the language prohibiting reliance on the federal question or mandamus provisions for any action 'to recover on a claim arising under' the Act only applied to actual claims for benefits. We noted that 'when suit is brought simply to vindicate an interest in procedural regularity, there is no statutory bar.'

Ringer, supra, 697 F.2d at 1293; see also Humana of South Carolina, Inc. v. Califano, 590 F.2d 1070, 1080 (CADC 1978); Elliott v. Weinberger, 564 F.2d 1219, 1226 (CA9 1977), aff'd in part and rev'd in part on other grounds sub nom. Califano v. Yamasaki, 422 U.S. 682, 99 S.Ct. 2545, 61 L.Ed.2d 176 (1979).

In this case, appellant is challenging only procedural matters. She does not claim entitlement to the funds erroneously paid to her deceased husband. Even if successful in this action, she would not be awarded any benefits. Thus, under the mandate of Ringer, we reluctantly hold that mandamus jurisdiction is proper.

Overpayment

Appellant's contention that the erroneous payment to her deceased husband constituted The pertinent provisions of the Act provide:

an "overpayment" under the Act, entitling her to an overpayment waiver hearing under 42 U.S.C.A. Sec. 404(a) and (b) is meritless.

(a) Whenever the Secretary finds that more or less than the correct amount of payment has been made to any person under this subchapter, proper adjustment or recovery shall be made....

(1) With respect to payment to a person of more than the correct amount, the Secretary shall decrease any payment under this subchapter to which such overpaid person is entitled, or shall require such overpaid person or his estate to refund the amount in excess of the correct amount, or shall decrease any payment under this subchapter payable to his estate or to any other person on the basis of the wages and self-employment income which were the basis of the payments to such overpaid person, or shall apply any combination of the above....

(b) In any case in which more than the correct amount of payment has been made, there shall be no adjustment of payments to, or recovery by the United States from, any person who is without default if such adjustment or recovery would defeat the purpose of this subchapter or would be against equity and good conscience.

Id.

Regulations, promulgated by the Secretary of Health and Human Services, defining "overpayment" are found in 20 C.F.R. Sec. 404.501 et seq. (1982). The regulations provide that

[a]s used in this subpart, the term "overpayment" includes a payment in excess of the amount due under Title II of the Act, a payment resulting from the failure to impose deductions or to suspend or reduce benefits ..., a payment resulting from the failure to terminate benefits, and a payment where no amount is payable under Title II of the Act.

20 C.F.R. Sec. 404.501(a) (1982).

We hold that the overpayment waiver provisions of Sec. 404(b), supra, are intended to benefit only designated payees who, through no fault of their own, have received more benefits than those to which they are entitled. It would be an abuse of the social security program to extend the overpayment waiver provisions to someone who has wrongfully negotiated a benefit check after the payee's death. The overall purpose of the social security program is to provide for the need of the beneficiaries. ⁶ See Evelyn v. Schweiker, 685 F.2d 351, 353 (CA9 1982). "Once the need of the beneficiary is extinguished, as by death ..., there is no longer a reason to pay the beneficiary." Id. at 353. Moreover, there is no reason deriving from need or otherwise to allow someone other than the designated payee, including a surviving spouse, to retain the funds. In this case, appellant was receiving her own widow's benefits to which she was entitled.

Support for our decision is found in the claims manual, Sec. 5500.1(a), which provides:

When a benefit check which was certified correctly is improperly negotiated by someone other than the designated payee, without the consent of the payee, or after his death a forgery occurred; the amount of the check may not be considered an overpayment .... The recovery of such amounts is the responsibility of the Treasury Department. [Emphasis added].

While the Secretary's interpretations above are not accorded the force and effect of law, Schweiker v. Hansen, 450 U.S. 785, 789, 101 S.Ct. 1468, 1471, 67 L.Ed.2d 685 (1981); Evelyn v. Schweiker, supra, 685 F.2d at 352 n. 5; Lewin v. Schweiker, 654 F.2d 631, 633 (CA9 1981), they are of persuasive value. See Morton v. Ruiz, 415 U.S. 199, 232-37, 94 S.Ct. 1055, 1073-75, 39 L.Ed.2d 270 (1974).

We hold that the Secretary's interpretations are consistent with the language and intent of the Act and within his authority.

Due Process

Appellant contends that appellees' method of recovering the funds constituted state action, which deprived her of a property interest in violation of the Fifth Amendment right to procedural due process. We disagree. Appellant has not shown that she has a protected property interest in the funds. Finding no protected property interest, we need not address her state action claim.

The requirement of procedural due process imposes constraints on governmental actions which deprive individuals of protected liberty and property interests. Mathews v. Eldridge, supra, 424 U.S. at 332, 96 S.Ct. at 901; Goss v. Lopez, 419 U.S. 565, 572-73, 95 S.Ct. 729, 735, 42 L.Ed.2d 725 (1975); Board of Regents v. Roth, 408 U.S....