Reed v. Heckler

• Decision Date: 06 March 1985
• Docket Number: No. 83-2193,83-2193
• Citation: 756 F.2d 779
• Parties: , 9 Soc.Sec.Rep.Ser. 59, Unempl.Ins.Rep. CCH 16,226 Leo REED, Fidel Cisneros, Nina Nicol, Abraham Manzanares, and Margaret Gardner by and through Kevin Burns as her next friend, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. Margaret M. HECKLER, Secretary of the Department of Health and Human Services, and Martha McSteen, Acting Commissioner of the Social Security Administration, in their official capacities, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 779

756 F.2d 779

1 Fed.R.Serv.3d 985, 9 Soc.Sec.Rep.Ser. 59,

Unempl.Ins.Rep. CCH 16,226

Leo REED, Fidel Cisneros, Nina Nicol, Abraham Manzanares,

and Margaret Gardner by and through Kevin Burns as her next

friend, on behalf of themselves and all others similarly

situated, Plaintiffs-Appellants, v. Margaret M. HECKLER, Secretary of the Department of Health and Human Services, and Martha McSteen, Acting Commissioner

of the Social Security Administration, in their official

capacities, Defendants-Appellees.

No. 83-2193.

United States Court of Appeals,

Tenth Circuit.

March 6, 1985.

Daniel M. Taubman, Denver, Colo., of Colo. Coalition of Legal Services Programs (Michael J. Steiner, Denver, Colo., of Legal Aid Society of Metropolitan Denver, Inc., and Aileen M. Hooks, of Colo. Lawyer's Committee, with him on brief), Denver, Colo., for plaintiffs-appellants.

John Barksdale, Asst. U.S. Atty. (Robert N. Miller, U.S. Atty., with him on brief), Denver, Colo., for defendants-appellees.

Before HOLLOWAY, Chief Judge, and SETH and SEYMOUR, Circuit Judges.

SEYMOUR, Circuit Judge.

Five recipients of social security benefits appeal from the district court's dismissal of their proposed class action for lack of subject matter jurisdiction. They sought to challenge the efforts of the Social Security Administration (SSA) to collect alleged overpayments of Supplemental Security Income (SSI) benefits by withholding current Old Age, Survivors and Disability Insurance (OASDI) benefits. ¹ The district court

ruled that the named plaintiffs had not exhausted their administrative remedies and therefore could not obtain judicial review of their claims. The court also denied certification of the class. We reverse.

I. BACKGROUND

Before becoming eligible for OASDI benefits, each named plaintiff below received SSI benefits. Leo Reed is a sixty-five year old veteran who currently receives $189.00 per month in OASDI benefits and a $254.83 per month veterans pension. In 1982 he received an SSI Notice of Overpayment Action for an outstanding balance of $69.18 resulting from alleged overpayments between July and September 1976. After his initial appeal and request for a waiver were denied, he was told he could repay the entire overpayment at once, pay monthly installments, or have the overpayment deducted from his OASDI benefits. ²

Fidel Cisneros is a sixty-three year old veteran who receives $223.33 per month in OASDI benefits and $220.00 monthly in veterans benefits. He received an SSI notice of overpayment which stated that he owed the SSA $10,645.78 and asked him to refund it immediately. The form did not advise him when this overpayment occurred or provide a monthly breakdown of the alleged overpayments, but did contain a tear sheet that Mr. Cisneros was intended to return. The tear sheet stated: "For my convenience, please withhold my full social security benefit each month until my supplemental security income (SSI) overpayment of $________ is fully recovered." Rec., vol. I, at 34. The SSA Debt Collection Center subsequently concluded that Mr. Cisneros could repay the alleged overpayment at the rate of $100.00 per month, more than 20 percent of his monthly income. Mr. Cisneros appealed.

Nina Nicol is a sixty-four year old widow whose income consists of $318 per month OASDI widow's benefits, and approximately $34 per month Colorado Old Age Pension benefits. In 1982 she received a similar notice of overpayment for the amount of $1,569.57, a debt apparently incurred during an overlap in her benefit payments between June 1974 and June 1975. An employee at the SSA Debt Collection Center examined Mrs. Nicol's living expenses, determined that she could afford to pay $44.00 per month, and rejected her offer to repay the debt at a rate of $10.00 per month. When Mrs. Nicol refused to enter into the proposed repayment agreement, she was informed that her account would be referred to the General Accounting Office for possible filing of a civil action against her unless she paid the full balance by November 30, 1982. This action was apparently not taken, but the Debt Collection Center continued to contact Mrs. Nicol and seek repayment.

Abraham Manzanares is a fifty-seven year old man whose income consists of $293.00 per month in OASDI benefits and about $327.00 per month in part-time employment. He was advised of an overpayment of $83.80, which he agreed to repay at the rate of $10.00 per month. He complains The final named plaintiff, Margaret Gardner, is a thirty-seven year old woman who lives in a nursing home. Because of her mental illness, she receives $298.00 per month in OASDI benefits, which is paid directly to the nursing home since the SSA has determined she is incapable of managing her own money. In 1982 she was notified that she had been overpaid $5,784.85, which she later learned had occurred between January 1974 and September 1975. Ms. Gardner was then induced to sign an "agreement" which would require her to make monthly payments of $100.00 on the alleged overpayment. This is more than one-third of her monthly income. A month later, she arranged to have the monthly payment reduced to $50.00. Finally, however, she decided to rescind the agreement. She filed an appeal of the overpayment determination and alternatively sought a waiver. At that time, the SSA waived only $1,941.68 of the total, leaving a balance of $3,843.17.

that he was coerced into this agreement and was discouraged from appealing. He then received another notice that an additional overpayment of $264.44 had been waived. Confused, he attempted to rescind his repayment agreement, but subsequently learned that the second overpayment was unrelated to the first. Despite his attempt to rescind the first agreement, he received notice that his OASDI check would be reduced by $10.00 per month.

Plaintiffs' suit in the district court challenged on statutory and constitutional grounds the Cross Program Recovery plan that permits recovery of SSI overpayments by the reduction of OASDI benefits; the sufficiency of notice concerning both the substance of the claims and the plaintiffs' procedural rights; the rulemaking procedure of the SSA; the attempt to recover overpayments from those who subsequently had been found no longer disabled; and the efforts of the SSA to recover amounts so small that the cost of recovery exceeded the alleged overpayment. The named plaintiffs also sought class certification.

The district court never reached the merits, holding instead that it had no subject matter jurisdiction because plaintiffs had failed to exhaust their administrative remedies. ³ Specifically, the court found that plaintiffs did not fit within the exception for exhaustion outlined in Mathews v. Eldridge, 424 U.S. 319, 330, 96 S.Ct. 893, 900, 47 L.Ed.2d 18 (1976). The court also denied class certification. After suit was filed but before the district court issued its opinion, the SSA determined that Fidel Cisneros was not at fault in his overpayment and agreed to waive the entire sum of $10,645.78. Following the district court's decision, the SSA ruled that some of the remaining named plaintiffs had received no overpayments and waived repayment for the others.

On appeal, the issues of jurisdiction and class certification are complicated by the subsequent overpayment waivers granted by the SSA. The Secretary contends that, even assuming there is subject matter jurisdiction, the merits of the case are moot as a result of the waivers. We turn first to the issue of subject matter jurisdiction, and then we address the class certification and mootness contentions.

II. SUBJECT MATTER JURISDICTION

In Weinberger v. Salfi, 422 U.S. 749, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975), the Supreme Court held that section 205(h) of the Social Security Act, 42 U.S.C. Sec. 405(h) (1982), bars general federal question jurisdiction in actions challenging denial of claimed benefits. Section 205(g) of the Act, 42 U.S.C. Sec. 405(g), thus provides the only means of judicial review and requires a final decision by the Secretary as a jurisdictional prerequisite. See also Mathews, 424 U.S. at 327, 96 S.Ct. at 899. In Mathews, the Court recognized an exception to the exhaustion requirement in those cases where actions of the Secretary are challenged on constitutional grounds and the constitutional claim is collateral to the substantive claim of entitlement. Id. at 330, 96 S.Ct. at 900. The Court identified two elements of the exhaustion requirement, one purely jurisdictional and the other waivable by the Secretary. The nonwaivable jurisdictional element requires a claimant to present the claim to the Secretary, so that some decision may be had. The waivable element requires a claimant to exhaust the administrative remedies prescribed by the Secretary. Id. at 328, 96 S.Ct. at 899. Although the discretion to waive the exhaustion requirement ordinarily rests with the Secretary, ⁴ Mathews held that a court may infer waiver "where a claimant's interest in having a particular issue resolved promptly is so great that deference to the agency's judgment is inappropriate." Id. at 330, 96 S.Ct. at 900; see Heckler v. Ringer, --- U.S. ----, 104 S.Ct. 2013, 2023, 80 L.Ed.2d 622 (1984). In other words, waiver may be inferred where "there is a showing of irreparable injury not recompensable through retroactive payments." Bartlett v. Schweiker, 719 F.2d 1059, 1061 (10th Cir.1983).

In this case, the district court recognized that each of the named plaintiffs had satisfied the nonwaivable element of the exhaustion requirement, with the possible exception of Fidel Cisneros. ⁵ The court also noted that the Secretary had not chosen to waive the requirement that plaintiffs complete the administrative process. It then considered whether waiver should be inferred. In this connection, the court first held plaintiffs' constitutional claims to be clearly collateral to the question of whether any overpayment actually occurred....