Sullivan v. Everhart, No. 88-1323

CourtUnited States Supreme Court
Writing for the CourtSCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, BLACKMUN, and O'CONNOR, JJ., joined. STEVENS
Citation110 S.Ct. 960,108 L.Ed.2d 72,494 U.S. 83
PartiesLouis W. SULLIVAN, Secretary of Health and Human Services, et al., Petitioners, v. Sandra EVERHART et al
Decision Date21 February 1990
Docket NumberNo. 88-1323

494 U.S. 83
110 S.Ct. 960
108 L.Ed.2d 72
Louis W. SULLIVAN, Secretary of Health and Human Services, et al., Petitioners,

v.

Sandra EVERHART et al.

No. 88-1323.
Argued Nov. 27, 1989.
Decided Feb. 21, 1990.
Syllabus

The Social Security Act requires the Secretary of Health and Human Services, when he "finds that more or less than the correct amount" of "payment" has been made under the Old-Age, Survivors and Disability Insurance program, or of "benefits" has been paid under the Supplemental Security Income program, to make "proper adjustment or recovery." If less than the correct amount has been paid, the Secretary shall pay the balance due; if more than the correct amount has been paid, the Secretary shall reduce future payment or obtain a refund from the beneficiary. The Act prohibits, however, "adjustment of payments to, or recovery . . . from, any person who is without fault," if such adjustment or recovery would defeat the Act's purposes or be against equity and good conscience. Califano v. Yamasaki, 442 U.S. 682, 697, 99 S.Ct. 2545, 2555, 61 L.Ed.2d 176, interpreted that limitation as entitling the beneficiary to an oral hearing on waiver of recoupment. Pursuant to his authority to "fin[d] [whether] more or less than the correct amount" of payment has been made, and under his general rulemaking authority, the Secretary promulgated "netting" regulations. Under these regulations, the Secretary calculates the difference between the amount due and the amount paid for the period beginning with the first month for which there was a payment error and ending with the month of the "initial determination." If the beneficiary was overpaid in certain months and underpaid in others, the Secretary will net the errors (i.e., calculate the difference between the underpayments and the overpayments) and treat the netted amount as an overpayment or underpayment, as the case may be, for purposes of adjustment or recovery. In this case, after the Secretary made both underpayments and overpayments to each respondent, he netted the errors, paid the net underpayments, and offered recoupment waiver hearings as to the net overpayments. The District Court granted summary judgment to respondents in their ensuing lawsuit, ruling that the regulations violated the Act. The Court of Appeals affirmed.

Held: The netting regulations are facially valid. Pp. 88-95.

(a) The regulations are based on a permissible construction of the Act. The Act authorizes the Secretary to determine whether "more or less than the correct amount" has been paid; and the "correct amount" can

Page 84

reasonably be construed to mean the net amount owing as of the date of the determination, rather than the amount owing each month. The Act refers to the correct amount "of payment," not of "any payment" (as it does elsewhere), which suggests computation on a multipayment basis. Nor does the restriction on "adjustment or recovery" of overpayments foreclose the netting regulations. These terms do not necessarily embrace all collection methods. The Secretary has reasonably interpreted "adjustment" to mean a reduction in future payments, and "recovery" to mean refund. Pp. 89-93.

(b) The method of computing the netting period does not make the regulations arbitrary and capricious. The inevitable delay between the discovery that something is amiss and the formal "initial determination" of error (which closes the netting period) is necessary to avoid spur-of-the-moment decisions. The Secretary's regulations limit delay, and the hypothesis that the Secretary will deliberately delay to net-in additional underpayments is implausible. Respondents' alternative regime of separate accounting would increase the administrative burden, and their alternative suggestion of delayed reimbursement of underpayments does not address the alleged delay problem. Pp. 93-95.

853 F.2d 1532, (CA10 1988) reversed and remanded.

SCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, BLACKMUN, and O'CONNOR, JJ., joined. STEVENS, J., filed a dissenting opinion, in which BRENNAN, MARSHALL, and KENNEDY, JJ., joined, post, p. 96.

Amy L. Wax, Silver Spring, Md., for petitioners, pro hac vice, by special leave of Court.

Linda J. Olson, Denver, Colo., for respondents.

Justice SCALIA delivered the opinion of the Court.

If the Secretary of Health and Human Services determines that a beneficiary has received "more or less than the correct

Page 85

amount of payment," the Social Security Act requires him to effect "proper adjustment or recovery," subject to certain restrictions in the case of overpayments. This case requires us to decide whether the Secretary's so-called "netting" regulations, under which he calculates the difference between past underpayments and past overpayments, are merely a permissible method of determining whether "more or less than the correct amount of payment" was made, or are instead, as to netted-out overpayments, an "adjustment or recovery" that must comply with procedures for recovery of overpayments imposed by the Act.

I

Two statutory benefit programs established by the Social Security Act (Act) are involved: the Old-Age, Survivors, and Disability Insurance program (OASDI), 53 Stat. 1362, as amended, 42 U.S.C. § 401 et seq. (1982 ed. and Supp. V), and the Supplemental Security Income program (SSI), 86 Stat. 1465, 42 U.S.C. § 1381 et seq. (1982 ed. and Supp. V). Millions of Americans receive benefits under these programs; inevitably, some beneficiaries occasionally receive more than their entitlement, and others less. The OASDI program provides the following procedure for correcting such errors:

"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, under regulations prescribed by the Secretary, as follows:

"(A) 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 over-

Page 86

paid person, or shall apply any combination of the foregoing. . . .

"(B) With respect to payment to a person of less than the correct amount, the Secretary shall make payment of the balance of the amount due such underpaid person. . . ." Act §§ 204(a)(1)(A), (B); 42 U.S.C. §§ 404(a)(1)(A), (B) (1982 ed., Supp. V).

As to overpayments, the Act provides:

"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 fault if such adjustment or recovery would defeat the purpose of this subchapter or would be against equity and good conscience." Act § 204(b); 42 U.S.C. § 404(b) (1982 ed.).

The provisions regulating payment errors in the SSI program are substantially similar.* Califano v. Yamasaki, 442 U.S. 682, 697, 99 S.Ct. 2545, 2555, 61 L.Ed.2d 176 (1979), held that the limitation on adjustment or recovery of overpayments imposed by § 204(b) of the Act

Page 87

gives recipients the right to an oral hearing at which they may attempt to convince the Secretary to waive recoupment.

In the provisions set forth above, the Act contemplates that the Secretary will "fin[d] [whether] more or less than the correct amount" of payment has been made. Elsewhere, it confers upon the Secretary general authority to "make rules and regulations and to establish procedures, not inconsistent with the provisions of this subchapter, which are necessary or appropriate to carry out such provisions," Act § 205(a), 42 U.S.C. § 405(a) (1982 ed.); see also Act § 1631(d)(1), 42 U.S.C. § 1383(d)(1) (1982 ed., Supp. V) (SSI). Pursuant to that authority, the Secretary promulgated the regulations at issue here. The SSI regulation provides:

"The amount of an underpayment or overpayment is the difference between the amount paid to a recipient and the amount of payment actually due such recipient for a given period. An overpayment or underpayment period begins with the first month for which there is a difference between the amount paid and the amount actually due for that month. The period ends with the month the initial determination of overpayment or underpayment is made." 20 CFR § 416.538 (1989).

The OASDI regulation unhelpfully provides that "[t]he amount of an overpayment or underpayment is the difference between the amount paid to the beneficiary and the amount of the payment to which the beneficiary was actually entitled," 20 CFR § 404.504 (1989), but the Secretary has interpreted this as embodying the methodology set forth in the SSI regulation. Dept. of Health and Human Services, Social Security Ruling 81-19a (cum. ed. 1981).

Two hypotheticals will illustrate the operation of the netting regulations. Mr. A, entitled to $100 per month, is erroneously paid $80 in January and erroneously paid $150 in February. In March, the Secretary determines that these payments were incorrect, nets the errors (i.e., calculates the difference between the underpayment and the overpayment),

Page 88

and seeks to recover the net overpayment of $30. Mrs. B, also entitled to $100 per month, receives $50 in April and $110 in May. In June, the Secretary makes the incorrect payment determination, nets the errors, and pays out $40. In neither case may the beneficiary seek to have the underpayment and the overpayment treated separately: Mr. A could not demand $20 for January and seek a waiver of the recoupment of $50 for February, and Mrs. B could not demand $50 for April and seek a waiver for the $10 in May.

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169 practice notes
  • Southern Ute Indian Tribe v. Amoco Production Co., Civ. A. No. 91-B-2273.
    • United States
    • United States District Courts. 10th Circuit. United States District Court of Colorado
    • 13 d2 Setembro d2 1994
    ...based on a permissible construction of the statute. (fn omitted). Chevron, at 842-43, 104 S.Ct. at 2781-82. See also Sullivan v. Everhart, 494 U.S. 83, 88-89, 110 S.Ct. 960, 964, 108 L.Ed.2d 72 (1990); Exxon Corp. v. Lujan, 970 F.2d 757, 759 (10th Cir.1992). In determining whether the agenc......
  • Nordgren v. Burlington Northern R. Co., No. 95-3390
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • 16 d4 Janeiro d4 1997
    ...look to the particular statutory language at issue, as well as the language and design of the statute as a whole." Sullivan v. Everhart, 494 U.S. 83, 89, 110 S.Ct. 960, 964, 108 L.Ed.2d 72 Nordgren contends that the plain meaning of "any device whatsoever" includes a counterclaim for proper......
  • Alberti v. San Francisco Sheriff's Dept., No. C-98-2834 WHO.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • 25 d3 Novembro d3 1998
    ...look to the particular statutory language at issue, as well as the language and design of the statute as a whole.'" Sullivan v. Everhart, 494 U.S. 83, 89, 110 S.Ct. 960, 108 L.Ed.2d 72 (1990) (quoting K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988)) ......
  • Ahern v. Thomas, (SC 15845)
    • United States
    • Supreme Court of Connecticut
    • 18 d2 Maio d2 1999
    ...467 U.S. 837, 843-45, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984) (Chevron), is applicable to the medicaid act. See Sullivan v. Everhart, 494 U.S. 83, 89, 110 S. Ct. 960, 108 L. Ed. 2d 72 (1990); Connecticut Dept. of Income Maintenance v. Heckler, 471 U.S. 524, 530-31 n.16, 532, 105 S. Ct. 221......
  • Request a trial to view additional results
168 cases
  • Southern Ute Indian Tribe v. Amoco Production Co., Civ. A. No. 91-B-2273.
    • United States
    • United States District Courts. 10th Circuit. United States District Court of Colorado
    • 13 d2 Setembro d2 1994
    ...based on a permissible construction of the statute. (fn omitted). Chevron, at 842-43, 104 S.Ct. at 2781-82. See also Sullivan v. Everhart, 494 U.S. 83, 88-89, 110 S.Ct. 960, 964, 108 L.Ed.2d 72 (1990); Exxon Corp. v. Lujan, 970 F.2d 757, 759 (10th Cir.1992). In determining whether the agenc......
  • Nordgren v. Burlington Northern R. Co., No. 95-3390
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • 16 d4 Janeiro d4 1997
    ...look to the particular statutory language at issue, as well as the language and design of the statute as a whole." Sullivan v. Everhart, 494 U.S. 83, 89, 110 S.Ct. 960, 964, 108 L.Ed.2d 72 Nordgren contends that the plain meaning of "any device whatsoever" includes a counterclaim for proper......
  • Alberti v. San Francisco Sheriff's Dept., No. C-98-2834 WHO.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • 25 d3 Novembro d3 1998
    ...look to the particular statutory language at issue, as well as the language and design of the statute as a whole.'" Sullivan v. Everhart, 494 U.S. 83, 89, 110 S.Ct. 960, 108 L.Ed.2d 72 (1990) (quoting K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988)) ......
  • Ahern v. Thomas, (SC 15845)
    • United States
    • Supreme Court of Connecticut
    • 18 d2 Maio d2 1999
    ...467 U.S. 837, 843-45, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984) (Chevron), is applicable to the medicaid act. See Sullivan v. Everhart, 494 U.S. 83, 89, 110 S. Ct. 960, 108 L. Ed. 2d 72 (1990); Connecticut Dept. of Income Maintenance v. Heckler, 471 U.S. 524, 530-31 n.16, 532, 105 S. Ct. 221......
  • Request a trial to view additional results
1 books & journal articles
  • Justice Antonin Scalia, Constitutional Discourse, and the Legalistic State
    • United States
    • Political Research Quarterly Nbr. 44-4, December 1991
    • 1 d0 Dezembro d0 1991
    ...v. Defense Investigative Service, 717 F.2d 1402 (D.C. Cir. 1983).Stanford v. Kentucky, 109 S Ct. 2969 (1989).Sullivan v. Everhardt, 110 S. Ct. 960 (1990).Synar v. United States, 626 F. Supp. 1374 (D.D.C. 1986). Tayflin v. Levitt, 110 S. Ct. 792 (1990).Tashjian v. Republican Pary of Connecti......

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