United States ex rel. Soc. Sec. Admin. v. Tucker (In re Tucker)

• Decision Date: 14 October 2015
• Docket Number: Case No. 14–20648–TLM,Adv. No. 14–07023–TLM
• Citation: 539 B.R. 861
• Parties: In re Anthony Neil Tucker, Debtor. United States of America, on behalf of the Social Security Administration, Plaintiff, v. Anthony Neil Tucker, Defendant.
• Court: U.S. Bankruptcy Court — District of Idaho

539 B.R. 861

In re Anthony Neil Tucker, Debtor.United States of America, on behalf of the Social Security Administration, Plaintiff

v.Anthony Neil Tucker, Defendant.

Case No. 14–20648–TLM

Adv. No. 14–07023–TLM

United States Bankruptcy Court, D. Idaho.

Signed October 14, 2015

Syrena Case Hargrove, William M. Humphries, U.S. Attorney's Office District of Idaho, Boise, ID, for Plaintiff.

James Stephen Macdonald, Elsaesser & Jarzabek, Sandpoint, ID, for Defendant.

MEMORANDUM OF DECISION

TERRY L. MYERS, CHIEF U.S. BANKRUPTCY JUDGE

On July 28, 2014, Anthony Neil Tucker (“Debtor”) filed a voluntary chapter 7 petition.¹ On October 27, 2014, the United States of America on behalf of the Social Security Administration (“Plaintiff” or, at times, “SSA”) timely filed a complaint initiating this adversary proceeding. Plaintiff seeks a determination that Debtor owes a debt that is nondischargeable under § 523(a)(2)(A).² The cause was tried on July 29, 2015, and the matter taken under advisement on September 10 upon completion of written closing arguments. The Court has carefully evaluated all the evidence, and the arguments of the parties. This Decision constitutes the Court's findings and conclusions under Rule 7052.³

BACKGROUND AND FACTS

A. Context

The SSA provides social security disability (“SSD”) benefits to citizens who have become disabled and unable to work.⁴ As a condition for receiving this benefit, recipients must advise the SSA when they regain employment, they have changes in income, or their disability resolves. Those events have impacts on when an individual is entitled to benefits or the amount or duration of benefits. The system depends on the recipient to provide forthright and timely information. The SSA regularly provides information and materials to reinforce the recipient's obligation to disclose the information. That the SSA does so reflects the lack of an alternative practical method by which it can obtain the detailed information as to all those receiving benefits on a current and ongoing basis. Though it is clear the SSA can receive information from other sources (for example, employers' reporting of FICA wages paid to individuals), that information is not timely and does not provide a reliable means of preventing overpayment. As one court noted: “Otherwise, as happened in this case, there could be a delay between the date the benefits should have ended and the date SSA discovered that the individual returned to work.” United States v. Drummond (In re Drummond), 530 B.R. 707, 710 (Bankr.E.D.Ark.2015).

B. Debtor's disability, benefits, and work history

Debtor injured his back in 2003. Several months later, he applied for SSD benefits. In applying, Debtor agreed to notify the SSA when he started working and when his condition improved and he could work. Ex. 100 (application). In that application, Debtor states, in part:

I AGREE TO NOTIFY THE SOCIAL SECURITY ADMINISTRATION OF ALL EVENTS AS EXPLAINED TO ME.

I AGREE TO NOTIFY THE SOCIAL SECURITY ADMINISTRATION:

—IF MY MEDICAL CONDITION IMPROVES SO THAT I WOULD BE ABLE TO WORK, EVEN THOUGH I HAVE NOT YET RETURNED TO WORK.

—IF I GO TO WORK WHETHER AS AN EMPLOYEE OR AS A SELF–EMPLOYED PERSON.

—IF I APPLY FOR OR RECEIVE A DECISION ON BENEFITS UNDER ANY WORKERS' COMPENSATION LAW OR PLAN ... OR OTHER PUBLIC BENEFIT BASED ON DISABILITY.

...

THE ABOVE EVENTS MAY AFFECT MY ELIGIBILITY TO DISABILITY BENEFITS AS PROVIDED IN THE SOCIAL SECURITY ACT, AS AMENDED.

...

MY REPORTING OBLIGATIONS HAVE BEEN EXPLAINED TO ME.

Ex. 100.

Debtor received a “notice of [SSD] award” in August 2005, Ex. 105, and the disclosure requirements were reinforced in that notice. Debtor also received a pamphlet regarding his disability benefits, and the notice of award advised Debtor that he should read it. Ex. 106 (“What You Need To Know When You Get Social Security Disability Benefits,” SSA Pub. No. 05–10153). The pamphlet, like the other materials Debtor received from the SSA, see, e.g., Ex. 107 (“Working While Disabled—How We Can Help,” SSA Pub. No. 05–10095), emphasized his “rights and responsibilities” in return for receiving the SSD benefits, and explained how working and earnings impacted the right to or amount of SSD benefits.

In discovery, Debtor provided a history of his work following the 2004 injury. Ex. 149. Eliminating an alleged job at Over The Top Flooring from 2006 through 2008—because Debtor admitted he lied about that job (including doing so in his deposition in this litigation)—his work history reflects the following:

6/2008–5/2009	Unicep Packaging	$12/hour
6/19/2009–2/4/2010	S & W Capital	$2,500/month
2/2010–2/2011	Country Inn	$2,000/month
5/29/2011–6/19/2011	CR England	$150/week
9/3/2011–12/21/2011	Wes Olsen Trucking	$2,900/month
1/3/2012–2/10/2012	Wes Olsen Trucking	$21/hour
4/30/2012–3/18/2013	Wes Olsen Trucking	$21/hour
4/22/2013–12/13/2013	Wes Olsen Trucking	$21/hour
5/1/2014–2/4/2015	Wes Olsen Trucking	$21/hour

Thus, during the period from 2008 to 2012, Debtor was unemployed for a total of about eight months.

Notwithstanding his work history, Debtor did not advise the SSA of changes in employment or income.

In January 2006, the SSA advised Debtor that he was overpaid benefits in the amount of $18,447.00 because the retroactive benefits he was paid for the period February 2004—July 2005 (which were paid upon the August 2005 notice of award) did not account for workers' compensation payments he received covering the same period. Exs. 109, 116. This notification advised Debtor he was still entitled to ongoing benefits (even though he had been previously overpaid) and explained Debtor's appeal rights and his right to request a waiver of repayment. Correspondence related to a waiver occurred from February 2006 (Ex. 110) through August 2006 (Ex. 112). In August 2006, Debtor submitted a “request for waiver” regarding the overpaid benefits. Ex. 113. That request was eventually granted. Ex. 115 (SSA letter waiving collection).

In June 2010 and again in July 2010, the SSA sent Debtor a work activity report form that he was to fill out and return in order for the SSA to conduct a work review. Debtor did not return the forms. In August 2010, the SSA sought information from Debtor's possible employers, which replied with information suggesting work performed in 2008 and 2009 for Unicep and S & W Capital.⁵ In October 2010, the SSA sent a letter to Debtor informing him it believed his disability had ended in October 2008 due to the work he performed. Ex. 117.⁶

The SSA sent another letter in December 2010 informing Debtor of the decision regarding his 2009 benefits. Ex. 120. This letter also told Debtor that, while prior benefits had been overpaid because Debtor had been working during the relevant period, he would still receive current ongoing benefits because he was not working⁷ at the time of the letters. It also analyzed Debtor's “trial work period” and subsequent eligibility. The SSA again reminded Debtor of his obligations to self-report his work status. He provided no information to the SSA in response even though, during 2010, he was working at Country Inn. Ex. 149.

In March 2011, SSA sent another request for a work activity report. Debtor completed this form and returned it in April 2011, disclosing his work at S & W Capital and Country Inn from January 2010 through February 2011, and asserting he was not working in April. Ex. 121. Debtor started working again right after filing this report (i.e., 5/29/11–6/19/11 with CR England, and 9/3/11 and after with Wes Olsen) but did not report that change.

The SSA sent letters regarding proposed decisions on Debtor's benefits in April and July 2011 (Exs. 122, 123 re: ineligibility 6/09–1/11 and overpayment of $23,500.90). In October 2012, the SSA sent a letter questioning entitlement for additional periods including 2/11, 6/11, 10/11 and thereafter. Ex. 124. In November 2012, the SSA sent notice that no benefits were due for those periods. Ex. 125. The November letter informed Debtor that he would be subsequently notified of the amount of overpayment and, in a December 2012 letter, Debtor was advised that the overpayment of benefits totaled $42,258.30. Ex. 126. As before, Debtor was advised of his right to appeal or request a waiver.

In February 2013, Debtor requested a waiver of the overpaid benefits. Ex. 127. The SSA denied the requested waiver and assessed Debtor the $42,258.30 in overpaid benefits. Exs. 128, 129.

DISCUSSION AND DISPOSITION

As this Court summarized in Huskey v. Tolman (In re Tolman), 491 B.R. 138 (Bankr.D.Idaho 2013) :

A party seeking to except a debt from discharge under § 523 must prove its case by a preponderance of the evidence.See Grogan v. Garner, 498 U.S. 279, 291, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). Generally, “exceptions to discharge are strictly construed against the objecting creditor and in favor of the debtor in order to effectuate the fundamental policy of providing debtors a fresh start.” Spokane Railway Credit Union v. Endicott (In re Endicott), 254 B.R. 471, 475 n. 5, 00.4 I.B.C.R. 199, 200 (Bankr.D.Idaho 2000) (citing Snoke v. Riso (In re Riso), 978 F.2d 1151, 1154 (9th Cir.1992) ). While a central purpose of bankruptcy is to allow an honest but unfortunate debtor a fresh start, “a dishonest debtor, on the other hand, will not benefit from his wrongdoing.” Apte v. Japra (In re Apte), 96 F.3d 1319, 1322 (9th Cir.1996) (citing Grogan v. Garner, 498 U.S. at 286–87, 111 S.Ct. 654 ).

491 B.R. at 149. Further:

To establish a debt is nondischargeable for fraud under § 523(a)(2)(A), Plaintiff must prove five elements by a preponderance of the evidence:

(1) misrepresentation, fraudulent omission or deceptive conduct by the debtor; (2) knowledge of the falsity or deceptiveness of his statement or conduct; (3) an intent to deceive; (4) justifiable reliance by the creditor on the debtor's statement or conduct; and (5) damage to the creditor proximately caused by its reliance on the debtor's statement or conduct.

Depue v. Cox (In re Cox), 462 B.R. 746, 756 (Ban

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