Valente v. Secretary of Health and Human Services, 590

• Decision Date: 03 May 1984
• Docket Number: No. 590,D,590
• Citation: 733 F.2d 1037
• Parties: Ermano VALENTE, Plaintiff-Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant-Appellant. ocket 83-6282.
• Court: U.S. Court of Appeals — Second Circuit

Page 1037

733 F.2d 1037

5 Soc.Sec.Rep.Ser. 125

Ermano VALENTE, Plaintiff-Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant-Appellant.

No. 590, Docket 83-6282.

United States Court of Appeals Second Circuit.

Argued Jan. 16, 1984.

Decided May 3, 1984.

Arthur J. Aronson, New York City (Lewis S. Fischbein, Kraver & Martin, New York City, on brief), for plaintiff-appellee.

Michael P. DiRaimondo, Sp. Asst. U.S. Atty., Brooklyn, N.Y. (Raymond J. Dearie, U.S. Atty., E.D.N.Y., Miles M. Tepper, Patrick B. Northup, Asst. U.S. Attys., Brooklyn, N.Y., on brief), for defendant-appellant.

Before FEINBERG, Chief Judge, and VAN GRAAFEILAND and KEARSE, Circuit Judges.

KEARSE, Circuit Judge:

The Secretary of Health and Human Services ("Secretary") appeals from an order of the United States District Court for the Eastern District of New York, I. Leo Glasser, Judge, granting plaintiff Ermano Valente's motion for judgment pursuant to Secs. 205(g) and 1631(c)(3) of the Social Security Act, 42 U.S.C. Secs. 405(g), 1383(c)(3) (1976 & Supp. V 1981), reversing the Secretary's decision requiring Valente to repay $19,859.60 in overpayments received as Supplemental Security Income ("SSI") benefits under the Social Security Act, id. Secs. 301-1397f (the "Act"). The Secretary had found that Valente was not without fault in causing the overpayments and that requiring him to make repayment would not be against equity or good conscience and would not defeat the purposes of the Act. The district court reversed the decision of the Secretary, ruling that Valente was not at fault and that it would not be inequitable to permit him to keep the overpayments. On appeal, the Secretary argues that the district court's order should be reversed and judgment entered in her favor because the court applied the wrong legal standard and because substantial evidence supports the Secretary's decision. For the reasons below, we reverse and remand for further administrative proceedings.

I. BACKGROUND

Valente became disabled in 1975 and thereafter began receiving SSI disability benefits. In 1980, the Social Security Administration ("SSA") determined that his disability had ceased in October 1976 and that from February 1977 to January 1980 Valente had received a total of $19,859.60 in "entitlement overpayment[s]," i.e., disability "benefit payment[s] ... to or on behalf of an individual who fails to meet one or more requirements for entitlement." 20 C.F.R. Sec. 404.510a (1983). SSA demanded repayment. Valente's request that the Secretary waive recovery of the overpayments was denied initially and on reconsideration. Valente appealed this determination and was given a de novo hearing before an administrative law judge ("ALJ").

A. The ALJ's Decision

Valente did not appear at the hearing before the ALJ but was represented by his wife, who apparently had made all of the pertinent contacts with SSA. The facts as described by the ALJ on the basis of SSA's file on Valente and testimony and exhibits presented by Mrs. Valente are as follows.

In August 1975, Valente filed an application for SSI benefits for himself, his wife, and his two children on the ground that he was disabled due to a heart condition. He and his family were awarded benefits which they began to receive in 1975. Valente returned to work in February 1976. In April 1976 he informed SSA of his return to work, and on July 9, 1976, SSA sent him a letter ("July 1976 letter") stating that his benefits would continue until September 1976 while he engaged in a nine-month trial work period to test whether he could work despite his impairment. The letter also stated that Valente would be contacted at the end of the trial work period and his case would be reviewed to determine whether he was "still disabled within the meaning of the law"; if Valente was found no longer disabled, his benefits would be terminated three months later. The last paragraph of the July 1976 letter began with the following advice:

If you have any questions about your claim, stop working, or need help in reporting, please telephone or visit any social security office. The people there will be glad to help you.

SSA did not contact Valente in September as promised, and the disability checks continued to arrive monthly. Valente continued working until June or July of 1977, when he once again became physically unable to work. He resumed full-time employment in October 1978 and remained employed at least until December 1980. Mrs. Valente notified SSA that Valente had again returned to work, but the Valentes heard nothing more from SSA. The checks kept coming.

Mrs. Valente testified that after Valente resumed working in 1978, she visited the local SSA office on two or three occasions and telephoned it monthly for six or seven months to inform SSA that Valente had again resumed working. She was able to give physical descriptions of the employees to whom she spoke in person, but had no record of the dates of her communications or the names of persons to whom she had spoken. She testified that these employees told her that her family was entitled to the benefits and that they should cash the checks, not return them. Mrs. Valente also testified that the reason she kept calling and visiting the SSA office was that she thought her family was not entitled to benefits when her husband was employed.

In October 1979, SSA sent Valente a questionnaire regarding his income. Based on his response, SSA concluded that Valente was no longer disabled, and on February 1, 1980, it informed him that the last disability payment he had been entitled to receive was for the month of January 1977. On February 15, 1980, SSA advised the Valentes that they had received overpayments for 35 months, totaling $19,859.60, which would have to be repaid. ¹ There was no record in the SSA files of any other contact with the Valentes after the July 1976 letter regarding Valente's trial work period.

The ALJ found that Valente's disability had ceased in October 1976; that he had engaged in substantial gainful activity from February 1976 to June 1977 and from October 1978 until at least January 1980; and that Valente was not entitled to benefits beginning with the month of January 1977. ² The ALJ found that Valente had been overpaid benefits in the total amount of $19,859.60 and that he was not without fault in causing the overpayments. The ALJ's opinion stated as follows:

Since the claimant was aware that he was not entitled to his disability insurance benefits once he became gainfully employed, his period of entitlement ended in January, 1977, three months after a nine month successful work attempt. The claimant was aware that he was not entitled to these benefits, but did continue to cash the checks, therefore, the Administration cannot find that the claimant is without fault in causing the overpayment and, as described in section 204(b) of the Act, ³ waiver is denied and repayment is required.

(Decision of ALJ dated August 10, 1982 ("ALJ Decision"), at 3-4.) (footnote added)

The ALJ concluded that requiring repayment would not be against equity or good conscience and would not defeat the purposes of the Act. He therefore denied the request for waiver of repayment. The ALJ's decision became the final decision of the Secretary.

B. The District Court's Decision

Valente commenced the present action in the district court, contending that the Secretary's decision was not supported by substantial evidence. The Secretary answered, contending that her decision was supported by substantial evidence, and both sides moved for judgment on the pleadings.

At the argument of these motions, Valente's counsel pointed out that during many months in the period for which repayment was demanded Valente had been disabled and not working, and counsel argued that repayment of benefits received in those months should not have been required. After hearing both sides, the district court found that Valente had been without fault as to all overpayments. The court pointed out that, contrary to the advice of the July 1976 letter, SSA had not contacted Valente again for several years regarding his entitlement to benefits (Transcript of hearing of June 24, 1983 ("Tr."), at 9), and that in the interim SSA employees kept telling Mrs. Valente to deposit the checks (id.). The court observed that the ALJ had made no finding that he did not believe Mrs. Valente's testimony regarding her repeated communications with SSA (id. at 6), nor any finding that either Mr. or Mrs. Valente was literate or had sufficient education or sophistication that they would be expected to keep records of their communications with SSA (id. at 7). The court described Mrs. Valente as "a woman who barely understands English" (id. at 9), and stated its own "surmise," based on the signature on the Valentes' financial statement, that the Valentes were "barely literate" (id. at 7.)

Counsel for the Secretary suggested that if the court found that Valente had been without fault, it should remand the case to the ALJ for further findings on the question of whether the requirement of repayment would be inequitable or contrary to the purposes of the Act. (Id. at 9-10.) The court, however, ruled as follows:

THE COURT: I find, Mr. Di Raimondo, on the basis of the record, that it will not defeat the purpose of the Act if that overpayment were waived, and I find, Mr. Di Raimondo on the basis of the record, that it would not be against equity, and good conscience, if that result were reached.

I am looking at this financial statement questionnaire which has been submitted. There is no way on the basis of this information, that th[ese] people at this stage, can make that kind of a repayment.

I am finding there is no evidence, not only no substantial evidence, no evidence in the record to support the conclusion reached by the Administrative Law Judge.

No basis for his finding, and also determining there is a waiver, there is...