Nadeau v. SSA 05-CV-020-SM 01/19/06 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Leon Nadeau, Claimant

v. Civil No. 05-CV-20-SM Opinion No.

Jo Anne Barnhart, Commissioner, Social Security Administration, Respondent

O R D E R

Pursuant to

(g), claimant, Leon Nadeau, moves

to reverse and remand the Commissioner's decision that he

received an overpayment of Social Security disability insurance

benefits and that he is not entitled to a waiver of recovery of

that overpayment because he was not without fault in procuring

it. The Commissioner, in turn, moves for an order affirming her

decision. For the reasons given below, the decision of the

Administrative Law Judge ("ALJ") is affirmed.

Standard of Review

The applicable standard of review in this case provides, in

pertinent part: The [district] court shall have power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Commissioner of Social Security, with or without remanding the cause for a rehearing. The findings of the Commissioner of Social Security as to any fact, if supported by substantial evidence, shall be conclusive

0 5 (g).

The Commissioner's findings of fact be supported by

substantial evidence. "The substantial evidence test applies not

only to findings of basic evidentiary facts, but also to

inferences and conclusions drawn from such facts." Alexandrou v.

Sullivan.

(S.D.N.Y. 1991) (citing Levine

v. Gardner.

(2d Cir. 1966)). In turn,

"[s ]ubstantial evidence is 'more than [a] mere scintilla. It

means such relevant evidence as a reasonable mind might accept as

adequate to support a conclusion.'" Currier v. Sec'v of H EW.

(1st Cir. 1980) (quoting Richardson v. Perales.

(1971)). Finally, when determining whether a

decision of the Commissioner is supported by substantial

evidence, the court must "review[] the evidence in the record as

a whole." Irlanda Ortiz v. Sec'v of H HS.

(1st

2 Cir. 1991) (quoting Rodriquez v. Sec'v of H HS.

(1st Cir. 1981) ) .

Background

The following summary of the factual background of this case

is drawn from the Joint Statement of Material Facts (document no.

15, hereinafter "Jt. Statement") and the Administrative

Transcript (hereinafter "Tr.").

On January 28, 1997, Nadeau was sent an award letter,

informing him that he was found to be disabled as of November 8,

1995, and was entitled to benefits starting in May 1996. He also

received workers's compensation benefits, which ended with the

payment of a lump-sum settlement on March 17, 2000. (Tr. at 46-

47 .)

During the time periods relevant to the matter before the

court, Nadeau was paid the following disability benefits: $109

per month from July through November 1999, $135 per month for

December 1999 and March 2000, $1091 per month from April 2000

through November 2000, and $1129 per month from December of 2000

3 through January 2001. (Jt. Statement at 3.) (Nadeau's benefit

history is complicated somewhat by a retroactive payment of $5736

in October 2000, but based on the Joint Statement of Material

Facts, all agree the effect of the retroactive payment was to

increase Nadeau's effective monthly benefit to $1091 from April

through October 2000.) Nadeau's last regular benefit check was

for January 2001.

Nadeau returned to work in July 1998, and earned $2154.50

that month, $1616.10 in August, $1582.35 in September, $2091.70

in October, $1641.65 in November, and $2052.43 in December. He

also worked in each month of 1999, earning between $794

(December) and $2336.42 (July) per month. (Jt. Statement at 4.)

According to claimant's own testimony, he worked from March 2000

through the date of his March 13, 2003, hearing (Tr. at 37), but

his earnings during that period are not included in the Joint

Statement of Material Facts.1

1 In his decision, the ALJ referred to "Administrative electronic records indicat[ing] that the claimant received from G.V. Moore Lumber Co., Inc. earnings of $22,432.10 in 2000, $30,254.31 in 2001, and $32,879.24 in 2002." (Tr. at 12.) Copies of the "Administrative electronic records" on which the ALJ relied are not included in the Administrative Transcript. Claimant criticizes the Commissioner and the ALJ for failing to subpoena his 2000, 2001, and 2002 pay stubs, but, when he had the

4 By letter dated February 24, 2002, the Social Security

Administration ("SSA") informed Nadeau that he had been paid

$11,808 in benefits to which he was not entitled. That letter

stated, in relevant part:

Earlier, we wrote to tell you that we had information about your work and earnings that could affect your Social Security disability payments. We also told you that we planned to decide that your disability ended because of your substantial work. We are now writing to tell you our decision.

We have decided that your disability has ended and that you are not entitled to Social Security disability payments for July 1999 through December 1999 and beginning March 2000.

Information About Your Payments

Your payments continued during your period of 9 trial work months while you tested your ability to work. Your trial work period ended March 1999.

You are entitled to payments for January 2000 through February 2000 because your work was not substantial for that time. However, you are not entitled to payments beginning March 2000 because you returned to substantial work.

chance, he did not introduce those pay stubs into evidence at his hearing, and he does not now assert that they demonstrate earnings below the level necessary to establish substantial gainful activity.

5 (Tr. at 82.) Nadeau filed a Request for Reconsideration in which

he stated:

I disagree with the alleged amount of the overpayment. I was not overpaid $11,808.00. An earlier notice told [me] I was overpaid July 1999 to December 1999. That does not equal $11,808.00. I also did not receive any disability benefits in 2002. I notified Social Security when I went back to work.

Please provide me with a month by month breakdown of this alleged overpayment and proof that I received benefits in 2002.

(T r . at 52, 54 .)

In response, Nadeau received the following special

determination dated May 10, 2002:

You received $64.00 for the month of 07/99. Because of increases paid in a check for $315.00 in 08/99, your effective [payment] for 07/99 was $109.00.

You were paid $109.00 for 8/99 through 11/99 and $135.00 for 12/99 through 03/00.

Even though your checks for the period 04/00 through 10/00 were $135.00 per month, the effective [payment] was increased by a retroactive amount paid in 10/00. The retroactive check of $5736.00 you received in 10/00 effectively increased your monthly benefit amount to $1091.00 effective 04/00. Thus, you were paid $1091.00 per month for the period 04/00 through 09/00.

6 Your actual payments for 10/00 and 11/00 were $1091.00 per month.

You were also paid $1129.00 for 12/00 and 01/01.

No Social Security payments were made after the 02/03/01 check.

Based on your work and earnings, no benefits are payable for 07/99 through 12/99 and 03/00 and thereafter.

Thus, the overpayment is calculated as follows:

$109.00 per month for 07/99 through 11/99= $545.00 $135.00 for 12/99= $135.00 $135.00 for 03/00= $135.00 $1091.00 per month for 04/00-11/00= $8728.00 $1129.00 per month for 12/00 and 01/01= $2258.00

This totals $11801.00

You received a retroactive check in 2001 because of a cost of living correction. Because of your work $7.00 was not due.

Thus the total overpayment is correct as is- $11808.00

(Tr. at 55). Nadeau responded by filing a Request for Hearing by

Administrative Law Judge, dated June 26, 2000, in which he

stated: "I think I am without fault in creating the overpayment.

It would be against equity and good conscience to try and collect

this overpayment. No explanation was given for alleged increases

in checks for 8/99 or 10/00. The whole explanation is very

confusing." (Tr. at 65.)

7 In the notice of hearing the ALJ sent Nadeau, the issues to

be addressed were set out as follows:

The general issues are whether you were overpaid benefits within the meaning of section 1631 of the Social Security Act and, if so, whether recovery of the overpayment may be waived.

The specific issues are whether you were "without fault" as defined in Social Security regulation 416.552 in causing the overpayment and, if so, whether recovery of the overpayment would (1) defeat the purpose of Title XVI of the Act, as defined in Social Security regulation 416.553, (2) be against equity and good conscien[c]e as defined in Social Security regulation 416.554.

(Tr. at 70.) By letter dated February 26, 2003, Nadeau's counsel

disputed inclusion of the waiver issue, noting that Nadeau had

"not yet requested a waiver [of recovery], as [he was]

challenging the amount and circumstances surrounding these lump

sum payments in 2000, as well as whether Social Security properly

calculated [his] trial work period from July 1998 to March 1999."

(T r . at 7 7.)

ALJ Frederick Harap held a hearing on March 13, 2003, after

which Nadeau's counsel filed a letter/memorandum arguing that

"claimant's overpayment claim should be dismissed . . . for a failure by SSA to provide [him] with the necessary information to

adequately respond to a claimed overpayment of $11,808.00."

(Tr. at 79.) Counsel went on to identify several specific types

of information that were not provided: (1) copies of all Social

Security checks Nadeau endorsed during the relevant time period;

(2) an explanation of how Nadeau's trial work period was applied

against the period of alleged overpayment; and (3) a workers'

compensation offset worksheet. (Tr. at 79-80.)

ALJ Harap's decision includes the following relevant

findings of fact:

1. The claimant completed his nine-month trial work period in March 1999.

2. The claimant began a 36-month reentitlement period in April 1999 which continued through March 2002.

3. The claimant continued working at a substantial gainful activity level in April 1999; his disability therefore ceased as of that month with benefits continuing through June 1999.

4. The claimant continued to engage in substantial gainful activity during the reentitlement period in the months of July 1999 through December 1999 and March 2000 through March 2002.

5. The claimant was not entitled to receive benefits during th[o]se months in which he engaged in

9 substantial gainful activity during the reentitlement period.

6. The claimant received a total of $11,808.00 paid in months in which he engaged in substantial gainful activity during the reentitlement period to which he was not entitled; this total of $11,808.00 constitutes an overpayment.

7. The claimant failed to report his work activity to the Administration, constituting a failure to provide information which he knew or reasonably should have known t[o] be material.

8. The claimant was not without fault in procuring the overpayment (

).

9. Recovery of the overpayment totaling $11,808.00 is not waived (

).

(Tr. at 15-16.)

Discussion

Claimant advances two arguments. First, he contends that

the Commissioner failed to properly develop the record before

issuing a notice of overpayment. In particular, he points to the

Commissioner's failure to provide copies of the benefit checks he

is alleged to have received and to SSA's failure to explain the

operation of the trial work provisions and the extended-period-

of-eligibility program. Second, he argues that the ALJ's

determination that he was not without fault in procuring the

10 overpayment is not supported by substantial evidence because of

the SSA's failure to: (1) promptly adjust his monthly benefit

upon settlement of his workers compensation claim; and

(2) explain to him the nature of the payments he received in 1999

and 2000. Based upon the foregoing, claimant asks the court to:

(1) remand the Commissioner's decision to deny reconsideration

regarding the amount of overpayment for further factfinding and

development; and (2) reverse or remand the Commissioner's

decision denying waiver of recovery, because that issue was not

properly before the ALJ and because the ALJ's decision was not

supported by substantial evidence. Respondent objects,

categorically, and also points out that claimant does not deny

receiving the benefits at issue here, nor does he deny working

from March 2000 through March 2002, as found by the ALJ.

A. The Relevant Law

The Social Security Act provides, in pertinent part:

With respect to payment to a person of more than the correct amount, the Commissioner of Social Security shall . . . require such overpaid person or his estate to refund the amount in excess of the correct amount

11

(a)(1)(A). The statute further 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. In making for purposes of this subsection any determination of whether any individual is without fault, the Commissioner of Social Security shall specifically take into account any physical, mental, educational, or linguistic limitation such individual may have (including any lack of facility with the English language).

(b). A Social Security recipient who has been

overpaid may take advantage of the foregoing provision by

requesting a waiver of adjustment or recovery, under procedures

described in

et sea.

While the Social Security Act does not indicate which party

bears the burden of proving the fact and amount of overpayment,

the three circuits that have addressed the issue "held that the

Commissioner has this burden." McCarthy v. Apfel,

(9th Cir. 2000) (citing Cannuni ex rel. Cannuni v.

Schweiker,

(3d Cir. 1984); United States v.

Smith.

(8th Cir. 1973)). On the other hand.

12 "the individual [seeking waiver of recovery] bears the burden of

establishing that he has met the requirements of § 404(b) of the

Social Security Act." Banuelos v. Apfel.

(7th Cir. 1999), overruled on other grounds, (citation omitted);

see also Valente v. Sec'v. H HS.

(2d Cir.

1984); Sierakowski v. Weinberger.

(6th Cir.

1974) .

B. Overpayment

Claimant asks the court to remand for further factfinding on

the issue of overpayment, arguing that the ALJ's decision was

either not supported by substantial evidence or rested on

information not made part of the record. There is no cause for

remand.

The Joint Statement of Material Facts lists the benefits

claimant received from July 1999 through January 2001, and also

lists his earnings from July 1998 through December 1999. Those

stipulated facts establish: (1) a trial work period running from

July 1998 through March 1999, see

(c);

; (2) ineligibility for benefits from July through December

13 1999, see 20 C.F.R. § 1592a; and, consequently, (3) an

overpayment for that period. At issue is the ALJ's determination

that claimant was overpaid from March 2000 through January 2001,

due to his substantial gainful employment.2

While claimant's employment history from March 2000 onward

is not documented by a Form SSA-L725, as is his employment from

July 1998 through December 1999, claimant testified at his

hearing that he had been employed, continuously from March 2000

onward, by J.B. Morria's Lumber. In addition to that testimony,

the ALJ relied upon certain "Administration electronic records"

that he described in his decision but did not include in the

Administrative Transcript. Claimant contends that the

Commissioner is at fault for not interviewing him concerning his

earnings at J.B. Morria, or asking him to produce his pay stubs.

But claimant did not testify at his hearing (nor does he now

claim) that his earnings at J.B. Morria fell below the threshold

for establishing substantial gainful employment. Because

2 While claimant argues at some length, in his brief, that he challenges the sufficiency of the evidence on which the ALJ based his findings concerning the amount of benefits claimant was paid, that argument would seem to be mooted by the Joint Statement of Material Facts.

14 claimant does not now contend that he was not gainfully employed,

had the opportunity to testify regarding his earnings, and could

have placed his pay stubs into evidence at his hearing but did

not do so, there is little reason to think that remand would

result in the presentation of evidence favorable to claimant with

regard to his gainful employment status. Moreover, claimant's

testimony about his continuous employment, coupled with his

failure to testify that he earned less than the threshold amount

for substantial gainful employment, constitutes substantial

evidence that claimant was engaged in substantial gainful

employment from March 2000 through March 2002, the end of his

reentitlement period. Accordingly, the Commissioner's decision

regarding overpayment is affirmed.

C. Waiver of Recovery

The ALJ determined that claimant did not qualify for a

waiver of recovery. Claimant advances two arguments in

opposition: 1) that the decision should be reversed because the

question of waiver was never properly before the ALJ; and 2) that

the issue should be remanded for further factfinding. Both

arguments lack merit.

15 Claimant's argument that the ALJ should not have considered

the waiver issue is not well-founded, given that claimant

introduced that issue into the case in the first place. In his

April 18, 2002, Request for Reconsideration, claimant challenged

the amount SSA said he had been overpaid. (Tr. at 52.) In his

June 26, 2002, Request for Hearing by Administrative Law Judge,

claimant stated he wanted a hearing because: "I think I am

without fault in creating the overpayment. It would be against

equity and good conscience to try and collect this overpayment."

(Tr. at 65.) Not coincidentally, claimant's statement of the

issues precisely tracked the statutory criteria for granting a

waiver of recovery. Given that claimant's request for a hearing

plainly raised the recovery waiver issue, it is difficult to see

how he can now argue that the issue of waiver was not properly

before the ALJ. Moreover, Nadeau did not assert, in his Request

for Hearing, that SSA wrongly determined that he had been

overpaid or wrongly calculated the amount of overpayment, leaving

waiver of recovery the only issue squarely raised for the ALJ's

consideration. Resolution of that issue by the ALJ denied

claimant the opportunity to take advantage of the procedures

16 described in

et se a ., but bypassing those

procedures was claimant's own choice.

Claimant's substantive argument that the ALJ wrongly

determined he was not eligible for a waiver of recovery rests on

the confusing history of his benefit payments which includes,

among other things, increases in benefits that were not explained

to him, confusion surrounding the interplay between his workers'

compensation benefits and his Social Security benefits, and a

large retroactive benefit payment he received in October 2000.

Claimant may well have been confused about the payments he

received, but the fact remains that he engaged in substantial

gainful employment for eighteen consecutive months, beginning in

July, 1998, thus completing a nine-month trial work period in

March 1999. Moreover, whether he was confused at the time or

not, claimant offers no legal theory or facts that would support

a reasonable belief that he was entitled to Social Security

benefits from July through December 1999, or from March 2000

onward.3 Yet, he continued to collect checks from SSA.

3 Claimant's counsel suggests he believed claimant was entitled to a trial work period from April 2000 through the end of that year, but any such belief is clearly erroneous based upon the undisputed factual record of claimant's earnings from July

17 At the hearing before the ALJ, claimant's counsel stated

that he and/or claimant had notified the Nashua SSA office that

claimant had returned to work. (Tr. at 23.) That claim appears,

in conclusory fashion, in Nadeau's April 18, 2002, Request for

Reconsideration (Tr. at 54), and is repeated in claimant's brief

(Pl.'s Mem. at 3), but claimant never testified to that fact at

the hearing; no evidence to support it was introduced at the

hearing; and it does not appear in the Joint Statement of

Material Facts. Thus, considering the record as a whole, and

claimant's burden of proving otherwise, substantial evidence

supports the ALJ's determination that claimant was not without

fault for the overpayment because he "failed to furnish

information to the Administration related to his work activity

. . . that he knew or should have known . . . was material."

(T r . at 15 .)

Based upon the record before the ALJ, there was also

substantial evidence to support a conclusion that claimant was

not without fault because he accepted "payment[s] which he either

knew or should have been expected to have known [were]

1988 through December 1999.

18 incorrect."

. Starting in July 1998,

claimant engaged in substantial gainful activity for

approximately fifty-four of the next fifty-six months (July 1998

through December 1999, and March 2000 through March 2003). No

matter how confusing his SSA payments may have been to him, no

plausible argument can be constructed under which claimant cannot

be charged with knowing that his payments from July 1999 onward

were incorrect.

Finally, in light of the foregoing, coupled with claimant's

failure to identify any statutory mitigating factor (i.e..

physical, mental, educational, or linguistic limitations) that he

might be able to prove at a rehearing, or any argument based upon

the purposes of the Social Security Act or equity and good

conscience, there is simply no basis for remanding this case for

further factual development on the issue of waiver of recovery.

Conclusion

For the reasons given, claimant's motion for an order

reversing the order of the Commissioner (document no. 13) is

denied and, necessarily, the Commissioner's motion for an order

19 affirming her decision (document no. 14) is granted. The clerk

of the court shall enter judgment in accordance with this order

and close the case.

SO ORDERED.

xeven j/ McAuliffe

January 19, 2006

cc: Raymond J. Kelly, Esq. David L. Broderick, Esq.

20