United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 15, 2010 Decided June 18, 2010

No. 09-5191

ACTION ALLIANCE OF SENIOR CITIZENS, ET AL.,

APPELLANTS

v.

KATHLEEN SEBELIUS, SECRETARY, DEPARTMENT OF HEALTH 

AND HUMAN SERVICES AND MICHAEL J. ASTRUE,

COMMISSIONER OF THE SOCIAL SECURITY ADMINISTRATION,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:06-cv-01607-HHK)

Gill Deford argued the cause for appellants. With him on 

the briefs were Judith Stein, Brad S. Plebani, Wey-Wey Kwok,

Vicki Gottlich, and Patricia B. Nemore.

Daniel Tenny, Attorney, U.S. Department of Justice, 

argued the cause for appellees. With him on the brief were 

Tony West, Assistant Attorney General, Channing D. Phillips, 

Acting United States Attorney, Mark B. Stern and Alisa B. 

Klein, Attorneys, David S. Cade, Acting General Counsel, 

U.S. Department of Health & Human Services, Janice L. 
2

Hoffman, Associate General Counsel, Mark D. Polston, 

Deputy Associate General Counsel, Lawrence J. Harder and

Marcus H. Christ, Supervisory Trial Attorneys, David Black, 

General Counsel, Social Security Administration, Thomas 

Crawley, Deputy General Counsel, Gwenda Jones Kelley, 

Associate General Counsel, Jeff Blair, Deputy General 

Counsel, and Eileen Farmer, Attorney.

Before: HENDERSON and KAVANAUGH, Circuit Judges, 

and RANDOLPH, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge

KAVANAUGH.

KAVANAUGH, Circuit Judge: Sometimes the Government 

mistakenly sends too much money to beneficiaries of federal 

benefits programs. When that happens, the Government 

naturally attempts to recover the money. But what if a

beneficiary already spent the money or otherwise would have 

difficulty paying the Government back? Some benefits

statutes – such as the Social Security statute – allow

beneficiaries to obtain a waiver when repayment would 

produce hardship. Other statutes – such as the Medicare 

prescription drug statute – do not. 

This case lies at the intersection of the Social Security 

and Medicare programs. Like many others, plaintiffs paid 

their Medicare prescription drug premiums by having them 

deducted from their monthly Social Security benefits. The

issue here arises because, in late 2006, plaintiffs received 

mistaken refunds of their Medicare premiums – and received 

them from the Social Security Administration. When the 

Government later sought to recover the mistaken Medicare 

premium refunds, plaintiffs asked for a waiver, relying on the 

fact that the Social Security Administration had made the 
3

overpayment and seeking to take advantage of the right to 

waiver in the Social Security statute. But the Social Security

statute allows waiver from recovery of overpaid Social 

Security benefits, not waiver from recovery of mistaken 

Medicare Part D premium refunds. We therefore affirm the 

District Court’s judgment dismissing plaintiffs’ complaint.

I

Title 42, Chapter 7 of the U.S. Code contains two 

subchapters of relevance. Subchapter II governs the Social 

Security program, and Subchapter XVIII covers the Medicare 

program. For ease of reference, we refer to Subchapter II as 

the “Social Security statute.” 

Under the Social Security program, workers are required 

to pay into the Social Security trust fund during their working 

careers, and the Federal Government in turn provides money 

to seniors, individuals with disabilities, and the survivors of 

eligible beneficiaries. This assistance is sent to beneficiaries 

in the form of monthly (or sometimes, lump-sum) benefits 

payments via check or direct deposit. 

The Medicare program provides, among other things, 

prescription drug coverage to seniors and individuals with 

disabilities. This is known as Part D of the Medicare 

program. Part D participants pay a monthly premium for that 

coverage. They may pay the premium in a variety of ways –

including deducting the amount from a bank account, credit 

card, or debit card, or from their monthly Social Security 

benefits. 

This case involves Medicare Part D participants who pay 

for their prescription drug coverage by having their monthly
4

prescription drug premiums withheld from their monthly 

Social Security benefits. 

The Centers for Medicare and Medicaid Services, or 

CMS, is a unit within the U.S. Department of Health and 

Human Services. CMS administers the Medicare prescription 

drug program. It coordinates with the Social Security 

Administration to accommodate those beneficiaries who pay 

their Medicare prescription drug premiums by way of 

deductions from their Social Security benefits. 

In August 2006, CMS determined that the Social Security 

Administration had wrongly collected excessive Medicare 

Part D premiums from approximately 230,000 Medicare Part 

D participants. These affected beneficiaries had paid their

Part D premiums by having them deducted from their Social 

Security benefits. CMS instructed the Social Security 

Administration to issue refunds to the affected beneficiaries. 

The Social Security Administration paid the refunds by check 

or direct deposit. The average refund amount was $215, with

no single refund exceeding $750. In total, the Government

refunded approximately $47 million. 

Several weeks later, CMS discovered that its initial 

determination had resulted from a processing mishap, that the 

premiums had not been wrongly withheld, and that the 

refunds had been made in error. CMS sent a letter to the 

participants asking them to return the refunds and detailing 

the ways they could do so. The letter specified that 

repayment could be made in installments. By the time of oral 

argument in this case, more than 65% of the affected 

beneficiaries had returned the erroneous refund; about $17 

million was still unreturned. See Tr. of Oral Arg. at 14.
5

Lucy Loveall is a Medicare Part D participant who pays 

for her prescription drug coverage by having her premiums

deducted from her Social Security benefits. Loveall received 

a refund of her Medicare Part D premiums in the amount of 

$161.70 as part of CMS’s error. CMS then asked Loveall to 

return the money. Loveall claimed that returning the payment 

would cause hardship, as she had already applied the money 

toward her monthly expenses. Along with the Action 

Alliance of Senior Citizens and the Gray Panthers 

(organizations whose membership includes similarly situated 

senior citizens), Loveall sued the Secretary of Health and 

Human Services and the Commissioner of the Social Security 

Administration. As relevant here, plaintiffs sought 

declaratory and injunctive relief on the basis that 42 U.S.C. § 

404(b) – a provision in the Social Security statute – allows 

them to obtain waiver from recovery of overpayments. The 

Government moved to dismiss the case. Concluding that the 

Social Security statute did not allow plaintiffs to obtain 

waiver in these circumstances, the District Court granted the 

Government’s motion to dismiss.1

II

 

When the Social Security Administration seeks to recover 

overpayment of Social Security benefits, beneficiaries may 

 1 This case previously came before this Court in Action 

Alliance of Senior Citizens v. Leavitt, 483 F.3d 852 (D.C. Cir. 

2007). There, plaintiffs asserted a right to seek waiver under both 

the Social Security waiver provision (42 U.S.C. § 404(b)) and the 

Medicare waiver provision (42 U.S.C. § 1395gg(c)). We rejected 

plaintiffs’ § 1395gg(c) claim, but we concluded that the district 

court lacked jurisdiction to consider plaintiffs’ § 404(b) claim 

because the claim had not been properly presented to the 

Commissioner of Social Security. Plaintiffs have since cured the 

jurisdictional defect.
6

obtain a waiver from recovery if they show hardship. The 

question here is whether Medicare Part D prescription drug 

participants who receive erroneous premium refunds from the 

Social Security Administration may also obtain such a waiver. 

The answer is no. 

The section of the Social Security statute codified at 42 

U.S.C. § 404 addresses the adjustment or recovery of 

overpayments and underpayments. Subsection (a) of § 404

provides: “Whenever the Commissioner of Social Security 

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 . . . .” 42 U.S.C. § 

404(a)(1) (emphasis added). Subsection (b) provides an 

exception for certain cases: “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.” 

Id. § 404(b). 

Plaintiffs argue that they are entitled to take advantage of 

that Social Security waiver provision because they received 

the overpayment here (a mistaken refund of their Medicare 

Part D premiums) from the Social Security Administration.

We disagree: The text and structure of § 404 show that § 

404(b) provides a right to waiver from recovery only for

overpayments covered by § 404(a) – that is, only for

overpayments of Social Security benefits. The Supreme 

Court and courts of appeals have therefore long interpreted § 

404(b) as providing an exception to subsection (a). See, e.g.,

Califano v. Yamasaki, 442 U.S. 682, 685 (1979) (§ 404(b) 

“expressly limits the recoupment authority conferred by” § 
7

404(a)); Everhart v. Bowen, 853 F.2d 1532, 1535 (10th Cir. 

1988) (the Social Security statute’s “waiver of recoupment 

provision, § 404(b), qualifies the Secretary’s right to recovery 

or adjustment under § 404(a)(1)(A).”) (footnote omitted), 

rev’d on other grounds, 494 U.S. 83 (1990); Webb v. Bowen, 

851 F.2d 190, 192 (8th Cir. 1988) (“section 404(b) only 

grants an opportunity of waiver of the amount found to be 

overpaid under section 404(a)”). Contrary to plaintiffs’ 

position, the waiver provision in the Social Security statute 

does not apply to any Government overpayment that happens 

to come through the Social Security Administration.

Indeed, plaintiffs’ position would produce an anomaly 

that illustrates the flaw in their interpretation. Plaintiffs’ 

approach would allow waiver from recovery for those 

Medicare prescription drug beneficiaries who pay their 

premiums through Social Security deductions – but not for

those who pay their premiums by deductions from a bank 

account, credit card, or debit card. That would make little 

sense, and we see no evidence that Congress intended such a 

half-baked waiver regime for recovery of mistaken Medicare 

prescription drug premium refunds.

2

 

 2 Because we agree with the Government’s interpretation of 

the statute, we need not address whether the statute is ambiguous 

for purposes of Chevron step one / step two analysis or whether the 

Government’s interpretation, which was provided in a letter, would 

be entitled to Chevron deference at step two. See Chevron, U.S.A., 

Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984). 
8

* * *

We have considered plaintiffs’ other arguments and find 

them without merit. We affirm the judgment of the District 

Court. 

So ordered.