IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

PHILLIP CARL HEISS, 

Plaintiff, 

v. 

CAROLYNW. COLVIN, 

ACTING COMMISSIONER OF 

SOCIAL SECURITY, 

Defendant. 

P ANNER, District Judge. 

MEDFORD DIVISION 

Civ. No. 1:14-cv-01595-PA 

ORDER 

Plaintiff Phillip Carl Heiss seeks judicial review of the final decision of the 

Commissioner of Social Security ("the Commissioner") denying his request for waiver of 

overpayment of disability insurance benefits pursuant to 42 U.S.C. § 405(g). Plaintiff seeks a 

waiver of repayment and return of the funds already recouped by the withholding of his benefits. 

For the reasons below, the Commissioner's decision is AFFIRMED and this case is 

DISMISSED. 

BACKGROUND 

Plaintiff began receiving Title II disability benefits in June 2006, effective retroactively 

to January 1, 1998. Tr. 13. Plaintiffs benefits were awarded pursuant to the decision of an 

Administrative Law Judge ("ALJ"), subsequent to a remand order by the United States District 

Court. !d. Plaintiff was represented by attorney Tim Wilborn in his case before the District 

Court and by a different attorney in his case before the ALJ. ld. 

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The Social Security Administration ("SSA") withheld 25% of Plaintiffs retroactive 

benefits in order to pay his attorney's fees. Jd. In August 2006, the SSA issued a notice to 

Plaintiff informing him that he would "soon receive a check for $29,414.50 because we are 

sending you the money which we did not have to use to pay an attorney fee." Tr. 26. The SSA 

apparently issued this notice because they paid the attorney's fees for the attorney who 

represented Plaintiff before the ALJ, but erroneously failed to pay the fees owed to Mr. Wilborn. 

Tr. 13. 

On October 9, 2008, Mr. Wilborn sent an inquiry to the SSA seeking information about 

the attorney's fee withholding. Tr. 28. On January 8, 2010, Mr. Wilborn was awarded 

attorney's fees in the amount of $24,688.78 pursuant to 42 U.S. C. § 406(b) for his representation 

of Plaintiff. Tr. 30. On February 26, 2010, the SAA admitted that it had mistakenly paid the 

-

sum withheld for Mr. Wilborn's fee to Plaintiff and that the SSA "should have continued to 

withhold" the money. Tr. 32. Mr. Wilborn was advised to attempt to collect the fee directly 

from Plaintiff. Jd. The SSA informed Mr. Wilborn that,if he was unable to reach a satisfactory 

agreement with Plaintiff, the SSA would withhold Plaintiffs benefits in order to pay Mr. 

Wilborn's fee. Jd. Plaintiff and Mr. Wilborn were not able to come to an agreement and in July 

2010 the SSA informed Plaintiff that they would be withholding his benefits in order to recover 

the overpayment. Tr. 13-14. 

Plaintiff requested that the SSA not collect the overpayment. Tr. 36, 38-40, 109, 141-48. 

The SSA denied Plaintiffs request. Tr. 51. In May 2011, Plaintiff requested a hearing before an 

ALJ. Tr. 57-58. In July 2011, the SSA began withholding Plaintiffs benefits in order to recoup 

the overpayment. Tr. 59. On January 17, 2013, a hearing was held before ALJ Marilyn S. 

Mauer. Tr. 14. The ALJ issued a decision denying Plaintiffs request for a waiver of 

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overpayment on February 4, 2013. Tr. 18. The Appeals Council denied review on August 28, 

2014, making the ALJ's decision the final Agency action. Tr. 3. 

LEGAL STANDARD 

When a claimant receives more disability benefits than he is entitled to, an overpayment 

has been made and the SSA is entitled to recover the overpayment. 20 C.P.R. § 404.501. 

Recovery of the overpayment may be partially or completely waived in certain circumstances. 

Under the regulations, repayment may be waived if the claimant was without fault and if 

recovery would defeat the purposes of the Act or be contrary to equity and good conscience. 20 

C.P.R. § 404.506. The ALJ's decision should be affirmed if it was supported by substantial 

evidence and if the ALJ applied the proper legal standard. Anderson v. Sullivan, 914 F .2d 1121, 

1122 (9th Cir. 1990). 

THE ALJ'S FINDINGS 

The ALJ found that Plaintiff was overpaid benefits in the amount of $24,687.28. Tr. 15. 

Plaintiff was determined to be without fault in causing or accepting the overpayment. !d. The 

ALJ determined that withholding the overpaid sum would not defeat the purpose of Title II of the 

Act in light of Plaintiffs large monthly annuity, substantial real estate holdings, and the sum of 

money in Plaintiffs IRA account. Tr. 16-1 7. In making that determination, the ALJ calculated 

Plaintiffs "ordinary and necessary expenses" and determined that Plaintiff "is able to spare his 

entire Social Security benefit check without significant impact on his standard of living." Tr. 17. 

Finally, the ALJ found that recovery of the overpayment would not be against equity and good 

conscience. Tr.17-18. 

Accordingly, the ALJ determined that Plaintiff was not entitled to a wmver of 

overpayment. Tr. 18. 

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DISCUSSION 

Plaintiff challenges only the ALI's determination that that recovery of the overpayment 

would not be against equity and good conscience. Recovery of an overpayment is against equity 

and good conscience if an individual "changed his or her position for the worse or relinquished a 

valuable right because of reliance upon a notice that a payment would be made or because of the 

overpayment itself." 20 C.F.R. § 404.509(a)(l). "The individual's financial circumstances are 

not material to a finding of against equity and good conscience." 20 C.F.R. § 404.509(b). 

However, in assessing equity and good conscience, the ALJ "must take into account all of the 

facts and circumstances of the case," and her decision must "be based on a broad concept of 

fairness." SSAR 92-5(9) (June 22, 1992), available at 1992 WL 248902, at *3. 

!d. 

Factors such as, but not limited to, the nature of the claimant's impairment, the 

amount and steadiness of the claimant's income, and the claimant's assets and 

material resources should all be considered in the decision as to whether recovery 

of an overpayment should be waived on the basis that recovery would be "against 

equity and good conscience." 

Plaintiff first argues that he changed his position for the worse in reliance on the 

overpayment. As noted, Plaintiff received the overpayment in 2006. Tr. 13. Between 2004 and 

2007, Plaintiff took out loans in order to acquire six investment properties. Pl.'s Br. 2. Plaintiff 

claims that he would not have purchased these properties but for the overpayment and that the 

SSA's decision to recover the overpayment caused him to default on the loans. Plaintiff argues 

that this demonstrates that he changed his position for the worse in reliance on the overpayment 

sum. This argument is unpersuasive. 

The Commissioner cites a recent district court decision from the District of Nebraska, 

which held that: 

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A claimant "changes position" when he takes new action or incurs a new expense 

or obligation. Although the individual must actually incur the expense or 

obligation, the change need not be dramatic. And the new act or obligation must 

be for the worse. Finally, the new act or obligation must be linked to the award of 

benefits. Thus, it is not enough to have simply spent the amount received. 

Rather, the individual must show that he spent the money in a way in which he 

would not have but for the receipt of overpayments. 

Wiles v. Colvin, 13 F. Supp.3d 1007, 1014 (D. Neb. 2014)(intemal quotation marks and citations 

omitted). 

As noted by the ALJ, Plaintiff purchased at least three of the properties at issue before he 

received Title II benefits. Tr. 17, 218, 219, 221. These investments cannot, therefore, be 

attributed to the award of benefits. The fact that Plaintiff was already in the process of acquiring 

investment properties at the time of the award also indicates. that these investments were not the 

"but for" consequence of a $24,687.28 overpayment by the SSA. 

Nor does it appear that Plaintiff's default on those loans was the consequence of the 

SSA's recovery of the overpayment. Plaintiff asserted before the ALJ that his monthly 

obligation on the loans for his investment property amounted to $2,152. _Tr. 17, 146. Plaintiff's 

benefits at the time of their suspension amounted to only $1,757.50 per month, which is less than 

the monthly obligation. Tr. 17. During the period in which the benefits were suspended, 

Plaintiff's monthly income included $8022 from a disability insurance annuity weighed against 

ordinary and necessary expenses, which the ALJ calculated at $5373. 1 Tr. 16-17. Plaintiff also 

receives income from rental properties and has an IRA account with a balance of over $151,000. 

1 Plaintiff appears to dispute the ALJ' s decision to discount the loan payments on Plaintiffs rental and investment 

properties in his assessment of Plaintiffs "ordinary and necessary expenses." 20 C.F.R. § 404.508 provides a list of 

. expenses which may be considered "ordinary and necessary." While."mortgage payments" are included, they 

appear as an example of"fixed living expenses," along with food, clothing, utilities and insurance. 20 C.F.R. § 

404.508(a)(l). It is clear from the regulation that the "mortgage payments" contemplated were for the provision of 

housing to the claimant, not investment properties. I fmd that the ALJ properly excluded those obligations from 

Plaintiffs "ordinary and necessary expenses." 

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Tr:. 144-45. Based on Plaintiffs resources, the ALJ determined that Plaintiff"had possession of 

sufficient liquid resources to repay the overpayment throughout the adjudicative period." Tr. 17. 

The ALJ also noted that, by Plaintiffs own admission, his financial difficulties are due to 

"the 'current upside down real estate market' that prevented him from selling the properties at a 

profit." Tr. 17; see also Tr. 147 (in explaining why he cannot sell his investment properties, 

Plaintiff responded that "There is little if any equity. [I] owe way more than [the] value of [the] 

lots, [which] resulted in defaults."). Plaintiff essentially reiterates this point in his opening brief. 

Pl.'s Br. 3. As the ALJ correctly concluded, the fact that Plaintiff made an unfortunate 

investment decision does not make recovery of the overpayment against equity and good 

conscience. 

Plaintiff also argues that the ALJ erred by considering his financial resources in assessing 

whether recovery would be against equity and good conscience. Plaintiffs argument is 

unpersuasive. As previously noted, Acquiescence Ruling 92-5(9) requires that the ALJ apply a 

"broad concept of fairness," including consideration of the amount and steadiness of Plaintiffs 

income and his material assets and resources. SSAR 92-5(9) (June 22, 1992), available at 1992 

WL 248902, at *3; see also Quinlivan v. Sullivan, 916 F.2d 524, 527 (9th Cir. 1990) ("Congress 

intended a broad concept of fairness to apply to waiver requests, one that reflects the ordinary 

meaning of the statutory language and takes into account the facts and circumstances of each 

case."); Newton v. Chater, 103 F.3d 139 (9th Cir. 1996) (table), available at 1996 WL 672318, at 

*3 ("[W]e have expanded the concept of equity and good conscience beyond the confines of [20 

C.F.R. § 404.509(a)] because we concluded that Congress intended to apply 'a broad concept of 

fairness' to waiver requests."). In light of SSAR 92-5(9), the ALJ's consideration of Plaintiffs 

income and resources was proper and conformed to the "broad concept of fairness." 

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I conclude that the ALJ applied the correct legal standards in her review of this case and 

that her decision was supported by substantial evidence. Accordingly, I AFFIRM the decision of 

the Commissioner. 

CONCLUSION 

The decision of the Commissioner is AFFIRMED and this action is DISMISSED. 

DATED this / Y day ofDecember, 2015. 

OWENM.PANNER 

~21tLe-. ~ 

United States District Judge 

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