Opinion ID: 463349
Heading Depth: 2
Heading Rank: 3

Heading: repayment of benefits

Text: 13 The Secretary is authorized under 42 U.S.C. Sec. 404(a)(1) to recoup overpayments of benefits to individuals. But Sec. 404(b) provides that: 14 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. 15 In dismissing the appellant's complaint against the Secretary, the District Court accepted the decision of the Administrative Law Judge that Mr. Peeler was at fault in accepting disability benefits during the period of October 1980 through June 1981. The record discloses no substantial evidence on which that decision could have been founded, at least as to the period of October through April. 16 Regulations applying Sec. 404(b) provide that an individual is at fault in retaining an overpayment of benefits when the overpayment resulted from: 17 (a) An incorrect statement made by the individual which he knew or should have known to be incorrect; or 18 (b) Failure to furnish information which he knew or should have known to be material; or 19 (c) With respect to the overpaid individual only, acceptance of a payment which he either knew or could have been expected to know was incorrect. 20 20 C.F.R. Sec. 404.507. The Secretary does not contend that Mr. Peeler failed to inform the Social Security Administration that he was incarcerated. (Indeed, Mr. Peeler testified without contradiction that his daughter had notified the Social Security Administration shortly after his imprisonment and had been assured at that time that he was still entitled to his benefits.) Nor is it alleged that he made a false or incorrect statement. Instead, the Secretary argues that Mr. Peeler knew or should have known that he was not entitled to receive the payments after October of 1980. The record on which the Administrative Law Judge based his finding of fact does not disclose by what means Mr. Peeler knew or could have been expected to know that he was no longer entitled to receive his benefits. The Social Security Administration itself apparently did not realize that Mr. Peeler was no longer eligible for benefits until April 1981 at the earliest, and did not demand repayment until June of that year. It is alleged that a form notice was sent to all affected recipients with their October 1980 benefits checks, but it was Mr. Peeler's uncontradicted testimony, not explicitly discredited by the ALJ, that his check was directly deposited with his bank; there was no evidence that he received notice in fact of the new law or its effect on him before April. 21 Beneficiaries are not presumed to know of each new arcanum of social-security law. See Cucuzzella v. Weinberger, 395 F.Supp. 1288, 1295 (D.Del.1975). They are not presumed to have acted with fault when, in the absence of changed personal circumstances, they accept a benefit payment in the amount which they have been accustomed to receiving each month. The waiver-of-repayment provision in Sec. 404(b) reflects Congressional recognition that mistakes do occur in the administration of a program as massive as Social Security and that it would be fundamentally wrong for the beneficiaries to bear the burden occasioned by the government's mistakes when they were innocent of any degree of fault themselves. Since there is no substantial evidence in the record to support the Administrative Law Judge's finding of fault, that finding must be reversed as to the alleged overpayments through the month of April 1981. As to the benefit payments which Mr. Peeler received in May and June 1981, there was some evidence that he had received some kind of notice (see Appellant's Brief Addendum at 65) in April 1981. However, the record does not disclose the content of that notice. Therefore, upon remand the District Court should remand to the Administrative Law Judge for a determination of whether, based on a consideration of all the pertinent circumstances surrounding the overpayment, Mr. Peeler was at fault in retaining his benefit checks for the months of May and June of 1981. 22 Since no fault was shown in Mr. Peeler's retention of the benefits checks for the months of October through April, there must be a further determination by the factfinder whether recovery of such overpayment would defeat the purpose of the statute or would be against equity and good conscience. 42 U.S.C. Sec. 404(b). Since there was no finding on this question in the first instance, upon remand it must be referred to the Administrative Law Judge for further factfinding and determination in the light of all relevant circumstances. 23 In summary, while we affirm the District Court's decision upholding 42 U.S.C. Sec. 402(x)(1), we conclude that the pro se complaint in other respects stated a possibly meritorious claim the dismissal of which was premature. Therefore, we reverse in part and remand to the District Court for further proceedings in accordance with this opinion. The District Court will in turn remand the overpayment issues to the ALJ for further findings of fact. The remainder of the case, relating to the possible consequences of the state courts' refusal to approve a rehabilitation program for plaintiff, should be held in abeyance in the manner described in Part IIB of this opinion. 24 It is so ordered.