Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 78-C-49 -- Alfred Y. Kirkland, Judge .
Before Cummings and Sprecher, Circuit Judges, and Dumbauld, Senior District Judge.*fn*
According to the district court complaint, plaintiff became disabled on December 8, 1971, and received disability payments under the Social Security Act until the end of November 1975 when defendant Secretary of Health, Education and Welfare (HEW) terminated those benefits and sought a refund of overpayments plaintiff had allegedly received. When upon reconsideration the HEW's Bureau of Disability Insurance affirmed its initial termination decision and upheld the claimed refund of overpayments, plaintiff sought de novo review of the overpayment question before an Administrative Law Judge (ALJ). The ALJ found for the Secretary and upon the plaintiff's administrative appeal the Appeals Council agreed. Plaintiff then sought review of the ALJ's decision in the district court, seeking to bar the Secretary from collecting any of the alleged overpayments. The defendant filed a motion for summary judgment on the ground that the ALJ's decision was supported by substantial evidence in the record (Record Item 4 at 8) and plaintiff filed a cross-motion for summary judgment "in view of all the evidence" (Record Item 7 at 12). Finding that "there is substantial evidence in the record to support the administrative law judge's holding that recovery of the overpayment would not defeat the purposes of the (Social Security) Act or be against equity and good conscience" (Record Item 8),*fn1 the district court granted the Government's motion on January 31, 1979. When on April 30, 1979, the district court denied plaintiff's petition for rehearing plaintiff appealed. We affirm.
Section 223(a)(1) of the Social Security Act provides for insurance benefits for certain persons who are "under a disability." (42 U.S.C. § 423(a)(1)). Under the Act, a "disability" is an "inability to engage in any substantial gainful activity by reason of any medically determinable physical * * * impairment * * * which has lasted or can be expected to last for a continuous period of not less than 12 months" (42 U.S.C. § 423(d)(1)). To qualify, a person must be unable to do either his previous work or, considering his personal characteristics, "any other kind of substantial gainful work which exists in the national economy" (42 U.S.C. § 423(d)(2)).*fn2 Under Regulations called for by the Act, even work activity performed on a part-time basis is considered substantial, though the work must be productive in nature and remunerative (20 C.F.R. § 404.1532(b)). The Regulations also specify that a disability ceases in the month in which the impairment is no longer of such severity as to prevent the individual from engaging in any substantial gainful activity, or the month in which the individual has regained his ability to engage in such activity (20 C.F.R. § 404.1539(a)).
Section 204 of the Act directs the Secretary to recover any overpayment of disability benefits, but provides that the United States cannot recover overpayments from "any person who is without fault if such adjustment or recovery would defeat the purpose of (the Act) or would be against equity and good conscience" (42 U.S.C. § 404(b)). Again the Regulations explain that recovery would defeat the purpose of benefits under the Act if it would "deprive a person of income required for ordinary and necessary living expenses." They specify that the existence of such a deprivation depends "upon whether the person has an income or financial resources sufficient for more than ordinary and necessary needs, or is dependent upon all of his current benefits for such needs" (20 C.F.R. § 404.508(a)). They also state that "recovery will defeat the purposes of (the Act) in (but is not limited to) situations where the person from whom recovery is sought needs substantially all of his current income (including social security monthly benefits) to meet current ordinary and necessary living expenses" (20 C.F.R. § 404.508(b)). The phrase "against equity and good conscience" meanwhile is interpreted in the Regulations to make recovery inequitable if the individual has "relinquished a valuable right * * * or changed his position for the worse" by reason of the overpayments (20 C.F.R. § 404.509).
Finally, Section 205(g) of the Act governs judicial review by a district court of the Secretary's insurance benefit determinations and specifies that "(t)he court shall have power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Secretary, with or without remanding the cause for a rehearing." In such cases the Secretary's findings of fact "if supported by substantial evidence, shall be conclusive * * * " (42 U.S.C. § 405(g)).
In his August 9, 1977, decision, the ALJ found, "based upon a preponderance of the credible evidence," that plaintiff was a 47-year-old woman, that she had attended school through the twelfth grade and had the equivalent of two years of college education, and that her usual and steady employment was secretarial work. According to the ALJ, plaintiff began receiving disability benefits under the Act in August 1972 after the Social Security Administration (SSA) determined that spinal surgery had left plaintiff under a disability that had commenced on December 8, 1971. Plaintiff continued to receive these benefits until November 1975. From July 1973 to March 1974 plaintiff engaged in a trial office work program under Social Security regulations (20 C.F.R. § 404.1536) so that the SSA could determine if she was still disabled. A September 1973 letter from the SSA notified her that after the nine months of trial work the SSA would decide whether plaintiff was still disabled; otherwise she would receive benefits only for three months after the close of the trial work period.*fn3
The ALJ found that plaintiff's trial work activity demonstrated that she possessed the ability to engage in substantial gainful activity commencing in April 1974, the first month after the close of the trial work period. Her entitlement to disability insurance benefits thus should have continued only through June 1974. Because she was not then officially notified of the termination of her entitlement, however, plaintiff continued to accept disability benefit payments from July 1974 through November 1975. In the meantime, plaintiff continued to work approximately half time for her trial period employer, earning over $200 per month through December 1975. After working intermittently during 1976, plaintiff began her own secretarial service in December 1976, to which she devoted between thirty and sixty hours per week in both a supervisory and secretarial capacity. The secretarial service continued through the date of the ALJ's decision, though it apparently never turned a profit and subsequently closed.
Based on the foregoing findings, the ALJ concluded that plaintiff's entitlement to disability insurance payments terminated at the end of June 1974, "the second month after the month in which the claimant's disability ceased." Therefore, he held that plaintiff had been overpaid benefits totaling $5,034.60 for the months of July 1974 through November 1975.*fn4 Relying on the September 1973 notice from the SSA, the ALJ found that plaintiff was not without fault in causing the overpayments. He then held that since plaintiff was operating her own business and had over $40,000 in savings accounts,*fn5 recovery of the overpayments would not defeat the purposes of the Act. Moreover, since she gave up no valuable right by accepting the overpayments, recovery would not be against equity and good conscience. Finally, the ALJ determined that recovery of the overpayments could not be waived by the defendant. On November 10, 1977, the Appeals Council upheld the ALJ's decision.
As previously noted, the district judge granted summary judgment for the Secretary in plaintiff's subsequent district court suit, stating that, unlike the ALJ, he regarded plaintiff as without fault, but that recovery would not defeat the purposes of the Act or be against equity and good conscience. In denying a petition for rehearing by plaintiff, the district judge filed a memorandum opinion on April 30, 1979, further explaining his ruling. Citing Beane v. Richardson, 457 F.2d 758, 759 (9th Cir. 1972), certiorari denied, 409 U.S. 859, 93 S. Ct. 144, 34 L. Ed. 2d 105, and declining to follow Nickol v. United States, 501 F.2d 1389 (10th Cir. 1974), Judge Kirkland stated that a judicial determination of the correctness of an administrative finding (such as the ALJ's finding here) presents only a question of law and not a question of fact, so that summary judgment was appropriate. He noted that the district court's duty on review to determine whether the ALJ's findings and conclusions were supported by substantial evidence represents a limitation on review and does not present new questions of fact. Then, relying on Sierakowski v. Weinberger, 504 F.2d 831, 835-836 (6th Cir. 1974), and Hatfield v. Richardson, 380 F. Supp. 1048, 1052-1053 (D.Kan.1974), the court reaffirmed its earlier conclusion that the ALJ's "findings and conclusions in this case are supported by substantial evidence when the record is considered as a whole, and that the ALJ properly applied the appropriate legal standard." The court concluded by stating that
"(specifically), substantial evidence supports the ALJ's conclusions that plaintiff possesses assets sufficient to prevent repayment from depriving plaintiff or her family of ordinary and necessary living expenses, and that plaintiff gave up no valuable right by accepting the overpayments." (Record Item No. 14.)
The ALJ Applied Correct Legal Standards and Allowed Full Development of the Record.
As a preliminary matter, plaintiff contends that the district court failed to consider and determine properly whether the ALJ employed the correct legal standards or allowed a sufficient development of the record. The district court's response to the rehearing motion addressed the question of legal standards, and the record indicates that the ALJ followed the dictates of the Act. To be sure, the ALJ found both that plaintiff was at fault and that recovery would not defeat the purposes of the Act or be against equity and good conscience. Yet far from allowing his conclusion on one issue to influence improperly his consideration of the other, the ALJ merely found in the ...