United States District Court, Northern District of Illinois, E.D
October 8, 1985
CHIQUITA GAVIN, ET AL., PLAINTIFFS,
MARGARET HECKLER, SECRETARY, HEALTH AND HUMAN SERVICES, DEFENDANT.
The opinion of the court was delivered by: Moran, District Judge.
It is ordered and adjudged that this court having reviewed the
report and recommendation of the magistrate, it is hereby
adopted. Plaintiffs' motion for summary judgment is granted and
defendant's motion is denied.
The magistrate's report and recommendation is attached as an
REPORT AND RECOMMENDATION
September 24, 1985.
JAMES T. BALOG, United States Magistrate.
Before the court is an action for judicial review pursuant to
42 U.S.C. § 405(g) of a final decision of the Secretary of
Health and Human Services, ("Secretary"). The parties have filed
cross-motions for summary judgment.
The plaintiffs seek review of a final decision of the Secretary
denying their request for waiver of the Secretary's right to
recoupment of overpayments of Social Security benefits.
The controversy involves overpayments made to a son of the
plaintiff's deceased husband, Walter Crite, Jr. Crite had three
children. Plaintiff Anna Gavin is the mother of plaintiffs
Chiquita and Oliver Gavin.
Chiquita and Oliver received Social Security benefits based
upon the earnings record of their father. Crite had a third son,
also named Walter Crite, who received benefits. Crite is not Anna
Gavin's son and he does not live with Gavin or contact her.
On January 31, 1980, Crite was notified by the Social Security
Office that he had been overpaid benefits because he had not
informed the office that he had turned 18 and was not continuing
further education. (R. 66). Crite owed $1,473.50. Id.
On December 11, 1981, plaintiffs were notified that they were
contingently liable for the overpayment of benefits and that
certain amounts would be withheld from plaintiff's benefits to
repay the administration (R. 20). On July 2, 1982, plaintiffs
filed a request for reconsideration (R. 26) and the prior
decision was affirmed by the Social Security Administration on
December 3, 1982. (R. 77). The plaintiffs sought and received a
hearing de novo before an administrative law judge ("ALJ"). On
June 10, 1983, the ALJ found that plaintiffs were contingently
liable for the over-payment and that recovery could not be
waived. (R. 17). The decision was approved by the Appeals Council
of Nov. 2, 1983 (R. 2), thereby rendering it the final decision
of the Secretary.
42 U.S.C. § 405(g), the statute conferring jurisdiction upon
this Court, provides that "(t)he findings of the Secretary as
to any fact, if supported by substantial evidence, shall be
conclusive." Thus, the limited function of the reviewing court
is to determine whether the Secretary's findings of fact are
supported by substantial evidence, i.e., "such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion."
Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427,
28 L.Ed.2d 842 (1971). Rhoderick v. Heckler, 737 F.2d 714, 715
(7th Cir. 1984). While the court must examine the record as a
whole in determining whether or not substantial evidence exists
to support the findings of the Secretary, Garcia v. Califano,
463 F. Supp. 1098 (N.D.Ill. 1979), it should not engage in a de novo
consideration of the evidence presented to the Secretary. Strunk
v. Heckler, 732 F.2d 1357 (7th Cir. 1984). However, where
the Secretary commits an error of law, the District Court must
reverse the Secretary notwithstanding its limited function. See
Schmoll v. Harris, 636 F.2d 1146 (7th Cir. 1980).
The Secretary's authority to recoup over-payments of benefits
is found in 42 U.S.C. § 404(a)(1), which provides:
(a) Whenever the Secretary 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, under regulations
prescribed by the Secretary, as follows:
(1) With respect to payment to a person of more than
the correct amount, the Secretary shall decrease any
payment under this subchapter to which such overpaid
person is entitled or shall require such overpaid
person or his estate to refund the amount in excess
of the correct amount, or shall decrease any payment
under this subchapter payable to his estate or to any
other person on the basis of the wages and self
employment income which were the basis of the
payments to such overpaid person, or shall apply any
combination of the foregoing.
Subsection (b) of 42 U.S.C. § 404(a)(1) provides that the
United States must waive the recoupment of the overpayments if
the person from whom recovery is sought is without fault and if
the recovery from that person would defeat the purpose of the
Act or would be against equity and good conscience. The "defeat
the purpose" clause is elaborated in 20 C.F.R. § 404.508:
(a) General "Defeat the purpose to Title II," for
purposes of this subpart means defeat the purpose of
the benefits under this title, i.e. to deprive a
person of income required for ordinary and necessary
(b) When adjustment or recovery will defeat the
purpose of Title II, adjustment or recovery will
defeat the purposes of Title II in (but not limited
to) situations where the person from whom the
recovery is sought needs substantially all of his
current income (including social security monthly
benefits) to meet current ordinary and necessary
The Secretary found that plaintiffs were not at fault, but did
find that recoupment was still appropriate because such recovery
would not defeat the purpose of the Act or would not be against
equity and good conscience.
The plaintiffs listed their income as $1,342.40 dollars per
month (R. 93). Of this amount, Chiquita and Oliver Gavin received
$1042.40 for social security, post office and V.A. benefits.
Monthly expenses were listed as $1314.00 dollars per month.
Id. Included in this amount were the expenses of Mrs. Gavin's
other two daughters who are not children of Walter Crite, Jr. The
SSA determined that it would withhold $96 per month from the
Gavin children until the total of $1,473.50 was recovered (R. 79).
At the hearing, the plaintiffs attempted to prorate their
expenses by computing the amount each household member
contributed. For example, plaintiff's rent was $400.00 per month.
Since Oliver and Chiquita contributed approximately 75% of the
monthly income, their rent share was estimated to be $292.00
dollars per month (R. 105).
The ALJ rejected this method of computing expenses. Since there
were five members of the Gavin household, the ALJ held that the
expenses should be split five ways. Thus, for example, the ALJ
found that plaintiffs share of rent should be $160.00 per month
(R. 16). Using this method of computation, the ALJ found that
plaintiff's monthly income exceeded their ordinary and necessary
The ALJ's decision is not supported by substantial evidence.
A person's entire financial position should be considered. See
Milton v. Harris, 616 F.2d 968, 974 (7th Cir. 1980), Hansen v.
Harris, 507 F. Supp. 900, 903 (W.D.Ark. 1981). The Gavin family
cannot be split in fifths. According to the ALJ's calculations,
plaintiffs would have monthly expenses of $774 (R. 16).
Using the ALJ's calculations, total monthly expenses would
total $1,935.00, well over the amount of income the entire Gavin
family receives each month. It surely cannot be the intent of the
regulations to have the decision of repayment on the individual
family member's income alone. Mrs. Gavin is unemployed. $96.00
dollars per month less income would be a great hardship. As the
court in Hansen stated, "To require recoupment from (the
Gavin's), who were completely without fault in the
overpayments and did not receive any of the overpayments
themselves and now live frugally on a limited income, would
certainly defeat the purpose of Title II." 507 F. Supp. at 903.
Since the Gavins were without fault in receiving the
overpayment and it would defeat the purpose of the Act to require
repayment, IT IS RECOMMENDED that the court GRANT the plaintiff's
motion for summary judgment and DENY the Secretary's motion for
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