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Deborah T. v. Saul

United States District Court, N.D. Illinois, Eastern Division

October 4, 2019

DEBORAH T., [1] Plaintiff,
ANDREW M. SAUL, Commissioner of Social Security, Defendant.



         Deborah T. (“Deborah”) has already been determined to be eligible for Supplemental Security Income (“SSI”). She brings this action seeking judicial review of the Social Security Administration's (“SSA”) withholding of certain benefits resulting from a calculation error that led to a $1, 643.87 underpayment to her. Before the court is Deborah's motion for summary judgment and the government's motion to dismiss or, in the alternative, for summary judgment. For the following reasons, Deborah's motion is denied and the government's motion for summary judgment is granted:

         Procedural History

          Deborah first began receiving SSI benefits on January 1, 1993. (Administrative Record (“A.R.”) 355.) From October 2001 to 2004, the SSA overpaid Deborah $13, 405.48 due to “an increase in wages, cash, or special income.” (Id.) Then in 2011 the SSA overpaid her $3, 870.30 because of her husband's unemployment compensation. (Id.) When Deborah received notices of the overpayment, she requested reconsideration and waivers―arguing that she was not at fault for the overpayment―in an effort to avoid repaying the SSA. (Id. at 355-64, 372-79, 412-20.) The SSA denied her request and, after a hearing, an administrative law judge (“ALJ”) affirmed the denial on January 25, 2013. (Id. at 352-64.) The ALJ found that while Deborah was “overpaid within the meaning of the Act, ” she was not without fault because she failed to “report events affecting payments and timely failed to furnish the necessary information.” (Id.)

         Deborah reapplied for SSI on October 17, 2014.[2] (Id. at 47, 214-23.) On December 10, 2014, the SSA approved Deborah's SSI claim but informed her that $73.30 would be withheld from her monthly benefits to satisfy the preexisting SSI overpayment. (Id. at 47-48.) In April 2015 the SSA informed Deborah that her withholding would be reduced to $29 per month beginning the following month. (Id. at 77.) Then in June 2015, the SSA informed Deborah that from November 2014 to June 2015 she had been underpaid SSI benefits in the amount of $1, 643.87. (Id. at 103-05.) Given Deborah's outstanding overpayment balance of $14, 049.64 at that time, the SSA notified her that $1, 473.84 of the underpayment would be withheld to satisfy part of the overpayment. (Id.) On July 30, 2015, Deborah requested reconsideration, but the request was denied because it was “a duplicate of an earlier request” and “no new issues” had surfaced since the prior request. (Id. at 117-20, 127-28.)

         In August 2015 Deborah requested a hearing before an ALJ. (Id. at 129-32, 235.) Her request was granted and on October 20, 2015, Deborah appeared for the hearing along with her attorney. (Id. at 11, 236-43, 268-93.) Deborah did not contest the finding that she was at fault for the overpayment or that the matter is in collection. (Id. at 12, 244.) However, she disputed the application of the underpayment to satisfy part of the overpayment. (Id. at 244.) The ALJ issued a decision in December 2015 denying Deborah's request to bar the SSA from applying the underpayment to the overpayment balance. (Id. at 11-14.) The ALJ found that the “underpayment was properly applied to recoup a portion of [Deborah's] overpayment” and that she did not present evidence showing that “recovery of her overpayment was against equity and good conscience.” (Id. at 12-14.)

         When the Appeals Council declined Deborah's request for review, (id. at 3-7), Deborah filed this lawsuit seeking judicial review of the Commissioner's decision, see 42 U.S.C. § 405(g), and the parties consented to this court's jurisdiction, see 28 U.S.C. § 636(c); (R. 12).


         Deborah moves for summary judgment claiming that the SSA applied incorrect standards and acted in a manner inconsistent with the applicable regulations when it withheld the underpayment owed to her. (R. 18, Pl.'s Mem. at 3-6.) The government in turn moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction or, in the alternative, for summary judgment, arguing that the SSA properly withheld the underpayment to partly satisfy an overpayment made to her. (R. 28, Govt.'s Mem. at 6-12.)

         A. Motion to Dismiss

         The government argues that the court lacks subject matter jurisdiction over the present dispute. (R. 28, Govt.'s Mem. at 6-10.) The government acknowledges that 42 U.S.C. § 405(g) allows a claimant to seek judicial review of “any final decision of the [SSA] made after a hearing.” (Id. at 7.) Nonetheless, the government asserts that the agency's own rules preclude administrative or judicial review for disputes such as this one contesting the “method of recovering an overpayment, ” including “netting [an overpayment] against an underpayment.” (Id. at 1-2, 8 (quoting Program Operations Manual System (“POMS”) SI 04010.010(C).) Given the POMS guideline, the government contends that the agency erred by having the ALJ and Appeals Council review Deborah's underpayment claim and issue decisions, and argues that these errors are not sufficient to confer jurisdiction here. (Id.)

         Deborah points to Smith v. Berryhill, 139 S.Ct. 1765, 1779 (2019), in response for the proposition that the SSA cannot decide which matters are subject to judicial review. (R. 32, Pl.'s Resp. at 1-3.) In Smith, the Supreme Court rejected a jurisdictional challenge where a claimant's request for review was dismissed by the Appeals Council on timeliness grounds after a hearing before an ALJ on the merits. 139 S.Ct. at 1771, 1779. Amicus argued that permitting judicial review “where a claimant loses on an agency-determined procedural ground” would open the flood gates to litigation and flout the “conclusive disposition, after exhaustion” required for an agency decision to be subject to review. Id. at 1777. The Court dismissed such arguments, finding that the plain language of Section 405(g), statutory context, and “strong presumption that Congress intends judicial review of administrative action” weighed in favor of finding no jurisdictional bar. Id. at 1774-79 (internal quotations and citation omitted).

         The Smith Court explained that the phrase “any final decision” in Section 405(g) has been construed “expansive[ly], ” and that “the statute as a whole is one that Congress designed to be unusually protective of claimants.” Id. at 1774, 1776 (internal quotations and citation omitted). The Court further noted that “the SSA is a massive enterprise, and mistakes will occur.” Id. at 1776. The Court thus could not “presume that Congress intended for this claimant-protective statute to leave a claimant without recourse to the courts when such a mistake does occur- least of all when the claimant may have already expended a significant amount of likely limited resources in a lengthy proceeding.” Id. (internal citation omitted). “While Congress left it to the SSA to define the procedures that claimants like Smith must first pass through, Congress has not suggested that it intended for the SSA to be the unreviewable arbiter of whether claimants have complied with those procedures.” Id. at 1777 (internal citation omitted).

         In light of Smith, Deborah argues that the SSA does not have “the power” to determine which agency issues may be reviewed by the federal court, even where the POMS says otherwise. (R. 32, Pl.'s Resp. at 2.) For support Deborah points to legal authority and asserts that the POMS “have no legal force” in federal court. (Id.) To be sure, the Supreme Court has held that the SSA's claims manual is “not a regulation” and therefore “has no legal force” and does not even “bind the SSA.” Schweiker v. Hansen, 450 U.S. 785, 786, 789 (1981); see also Pulley for Pulley v. Bowen, 817 F.2d 453, 454 (7th Cir. 1987) (accord); Jackson v. Colvin, No. 13 CV 5254, 2016 WL 3087056, at *2 (N.D. Ill. May 31, 2016) (“POMS is a non-binding internal guidebook used by the SSA, ” which “has no ...

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