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Lindsey N. v. Saul

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

November 1, 2019

LINDSEY N., Plaintiff,
ANDREW MARSHALL SAUL, Commissioner of Social Security, Defendant.



         This is a Social Security disability appeal. See 42. U.S.C. § 405(g). The issue raised-one apparently not litigated frequently-is whether Plaintiff Lindsey N. qualifies for a waiver of overpayment of Social Security disability benefits. Over a period of nearly two years, Plaintiff was paid approximately $41, 000 in benefits that everyone now agrees were mistakenly paid to her. When the Administration realized the mistake and asked Plaintiff to repay the money, she applied for a waiver, relying on procedure set forth in Administration regulations. An administrative law judge (“ALJ”) found that Plaintiff did not qualify for a waiver because she could not meet the threshold requirement of showing she was “without fault.” The ALJ found that Plaintiff made misrepresentations or omissions about her income from part-time work when she applied for benefits. The ALJ also found that Plaintiff later failed to report that her income had increased significantly. Plaintiff argues here that the ALJ erred in making these findings. After considering the parties' arguments and reviewing the relevant records, this Court concludes that a remand is required because the ALJ's findings were, at a minimum, unclear as to what exactly Plaintiff did wrong and the ALJ failed to explore several mitigating factors in Plaintiff's favor.


         In the fall of 2003, during a time of physical distress and financial uncertainty, Plaintiff considered whether to apply for Social Security disability benefits. She was then working several part-time teaching jobs and hoped eventually to return to working full-time. But she was also suffering from Crohn's disease, a chronic incurable autoimmune disease, with fluctuating symptoms, causing her to use the bathroom frequently and unexpectedly, sometimes 20 times a day. Her doctor described her condition, in somewhat blunt terms, as permanent diarrhea. (R. 138.) Eventually, Plaintiff decided to apply, and did so on October 16, 2003, by going into a Social Security office and speaking with an Administration employee. Plaintiff was then 52 years old. This meeting is the central event in this case.

         At the meeting, Plaintiff described her ongoing health problems, including that she had three surgeries to remove parts of her bowel and that she was currently receiving a biweekly 5hour IV infusion to replace nutrients, as well as monthly B12 injections, and that she had multiple surgeries to remove recurring kidney stones, a side effect of Crohn's disease. (R. 138, 642.) Plaintiff told the employee that she had worked full-time in the late 1990s but had to quit because she spent 50% of the day in the bathroom. She then began working part-time teaching writing as an adjunct professor at three area colleges (City Colleges of Chicago, DePaul University, and Columbia College) and also did self-employed work writing articles for a newspaper. The benefit of working part-time in these jobs was that she could somewhat control her schedule to accommodate her unpredictable bathroom needs. But this work was not guaranteed; nor was it clear how her Crohn's disease would progress. The teaching was on an “as needed” basis, subject to semester-to-semester demands of the colleges, which meant that she could not predict whether, or how much, she would be teaching in the future. Plaintiff was also concerned about her financial situation and whether she would be able to pay for a fourth intestinal resection surgery, if needed. Plaintiff raised these concerns with the employee and told her that she was applying for disability benefits with “great hesitation.” (R. 641.) Plaintiff also brought various financial documents with her to the meeting, including tax returns and pay stubs.

         According to Plaintiff, the Administration employee encouraged her to apply despite these concerns. The employee explained, among other things, that the Administration was then beginning a new Ticket to Work program and encouraged people getting disability benefits to try to transition back to working. (R. 749.) The employee helped Plaintiff complete several required Administration forms asking details about Plaintiff's jobs. She also submitted another form the next month, in November, asking for similar information.[1]

         On December 8, 2003, the Administration informed Plaintiff that she had been approved for benefits.[2] However, in 2005, the Administration reviewed Plaintiff's file and concluded that she should not have been awarded benefits because her income from all her work exceeded the Administration's yearly limits for substantial gainful activity (“SGA”). Under Social Security Rules, if a claimant is making more than the SGA limit, then the claimant cannot receive benefits regardless of the severity of the health problems. The Administration requested that Plaintiff return the overpayment of $43, 084 (the amount was later adjusted downward slightly) whereupon Plaintiff filed a request for a waiver. See 42 U.S.C. § 404(b)(1). Under the applicable rules, the Administration may waive the overpayment if the claimant was “without fault” and if recovery would not defeat the purpose of the Act or be against equity and good conscience. Id. In support of her waiver request, Plaintiff submitted financial records showing she could not afford to repay the money and was then living month-to-month and relying on the help of friends. (R. 136.)

         The case was then litigated over a long period at the administrative level. Plaintiff hired several attorneys along the way, including one specializing in overpayment waivers, and she also submitted numerous documents and letter briefs on her own. The Court will not describe all of this history, except to note that Plaintiff diligently pursued this claim, travelling a long journey through several layers of bureaucracy, with a number of twists and turns and delays. (See R. 213-18 (summarizing the details).) In 2008, an ALJ located in Chicago held a hearing and then found that Plaintiff did not qualify for a waiver. (R. 34.) However, the Appeals Council eventually ordered a new hearing. (R. 219.) In 2011, a new ALJ, located in Washington, D.C., conducted a second hearing and later issued a written decision finding that Plaintiff did not qualify for a waiver. (R. 18-24.) This case is an appeal from that second ruling.

         The ALJ found that Plaintiff was at fault, and therefore not entitled to a waiver, because she made conflicting, confusing, or inaccurate statements on the written forms submitted in the fall of 2003 as part of the initial application process. The representations related to the number of hours she worked and the amount she was paid at the three part-time teaching jobs. Although not directly stating so, the ALJ seemed to believe that, if Plaintiff had generally been honest, then the Administration never would have awarded her benefits because her income clearly exceeded the SGA limit. The ALJ's rationale rested on the premise that the Administration could not have simply made a mistake on its own accord. (See R. 22.) As an alternative rationale, the ALJ found that Plaintiff, after the initial application process, failed to inform the Administration that her income and hours had increased significantly. Because the ALJ found that Plaintiff was at fault, the ALJ did not address the additional waiver requirements, including equity and good conscience.


         The basic legal framework for overpayment waivers is set forth in the Administration regulations-specifically, 20 CFR §§ 404.501-545. The ALJ relied generally on these provisions, although not all of them were discussed.[3] The ALJ did partially summarize 20 C.F.R. § 404.507 (hereinafter, “Section 507”), which defines the important phrase “without fault.” It reads, in full, as follows:

Fault as used in without fault (see §404.506 and 42 CFR 405.355) applies only to the individual. Although the Administration may have been at fault in making the overpayment, that fact does not relieve the overpaid individual or any other individual from whom the Administration seeks to recover the overpayment from liability for repayment if such individual is not without fault. In determining whether an individual is at fault, the Social Security Administration will consider all pertinent circumstances, including the individual's age and intelligence, and any physical, mental, educational, or linguistic limitations (including any lack of facility with the English language) the individual has. What constitutes fault (except for deduction overpayments-see §404.510) on the part of the overpaid individual [] depends upon whether the facts show that the incorrect payment to the individual [] resulted from:
(a) An incorrect statement made by the individual which he knew or should have known to be incorrect; or
(b) Failure to furnish information which he knew or should have known to be material; or
(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 CFR ยง 404.507 (emphasis in original). In everyday parlance, subsection (a) means the claimant lied; subsection (b) means the claimant withheld material information; and subsection (c) is akin to a teller providing too much change. Although this section provides the basic framework, as will be discussed, several ...

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