Gagnon v. Commissioner of Social Security
MEMORANDUM Opinion and Order Signed by the Honorable Jeffrey Cole on 1/19/2017:Mailed notice(jms, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
CAROLYN COLVIN, Acting
Commissioner of Social Security,
Case No: 15 C 4306
Magistrate Judge Jeffrey Cole
MEMORANDUM OPINION AND ORDER
The plaintiff, Scott Gagnon, seeks review of the final decision of the
Commissioner (“Commissioner”) of the Social Security Administration (“Agency”)
finding that he is liable for an overpayment of Social Security Disability Insurance
Benefits in the amount of $31,408.70 for the period of June 2007 through April 2012.
(Administrative Record (R.) 9-10). Mr. Gagnon seeks review of that determination under
42 U.S.C. §405(g), hoping to have it overturned, and the Commissioner asks that the
determination be affirmed.
Mr. Gagnon has been a somewhat reluctant participant in these proceedings.
Litigating pro se, he neither wrote, filed, nor signed his initial complaint. His mother
did. [Dkt. # 1, 10]. He failed to show up at the first hearing in this case. [Dkt. # 10]. He
was given six weeks to file a response to the Commissioner’s opening brief in this case.
[Dkt. #18]. He’s neither filed a response, nor asked for more time in which to do so. It is
now many weeks since his response was due. Pro se status does not relieve a litigant of
his litigation duties; he must comply with orders and schedules. Dukes v. Cox, 657
Fed.Appx. 596, 598-99 (7th Cir. 2016); Pearle Vision, Inc. v. Romm, 541 F.3d 751, 758
(7th Cir. 2008); Raven v. Madison Area Tech. Coll., 443 F. App'x 210, 212 (7th Cir.
2011). Not showing up for hearings, ignoring deadlines, and failing to ask for extensions
does not evince a lack of legal sophistication that might on occasion be excused in the
case of a pro se litigant. Instead, it seems Mr. Gagnon no longer cares about this case,
which will have to be decided based on the administrative record and what the
Commissioner has filed with the court.1
That’s unfortunate, because the Commissioner’s brief is rather sketchy and
unilluminating. More is expected of a brief from an agency of the United States.
Freeport-McMoRan Oil & Gas Co. v. F.E.R.C., 962 F.2d 45, 47 (D.C. Cir.1992). Barely
five pages long, it cites a single case, from the Eighth Circuit. In the main, it relies on
sections from the agency’s Program Operations Manual System, an internal guidebook
that has no legal force here. Schweiker v. Hansen, 450 U.S. 785, 789 (1981); Parker for
Lamon v. Sullivan, 891 F.2d 185, 190 (7th Cir. 1989). In other words, it is not the kind of
“pertinent authority” that litigants are expected to cite to support their arguments. See
Crespo v. Colvin, 824 F.3d 667, 674 (7th Cir. 2016)(“ . . . arguments that are unsupported
by pertinent authority, are waived (even where those arguments raise constitutional
Mr. Gagnon was found disabled and entitled to disability benefits due to anxiety
disorder and affective/mood disorder in 2007. (R. 62). In February 2008, Mr. Gagnon
submitted a Continuing Disability Review Report in which he informed the Social
Security Administration that he had begun working at a large grocery store in January
Mr. Gagnon has never shown he is indigent nor asked the court to recruit counsel pursuant to 28
U.S.C. § 1915(e)(1). See Dukes v. Cox, supra.
2008 and was earning about $15 per hour working 6 to 8 hours a day, 4 to 5 days a week.
(R. 32). He explained that he was doing this on a trial basis to see if he was able to do it.
(R. 37). Prior to that he had worked in the same capacity for 10 to 20 hours a week in
2006 and 2007. (R. 32).
The Administration sent Mr. Gagnon a notice on September 10, 2008, informing
him that it had information that he was performing substantial work beginning in March
2007, meaning that his disability had ended and he was not entitled to payments he had
received in June 2007, August 2007, and from October 2007 on. (R. 38). The notice
explained that Mr. Gagnon had been allowed a 9-month trial work period beginning in
June 2006 and ending in February 2007. (R. 39). The notice also indicated that Mr.
Gagnon would be getting word about any overpayment he received during that time. (R.
40). Finally, the notice gave Mr. Gagnon 15 days to provide any information he thought
was pertinent to the Administration’s decision. (R. 41).
Mr. Gagnon didn’t get his 15 days; he didn’t even get 3 days. The Administration
sent its Notice of Disability Cessation on September 12, 2008, telling Mr. Gagnon that it
had determined that his disability ended, and he was not entitled to payments received in
June 2007, August 2007, and from October 2007 on.
Administration didn’t stop sending him checks until September 2008, he was paid
$14,400.10 too much in disability benefits. (R. 43). There is no dispute that Mr. Gagnon
eventually paid this back; it was withheld from his subsequent benefit checks. (R. 79,
In October 2008, Mr. Gagnon provided another continuing disability report to the
Administration, stating that he had been working 4 to 5 hours a day 4 to 5 hours a week
as a grocery inventory clerk since 2005, earning 10.50 an hour. (R. 56). Three months
after that, in January 2009, the Administration determined that Mr. Gagnon had not
experienced medical improvement and his disability continued. (R. 62-63). Apparently,
at about that time, it restarted Mr. Gagnon’s disability insurance payments. (R. 77).
There seems to be no further contact between Mr. Gagnon and the Administration
until January 2012, when Mr. Gagnon wrote to the Administration asking them to stop
his disability benefits checks because he had improved and would soon be working fulltime at the grocery store. (R. 64). In March 2012, the Administration determined
internally that Mr. Gagnon had performed substantial gainful activity from November
2008 to January 2009, and in April 2009, August 2009, November 2009, and from
October 2010 on. (R. 76). It sent Mr. Gagnon notice of this determination on April 14,
2012, again giving him 15 days to respond.
Mr. Gagnon responded by
explaining that he had only been working part-time and attached his W-2. He reminded
the Administration that he had already repaid the previous overpayment. (R. 79-80). The
Administration than wrote to Mr. Gagnon telling him its decision stood and he would,
once again, be getting information about another overpayment. (R. 84).
The Administration sent Mr. Gagnon the bill on July 18, 2012, in the amount of
$31,950.90. (R. 89). The amount was due in less than a month, on August 3, 2012. (R.
89). For some reason, the notice stated that the Administration had not received payment
– how could it have, it had just sent the notice – and that payment should be sent right
away. It did give Mr. Gagnon the option of asking for monthly payment plan. (R. 89).
On October 1, 2012, the Administration sent another notice to Mr. Gagnon,
informing him of the $31,950 overpayment. This one broke the amount down on a
month-by-month basis. (R. 93-94). It sent another notice telling Mr. Gagnon he was no
longer entitled to disability benefits as of October 2010 on October 31, 2012. (R. 97).
On November 9, 2012, Mr. Gagnon exercised his option to request a waiver of
repayment, arguing that overpayment was not his fault and he could not afford to pay
over $30,000 back to the Administration. (R. 99). His take-home pay was $450 per
month and he had $3108 in his checking account. (R. 102-103). His monthly expenses
were more than he took home, and he had to get support from his parents. (R. 105).
Four days later, the Administration informed Mr. Gagnon that it could not
approve his request for a waiver, but said he could come in for a conference about the
issue. (R. 107). Mr. Gagnon asked for an administrative hearing on his case.
postponement so that Mr. Gagnon could obtain a representative (R. 131), an
administrative law judge (“ALJ”) convened a hearing on July 18, 2013, with Mr. Gagnon
choosing to forgo representation. (R. 153).
Mr. Gagnon testified that he lived with his parents, who were retired and
receiving Social Security retirement benefits. (R. 161). He said he continued to work at
the grocery store and his mental health was good; panic attacks were few and far
between. (R. 162). About a month before his hearing, he had increased his hours to full
time. (R. 162). When he had the money, he paid his parents some rent – $100 to $200 –
and tried to chip in for groceries. (R. 168).
Mr. Gagnon was confused about the
overpayment because he had notified the Administration he was working and he was
making so little money at the time. (R. 165-166). And, since the Administration knew
he was working, he couldn’t understand why they wouldn’t notify him of an
overpayment until it got up to more than $30,000. (R. 172-173). He had even notified
the Administration when his condition improved and he was going to try to work full
time. (R. 175). He said he didn’t know he had to send in his pay stubs. Mr. Gagnon
didn’t think the overpayment was his fault, but if it was, he thought he could pay back
about $25 or $50 a month. (R. 177).
On August 1, 2013, the ALJ issued her decision. She found that there had been
an overpayment of $31,408.70 for the period from October 2010 through April 2012. (R.
17). She determined that Mr. Gagnon was at fault in causing the overpayment. She
noted that Mr. Gagnon had written to the Administration to stop his benefits in January
2012, and that he had had a previous overpayment. (R. 18). The ALJ noted that Mr.
Gagnon had stated that Mr. Gagnon had a responsibility to report not just that he was
working, but his earnings. She said Mr. Gagnon’s award notice contained his reporting
responsibilities and that, because he had been through a previous overpayment situation,
he should have been aware of his reporting responsibilities as well as the fact that his
work activities could result in an overpayment. (R. 19). Finally, the ALJ concluded that
recovery of the overpayment was not waived because Mr. Gagnon testified he was
working full time and that he could repay $25 or $50 a month. (R. 19). The ALJ said
that, based on Mr. Gagnon’s earnings, “a repayment plan of perhaps $50.00 per month
seems appropriate.” (R. 19).
Mr. Gagnon asked the Appeals Council to review the ALJ’s decision. On March
27, 2015, the Appeals Council determined that the ALJ was right about there having been
a $31,408.70 overpayment, but that the period was from June 2007 through April 2012.
Mr. Gagnon was not due benefits in June 2007, August 2007, October 2007 through
August 2008, November 2008 through January 2009, August 2009, and November 2009
because of work activity, and not due benefits from October 2010 through April 2012
because his benefits terminated. (R. 8). The Appeals Council stated that Mr. Gagnon
had been informed of his reporting responsibilities in his initial award letter, but had
failed to timely inform the Administration that his earnings rose above substantial gainful
activity levels after his trial work period ended in February 2007. (R. 9). The Appeals
Council also noted that Mr. Gagnon had filed two continuing disability reports meaning
that he was aware of his responsibilities. (R. 9). As such, Mr. Gagnon was at fault in
causing the overpayment. (R. 9). He also knew or should have known that he should not
have accepted checks from November 2010 through April 2012, after his benefits were
terminated due to substantial gainful activity.
(R. 9). The Council concluded that
recovery was not waived and Mr. Gagnon was liable for a repayment of $31,408.70. (R.
There is no dispute that Mr. Gagnon received an
Agency mistakenly has made an overpayment of disability benefits, it may not recover an
overpayment from the recipient when: (1) the recipient is without fault and (2) “recovery
would defeat the purpose of [the Social Security Act] or would be against equity and
good conscience.” 42 U.S.C. 404(b). According to the regulations governing the
implementation of this statutory provision, “[a]lthough the [Agency] 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.” 20 C.F.R. § 404.507. A
finding of fault can be based on any of the following:
(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 C.F.R. §404.507. The Commissioner’s determination that Mr. Gagnon was not
without fault in causing the overpayment in this case is based on subsections (b) and (c).
We begin with subsection (b), the “[f]ailure to furnish which he knew or should
have known was material. The ALJ said that the award notice Mr. Gagnon received
“contained reporting responsibilities” (R. 19), and the Appeals Council stated that “the
Administration notified [Mr. Gagnon] of his responsibility to report changes to his work
activity in his initial award letter . . . .” (R. 8). Actually, the letter itself was not specific
about reporting requirements – why such letters are not is a mystery as it would be
simple to just say “tell us if you happen to go back to work” – but did state that:
We have enclosed a pamphlet, "When You Get Social Security Disability
Benefits ...What You Need To Know." It will tell you what must be
reported and how to report. Please be sure to read the parts of the
pamphlet which explain what to do if you go to work or if your health
If you go to work, special rules can allow us to continue your cash
payments and health insurance coverage. For more information about
how work and earnings may affect disability benefits, you may call or
visit any Social Security office.
The pamphlet referred to is not a part of the record but, according to the
Commissioner’s brief, the pamphlet is SSA publication No. 05-10153. [Dkt. #20, at 3].
The version available online does, indeed, inform the benefits recipient that they:
should tell [the Administration] if you take a job or become self-employed,
no matter how little you earn. Please let us know how many hours you
expect to work, and when your work starts or stops. If you still have a
qualifying disability, you’ll be eligible for a trial work period, and you can
continue receiving benefits for up to nine months. Also, tell us if you have
any special work expenses because of your disability (such as specialized
equipment, a wheelchair or even prescription drugs), or if there’s any
change in the amount of those expenses.
https://www.ssa.gov/pubs/EN-05-10153.pdf (emphasis supplied). As can be seen, there
is nothing in this section about reporting earnings or providing the Administration with
pay stubs, despite what the ALJ (R. 19), the Appeals Council (R. 9), and the
Commissioner [Dkt. #20, at 3] seem to think. The section only states that the benefits
recipients’ report whether they are working and how many hours they are working. Mr.
Gagnon did not only that, but reported his hourly wage which ought to have made it easy
for the Administration to see that it was likely he was performing substantial gainful
activity, at least in certain months.2
As of 2008, Mr. Gagnon was working between 16 and 25 hours a week, and
earning $10.50 per hour. That means he was earning $168-$262.50 a week or $672$1050 a month. He reported this to the Administration. (R. 56). The substantial gainful
activity cutoff for 2008 was $940 a month, $980 for 2009, $1000 for 2010 and 2011, and
$1010 for 2012. https://www.ssa.gov/oact/cola/sga.html. Mr. Gagnon never indicated
his hours decreased so, as far as the Administration knew, Mr. Gagnon was likely
engaging in substantial gainful activity in 2008 and beyond. And, Mr. Gagnon told them
so in October of that year. He reported how many hours he was working or expected to
work, just as the pamphlet directed. It’s unclear from the opinions of the Appeals
Council and the ALJ what more Mr. Gagnon had to do. The Appeals Council’s finding
The Commissioner contends that the problem is that Mr. Gagnon failed to “timely report his work
activity to the agency when he changed the number of hours he was working as of December 2010.”
[Dkt. #20, at 3]. Neither the Appeals Council (R. 7-9) nor the ALJ (R. 16-19) mention anything
about a change in hours in December 2010. Under the Chenery doctrine, the Commissioner’s lawyers
cannot rework the decisions of the Appeals Council or the ALJ to supply rationale to support the
result. See SEC v. Chenery Corp., 318 U.S. 80, 87–88 (1943); Meuser v. Colvin, 838 F.3d 905, 911
(7th Cir. 2016). But even if that were allowed, it is still not clear from the Commissioner’s brief,
which includes no citation to the record on this point, what the significance of December 2010 was.
The overpayment for 2010 was determined to have begun in October. (R. 8).
that Mr. Gagnon was at fault because he failed to report that his earnings rose above the
level of substantial gainful activity after 2007 (R. 9), is not supported by substantial
evidence because the document Mr. Gagnon filed in October 2008 should have done the
job, and there is nothing in the materials that the Commissioner relies on that require a
benefits recipient to report earnings rather than hours. If the Commissioner’s decision
on this issue was actually based on some other notice or warning, that rationale is
certainly not illuminated in either of the administrative decisions or the Commissioner’s
That leaves 20 C.F.R. §404.507(c), whether Mr. Gagnon accepted payments
which he either knew or could have been expected to know were incorrect. The ALJ, the
Appeals Council, and the Commissioner’s brief all make much of the fact that Mr.
Gagnon continued to accept benefits checks after his benefits were terminated in
But, while the Administration decided to terminate benefits in
November 2010, they kept that a secret from Mr. Gagnon and kept sending him checks.
No one – not ALJ, not the Appeals Council, not the Commissioner – cites to anything
that would have informed Mr. Gagnon that his benefits terminated. In January 2012, Mr.
Gagnon wrote to the Administration telling them that he wanted his disability benefits
stopped because he would soon be working full time. The Administration didn’t inform
Mr. Gagnon that his benefits had terminated in November 2010 until October 31, 2012.
(R. 97). The Commissioner asks why Mr. Gagnon would accept checks from November
2010 through April 2012 when his benefits had been terminated. [Dkt. #20, at 4]. Well,
the easy answer is he didn’t know they had been terminated – the Administration kept
sending checks, after all – until the Administration notified him on October 31, 2012.
The better question is why the Administration sent Mr. Gagnon checks for two years
after it terminated his benefits.
It may well be that there is evidence to show that Mr. Gagnon either failed to
furnish information he was obligated to provide or that he accepted payments he ought to
have know he wasn’t entitled to, but as the Appeals Council’s and ALJ’s decisions are
written, they cannot be affirmed. O'Connor–Spinner v. Colvin, 832 F.3d 690, 698 (7th
Cir. 2016)(ALJ must “build an accurate and logical bridge between the evidence . . . and
[her] ultimate conclusion.”); Sarchet v. Chater, 78 F.3d 305, 307 (7th Cir. 1996)(“. . . we
cannot uphold a decision by an administrative agency, any more than we can uphold a
decision by a district court, if, while there is enough evidence in the record to support the
decision, the reasons given by the trier of fact do not build an accurate and logical bridge
between the evidence and the result.”). Neither decision is supported by citation to any
notice or pamphlet section telling Mr. Gagnon that he had to report his earnings or
provide pay stubs – nor, for that matter, is the Commissioner’s brief. The materials the
court has been directed to all indicate he had to report hours. The last time he did that,
simple math shows that it was likely he was over the substantial gainful activity
threshold. Similarly, the court has not been directed to any notice or evidence that would
have informed Mr. Gagnon that his benefits were terminated in November 2010. Based
on the record before me, the Administration didn’t get around to that until two years
later. On remand, the ALJ or Appeals Council Commissioner should take care to provide
a rationale that allows a reviewing court to trace the path of their reasoning. We should
not have to infer their reasoning. And, that being said, it would behoove Mr. Gagnon to
be a more active participant in his case, especially should it find its way back to federal
For the foregoing reasons, the Commissioner’s motion for summary judgment
[Dkt. #19] is denied and this case is remanded to the Commissioner for further
proceedings consistent with this opinion.
UNITED STATES MAGISTRATE JUDGE
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