Matar v. Berryhill

Filing 15

ORDER. IT IS ORDERED that the Commissioner's decision be REVERSED, and this matter be REMANDED pursuant to sentence four of 42 U.S.C. § 405(g) for further proceedings consistent with this opinion. Signed by Magistrate Judge Timothy J. Cavan on 3/18/2019. (JDR)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
KAREN L. MATAR,

CV 17-144-BLG-TJC

Plaintiff,
ORDER
vs.
NANCY A. BERRYHILL, Acting
Commissioner of the Social Security
Administration,
Defendant.
On October 30, 2017, Plaintiff Karen L. Matar (“Plaintiff”) filed a
Complaint pursuant to 42 U.S.C. § 405(g) of the Social Security Act, requesting
judicial review of the final administrative decision of the Commissioner of Social
Security (the “Commissioner”) regarding the denial of her request that an
overpayment of disability insurance benefits be waived. (Doc. 2.) On January 2,
2018, the Commissioner filed the Administrative Record (“A.R.”). (Doc. 7.)
Presently before the Court is Plaintiff’s motion for summary judgment,
requesting the Court set aside the decision of the Commissioner, grant Plaintiff’s
request for a waiver, and recalculate the overpayment. (Doc. 12.) The motion is
fully briefed and ripe for the Court’s review. (Docs. 13, 14.)

1

For the reasons set forth herein, and after careful consideration of the record
and the applicable law, the Court finds Plaintiff’s motion should be GRANTED,
and the Commissioner’s decision should be REVERSED.
I.

PROCEDURAL BACKGROUND
Plaintiff began receiving disability insurance benefits (“DIB”) in July 1990.

(A.R. 12.) In July 2010, the Social Security Administration (“SSA”) notified
Plaintiff that she was no longer entitled to DIB payments, and that she had been
overpaid. (A.R. 21.) Subsequently, the SSA sent Plaintiff a letter indicating she
was overpaid in the total amount $27,497.70.1 (A.R. 33-37.)
Plaintiff requested that recovery of the overpayment be waived. (A.R. 113.)
The SSA denied her request initially and after a personal conference. (A.R. 44, 46,
49-51.) On April 9, 2015, Plaintiff filed a written request for a hearing. (A.R. 59.)
Administrative Law Judge Michele M. Kelley (the “ALJ”) held a hearing on
March 24, 2016. (A.R. 141-162.) On July 28, 2016, the ALJ issued a written

1

The letter sent to Plaintiff stated her overpayment was $27,497.70. (A.R. 33, 37.)
However, printouts from the SSA’s computerized payment records show that the
total overpayment was $27,497.10. (A.R. 56, 62.) A letter from the SSA, standing
alone, does not constitute substantial evidence of the amount of the overpayment.
McCarthy v. Apfel, 221 F.3d 1119, 1125 (9th Cir. 2000). Rather, “[p]ayments of
Title II benefits are generally proved by the Commissioner through computerized
SSA payment records and cancelled checks from the Treasury Department.” Id.
Accordingly, the Court finds the figure reflected in the SSA payment records is
evidence of the correct amount of the overpayment.
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decision determining that recovery of the overpayment should not be waived.
(A.R. 9-16.)
Plaintiff requested review of the ALJ’s decision. (A.R. 7-8.) On August 25,
2017, the Appeals Council issued a partially favorable decision in which it reduced
the amount of the overpayment to account for the fact Plaintiff’s federal tax
refunds had been withheld to repay the overpayment.2 (A.R. 2.) But the Appeals
Council affirmed the portion of the ALJ’s decision finding that recovery of the
overpayment could not be waived. (Id.) This made the ALJ’s determination the
Commissioner’s final decision for purposes of judicial review. 20 C.F.R. §
404.981. Thereafter, Plaintiff filed the instant action.
II.

LEGAL STANDARDS
A.

Scope of Review

The Social Security Act allows claimants to seek judicial review of the
Commissioner’s final agency decision. 42 U.S.C. §§ 405(g), 1383(c)(3). The
scope of judicial review is limited. The Court must affirm the Commissioner’s
decision unless it “is not supported by substantial evidence or it is based upon legal

2

It appears that the Appeals Council made a mathematical error in its revised
calculation of the overpayment. The Appeals Council determined that the
overpayment balance was $24,593.70 at the time of the hearing, less $160.00 that
had been withheld from Plaintiff’s federal tax refund for 2016. (A.R. 2.)
Therefore, the Appeals Council stated the current balance was $24,473.70. (Id.)
However, $24,593.70 minus $160.00 equals $24,433.70.
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error.” Tidwell v. Apfel, 161 F.3d 599, 601 (9th Cir. 1999). See also Bayliss v.
Barnhart, 427 F.3d 1211, 1214 n.1 (9th Cir. 2005) (“We may reverse the ALJ’s
decision to deny benefits only if it is based upon legal error or is not supported by
substantial evidence.”); Flaten v. Sec’y of Health & Human Servs., 44 F.3d 1453,
1457 (9th Cir. 1995).
“Substantial evidence is more than a mere scintilla but less than a
preponderance.” Tidwell, 161 F.3d at 601 (citing Jamerson v. Chater, 112 F.3d
1064, 1066 (9th Cir. 1997)). “Substantial evidence is relevant evidence which,
considering the record as a whole, a reasonable person might accept as adequate to
support a conclusion.” Flaten, 44 F.3d at 1457. In considering the record as a
whole, the Court must weigh both the evidence that supports and detracts from the
ALJ’s conclusions. Jones v. Heckler, 760 F.2d 993, 995 (9th Cir. 1985); Day v.
Weinberger, 522 F.2d 1154, 1156 (9th Cir. 1975)); Burch v. Barnhart, 400 F.3d
676, 679 (9th Cir. 2005) (“Where evidence is susceptible to more than one rational
interpretation, it is the ALJ’s conclusion that must be upheld.”); Flaten, 44 F.3d at
1457 (“If the evidence can reasonably support either affirming or reversing the
Secretary’s conclusion, the court may not substitute its judgment for that of the
Secretary.”). However, even if the Court finds that substantial evidence supports
the ALJ’s conclusions, the Court must set aside the decision if the ALJ failed to
apply the proper legal standards in weighing the evidence and reaching a
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conclusion. Benitez v. Califano, 573 F.2d 653, 655 (9th Cir. 1978) (quoting Flake
v. Gardner, 399 F.2d 532, 540 (9th Cir. 1968)).
B.

Applicable Law Regarding Overpayments

When a DIB recipient receives more disability benefits than she is entitled,
the Commissioner may recover the overpayment. 42 U.S.C. § 404(a)(1)(A). The
Commissioner may, however, waive repayment if: (1) the DIB recipient is without
fault; and either (2) recovery of the overpaid benefits would defeat the purpose of
Title II of the Social Security Act; or (3) recovery of the overpaid benefits would
be against equity and good conscience. 42 U.S.C. § 404(b)(1).
The Social Security regulations define fault as: (1) an incorrect statement
made by the individual that she knew or should have known to be incorrect; (2)
failure to furnish information that she knew or should have known to be material;
or (3) acceptance of a payment that she either knew or could have been expected to
know was incorrect. 20 C.F.R. § 404.507; McCarthy v. Apfel, 221 F.3d 1119, 1126
(9th Cir. 2000). “In making these determinations of fault, the agency ‘will
consider all pertinent circumstances, including [the claimant’s] age, intelligence,
education, and physical and mental condition.’” Anderson v. Sullivan, 914 F.2d
1121, 1122 (9th Cir. 1990) (citing 20 C.F.R. § 404.507).
The definition of “fault” as used in the Social Security regulations “applies
only to the individual.” 20 C.F.R. § 404.507. Therefore, it is immaterial whether
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the SSA was also at fault. “Although the Administration may have been at fault in
making the overpayment, that fact does not relieve the overpaid individual ... from
liability for repayment if such individual is not without fault.” Id. See also
McElvain v. Comm’r of Soc. Sec., 2016 WL 4002018, at *3 (E.D. Cal. July 25,
2016) (stating that even where “there is no question that the Commissioner was at
fault . . . the inquiry for purposes of whether recovery should be waived is focused
not on the Commissioner’s fault, but on whether plaintiff himself had any fault
with respect to the overpayment.”).
“[T]he Commissioner bears the burden of proving the fact and amount of
overpayment.” McCarthy, 221 F.3d at 1124. The plaintiff bears the burden of
proving that she was without fault and that a waiver of repayments is warranted.
Id. at 1126.
III.

FACTUAL BACKGROUND
A.

Timeline

In the late 1990’s, Plaintiff began receiving disability benefits. (A.R. 147.)
Eventually, she was able to return to work in 2006. (Id.)
On June 3, 2010, the SSA sent Plaintiff a notice indicating that it appeared
her disability had ended because of substantial work activity. (A.R. 17-20.) The
letter advised Plaintiff that it appeared she was not entitled to payments for
October 2007 through January 2010. (Id.) The letter further advised Plaintiff that
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she had 10 days to provide the SSA with more information before a final decision
was made. (Id.)
On July 11, 2010, the SSA sent Plaintiff a follow-up letter stating it had
determined she was “no longer entitled to Social Security disability payments for
October 2007 through January 2010 because of substantial work.” (A.R. 21-27.)
The letter stated Plaintiff owed a $21,837.60 overpayment. (A.R. 22.) Curiously,
however, the letter simultaneously informed Plaintiff that she was “entitled to
payments for months beginning February 2010 because you are no longer doing
substantial work.” (A.R. 21.) Plaintiff was advised she would receive DIB benefit
payments in the amount of $712 per month. (Id.)
On August 30, 2010, the SSA sent Plaintiff a “repayment withholding
schedule.” (A.R. 28-29.) The SSA stated that starting in September 2010, it would
begin withholding her restarted DIB benefit payments and apply them to the
outstanding overpayment. (Id.) The letter indicated the DIB benefit payments
would be withheld through December 2012. (Id.)
On May 18, 2012, the SSA sent Plaintiff a “revised decision” regarding her
benefits. (A.R. 30-32.) The SSA stated it had decided her disability had ended,
and that she was “not entitled to payments for: October 2007 and continuing.”
(A.R. 30.) The SSA followed up with a letter dated June 7, 2012, stating it had
paid her “$27,497.70 too much in benefits.” (A.R. 33.) The letter went on to state
7

that it should have paid her nothing from February 2010 through May 2012, but
had incorrectly paid her $22,820.40 3 for that time period. (Id.) Therefore, the SSA
stated “we paid you $22,820.40 more than you were due.” (Id.)
On June 13, 2012, the SSA sent Plaintiff a Billing Statement showing she
owed a balance of $27,497.70. (A.R. 37.)
B.

The Hearing

A hearing was held before the ALJ in Billings, Montana on March 24, 2016.
(A.R. 141-162.) Plaintiff testified that she returned to working in 2006, and that
she was aware that going back to work would affect her benefits. (A.R. 147.)
Plaintiff stated she knew she was supposed to report earnings of $1,000.00 or
more, but that she did not report her wages because she assumed a computer
system would alert the SSA since her employer used her social security number.
(A.R. 148.)
Plaintiff stated that after she received the July 2010 letter indicating her
benefits were going to be reinstated, she called the SSA. (A.R. 149.) She testified
that she informed the SSA that she was working full-time, and that she had even
received a raise. (A.R. 149, 152.) Plaintiff was told her benefits were being
reinstated anyway. (A.R. 152.) Plaintiff stated she did not ask for the
reinstatement. (A.R. 149.)

3

It is unclear how the SSA arrived at this figure.
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C.

The ALJ’s Findings

In considering Plaintiff’s request for a waiver of the overpayment, the ALJ
first found Plaintiff was overpaid benefits in the amount of $27,497.70 during the
period of October 2007 to May 2012. (A.R. 14.) Next, the ALJ found Plaintiff
was not without fault in causing the overpayment. (A.R. 14-16.) The ALJ
therefore, determined recovery of the overpayment should not be waived, and
Plaintiff was liable for repayment of $27,497.70. (A.R. 16.) In reaching her
conclusion, the ALJ discussed the overpayment in terms of two time periods: 1) a
“first overpayment” for October 2007 through January 2010; and 2) a “second
overpayment” for February 2010 through May 2012. (Id.)
With regard to the “first overpayment,” the ALJ found Plaintiff was aware
returning to work would affect her payments, yet she failed to report her work
activity between June 2007 and February 2010 even though she continued to
receive full benefits. (A.R. 15.) Thus, the ALJ concluded Plaintiff was not
without fault for the “first overpayment” because she “failed to furnish information
that she knew or should have known to be material, [and] she also accepted
payments that she either knew or could have been expected to know were
incorrect.” (A.R. 15.) The ALJ also noted that there were no mental, educational,
or linguistic limitations precluding Plaintiff from understanding her reporting
requirements. (Id.)
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With regard to the “second overpayment” of reinstated benefits, the ALJ
found Plaintiff “did not receive any checks/deposits during this period of time, as
all payments were applied to the claimant’s previous overpayment.” (A.R. 15.)
Regardless, the ALJ stated “it was incumbent upon the claimant to furnish correct
and material information to Social Security regarding the incorrect information in
the July 11, 2010 letter, wherein Social Security was under the impression that the
claimant had stopped all work activity.” (A.R. 16.) Therefore, the ALJ concluded
Plaintiff was not without fault for the “second overpayment” because she “failed to
furnish information that she knew or should have known to be material.” (A.R.
16.)
The ALJ further determined that even if Plaintiff was not at fault for the
“second overpayment,” consideration of equity and good conscience would not
preclude recovery. (A.R. 16.) Again, the ALJ based this determination on her
finding that “claimant had sufficient knowledge and familiarity with reporting
requirements.” Id.
IV.

DISCUSSION
As an initial matter, the Court will address the calculation of the

overpayment, as it is unclear at first how the SSA determined Plaintiff owed
$27,497.10. The letters the SSA sent to Plaintiff are confusing, incomplete, and
generally lacking in detail. Indeed, at the hearing, the ALJ remarked that the
10

record was difficult to decipher. (See e.g. A.R. 156 (“So I mean this one -- the one
that says, it says paid 22,820 from 2010 to 2012, I just don’t know where that
comes from. . . . I think that’s incorrect, frankly. I just don’t -- I don’t know. I
truly don’t know.”); 158 (“You know I have to tell you. I think this file is deficient
in several reasons. I mean, I don’t think we have all the notices. I mean it seems
weird . . . that they would reinstate any benefits without sending a notice.”); 159
(“I just don’t think it’s -- this is complete. It’s very disjointed to me.”); 160 (“I
don’t know what to think of it, not with what I have in front of me.”).
As a starting point, neither party disputes Plaintiff was overpaid from
October 2007 through January 2010 because she was working. However, after
determining Plaintiff was no longer entitled to benefits, the SSA inexplicably
reinstated Plaintiff’s benefits as of February 2010. (A.R. 21.) The ALJ and
Plaintiff refer to these two time periods as separate events. But upon review of the
record, it appears that Plaintiff’s benefits actually continued uninterrupted. The
SSA payment record shows Plaintiff directly received a monthly benefit
continuously from October 2007 through August 2010. (A.R. 58-59.)
Specifically, $21,837.60 was paid from October 2007 to January 2010, plus an
additional $5,659.50 was paid from February 2010 to August 2010 ($21,837.60 +
$5,659.50 = $27,497.10). Then, starting in September 2019, the payments were
suspended, and the benefits were redirected toward paying down the overpayment.
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(A.R. 59-60.)
Plaintiff initially indicated that she did not receive any direct payments after
January 2010. (Doc. 12 at 6.) But in reply, Plaintiff concedes that she received
payments after January 2010. (Doc. 14 at 5.) Accordingly, there is no dispute that
the additional $5,659.50 was paid, and is correctly part of the total overpayment.
With this understanding in mind, the Court turns to the ALJ’s decision.
Plaintiff concedes that she is responsible for the “first overpayment” of $21,837.60
from October 2007 through January 2010. But she argues the ALJ erred in not
granting her a waiver as to the “second overpayment” that accrued after the SSA
reinstated her benefits starting February 2010. The Commissioner counters that
substantial evidence supports the ALJ’s determination that Plaintiff was not
entitled to a waiver for any portion of the $27,497.10 overpayment.
First, it is evident that the ALJ made a factual error in her findings. She
stated Plaintiff did not receive any direct payments after January 2010. (A.R. 15.)
The ALJ proceeded under the misapprehension that all of the reinstated benefits
after January 2010 were redirected to pay down the outstanding overpayment.
(Id.) However, the record shows that Plaintiff was in fact paid an additional
$5,659.50 after January 2010. (A.R. 59.) Accordingly, the ALJ’s decision is
factually incorrect. See Brownawell v. Comm’r of Soc. Sec., 554 F.3d 352, 357 (3d
Cir. 2008) (ALJ’s decision not supported by substantial evidence when it is based
12

on mistakes and mischaracterization of evidence). 4
More importantly, however, the ALJ’s determination is not supported by
substantial evidence because the ALJ failed to make a credibility finding as to
Plaintiff’s testimony. The ALJ determined Plaintiff was not without fault as to the
“second overpayment” because she did not furnish material information to the SSA
regarding “the incorrect information in the July 11, 2010 letter, wherein Social
Security was under the impression that the claimant had stopped all work activity.”
(A.R. 16.) However, Plaintiff testified that she did in fact, call and tell the SSA
that she was working after she received the July 11, 2010 letter. (A.R. 149-152.)
The ALJ did not discredit this statement, or otherwise acknowledge it. At most,
the ALJ implicitly found Plaintiff not credible by finding she failed to tell the SSA
material information about her work activity. But implicit credibility findings are
not sufficient. Albalos v. Sullivan, 907 F.2d 871, 873-74 (9th Cir. 1990). Rather,
“courts have consistently required that there be an explicit finding whether the

4

While this could potentially be considered harmless error, it may be a factor for
the ALJ to consider on remand. It may be possible for the ALJ to find that
Plaintiff was not without fault as to the “second overpayment” under 20 C.F.R. §
404.507(c) on the basis that she accepted a payment that she either knew or could
have been expected to know was incorrect. Because the ALJ thought Plaintiff did
not receive any direct payments after January 2010, the ALJ did not have reason to
consider whether that factor applied to the “second overpayment.” Therefore, the
ALJ may reconsider the factors under 20 C.F.R. § 404.507 in light of the fact that
Plaintiff directly received $5,659.50 after the SSA restarted her benefits.
13

Secretary believed or disbelieved the claimant whenever the claimant’s credibility
is a critical factor in the Secretary’s decision.” Lewin v. Schweiker, 654 F.2d 631,
635 (9th Cir. 1981) (reversing ALJ for failure to make explicit credibility finding
in an overpayment case); Albalos, 907 F.2d at 873-74 (holding explicit credibility
finding was required in an overpayment of benefits case). The Court finds
Plaintiff’s credibility on this point was critical to the without fault determination.
Accordingly, because the ALJ failed to expressly discredit Plaintiff’s testimony or
articulate any reasons for questioning her credibility, the ALJ’s fault determination
is not supported by substantial evidence.
Finally, the ALJ also held that even if Plaintiff was without fault,
consideration of equity and good conscience nevertheless precluded waiver. The
ALJ’s finding was again based on her determination that Plaintiff failed to report
material information. In light of the fact the ALJ ignored Plaintiff’s testimony that
she told the SSA that she was working after it restarted her benefits, the Court
finds the ALJ’s decision in this regard is not supported by substantial evidence.
V.

CONCLUSION
The Court notes mathematical and/or scrivener’s errors permeate the record

and the parties’ briefing in this case. Nevertheless, to the best of its ability, the
Court has determined that $27,497.10 is an accurate accounting of the total

14

overpayment. 5 (See A.R. 62.) Because Plaintiff does not dispute she owed
$21,837.60, the Court will remand for a determination of whether Plaintiff is
entitled to a waiver as to the “second overpayment” in the amount of $5,659.50.
Based on the foregoing, IT IS ORDERED that the Commissioner’s
decision be REVERSED, and this matter be REMANDED pursuant to sentence
four of 42 U.S.C. § 405(g) for further proceedings consistent with this opinion.
IT IS ORDERED.
DATED this 18th day of March, 2019.
_______________________________
TIMOTHY J. CAVAN
United States Magistrate Judge

5

The outstanding amount due as of the date of the Appeals Council’s decision, was
$24,433.10. (A.R. 2; 61-62.) The Court notes that this may not reflect Plaintiff’s
current overpayment balance, as additional tax refund withholdings and/or other
payments may have been credited to the overpayment, which are not reflected in
the record before the Court.
15