Tagliaferro v. Berryhill

Filing 21

ORDER denying 16 Motion for Judgment on the Pleadings; granting 18 Motion for Judgment on the Pleadings. For the reasons set forth herein, the Court grants the Commissioner's motion for judgment on the pleadings, denies plaintiff's motion for judgment on the pleadings, and affirms the ALJ's determination. The Clerk of the Court shall enter judgment accordingly and close the case. Ordered by Judge Joseph F. Bianco on 9/28/2018. (Karamigios, Anna)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 17-CV-0864 (JFB)
_____________________

THOMAS G. TAGLIAFERRO,
Plaintiff,
VERSUS

NANCY A. BERRYHILL,
ACTING COMMISSIONER OF SOCIAL SECURITY,
Defendant.

___________
MEMORANDUM AND ORDER
September 28, 2018
____________
JOSEPH F. BIANCO, District Judge:

I. BACKGROUND

Plaintiff
Thomas
G.
Tagliaferro
commenced this action under 42 U.S.C.
§ 405(g) of the Social Security Act to
challenge the final decision of the Acting
Commissioner of Social Security (the
“Commissioner”) denying plaintiff’s waiver
of overpayment under 42 U.S.C. § 404(b).

The following summary of the relevant
facts is based on the Administrative Record.
(ECF No. 13.) A more exhaustive recitation
is contained in the parties’ submissions to
the Court and is not repeated here.

Plaintiff now moves for judgment on the
pleadings under Federal Rule of Civil
Procedure 12(c).
The Commissioner
opposes the motion and cross-moves for
judgment on the pleadings. For the reasons
set forth below, the Court denies plaintiff’s
motion for judgment on the pleadings, and
grants the Commissioner’s cross-motion for
judgment on the pleadings.

Plaintiff applied for Title II Disability
Insurance benefits on August 12, 2005,
alleging a February 25, 2004 disability onset
date. (AR 24.) After his claim was denied,
plaintiff requested a hearing before an
Administrative Law Judge. (AR 177.) In
the request, plaintiff reported being disabled
from February 25, 2004 through November
22, 2005. (Id.) Plaintiff also reported that
he had “returned to his prior position with is

A. Personal and Education History

former employer” on November 23, 2005.
(Id.)

informed plaintiff that he had “a right to
meet with us before we decide if you have to
pay back the overpayment.” (Id.)

In a decision dated March 22, 2016,
Administrative Law Judge Richard Karpe
found plaintiff disabled from February 25,
2005 through November 22, 2005, and
awarded retroactive benefits. (AR 181-85.)
ALJ Karpe noted that plaintiff had “returned
to work on November 23, 2005,” but, “[i]n
light of the lack of evidence of medical
improvement,” concluded that plaintiff was
“entitled to a trial work period, not
exceeding nine months, commencing
November 23, 2005.” (AR 183.)

On February 10, 2009, plaintiff
participated in an in-person meeting about
the waiver of overpayment. (AR 72-75.)
Approximately two weeks later, on February
27, 2009, the SSA sent plaintiff a letter
advising him that he did not meet the criteria
to waive the overpayment. (AR 78-79.)
Plaintiff then requested a hearing before
an ALJ.
A hearing was held before
Administrative Law Judge Seymour Rayner
on September 3, 2009, and on October 26,
2009, ALJ Rayner issued a decision denying
plaintiff’s
request
for
waiver
of
overpayment. (AR 92-94.) ALJ Rayner
found that plaintiff was not without fault for
the overpayment because he accepted
disability checks while he was still working
and did not notify the SSA. (AR 93.)

On September 9, 2008, the Social
Security Administration (“SSA”) sent
plaintiff a “Notice of Disability Cessation,”
informing plaintiff that his “disability ha[d]
ended” and that he had not been entitled to
disability payments as of November 2006.
(AR 62.) The letter explained that plaintiff’s
trial work period ended in July 2006, and
that, because he was doing substantial work
at that time, he was not entitled to benefits
as of November 2006. (Id.) The letter
further explained that the SSA “pay[s]
benefits for the month disability ends and
the following 2 months no matter how much
is earned,” and that, in plaintiff’s case, that
was “August 2006 through October 2006.”
(Id.) The letter concluded that, “[b]ecause
we did not stop your checks until September
2008, you were paid $35,902.10 too much in
benefits.” (AR 63.) 1

On December 16, 2009, plaintiff
requested review of ALJ Rayner’s decision.
(AR 96.) The Appeals Council remanded
the case for further administrative
proceedings because it could not locate the
record upon which ALJ Rayner had made
his decision. (AR 109.)
On remand, after a supplemental
hearing, ALJ Rayner again concluded that
plaintiff did not qualify for a waiver. (AR
18-22.) Based on record evidence, ALJ
Rayner found that plaintiff “worked while
receiving disability insurance benefits and
failed to notify the Social Security
Administration,” and that he “failed to
furnish information which he knew or
should have known to be material and has
accepted payments which he either knew, or
could have been expected to know were
incorrectly paid.” (AR 21.) ALJ Rayner

Thereafter, plaintiff requested that the
SSA waive the overpayment. (AR 74.) By
letter dated January 16, 2009, the SSA
informed plaintiff that it could not approve
his request based on the facts before it, and
1

By letter dated September 19, 2008, the SSA
revised the amount of overpayment due to
$34,340.10 because it was “able to stop [plaintiff’s]
September 24, 2008 payment.” (AR 68.) The
amount owed is not in dispute.

2

recommended that plaintiff pay $50 per
month to the SSA. 2 (AR 22.)

plaintiff responded to the Commissioner’s
cross-motion for judgment on the pleadings.
(ECF No. 19.) On June 1, 2018, the
Commissioner filed a letter indicating that
she intended to rest on the arguments in her
April 20, 2018 submission. (ECF No. 20.)
The Court has fully considered the parties’
submissions.

Plaintiff requested an Appeals Council
review, and on February 2, 2012, the request
was granted. (AR 214-15.) The Appeals
Council noted that ALJ Rayner made
inconsistent statements regarding whether,
and to what extent, plaintiff was at fault.
(AR 215) The Appeals Council also noted
that ALJ Rayner failed to address plaintiff’s
hearing counsel’s post-hearing brief. (Id.)
Accordingly, the Appeals Council remanded
the case. (Id.)

III. STANDARD OF REVIEW
A district court may set aside a
determination by an ALJ “only if it is based
upon legal error or if the factual findings are
not supported by substantial evidence in the
record as a whole.” Greek v. Colvin, 802
F.3d 370, 374-75 (2d Cir. 2015) (citing
Burgess v. Astrue, 537 F.3d 117, 127 (2d
Cir. 2008); 42 U.S.C. § 405(g)). The
Supreme Court has defined “substantial
evidence” in Social Security cases to mean
“more than a mere scintilla” and that which
“a reasonable mind might accept as adequate
to support a conclusion.” Richardson v.
Perales, 402 U.S. 389, 401 (1971) (quoting
Consolidated Edison Co. v. NLRB, 305 U.S.
197, 229 (1938)). Furthermore, “it is up to
the agency, and not [the] court, to weigh the
conflicting evidence in the record.” Clark v.
Comm’r of Soc. Sec., 143 F.3d 115, 118 (2d
Cir. 1998). If the court finds that there is
substantial evidence to support the
Commissioner’s determination, the decision
must be upheld, “even if [the court] might
justifiably have reached a different result
upon a de novo review.” Jones v. Sullivan,
949 F.2d 57, 59 (2d Cir. 1991) (citation
omitted); see also Yancey v. Apfel, 145 F.3d
106, 111 (2d Cir. 1998) (“Where an
administrative decision rests on adequate
findings sustained by evidence having
rational probative force, the court should not
substitute its judgment for that of the
Commissioner.”).

On remand, the case was assigned to
Administrative Law Judge Brian J. Crawley,
who held a hearing on October 6, 2014.
(AR 449-74.) Plaintiff was represented by
counsel at the hearing. On November 24,
2014, ALJ Crawley denied plaintiff’s
request for waiver of overpayment, finding
that plaintiff was not without fault in
accepting the overpayment and that, even if
plaintiff were without fault, his expenses
could be reasonably reallocated to repay the
overpayment. (AR 14.)
On December 15, 2016, the Appeals
Council denied review of ALJ Crawley’s
decision, making it the Commissioner’s final
decision.
II. PROCEDURAL HISTORY
Plaintiff commenced this lawsuit on
February 16, 2017. (ECF No. 1.) On
February 19, 2018, plaintiff moved for
judgment on the pleadings. (ECF No. 16.)
The Commissioner opposed plaintiff’s
motion and submitted a cross-motion for
judgment on the pleadings on April 20,
2018. (ECF No. 18.) On May 11, 2018,
2

Plaintiff’s attorney testified at a subsequent hearing
that plaintiff has been paying $50 per month to the
SSA since the time of ALJ Rayner’s decision. (AR
462.)

3

IV. DISCUSSION

have been expected to know was
incorrect.

A. Waiver of Overpayments

20 C.F.R. § 404.507. In making this
determination, the SSA is required to
consider all relevant facts, including the
individual’s age, intelligence, and any
physical, mental, educational, or linguistic
limitations. Id.

The Social Security Regulations provide
that “[w]henever the Commissioner of
Social Security finds that more or less than
the correct amount of payment” has been
made to an individual, “proper adjustment of
recovery shall be made.”
42 U.S.C.
§ 404(a)(1). However,

The Second Circuit interprets 20 C.F.R.
§ 404.507 “liberally, making it relatively
easy for the [SSA] to recover an
overpayment.” Barone v. Bowen, 869 F.2d
49, 51 (2d Cir. 1989). Bad faith is not
required to establish fault; rather, “an honest
mistake may be sufficient to constitute
fault.” Center v. Schweiker, 704 F.2d 678,
680 (2d Cir. 1983). Further, any mistake or
fault by the SSA does not relieve an
individual from repayment if they are found
to also be at fault. 20 C.F.R. § 404.507.

In any case in which more than the
correct amount of payment has been
made, there shall be no adjustment of
payments to, or recovery by the
United States from, any person who
is without fault if such adjustment or
recovery would defeat the purpose of
this subchapter or would be against
equity and good conscience.
Id. § 404(b). In other words, a waiver of
overpayment is warranted when “(1) the
overpaid person is without fault, and
(2) recovery would defeat the purpose of
Title II or would be against equity and good
conscience.” Ming v. Astrue, No. 07-CV4567 (DLI)(SMG), 2009 WL 2495947, at *4
(Aug. 13, 2009). The burden is on the
overpaid individual to establish that he is
entitled to a waiver. Id. (citing 20 C.F.R.
§ 404.506(c)).

However, if an individual accepts an
overpayment “because of reliance on
erroneous information from [the SSA] . . .
with respect to the interpretation of a
pertinent provision of the Social Security
Act . . ., such individual, in accepting such
overpayment, will be deemed to be without
fault.” Id. § 404.510.
Recovery of overpayment “defeats the
purpose of Title II” if it “deprive[s] a person
of income required for ordinary and
necessary living expenses,” including fixed
living expenses (e.g., food, clothing, rent,
mortgage payments, utilities, and insurance),
medical expenses, expenses for supporting
those for whom the individual is legally
responsible, or other expenses reasonably
considered part of the individual’s standard
of living. Id. § 404.508(a).

Under the pertinent regulations, an
individual is not “without fault” if the
overpayments resulted from:
(a) An incorrect statement made by
the individual which he knew or
should have known to be incorrect;
(b) Failure to furnish information
which he knew or should have
known to be material; or

Finally, recovery of overpayment is
“against equity and good conscience” if the
individual “[c]hanged his or her position for
the worse” or “relinquished a valuable right”

(c) With respect to the overpaid
individual only, acceptance of a
payment which he knew or could
4

B. The ALJ’s Ruling

in reliance on the overpayment.
Id.
§ 404.509(a). The applicable regulation
states that “[t]he individual’s financial
circumstances are not material to a finding
of against equity or good conscience.” Id.

ALJ Crawley’s November 14, 2014
determination, which plaintiff currently
challenges, denied plaintiff’s request for
waiver of overpayment both because
plaintiff was not “without fault” and because
requiring repayment would not “defeat the
purpose of Title II” or “be against equity and
good conscience.” (See generally AR 8-14.)

The Second Circuit has explained how
district courts should review whether the
above-described factors are satisfied, in light
of the general legal framework for reviewing
decisions by the Commissioner:

As to plaintiff’s fault, ALJ Crawley
explained that plaintiff testified at the
hearing that he “was aware of the basic
principle that a disability benefits recipient
is unable to work and receive[] social
security benefits,” and understood that “it
was permissible to receive disability benefits
while working during the trial work period.”
(AR 13.) ALJ Crawley further concluded
that,

The [Commissioner’s] determination
of whether these factors have been
satisfied may not lightly be
overturned. First, the district court
must uphold a decision by the
[Commissioner] that a claimant was
not without fault if it is supported by
substantial evidence in the record as
a whole, because that determination
is factual in nature. Further the
issues of whether repayment would
defeat the purposes of the Act or be
against equity or good conscience
implicate an exercise of informed
judgment, and the [Commissioner]
has considerable discretion in
making
these
determinations.
Factual determinations by the
[Commissioner] in relation to these
issues must be upheld if supported
by substantial evidence, and the
[Commissioner’s] exercise of her
judgment on the basis of such factual
determinations
is
entitled
to
considerable deference. The court
may not substitute its own judgment
for that of the [Commissioner], even
if it might justifiably have reached a
different result upon a de novo
review.

The agency may have sent some
confusing notices, granted [plaintiff]
cost of living adjustments, and
increased the primary insured
amount limits because of his work
activity,
however,
[plaintiff’s]
notifying the Social Security
Administration
indicates
his
awareness that receipt of continued
payments
was
problematic.
Although the Administration may
have been at fault for making an
overpayment, that does not relieve
that . . . individual from liability for
repayment if such individual is [not]
without fault.
(AR 13-14.)
ALJ Crawley also found that, even if
plaintiff was without fault, recovery of the
overpayment would not “defeat the purpose
of Title II” or “be against equity and good
conscience.” (AR 14.) ALJ Crawley found
that plaintiff’s reported expenses were “not
reasonable and appear[ed] inflated.” (Id.)

Valente, 733 F.2d at 1041 (citations
omitted).

5

RRM, 2012 WL 3704824, at *8 (E.D.N.Y.
Aug. 24, 2012) (concluding that plaintiff’s
testimony “reflect[ed] his understanding of
the relevance that his working status had on
his entitlement to benefits, and therefore the
error evident in the continuation of
payments,” which was “an independent
basis” for a finding of fault); Borodkin v.
Barnhart, No. 06 CIV. 2583 (RWS), 2007
WL 1288602, at *4 (S.D.N.Y. May 2, 2007)
(substantial evidence for fault existed where
plaintiff “acknowledged that SSA personnel
advised him that he could work for a short
period and that after that period, SSA would
stop his benefits” and, “notwithstanding,
[plaintiff] continued to collect benefits for
over two and one-half years after returning
to work”).

For instance, ALJ Crawley noted that
plaintiff alleged he spent $600 per month on
lunch, $300 per month in cigarettes, and
$500 per month in gas/car expenses. (Id.)
From this, ALJ Crawley reasoned that
plaintiff could “quite reasonably” reallocate
funds to repayment of the overpayment.
(Id.)
C. Analysis
For the reasons discussed below, after
carefully reviewing the administrative
record, the Court concludes that ALJ
Crawley’s determinations are supported by
substantial evidence.
First, ALJ Crawley’s determination that
plaintiff was not without fault is supported
by substantial evidence. As noted above, an
individual is at fault if, among other things,
he accepts “a payment which he knew or
could have been expected to know was
incorrect.” 20 C.F.R. § 404.507. Here,
plaintiff testified that when he called the
SSA sometime before 2006, he was told that
he was “able to collect Social Security for
the amount of time [he w]as out, and then a
nine-month trial period, and a three-month
grace period.” (See AR 470-71.) Thus, the
SSA accurately informed plaintiff, well
before his grace period ended, that he would
not receive benefits after that time. In other
words, plaintiff testified to having actual
knowledge that he would no longer be
entitled to benefits twelve months after he
returned to work. Indeed, at the hearing,
plaintiff exhibited a clear understanding that
employed individuals are generally not
entitled to social security benefits. (See id.)

Plaintiff’s arguments regarding his lack
of fault are unpersuasive. For instance, his
assertion that he believed his payments
would automatically stop when they were
supposed to does not undermine a finding
that he knew or should have known that he
was not entitled to the overpayments—
particularly when he continued to receive
payments for nearly two years after his
grace period ended. See, e.g., Brown v.
Bowen, 905 F.2d 632, 638 (2d Cir. 1990)
(plaintiff’s contentions that he believed his
payments would be automatically adjusted
was undermined by the undisputed fact that
he continued to receive overpayments for
over a year). His argument that the notices
he received from the SSA were confusing
also do not mandate a finding that he was
without fault. See, e.g., Yankus v. Astrue,
No. 07-CV-0316 (JFB), 2008 WL 4190870,
at *5 (E.D.N.Y. Sept. 10, 2008) (“[A]
claimant’s ‘confusion’ as to whether she is
entitled to benefits does not automatically
relieve her of fault for overpayments.”);
Howard v. Astrue, No. 07-CV-1558(NG),
2007 WL 4326788, at *3 (E.D.N.Y. Dec. 7,
2007) (“Howard’s confusion with respect to

The Court concludes that plaintiff’s
demonstrated understanding of the fact that
he could not simultaneously continue
working and also receiving benefits is
substantial evidence for a finding of fault.
See, e.g., Mesias v. Doe, No. 11-CV-2373
6

decreased to about $240 per month.
Accordingly, his decreased gas expenses
provide plaintiff with an additional $260 per
month from which he can pay his $50 per
month repayment.
(See AR 469-70.)
However, even assuming plaintiff still
requires $500 per month for gas, he could
reasonably spend $50 less per month on
cigarettes (on which he currently spends
$300 per month) 3 in order to make his
monthly repayment. In fact, plaintiff admits
that he has been paying $50 per month to the
SSA since ALJ Rayner’s May 2, 2012
decision. (AR 462.) In short, the Court
finds that ALJ Crawley’s assessment of
plaintiff’s ability to repay the overpayment
is supported by substantial evidence. 4

information provided him by SSA does not
render him without fault.”).
Finally, plaintiff argues that he is
without fault because he notified the SSA
that he was working. However, under the
relevant regulations, the determination of
fault applies only to the individual, and
courts do not consider any fault on the part
of the SSA. See 20 C.F.R. § 404.507.
Accordingly, plaintiff cannot rely on the fact
that the SSA did not process that plaintiff
was no longer entitled to benefits to argue
that he is without fault.
Moreover,
plaintiff’s attempts to notify the SSA that he
was working provide further evidence that
he knew he should not be receiving the
payments. See, e.g., Center v. Schweiker,
704 F.2d 678, 680 (2d Cir. 1983) (“The
record reflects that appellant was aware of
his responsibility to return SSI checks: he
admitted at his hearing that he had instructed
his father to do so; he filed a statement with
SSA on March 8, 1979, in which he
requested that SSI benefits be terminated
and stated that he had returned the February
and March checks . . . .”). Thus, the Court
finds that substantial evidence supports ALJ
Crawley’s conclusion that plaintiff is not
without fault.

Finally, repayment is not against equity
of good conscience. As explained above,
recovery of overpayment is “against equity
and good conscience” if the individual
“[c]hanged his or her position for the worse”
or “relinquished a valuable right” in reliance
on the overpayment.
20 C.F.R.
§ 404.509(a). Plaintiff “has the burden of
showing a change in position for the worse
in order to demonstrate that recovery would
be against equity and good conscience.”
Tejada v. Colvin, No. 14-CV-841 JLC, 2014
WL 4744435, at *6 (S.D.N.Y. Sept. 24,
2014). Here, plaintiff has not argued, and
nothing in the record indicates, that he

Second, ALJ Crawley’s findings that
repayment would not “defeat the purpose of
the Title II” or “be against equity and good
conscience” are also supported by
substantial evidence.
As explained,
repayment “defeats the purpose of Title II”
if it “deprive[s] a person of income required
for ordinary and necessary living expenses.”
20 C.F.R. § 404.508(a). Here, ALJ Crawley
determined that plaintiff could reasonably
reallocate certain expenses to repaying the
overpayment.

3

The Court doubts that the cost of cigarettes
constitutes an “ordinary and necessary living
expense” under the pertinent regulations, but, for
purposes of this Memorandum and Order, will
assume that such cost qualifies.
4
Although ALJ Crawley stated that plaintiff’s
expenses were not reasonable and appeared inflated,
this is not a case where plaintiff’s credibility is at
issue. ALJ Crawley’s analysis assumed that plaintiff
was in fact spending the amounts that he reported
spending each month, and concluded that those
expenses could reasonably be reallocated. This Court
also assumes plaintiff’s assertions to be true.

As an initial matter, plaintiff testified at
the hearing that, although he reported $500
per month in gas expenses, that amount had
7

changed his position for the worse or
relinquished a valuable right in reliance on
the overpayments.
V. CONCLUSION

For the reasons set forth above, the
Court grants the Commissioner's motion for
judgment on the pleadings, denies plaintiff's
motion for judgment on the pleadings, and
affirms ALJ Crawley' s decision. The Clerk
of the Court shall enter judgment
accordingly and close the case.
SO ORDERED.

nited States District Judge
Dated: September 28, 2018
Central Islip, New York

***
Plaintiff is represented by Howard D.
Olinsky, Esq., Olinsky Law Group, One
Park Place, 300 South State Street,
Syarcuse, New York 12302.
The
Commissioner is represented by Assistant
United States Attorney Megan J. Freismuth
of the U.S. Attorney's Office, 610 Federal
Plaza, Central Islip, New York 11722.

8