20 CFR 404.354(b), 404.355(a), 404.506(a), and 404.507
PHIPPS v. HARRIS, USDC, W.D.N.C., C.V. NO. A-C-79-258 (7-7-80)
JONES, Chief Judge:
The Plaintiff brought this action pursuant to Section 205(g) of the Social Security Act as amended [42 U.S.C.A. § 405(g)] to obtain judicial review of a final decision of the Secretary of Health, Education and Welfare denying Plaintiff's claim for child's and mother's insurance benefits and refusing to waive recoupment of the overpayment of such benefits to Plaintiff. The matter is now before the Court upon the respective motions of the Plaintiff to strike Exhibits 19, 20 and 21 from the answer and transcript, and of the Defendant for judgment on the pleadings. A hearing was conducted on these motions in Asheville on May 1, 1980 and after a careful consideration of the record, briefs and arguments of counsel the Court now enters its findings and conclusions.
As the widow of the deceased wage earner, William C. Phipps, Plaintiff Agnes Phipps applied for mother's insurance benefits, and on behalf of her son, Joseph, applied for surviving child's insurance benefits, and on December 22, 1976 (Rec. 41, 45). Initially, Plaintiff and her son were awarded mother's and child's insurance benefits. However, pursuant to a review of eligibility, the Social Security Administration determined in November 1977 that such benefits should be terminated (Rec. 50, 51). In December, 1977, Plaintiff requested that this termination be reconsidered (Rec. 68). After reconsideration in August 1978, the Social Security Administration determined that Joseph was not the child of the deceased wage earner as defined in Section 216(e) of the Social Security Act, as amended [42 U.S.C.A. § 416(e)], and consequently Agnes Phipps was not entitled to mother's benefits due to her ineligible son (Rec. 78). Plaintiff then requested a hearing and it was subsequently held on January 10, 1979 (Rec. 18, 19). The administrative law judge ruled on April 9, 1979 that Joseph Phipps was not entitled to child's insurance benefits under Section 202(d) of the Social Security Act as amended [42 U.S.C.A. §402(d)], that Plaintiff was not entitled to mother's insurance benefits under Section 202(g) of the Act as amended [42 U.S.C.A. § 402(g)], and that both Joseph and Plaintiff were overpaid benefits and that such overpayment should not be waived (Rec. 7-12). The total amount of overpayment for both Plaintiff and Joseph is $2,230.40 (Rec. 50, 51). This finding became the final decision of the Secretary of Health, Education and Welfare, when approved by the Appeals Council on September 19, 1979 (Rec. 3).
This Court's scope of review of the Secretary's decision is restricted to a determination of whether the Secretary's findings are supported by substantial evidence [42 U.S.C.A. § 405(g)]. When that determination is made, this Court's review is complete. Estep v. Richardson, 459 F.2d 1015 (4th Cir. 1972).
Substantial evidence has been defined as more than a scintilla and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389, 91 S.Ct. 1420 (1971); Collins v. Mathews, 547 F.2d 795 (4th Cir. 1976), citing Blalock v. Richardson, 483 F.2d 773 (4th Cir. 1972).
William C. Phipps and Plaintiff were married on May 5, 1951 (Rec. 52, 53). They remained married until Williams's death on December 4, 1976 (Rec. 23, 44, 55, 56); however, during this period of marriage they only lived together on a sporadic basis (Rec. 24, 31). On March 10, 1962 Plaintiff gave birth to a son, Joseph Phipps, and the birth certificate lists William C. Phipps as the father and cites the pregnancy as being thirty-six weeks in duration (Rec. 54). According to the Secretary and various prison officials, William C. Phipps was incarcerated at the Jackson County Prison Unit when Joseph was conceived (Rec. 69, 70). Prison officials have stated that William C. Phipps was a convicted felon confined to Jackson Prison which was a medium security prison where felon inmates were under constant armed supervision (Rec. 69). William C. Phipps began his confinement there on July 18, 1960 and because of his refusal to follow orders and fighting he was demoted to a "C" grade prisoner and denied all extra privileges (Rec. 70). In September, 1961 he was promoted to "honor grade." Nevertheless, any assignment outside the prison would have required the presence of an armed guard (Rec. 69).
Plaintiff has filed a motion to strike from the answer and transcript the exhibits numbered 19, 20 and 21 (Rec. 69-70, 71- 72, 73-74). Exhibit 19 referred to above, consists of two statements made by a prison official concerning the conditions of William's incarceration at the Jackson County Prison (Rec. 69, 70). Plaintiff did not object to this exhibit at the administrative hearing. Exhibits No. 20 and No. 21 are statements from William's sisters, both denying that William ever acknowledged Joseph Phipps as his son (Rec. 71-72, 73). At the administrative hearing Plaintiff objected to these exhibits as being hearsay (Rec. 21). Plaintiff did not exercise the available subpoena power to compel the appearance of hearsay declarants or other witnesses for direct or cross-examination.
The Secretary is empowered and commanded under Section 205(a) of the Social Security Act, as amended [42 U.S.C.A. § 405(a)] to adopt regulations for the "nature and extent of the proofs and evidence" to be used in establishing the right to Social Security benefits. Also the Secretary is permitted to have hearings, receive evidence and to make findings of fact and decisions as to the rights of any applicant. Section 205(b) of the Social Security Act, as amended [42 U.S.C.A. § 405(b)]. Furthermore, the Secretary is authorized to receive evidence at any hearing regardless of its inadmissibility under the rules of evidence applicable to court procedure.
Hearsay evidence is admissible in administrative hearings to determine whether a claimant is entitled to social security benefits. Rocker v. Celebrezze, 358 F.2d 119 (2d Cir. 1966); Bethlehem Steel Corporation v. Clayton, 578 F.2d 113 (5th Cir. 1978). Furthermore, the United States Supreme Court has held that hearsay is admissible in social security administrative hearings and that such hearsay may be substantial evidence supportive of a finding adverse to the claimant. Richardson v. Perales, 402 U.S. 389, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971). Since Plaintiff had the power to subpoena these witnesses and did not exercise it, she is in no position to complain that she was denied the rights of confrontation and of cross-examination. Richardson v. Perales, supra. Since the evidence contained in Exhibits 19, 20 and 21 is relevant and material to the issue of whether or not William C. Phipps was the biological father of Joseph Phipps, it was properly admitted by the administrative law judge.
Pursuant to Section 216(h)(2)(A) of the Social Security Act as amended, [42 U.S.C.A. § 416(h)(2)(A)], the Secretary in determining whether an applicant is a "child" is directed to apply the law governing the devolution of personal property of the State of the wage earner's domicile at the time of his death. Applicants who would have the same status as a child for taking intestate personal property shall be "deemed" a child for purposes of child's insurance benefits.
When William C. Phipps died he was living in Easley, South Carolina (Rec. 56), and had been living there with his mother since the separation from Plaintiff in 1971 (Rec. 23, 71). Consequently, the administrative law judge applied the law of South Carolina in determining whether or not Joseph was William's son (Rec. 8).
The law of South Carolina presumes that children born in wedlock are legitimate. Nevertheless this presumption of legitimacy may be rebutted by a preponderance of evidence or by proof of incapacity. Tarleton v. Thompson, 118 S.e. 451 (1923); The People's National Bank of Greenville v. Manos Brothers, Inc., 84 S.E. 2d 857 (1954); Pooler et al v. Smith, 525 S.E. 967 (1905).
Here there is no factual issue concerning the validity of William's marriage to Plaintiff on May 5, 1951 or that it ended upon Williams's death on December 4, 1976 (Rec. 52, 56). Also, there is no dispute that Joseph was born on March 10, 1962 in Brevard, North Carolina or that the length of pregnancy was thirty-six weeks (Rec. 54). Additionally, the fact is undisputed that William was an inmate in the North Carolina Prison System when Joseph was conceived (Rec. 25).
The Plaintiff testified at the hearing that when Joseph was conceived William was in prison at Murphy (Rec. 25). The Court takes judicial notice of the fact that Murphy is in Cherokee County. Plaintiff contends that, after June of 1961 while William was at the Murphy Unit, he was made a trustee or honor guard and was allowed to walk around the prison grounds without a guard and to go the prison farm (Rec. 66). Plaintiff further alleges that during one of her visits with William he left the prison farm and met her at a secluded area near a river, and at this time Joseph was conceived (Rec. 67). The Plaintiff denies having had sexual intercourse with anyone other than William during his incarceration (Rec. 27).
The attorney for the Plaintiff also contends that when Joseph was conceived, William was incarcerated in Peachtree Unit at Murphy, Cherokee County, and that it was a misdemeanor camp with minimum security. Plaintiff's attorney argues that William was housed at the Jackson County Unit only long enough to be processed into the North Carolina Prison System. In support of these allegations counsel for the Plaintiff submitted, after the hearing was held on these motions, a letter dated May 9, 1980 from R. S. Moreland, Administrative Assistant with the North Carolina Department of Correction, Division of Prisons. This letter states that William C. Phipps was admitted to prison on July 18, 1960 to serve two years for embezzlement. (Where he was admitted is unspecified.) Mr. Moreland further states that on May 29, 1961 William was transferred to Cherokee County and remained there until his discharge on January 14, 1962. Mr. Moreland does not state what custody classification the Cherokee Unit had at this time but he does mention that William was promoted to minimum custody in September of 1961.
Thus, even though the Plaintiff's attorney has asserted that the Cherokee County Prison Unit was a minimum security facility and that Mr. Phipps was under minimum security at the time of Joseph's conception, there is no evidence to support these allegations. The only evidence presented by this letter of May 9, 1980 is that Mr. Phipps was transferred to Cherokee County on May 29, 1961.
The United States Attorney, after receiving a copy of this letter from Mr. Moreland to Plaintiff's attorney, filed a reply on behalf of the Secretary. Contained therewith is a copy of a letter from Mr. Moreland to the United States Attorney dated June 13, 1980. In it, Mr. Moreland again states that Mr. Phipps was admitted to the North Carolina Prison System on July 18, 1960 to serve a two year sentence for embezzlement, that he was transferred to the Cherokee County Prison Unit on May 29, 1961, that he was promoted to minimum custody or Honor Grade in September, 1961, and that he remained in this status until his discharge on January 14, 1962. However, Mr. Moreland goes on to state in this June 13, 1980 letter, that when Mr. Phipps was transferred to the Cherokee County Unit on May 29, 1961 he was classified medium custody. Additionally, Mr. Moreland relates that Mr. Phipps would have normally been confined to the prison compound unless he was assigned to a road squad during which time he would have been under armed guard at all times.
Mr. Moreland's letter dated June 13, 1980 along with the letter and statement of Mr. Baker (Rec. 69, 70), all support the finding of "positive proof of incapacity" on the part of William during the time when conception occurred. Joseph was born on March 10, 1962 and the length of pregnancy was thirty-six weeks, that would place conception around June 30, 1961 and at that time Mr. Phipps was in medium custody and under armed supervision. The conditions of his incarceration would have precluded him from having any sexual relations with his wife and consequently he could not have been Joseph's father. Therefore, the presumption of legitimacy under South Carolina law was rebutted by the evidence of non access and it supports the Secretary's finding that William was not the biological father of Joseph. Also, the record contains the statements of Mary Owen and Marie P. Mathis, William's two sisters, and they both certified that William never acknowledged Joseph as his son.
Having found that Joseph is not the son of William, the conclusion necessarily followed that Joseph was not entitled to child's benefits and Plaintiff was not eligible for mother's benefits. The Secretary also held that Joseph and Plaintiff were overpaid benefits based on the applications filed by Plaintiff and that recovery of the overpayment should not be waived.
The Secretary is authorized pursuant to Section 204(b) of the Social Security Act, as amended [42 U.S.C.A. § 404(a) and (b)], to recover an overpayment from any person who is at fault in causing it. In order to avoid liability for the recovery of the overpayment, the recipient must show first, that he is without fault in causing it and second, that recovery of the overpayment would defeat the purpose of the Social Security Act or would be against equity and good conscience. Morgan v. Finch, 423 F.2d 551 (6th Cir. 1970); Social Security Act 204(b) as amended [42 U.S.C.A. § 404(b)]. However, once there is substantial evidence that the claimant was not without fault, there is no need to proceed further and determine whether recovery would be against equity and good conscience, or defeat the purposes of the Act. Morgan v. Finch, supra.
In this case the Plaintiff, on her own behalf and that of her son, filed applications for mother's and child's insurance benefits. After considering the evidence furnished by prison officials and Plaintiff's own account of conception the Secretary held that Joseph was not William's child. Under these circumstances the Plaintiff knew or should have known at the time the applications were filed that William was not Joseph's father.
While the Court is sympathetic to the Plaintiff's plight, a review of the entire record reveals that Plaintiff was not entitled to mother's insurance benefits and Joseph was not entitled to child's benefits because he was not the child of the deceased wage earner, within the meaning of the Social Security Act. Also, the Plaintiff was not without fault in applying for child's and mother's insurance benefits under the Act. Therefore the conclusion of the Court is that the Secretary's decision rests upon substantial evidence and the Defendant's motion for judgment on the pleadings should be allowed, and the recoupment of the overpayment should not be waived.