SSR 86-19: SECTION 204(a) OF THE SOCIAL SECURITY ACT (42 U.S.C. 404(a)) OVERPAYMENT -- DETERMINATION OF LIABILITY -- RECOVERY

20 CFR 404.502(a)

SSR 86-19

The claimant became entitled to wife's insurance benefits on W's earnings record effective December 1982. These benefits were converted to mother's insurance benefits effective October 1983 when W died. R and S became entitled to child's insurance benefits on W's earnings record effective December 1982. R's entitlement, however, ended in August 1983 because he became age 18 in September 1983. The Social Security Administration (SSA) withheld the $953 due R on W's earnings record from December 1982 through August 1983 and applied that amount towards a $6,157.70 overpayment R had incurred as a child on T's earnings record. SSA withheld the $5,204.70 balance of this overpayment from the benefits due the claimant and S on W's earnings record. The claimant filed a request for a hearing, protesting the withholding of these benefits. Held, under 20 CFR 404.502(a)(1), SSA was correct in withholding the $953 due R on W's earnings record and applying that amount towards the overpayment R had incurred on T's earnings record. However, neither the claimant nor S was entitled to benefits on T's earnings record; therefore, they were not liable for the overpayment incurred by R on that earnings record. Consequently, SSA could not withhold the $5,204.70 balance of the overpayment incurred by R on T's earnings record from the benefits due the claimant and S on W's earnings record.

The issue to be resolved was whether the overpayment incurred by R was a child on T's earnings record could be recouped from the benefits that were due R, the claimant, and S on W's earnings record.

The claimant was entitled to wife's insurance benefits on W's earnings record from December 1982 through September 1983. Her wife's insurance benefits were converted to mother's insurance benefits effective October 1983 when W died. R and S were entitled to child's insurance benefits on W's earnings record effective December 1982; however, R's entitlement ended in August 1983 because he became 18 in September 1983.

The evidence of record showed that R was overpaid $6,157.70 as a child on T's earnings record. The Social Security Administration (SSA) recouped a portion of this overpayment by withholding the $953 due R on W's earnings record from December 1982 through August 1983. SSA recouped the balance of the overpayment by withholding $5,204.70 from the benefits due the claimant and S on W's earnings record. The claimant protested the withholding of these benefits, but her protest was denied initially and upon reconsideration. Therefore, the claimant filed a request for a hearing before an administrative law judge (ALI).

Section 204(a) of the Social Security Act provides, in pertinent part, that --

"Whenever the Secretary finds that more or less than the correct amount of payment has been made to any person under this title, proper adjustment . . . shall be made, under regulations prescribed by the Secretary, as follows:

(1) With respect to payment to a person of more than the correct amount, the Secretary shall decrease any payment under this title to which such overpaid person is entitled . . . or shall decrease any payment under this title payable to his estate or to any other person on the basis of the wages and self-employment income which were the basis of the payments to such overpaid person, or shall apply any combination of the foregoing."

Section 404.502 of Regulations No. 4 provides, in pertinent part, that --

"Upon determination that an overpayment has been made, adjustments will be made against monthly benefits and lump sums as follows:

(a) Individual overpaid is living.

(1) If the individual to whom an overpayment was made is at the time of a determination of such overpayment entitled to a monthly benefit or a lump sun under title II of the Act, or at any time thereafter becomes so entitled, no benefit for any month and no lump sum is payable to such individual . . . until an amount equal to the amount of the overpayment has been withheld or refunded. Such adjustments will be made against any monthly benefit or lump sum under title II of the Act to which such individual is entitled whether payable on the basis of such individual's earnings or the earnings of another individual.

(2) If any other individual is entitled to benefits for any month on the basis of the same earnings as the overpaid individual . . . no benefit for any month will be paid on such earnings to such other individual until an amount equal to the amount of the overpayment has been withheld or refunded. . . ."

The ALJ found that, under section 404.502(a)(1) of Regulations No. 4, SSA was correct in withholding the $953 due R on W's earnings record and applying that amount towards the overpayment R had incurred on T's earnings record. However, the ALJ further noted that, since neither the claimant nor S was entitled to benefits on T's earnings record, they were not liable for the overpayment incurred by R on that earnings record. Consequently, the ALJ concluded that SSA could not withhold the $5,204.70 balance of the overpayment incurred by R on T's earnings record from the benefits due the claimant and S on W's earnings record.

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