SSR 65-41c: SECTIONS 203, 204(b), AND 211. -- WORK DEDUCTIONS -- TRANSFER OF BUSINESS -- SUBSTANTIAL SERVICES IN SELF-EMPLOYMENT -- WAIVER OF RECOVERY OF OVERPAYMENT
SLIMAN v. CELEBREZZE, CCH U.I.R., Vol. 1, Fed. Para. 16,421 (U.S.D.C., E.D. Ark., Jonesboro Div., 12/14/64)
- Where plaintiff became entitled to social security benefits in 1957 based on income he reported from the operation of two theaters for the years 1951 through 1956; where plaintiff claimed that as of 1957, he did not have sufficient income to cause deductions from his benefits, alleging he transferred one theater to his daughter in 1951 and that he operated the other at a small profit; where beginning in 1957, his wife reported a part of the income from the business as her own; where some of the creditors continued to look to plaintiff for satisfaction of their debts; and where he executed written conveyances to his daughter of both theaters on March 1, 1962, held, there is substantial evidence to support the finding of the Secretary that plaintiff did not transfer either theater to his daughter until March 1, 1962, and that the income reported to the account of the wife of the plaintiff was properly income of the plaintiff and that plaintiff rendered substantial services in self employment; accordingly his benefits for certain months in the years 1957 through 1961 were subject to deductions; also, plaintiff is liable for repayment of overpayments made to him since he had not established that he was without fault and that such repayment would either defeat the purposes of the Social Security Act or would be against equity and good conscience.
YOUNG, District Judge:
Plaintiff instituted this action pursuant to the Social Security Act 42 U.S.C.A. § 405(g) to review a final decision of the Secretary of Health, Education and Welfare, imposing deductions against the benefits previously awarded to plaintiff and his wife and asking that certain benefits already paid be returned.
On April 7, 1958, plaintiff and his wife applied for old-age insurance benefits. By a Certificate of Social Insurance Award dated May 9, 1958, they were awarded combined monthly benefits of $149.30, effective as of August 1957. On December 5, 1961, plaintiff was notified that certain self-employment income reported to his wife's account had been transferred to his account, making necessary the imposition of deductions against his benefits for specified months during 1959, 1960, and 1961. Plaintiff asked that a reconsideration be made of this adverse determination and this was done. Plaintiff was then notified on October 10, 1962, as follows:
- "Upon review it has been determined that the original decision must be revised to the extent that you had total earnings for deduction purposes of $3,623.49 in 1957, $5,424.27 in 1958, $5,958.24 in 1959, $7,932.74 in 1960, $5,146.65 in 1961, and that you rendered substantial services in self-employment during the months of August 1957 through December 1961. Hence, no benefits were due on this claim for August 1957 through December 1958, and $159.50 for the months of January 1959 through May 1961, you were overpaid $5,208.50 and Mrs. Sliman was overpaid $1,955.10; or a combined total overpayment of $7,163.60. . . ."
It was pointed out that a refund of $594.50 had been used to reduce the balance owed to $6,569.10, request for which was thereupon made.
By letter of October 18, 1962, plaintiff was advised that the amount he owed, i.e., the amount he had been overpaid, had been revised to $6,525.60. Plaintiff then requested a hearing before a hearing examiner, and a hearing was held on May 7, 1963. The Hearing Examiner before whom plaintiff, his attorney, and his witnesses appeared considered the case de novo, and held that:
- ". . . The claimant was erroneously paid old-age insurance benefits for August 1957 through May 1961 in the total amount of $5,208.50 and Mrs. Sliman was overpaid for August 1957 through April 1961 in the total amount of $1,911.60 for a combined total overpayment of $7,120.10, which amount has been reduced by reason of a refund payment of $594.50, leaving a balance of unrefunded overpayment in the amount of $6.525.60."
The decision of the Hearing Examiner became the final decision of the Secretary of Health, Education and Welfare on plaintiff's claim when the Appeals Council declined to review this decision. Plaintiff has exhausted his administrative remedies and therefore this Court has jurisdiction. The case is now before the Court on motion for summary judgment by defendant. Briefs have been received from both sides in support of their respective contentions and have been considered by this Court.
Plaintiff contends that the Hearing Examiner erred in finding that: (1) the plaintiff had not retired at the time when his application for social security benefits was filed on April 7, 1958; (2) that there was a valid transfer of plaintiff's enterprises as of March 1, 1962; and (3) that plaintiff rendered substantial services in self-employment continuously for the months of August 1957 through December 1961, sufficiently to disqualify him from claiming benefits.
The Hearing Examiner's findings are conclusive, if supported by substantial evidence. Parker v. Celebrezze, 228 F.Supp. 945 (E.D. Ark. 1963). Substantial evidence is more than a scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, i.e., affording a substantial basis of fact from which the fact in issue can be reasonably inferred. Park v. Celebrezze, 214 F.Supp. 153, 159 (W.D. Ark. 1963). Thus, the ultimate issue now presented is whether those findings which plaintiff attacks are supported by substantial evidence. It is the view of this Court that the voluminous record establishes that these findings are supported by substantial evidence, and hence the decision of the Hearing Examiner must be upheld.
The record reflects that when self-employed persons were first covered by the Social Security Act, plaintiff started paying the self-employment taxes necessary to give him coverage. His earnings record shows that he paid on earnings of $1,941.68 in 1951; $3,600.00 in 1952; $4,200.00 in 1955; and $4,200.00 in 1956. Those earnings were derived, according to his income tax returns, from the operation of two theaters. After thus building up his wage record, plaintiff applied for and received an award of old-age insurance benefits for himself and his wife as reflected by his self-employment income from the two theaters for the years 1951 and following. After thus using the income from the theaters to obtain social security benefits for himself and his wife, plaintiff was placed in a dilemma, i.e., the same income which had been sufficient to obtain benefits was also sufficient to justify deduction against those benefits in later years. When those deductions were actually imposed and he was notified that his earnings from the theaters in question were the cause, plaintiff claimed that there was hardly any income from one theater during the years in question and that he had transferred the other theater to his daughter in 1951; and, therefore, the income from the latter theater could not be used to impose deductions against his benefits.
Plaintiff now claims as his own the income from one theater for the years 1951 until he retired, for the purpose of obtaining benefits and then, after those benefits were obtained, of disavowing the earnings from this theater since 1951 for the purpose of preventing deductions, contending that, actually, the theater was given to his daughter in 1951. However, defendant points out that if plaintiff transferred the theater to his daughter in 1951, he should not have continued reporting the income from that theater as his own and his earnings record would have been adjusted accordingly, giving him and his wife benefits in a much smaller amount for the rest of their lives but probably making unnecessary the imposition of deductions. If, on the other hand, he did not transfer the theater to the daughter in 1951, then according to the wage record established he was entitled to the benefits which were awarded to him, subject, however, to the deductions imposed against those benefits for the years prior to the time he actually divested himself of the theater, with benefits continuing after that date. Obviously, the plaintiff cannot have it both ways.
There is substantial evidence in the record which establishes that plaintiff had not retired at the time when his application for social security benefits was filed on April 7, 1958. Admittedly, the evidence is in conflict. However, it was established that plaintiff was an experienced businessman and had claimed income from the operation of the Lux Theater during the period in question. His wife had made a statement in an annual report of earnings for another theater in 1960 that plaintiff operated the theater with his daughter. At least some of the creditors looked to plaintiff for satisfaction of any debts of the operation. Clearly, the evidence establishes that on March 1, 1962, there was a valid transfer of plaintiff's enterprises when written conveyances were executed. Prior to this time, there allegedly had been an oral transfer between the parties but the Hearing Examiner was not forced to accept this explanation in view of the contradictory facts and circumstances. Again, while there is conflict in the evidence as to whether plaintiff rendered substantial services in self-employment continuously for the months of August 1957 through December 1961 sufficiently to disqualify him from claiming benefits, plaintiff has failed to establish that defendant's finding in this regard is not based on substantial evidence. On the contrary, this Court is compelled to the conclusion that the findings below are based on substantial evidence.
The determination by the Hearing Examiner that plaintiff was not without fault and thus liable for the repayment is based on substantial evidence and is therefore binding on this Court. Even if plaintiff had been without fault, the burden further lay upon him to establish that repayment by him of the overpayments would either defeat the purposes of the Social Security Act or would be against equity and good conscience. Price v. Folsom, 168 F.Supp. 392, 400 (D. N.J.). The Hearing Examiner's decision in this regard, not being arbitrary or capricious, should also be upheld.
The motion for summary judgment is granted and the petition to review is dismissed.