SSR 84-9a: SECTIONS 204(a) AND (b) (42 U.S.C. 404(a) AND (b)) OVERPAYMENT -- WITHOUT FAULT -- WAIVER OF RECOVERY AND ADJUSTMENT
20 CFR 404.506, 404-507, and 404.511(a)
- When the Social Security Administration (SSA) determined that the claimant had been overpaid child's insurance benefits as a student for 1978 and 1979 because of excess earnings, the claimant requested waiver of recovery. He contended that he had never been informed that he was responsible for filing a timely report of his earnings, the claimant requested waiver of recovery. He contended that he had never been informed that he was responsible for filing a timely report of his earnings and that he was unaware that his earnings for 1978 and 1979 could adversely affect the amount of benefits payable to him for those years. The record showed, however, that when the claimant applied for student benefits in 1975, he received instructions which gave a detailed explanation of how excess earnings affect benefits and agreed to make all necessary reports. A booklet describing the claimant's rights and responsibilities was also mailed to him when he was awarded student benefits. In addition, the claimant regularly completed student reports which informed him of the annual and monthly earnings limits and which required him to make a direct response as to whether his earnings exceeded those limits. Held, because the claimant did not exercise the high degree of care required in 20 CFR 404.511(a), he was at fault in causing the overpayment for 1978 and 1979 and thus recovery of the overpayment could not be waived.
The issue before the Appeals Council (AC) was whether recovery of a deduction overpayment of $917.70 could be waived. This depended on (1) whether the claimant was without fault in causing the overpayment and (2) whether recovery of the overpayment would either defeat the purpose of title II of the Social Security Act (the Act) of be against equity and good conscience.
Section 204(a) of the Act provides, in part, that whenever an incorrect payment has been made, recovery or adjustment of the incorrect payment shall be made.
Section 204(b) of the Act and § 404.506 of Regulations No. 4 provide that 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 from, any person who is without fault if such adjustment or recovery would defeat the purpose of title II of the Act or would be against equity and good conscience.
Section 404.507 of Regulations No. 4 provides, in part, that --
"In determining whether an individual is at fault, the Administration
will consider all pertinent circumstances, including his age,
intelligence, education, and physical and mental condition. What
constitutes fault . . . on the part of the overpaid individual . .
.depends upon whether the facts show that the incorrect payment to the
individual . . . resulted from:
- (a) An incorrect statement made by the individual which he knew or should have known to be incorrect; or
- (b) Failure to furnish information which he knew or should have known to be material; or
- (c) With respect to the overpaid individual only, acceptance of payment which he either knew or could have been expected to have known was incorrect."
Section 404.511(a) of Regulations No. 4 provides, in part, that fault exists if an incorrect payment arose from a lack of good faith or a failure to exercise a high degree of care in determining whether circumstances which may cause deductions from benefits should be brought to the attention of SSA by an immediate report or by return of a benefit check. The high degree of care expected of an individual may vary with the complexity of the circumstances giving rise to the overpayment and with the capacity of the particular individual to realize that he or she is being overpaid.
The claimant initially became entitled to child's insurance benefits on his father's record in October 1971, based on an application filed by his mother on November 1, 1971. The claimant attained age 18 in October 1975 and, pursuant to section 202(d)(1)(E) of the Act, his benefits would have terminated in that month unless he was a full-time student or under a disability.
To determine whether the claimant would be a full-time student upon attaining age 18, he was required to complete a student statement regarding his anticipated school attendance, and his work and earnings status, if any. This form contained a detachable sheet explaining the conditions for continuing benefits and gave a detailed explanation to how excess earnings affect the amount of benefits payable. The claimant signed this student statement on July 26, 1975, and agreed to make all necessary reports. Based on this statement, the claimant's benefits were continued when he attained age 18 through a determination of benefit adjustment prepared on September 24, 1975. The benefit adjustment form showed that a booklet describing the rights and responsibilities of student beneficiaries was mailed to the claimant at the time. Thus, the claimant's continuing entitlement to benefits when he attained age 18 was based on his own actions and representations.
On March 11, 1976, the claimant filed a student report showing that he would be in full-time attendance at a university from August 1976 through May 1977, and that his 1976 earnings would not exceed the $2,760 limit in effect for that year. On March 19, 1977, he filed another student report showing that he was still in full-time school attendance and that his 1977 earnings would not exceed $3,000 limit in effect for that year. Similar reports were filed on April 9, 1979, and July 10, 1979. The first report showing an earnings estimate in excess of the applicable annual limit was the one for April 27, 1979. ON that report, the claimant estimated that his 1979 earnings would be $4,200, but even then he indicated that he was not working for wages in excess of the $290 monthly limit in effect for that year. In July 1979, the claimant changed his 1979 earnings estimate. He indicated that his earnings for that year would be $5,730 and, for the first time, reported that he was working fore wages in excess of the monthly limit. Each of these forms was mailed to his mother's address along with instructions for completing the form, and his signature on each form established that he had received all of these materials. Therefore, the claimant's testimony that he never received instructions about reporting his earnings or that he did not understand that excess earnings affected the amount of benefits payable was not credible.
Although his April 27, 1979, report stated that he was not earning in excess of $290 a month, it was later shown, through a report obtained from his employers for 1979, that the claimant earned in excess of that amount in all months of 1979. Thus, he provided information on that student report which he knew, or should have known, was incorrect. The annual report of earnings for 19789 was not filed until July 15, 1980, and thus cannot be considered a timely report.
The overpayment for 1978 was caused by the claimant's estimate, given in April 1978, that his earnings would not exceed the $3,240 limit in effect for that year. Thus, SSA had no knowledge that the claimant was employed or had excess earnings in 1978 until the claimant filed a student report in April 1979. There is no evidence to show that a timely annual report of earnings was filed for 1978, but it was ultimately discovered that the claimant earned wages of $4,822 for that year. Even if the report had been timely filed, SSA could not have prevented the incorrect payments because all prior reports showed that the claimant's 1978 earnings had not exceeded the limit in effect for that year.
The claimant had been a university student since August 1976 and there was no indication in the record to show that he was incapable of understanding the instructions that were provided to him. Essentially all of the reports he completed showed the annual and monthly earnings limits and required that he make a direct response as to whether his earnings exceeded those limits. Nonetheless, he did not report that he was working or had excess earnings until April 1979 -- by which time the total overpayment had already been incurred -- nor did he return any benefit checks which he should have known were incorrect payments.
The AC found that the claimant had not exercised the high degree of care required by § 404.511(a) of Regulations No. 4. Accordingly, the AC concluded that the claimant was at fault in causing the $917.70 overpayment of child's insurance benefits made to him during 1978 and 1979, and that recovery of the overpayment could not be waived.