United States District Court, D. Nebraska
JAMES P. HUBER and ARDELLA S. HUBER, Plaintiffs,
CAROLYN W. COLVIN, Acting Commissioner of the Social Security Administration, Defendant.
MEMORANDUM AND ORDER
RICHARD G. KOPF, Senior District Judge.
Plaintiff, James P. Huber,  brings this action to contest a final administrative decision by the Commissioner of the Social Security Administration ("Commissioner" or "SSA") that he is not entitled to a waiver of recovery of overpayments for Social Security benefits that he received between November 2007 and August 2010, in the total amount of $63, 318.00. For the reasons discussed below, the Commissioner's decision will be affirmed.
I. Statement of Facts and Procedural Background
Plaintiff applied for disability insurance benefits under Title II of the Social Security Act on July 28, 2006, alleging disability beginning January 27, 2006, due to organic mental disorders and affective mood disorders. See 42 U.S.C. §§ 416(i) & 423. SSA determined that Plaintiff became disabled on June 1, 2006, and was eligible for disability benefits beginning in November 2006, five calendar months after he became disabled. SSA stated that Plaintiff would receive $1, 754.00 each month. The notice of award stated that it was Plaintiff's responsibility to let SSA know if he was able to return to work. SSA also cited two publications that Plaintiff could access about how work and earnings affect disability benefits.
In August 2007, Plaintiff filed a work activity report, stating that on November 13, 2006, he started full-time work as a laborer at BNSF. Plaintiff stated that he made $15.04 an hour at the start of his employment and was currently earning $15.89 an hour. In an internal SSA document, SSA acknowledged that Plaintiff timely reported his work activity. That same month, SSA responded to Plaintiff's information, stating "it appears we will decide that your disability ended because of substantial work [in] August 2007 and that you are not entitled to payments beginning November 2007" (Tr. 36). SSA's August 2007 letter explained that Plaintiff had an extended 36-month eligibility period that began immediately after his trial work period. During the 36-month period, SSA would restart payment for any month that Plaintiff's work did not qualify as "substantial" if his health problems still met SSA's rules for disability eligibility. SSA stated that work qualified as substantial if the employee's gross monthly earnings averaged more than $860 in 2006 and $900 in 2007. SSA gave Plaintiff several telephone numbers and a web site address to use if he had any questions. Plaintiff's updated June 2011 earnings records showed that he earned $2, 997.30 in 2006; $36, 157.72 in 2007; $38, 059.74 in 2008; $42, 102.70 in 2009; and $45, 283.43 in 2010.
In September 2007, SSA sent Plaintiff a cessation of benefits notice, stating that Plaintiff's eligibility ended in August 2007. That same month, SSA sent Plaintiff a notice of revised decision, stating that beginning November 2007, Plaintiff's disability ended and that Plaintiff was no longer entitled to payments. SSA noted that Plaintiff's payments had continued during a 9-month trial work period, which ended in July 2007. In keeping with the regulations, SSA continued to make payments for 2 months following the trial work period, through October 2007. SSA explained again that after Plaintiff's trial work period, he was entitled a to a 36-month extended period of eligibility during which SSA would restart payments for any months where Plaintiff's work was not substantial gainful activity and he continued to meet SSA's health rules. SSA told Plaintiff that "[b]ased on the information we have, your extended period of eligibility began August 2007 and will end after 36 months" (Tr. 44). The notice of revised decision again set out the 2006 and 2007 amount of earnings per month that indicated substantial gainful activity. The notice also mentioned the possibility of underpayment or overpayment that could be due and relisted contact information if Plaintiff had any questions.
Despite SSA's August and September 2007 communications to Plaintiff, both of which were from the Lincoln, Nebraska field office, SSA's Kansas City, Missouri processing center sent Plaintiff notice in November 2009 that SSA was increasing his monthly benefit amount to $1, 983.00 beginning December 2009. The letter provided the usual contact numbers and web site information.
On August 30, 2010, SSA notified Plaintiff that it had paid him $65, 281.00 more in benefits than he was entitled to from November 2007 through August 2010. SSA asked Plaintiff either to pay the full amount or to contact SSA to schedule partial payment. In September 2010, Plaintiff responded, stating that the overpayment was not his fault and he could not afford to repay it. Plaintiff stated that he had "[n]ever received statement or letter of denial or termination of payment, " but had "[r]eceived yearly notification of what monthly payment would be" and the "[e]xtended period of eligibility continued (letter 9-11-07)" (Tr. 54). Plaintiff listed assets of $100.00 in savings and two vehicles, with a combined value of $6, 500.00. Plaintiff stated that he was employed at BNSF had monthly take home pay of $2, 400.00. Plaintiff's spouse had $1, 600.00 in monthly take home pay. Plaintiff listed their adjusted monthly household expenses as $3, 930.00.
In March 2011, SSA informed Plaintiff that it would not waive the collection of the overpayment. SSA noted that Plaintiff had continued to receive his Social Security disability payments while working full time and had not provided SSA with any earnings information after 2007. Although Plaintiff asserted that he assumed SSA had all of his earnings information from the Internal Revenue Service, and that he believed he had 3 years to receive benefits and work at the same time, SSA did not consider these valid reasons for waiving the overpayment. In April 2011, SSA sent a new letter to Plaintiff communicating its reasoning and decision not to waive the overpayment. SSA explained to Plaintiff: "You accepted payments that you were expected to know were incorrect. The Social Security Administration does not pay monthly disability checks to individuals [who] are working full time" (Tr. 87).
In July 2011, Plaintiff responded that he believed SSA sent him the payments during the disputed time to see if he would be able to maintain employment. Plaintiff stated that he has difficulty maintaining focus and that he never thought that SSA was overpaying him. Plaintiff estimated his adjusted monthly expenses at $4, 095.00.
Plaintiff requested and was granted a hearing before an ALJ. SSA informed Plaintiff of his right to representation, but Plaintiff elected to represent himself at the hearing, which was held on February 22, 2012.
Plaintiff testified that he recalled being approved to receive benefits beginning in November 2006 and that he did, in fact, receive the benefits. Plaintiff testified that after he began receiving benefits, he started working for BNSF in November 2006, working 40 hours a week and making $15.04 an hour. Plaintiff agreed that he was working at the same time he received benefits and that he had reported his work activity to SSA in August 2007. Plaintiff stated he believed that once he qualified for benefits, he could receive benefits for 36 months while he worked.
Plaintiff's wife also testified at the hearing. She referred to the September 11, 2007 notice in which the SSA stated that Plaintiff's "extended period of eligibility began August 2007 and will end if substantial work is performed after 36 months following this date" (Tr. 44), and testified: "This is why we thought we were entitled or would continue to receive the benefits for a period of time regardless of Jim's ability to work, because we thought that 36 months was a trial period to see if he could maintain a job at his mental capacity" (Tr. 162).
Ms. Huber further noted that SSA knew Plaintiff was working at BNSF and had been informed by Plaintiff almost a year after he started working that he did not need Medicare because he had health insurance with BNSF. She testified Plaintiff received a letter from SSA stating that his benefits would be increased because he declined Medicare benefits, and that he received another letter in November 2009 stating that his benefits would again be increased. In response to questioning by the ALJ, Ms. Huber testified they were not concerned about the fact that usually $900.00 in wages indicated substantial work, because they thought their circumstances fell outside the usual circumstances. She noted that they always reported the Social Security disability payments to the IRS. ...