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Schwingel v. Harris

decided: October 2, 1980.


Appeal from judgment in the United States District Court for the Western District of New York, upholding appellee's determination, pursuant to 42 U.S.C. § 1383(b), requiring recover from appellant of overpaid Supplemental Security Income benefits. Reversed and remanded.

Before Feinberg, Chief Judge, Lumbard and Oakes, Circuit Judges.

Author: Feinberg

Plaintiff Pearle Schwingel, an 84-year-old widow, appeals from a judgment of the United States District Court for the Western District of New York in favor of defendant Patricia Roberts Harris, Secretary of Health and Human Services, in plaintiff's action to review the Secretary's determination that she had been overpaid $929.95 in Supplemental Security Income (SSI) benefits and that recovery of such overpayment should not be waived. On this appeal, plaintiff challenges neither the fact nor the amount of overpayment, but claims error only in the Secretary's determination not to waive the overpayment. For reasons given below, we vacate the judgment of the district court with instructions to remand the matter to the Secretary for further appropriate proceedings.


Plaintiff began receiving monthly SSI benefits in April 1974 as an aged individual, under Title XVI of the Social Security Act (the Act), 42 U.S.C. §§ 1381 et seq. The Act limits eligibility for benefits to individuals whose statutorily defined "resources" do not exceed $1,500.*fn1 42 U.S.C. § 1382(a)(1)(B). Plaintiff's problems with the Social Security Administration stem from her receipt in November 1974 of a retroactive payment of $500 in SSI benefits, which brought the balance in her bank account to $1,929.15. The balance continued to exceed $1,500 until March 1976, when the Administration informed plaintiff that her SSI benefits would be terminated. Soon thereafter, she was told that the Secretary would require repayment of $1,445.65 in excess payments made between April 1974 and March 1976. After reconsideration at plaintiff's request, the Secretary waived overpayment for the period prior to April 1975, but insisted on repayment of $929.95 paid subsequently, on the ground that plaintiff had failed to report her excess resources and "should have been aware of the resource limitations especially because of the work done concerning them when you applied."*fn2

In September 1976, plaintiff had a de novo hearing before an Administrative Law Judge (ALJ), pursuant to 42 U.S.C. § 1383(c). The issues before the ALJ were whether there had in fact been an overpayment of SSI benefits to plaintiff and, if so, whether the agency should waive recovery of such overpayment. Plaintiff, represented by counsel, was the only witness at the hearing, although various documents were also introduced into evidence. In his decision, issued in November 1976, the ALJ found that plaintiff lived alone in a house in Cohocton, New York, with a total monthly income of $154 in social security disability benefits and $90 in interest from a trust created in her late husband's estate. Her only resource was the bank account mentioned above.

The ALJ determined that no overpayment had been made to plaintiff because the $500 SSI check in November 1974 should have been considered as part of her "resources" under the Act. The ALJ observed:

To hold that the claimant is over resources because of the fact that she had deposited the supplemental security income check in addition to some monies which she had previously had on deposit would seem clearly to defeat the purposes and intent of Title XVI. This being the case the claimant was clearly entitled to supplemental security income benefits during the time period in question and consequently there can be no overpayment of benefits as originally claimed by the Administration in the total amount of $929.95.

The ALJ, therefore, never reached the issue whether any overpayment of SSI benefits to plaintiff should be waived.

In March 1978, sixteen months later, the Social Security Administration's Appeals Council notified plaintiff, under the applicable regulation,*fn3 that it was reopening her claim. The notice informed plaintiff that in the absence of persuasive evidence to the contrary the Council was prepared to find that plaintiff had been overpaid from April 1975 to March 1976 and that she knew or could have been expected to know that the amount in her bank account would affect her eligibility for benefits. The notice gave plaintiff twenty days to submit additional evidence and notified her that she could request an appearance before the Council to present oral argument. In a letter dated April 26, 1978 more than twenty days after the Council's notice but before it issued its decision plaintiff's attorney wrote to the Council, explaining the delay and enclosing an affidavit in which plaintiff swore that "Nobody explained to me that there was a limit on my savings or other resources for SSI eligibility. It was not explained to me that I had to report changes in the amount of my savings." Plaintiff also stated that the first time the limit had been explained to her was in March 1976, just before she received the notice of overpayment.

In an opinion dated May 5, 1978, the Appeals Council reversed the ALJ's construction of the Act, as follows:

The administrative law judge held that the $500 should not be considered as part of the $1500 resource limit. The Appeals Council notes that section 1613(a) of the Social Security Act and 416.1210 of Regulations No. 16 do not list supplemental security income checks as an excludable resource. On January 8, 1975, the Commissioner of Social Security approved a policy under which the Administration considers retroactive title XVI payments as an excludable resource in the quarter in which they are received and in the following quarter. There is no provision for further exclusion.

In this case, the retroactive payment was considered an excludable resource through March 31, 1975. Based on the Social Security Act and Regulations, as supplemented by the Commissioner's policy statement, the claimant's countable resources exceeded $1500 beginning April 1, 1975....

On this theory, the Council found that there had been an overpayment for the period from April 1975 to March 1976, which had earlier been calculated to be $929.25. However, this determination still left open the question whether to waive the overpayment, an issue that the ALJ had found unnecessary to decide. Rather than ...

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