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ELLENDER v. SCHWEIKER

October 27, 1982

DOROTHY ELLENDER, ANGELA ZAMSKI, JAMES TROWBRIDGE, LOIS V. BRUNJES, and VERLEY SMITH, individually and on behalf of all others similarly situated, Plaintiffs,
v.
RICHARD S. SCHWEIKER, Secretary of the Department of Health and Human Services, and JOHN A. SVAHN, Commissioner of the Social Security Administration, Defendants


Irving Ben Cooper, D.J.


The opinion of the court was delivered by: COOPER

IRVING BEN COOPER, D.J.

Plaintiffs seek an order, pursuant to 28 U.S.C. § 2202 and Fed.R.Civ.P. 65, enjoining Richard S. Schweiker, Secretary of the Department of Health and Human Services, and John Svahn, Commissioner of the Social Security Administration, from recovering overpayments of Social Security benefits and withholding future benefits. Additionally, plaintiffs seek an order, pursuant to Fed.R.Civ.P. 23, certifying a class of all persons in New York State who have been, or will be, subjected to the collection efforts of the Social Security Administration. For reasons set forth below, the motions are granted in all respects.

 On September 14, 1982 Rose Cinque, Joyce Koslin and Jennie Koslin moved, by way of Order to Show Cause, to intervene in this action pursuant to Fed.R.Civ.P. 24. For reasons set forth infra, their application is granted in all respects.

 The gravamen of the factual allegations set forth in the complaint and the application for a preliminary injunction is that plaintiffs at present receive benefits under the Old Age, Survivors and Disability (OASDI) program, and formerly received benefits under the Supplemental Security Income (SSI) program. All have received notices from the Social Security Administration informing them that they have received SSI overpayments and repayment is due immediately or through reduction of OASDI benefits they now receive. *fn1" The claimed offending notices read:

 SUPPLEMENTAL SECURITY INCOME NOTICE OF ACTION TO RECOVER OVERPAYMENT

 FROM: Department of Health and Human Services Social Security Administration 333 Avenue X, Brooklyn, NY 11223

 Date: April 19, 1982

 Social Security Number:

 There is an outstanding $1954.86 balance on your supplemental security income overpayment due the Social Security Administration.

 Please refund the $1954.86 immediately. Make your check or money order payable to the Social Security Administration, social security number , and mail it in the enclosed envelope.

 If you cannot make full refund at this time, please refund as much as you can and contact us to arrange for refunding the balance. For your convenience, we can withhold the balance of your overpayment from your social security benefit.

 If you would like to use this method of repaying your overpayment, please sign the attached statement and return it to us in the enclosed envelope.

 If you wish to discuss a different method of repaying the overpayment, call, write or come into this office.

 Enclosures 627-3351

 Name

 SSN

 For my convenience, please withhold my full social security benefit each month until my supplemental security income (SSI) overpayment of $ is fully recovered.

  Signature

  Date

 In essence, plaintiffs assert that such notices are defective in the main, especially because they violate due process and statutory law by failing to advise them of their rights and omit necessary information concerning repayment. Thus: (1) Time periods during which the alleged overpayments arose; (2) Amount of overpayment in each time period; (3) Amount of any prior repayment; (4) Reason for the overpayment; (5) Right to reconsideration of the existence of the overpayment; (6) Right to have the overpayment waived; (7) Right to a hearing; (8) Assignment of OASDI benefits is prohibited by law; (9) Recovery of the overpayments may be barred by the applicable statute of limitations; and (10) Partial payment or written acknowledgement of the overpayment may revive the statute of limitations. *fn2"

 Plaintiffs further allege that efforts by the Social Security Administration to recoup overpayments in one program by reducing benefits in another program violate statutory provisions which bar, as a matter of law, the transfer or assignment of such benefits. See 42 U.S.C. § 407. Additionally, defendants have moved for an order dismissing the complaint for lack of subject matter jurisdiction and failure to state a claim. This application is denied to the extent discussed infra.

 Background

 The Supplemental Security Income (SSI) program is a federally-funded public assistance program established under Title XVI of the Social Security Act. *fn3" It provides minimum subsistence benefits to persons in need who are 65 years or older, and to persons under 65 who are blind or disabled and whose other incomes and resources fall below a prescribed level set by statute. It went into effect in January, 1974 and replaced earlier state-administered welfare programs for the aged, blind and disabled. *fn4"

 The Old Age, Survivors and Disability Insurance (OASDI) program, established under Title II of the Social Security Act, is an insurance program which provides retirement, disability and survivor benefits to former wage earners who have contributed to the program for a sufficient number of calendar quarters. *fn5" Once an eligible wage earner can no longer work due to age, disability or death, funds are paid to him or his survivors from the OASDI "trust fund" administered by the Social Security Administration. Millions of former workers receive their monthly green-colored Social Security checks from this fund.

 Even though both programs are under the auspices of the Social Security Administration, they are separate and distinct, and exist pursuant to different statutory authority. They have different eligibility requirements and were designed to serve entirely separate groups. SSI is a needs-based program funded from general revenues. *fn6" OASDI payments, funded through a trust fund, are based on contributions of the wage earner, number of working years and age of retirement. *fn7" Aged, blind or disabled OASDI recipients may be entitled to receive SSI payments in addition provided they meet the prerequisites of that program. *fn8"

 For reasons which remain largely unexplained, between January, 1974 and December, 1975 the Social Security Administration overpaid SSI recipients, including plaintiffs in the instant action. The only explanation for these overpayments in the record before us is that in one instance they resulted from "computer error." Affidavit, Anastasis Kastanos, undated, para. 7. The total amount of SSI overpayments nationwide was approximately $1 billion as of December 31, 1981. *fn9"

 The Secretary of the Department of Health and Human Services is empowered to recover OASDI overpayments by adjusting future OASDI payments:

 
"When the Secretary finds that more . . . than the correct amount of payment has been made to any person under this subchapter, proper adjustment or recovery shall be made, under ...

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