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POSNACK v. SECRETARY OF HHS

March 14, 1986

MILDRED POSNACK, Plaintiff,
v.
SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant



The opinion of the court was delivered by: PLATT

THOMAS C. PLATT, D. J.

 MEMORANDUM AND ORDER

 This case is before the Court on the motion of the defendant Secretary for judgment on the pleadings, pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. The plaintiff seeks a waiver of the recovery of an overpayment of benefits and has filed a memorandum of law in opposition to the defendant's motion. For the reasons set forth below, defendant's motion is granted but any recovery of overpayments shall proceed in accordance with the instructions in this Order.

 I. Background

 Plaintiff, Mildred Posnack, is a woman in her late seventies who is allegedly suffering from cataracts and a knee disability. The controversy in this case concerns Social Security benefits which Ms. Posnack received some years ago.

 In April of 1967 plaintiff's husband died. Shortly thereafter, plaintiff applied for widow's insurance benefits under her husband's Social Security account. This application was approved and plaintiff began receiving widow's benefits, under her husband's account, in December 1968. Sometime in late 1973 plaintiff became eligible for Social Security retirement benefits under her own account. The Social Security Administration ("SSA") approved plaintiff's application for retirement benefits and payments commenced sometime in late 1973-early 1974. At this point, plaintiff's benefits under the two programs should have been combined into a single, reduced monthly payment. However, an error by the SSA resulted in plaintiff receiving continued benefits under both programs. It appears that from January 1974 until May 1981, plaintiff received two checks from the SSA, one for widow's benefits and one for her own retirement benefits. It was not until June of 1981 that the SSA discovered the mistake.

 The SSA determined that the widow's benefits which plaintiff had received from January 1974 through May 1981 were an overpayment amounting to $22,833.30. The SSA recovered $495.00 of this amount by withholding $99 from five of plaintiff's monthly benefit checks in 1982, leaving an outstanding overpayment of $22,338.30. In the interim, plaintiff had requested a waiver of the recovery of overpayments by the SSA. In April of 1984 a hearing was held in which the Administrative Law Judge ("ALJ") found that although the plaintiff was not at fault in accepting the overpayment, it would not defeat the purpose of Title II of the Social Security Act (the "Act") and would not be against equity and good conscience to recover the overpayment. The Appeals Council affirmed this decision in August of 1984. The sole issue before the Court is whether recovery of the overpayment in question would defeat the purpose of Title II or be against equity and good conscience.

 II. Discussion

 A. Legal Framework

 Given the fact that the parties agree that there was an overpayment and that the plaintiff was without fault in accepting it, the controlling statutory provision in this case is 42 U.S.C. § 404(b), which governs the recovery of overpayments under Title II of the Act. Section 404(b) provides:

 
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 by the United States from, any person who is without fault if such adjustment or recovery would defeat the purpose of this subchapter or would be against equity and good conscience.

 The Secretary has promulgated regulations which interpret the meaning of the statutory phrases: "defeat the purpose of" and "against equity and good conscience." Defeating the purpose of Title II is defined at 20 C.F.R. § 404.508 (1985):

 
(a) General. "Defeat the purpose of title II," for purposes of this subpart, means defeat the purpose of benefits under this title, i.e., to deprive a person of income required for ordinary and necessary living expenses. This depends upon whether the person has an income or financial resources sufficient for more than ordinary and necessary needs, or is dependent upon all of his current benefits for such needs. An individual's ordinary and necessary expenses include:
 
(1) Fixed living expenses, such as food and clothing, rent, mortgage payments, utilities, maintenance, insurance (e.g., life, accident, and health insurance including premiums for supplementary medical insurance ...

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