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Cohen v. Bowen

decided: January 25, 1988.

MARY COHEN, PLAINTIFF-APPELLANT,
v.
OTIS BOWEN, SECRETARY OF HEALTH AND HUMAN SERVICES, DEFENDANT-APPELLEE



Appeal from a judgment of the United States District Court for the Southern District of New York, Constance Baker Motley, Judge, denying plaintiff's application for attorney fees under the Equal Access to Justice Act, 28 U.S.C. 2412. Affirmed.

Kaufman, Miner and Davis,*fn* Circuit Judges.

Author: Davis

DAVIS, Circuit Judge:

Following her successful court challenge of an adverse decision of the Social Security Administration (SSA), plaintiff-appellant Mary Cohen applied for attorney fees pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412. The district court determined that the position of the Government in defending the agency was substantially justified, and therefore declined to award attorney fees. Mrs. Cohen has brought this appeal.

I.

The EAJA permits parties who successfully challenge Government actions in the courts to recover the costs of the litigation when the legal position taken by the Government in defending the action is not "substantially justified."*fn1 In this case, the Government chose to defend against appellant's successful appeal of an administrative decision denying her relief from repayment of a windfall in benefits. The question here is whether that position was substantially justified.

Mrs. Cohen first received social security retirement benefits on her own account in 1963. When her husband, Sidney Cohen, died in 1968, she received widow's benefits, apparently on her husband's account. She remarried in 1971. Coincidentally, her second husband's last name was also Cohen. When the second Mr. Cohen died in 1980, she applied for widow's benefits on his account. At this time it was discovered that the appellant had continued to receive widow's benefits on the account of the first Mr. Cohen throughout the period of her marriage to the second Mr. Cohen. Under the law applicable between 1971 and 1979, her widow's benefits on the account of her first husband should have been reduced when she remarried.*fn2

The SSA notified the appellant that she had been overpaid by $7,175.40, and began to recover that overpayment by deducting $81 per month from her benefits. Mrs. Cohen applied to have this recoupment waived, claiming that her failure to report her remarriage was innocent, and that the recoupment would cause her serious economic hardship. Under 42 U.S.C. § 404(b), the repayment will be excused where the recipient of the overpayment was "without fault" and recovery of the overpayment would "defeat the purpose" of the Social Security Act or "would be against equity and good conscience." An overpaid beneficiary may be found to be at fault, and thus not entitled to a waiver, for "(b) Failure to furnish information which he knew or should have known to be material; or (c) . . . [A]cceptance of a payment which he either knew or could have been expected to know was incorrect." 20 C.F.R. § 404.507(b)-(c) (1984). Recovering an overpayment will "defeat the purpose" of the Act when the individual "needs substantially all of his current income (including social security monthly benefits) to meet current ordinary and necessary living expenses." 20 C.F.R. § 404.508(b).

A hearing was held before an Administrative Law Judge (ALJ) on the issue of whether recoupment should be waived. Appellant testified that, although she was aware that remarriage should be reported to the SSA, her new husband had told her that he would take care of it and she assumed that he had done so. She said that she had never realized that she had been receiving widow's benefits on her first husband's account, but rather had believed all along that she was receiving payments on her own account. There was no documentary evidence that she had ever applied for widow's benefits when her first husband died. She received correspondence and payments from the SSA bearing her own social security number and the suffix "A", SSA code for payments on one's own account.

The AL), however, did not find this evidence to be persuasive. He denied her petition after concluding that she was not without fault because she had failed to furnish information about her remarriage which she knew or should have known affected her payments and accepted payments which she knew or should have known were incorrect. His opinion noted that all social security recipients are given legal notices concerning their reporting responsibilities when they apply for benefits and in periodic mailings that accompany benefit checks, and emphasized Mrs. Cohen's admission that she knew that the SSA should be notified of any remarriage.

II.

When the ALJ's decision became final, appellant brought an action under 42 U.S.C. § 405(g) asking the United States District Court to review the Secretary's denial of her request for waiver of recoupment. Both parties moved for a judgment on the pleadings and the case was referred to a magistrate for a Report and Recommendation. In her report the magistrate recommended reversal of the Secretary's decision. The magistrate found nothing in the record to support the ALJ's holding that Mrs. Cohen knew or should have known that failure to inform the SSA of her remarriage would affect her benefits or that the payments she received were incorrect. The reasoning was that as long as Mrs. Cohen believed she was receiving her benefits only on her own account, there was no cause for her to suspect that failure to report her remarriage would affect those benefits or that the payments were incorrect. Since there was no evidence in the record controverting Mrs. Cohen's testimony, there was no substantial evidence supporting the finding that she was at fault. Her admission that she knew she had to report her remarriage to the SSA did not necessarily imply knowledge that informing the SSA of her marriage would reduce her benefits. The report also noted that the record had established, and the Secretary had conceded, that recoupment would impose a hardship on Mrs. Cohen that would "defeat the purpose" of the Act within the meaning of 20 C.F.R. 404.508.

The Government did not object to the magistrate's Report and Recommendation. The district court then entered an order reversing the decision of the Secretary and ordering the Secretary to restore Mrs. Cohen's full ...


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