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March 28, 1990


The opinion of the court was delivered by: Stewart, District Judge:


At the outset we express our great hope that this decision will help to resolve a long and often troubling course of events. This action has been particularly frustrating because the parties had reached the brink of what all considered to be an fair settlement over a year ago only to see it subsequently unravel. A recitation of the background to this action will amply illustrate the convoluted twists and turns this case has taken and the almost unfathomable bureaucracy of the Social Security Administration (the "SSA") which has in great part complicated the resolution of this matter.


Plaintiff, Granville Hinton, originally filed this action pro se on December 26, 1984 seeking, inter alia, reinstatement of Supplemental Security Income ("SSI") benefits.*fn1 Mr. Hinton's difficulties began in 1980 when the SSA erroneously denied plaintiff's application for Social Security retirement insurance benefits in 1980. In 1981 this error was corrected and retroactive retirement benefits of $5626.50 were awarded to plaintiff along with monthly retirement benefits of $180.40. Since plaintiff was also a recipient of SSI this award of retirement benefits reduced his SSI benefits.*fn2 Thus, commencing in March of 1982 plaintiff began to receive monthly SSI benefits of $167.51.*fn3

This would have been the end of it were it not for the fact that plaintiff's receipt of over $5000 in retroactive retirement benefits also had an effect on his eligibility for SSI benefits. SSI recipients must have limited resources to be eligible for SSI benefits.*fn4 In 1982 the resource limit was $1500. Accordingly, despite plaintiff's assertion that he had spent $4500 of his retroactive retirement benefits repaying loans, the SSA terminated his SSI benefits in July of 1982 for being over the resource limit. It also concluded that plaintiff had been overpaid $1646.66 in SSI benefits, and that no SSI benefits were due to plaintiff for the preceding three months. Plaintiff requested a reconsideration of these actions since he contended that the retroactive benefit funds had been used to pay creditors. His request for reconsideration was administratively denied.

In December of 1982 plaintiff requested an administrative hearing to appeal the termination and overpayment determinations before an administrative law judge. Unfortunately, the administrative law judge did not directly address these issues in her decision, deciding only a collateral issue. In May of 1983 the Appeals Council denied plaintiff's request for review. Plaintiff then filed in June of 1983 a new application for SSI benefits. This new application was apparently not acted upon.

The next step taken by plaintiff was the filing of the instant action in December of 1984. Defendant Secretary of Health and Human Services (the "Secretary") moved for remand in order to locate plaintiff's claims file. On August 16, 1985 we granted the Secretary's motion for remand (the "August Order" or "remand Order") and awarded plaintiff interim benefits during the pendency of the remand "in an amount equal to the amount that plaintiff had been receiving prior to defendant's termination of benefits in July 1982."

Nevertheless, the defendant released a check of approximately $1800 representing retroactive SSI benefits from June 1983 until July 1985. Despite plaintiff's statements to the contrary this check calculated retroactive benefits on the assumption that plaintiff had "reported" receiving in-kind support from the two deceased individuals. Moreover, the SSA informed plaintiff that his SSI benefits also were reduced because of his receipt of unearned income of $250.00/month from June 1983 until July 1985. However, and incredibly, this $250/month was apparently a "phony" entry which had been entered into the computer by SSA employees to keep the computer from releasing any checks to the plaintiff for retroactive benefits. See Defendant's Memorandum of Law In Opposition To Plaintiff's Motion for an Order Directing the Payment of Additional Benefits and Penalties and Enjoining the Reduction or Termination of Benefits ("Deft's Brief in Opposition") at 5. Yet this "phony" amount was actually charged as income to plaintiff.

Plaintiff requested an administrative appeal of this determination. This appeal was apparently not acted upon. Therefore, since plaintiff believed the amount of the retroactive benefits to be wrong he returned the check to the SSA uncashed.

To add to the confusion, the information about the in-kind support from the two deceased individuals was not corrected in the computer. The result was that plaintiff also received greatly reduced SSI benefit checks for the winter months of 1985. When plaintiff also returned these benefit checks uncashed, he was placed on "non-pay" status and no longer received any checks whatsoever.*fn5

Meanwhile pursuant to our remand Order a number of administrative hearings were held. On October 6, 1986, the Social Security Appeals Council issued a decision which held that the plaintiff was not over the resource limit, that there was no basis for termination of his benefits, and that there was no basis for the overpayment determination except for the month of April 1982. The Appeals Council waived this April overpayment.*fn6 In February of 1987 defendants notified this court of the Appeals Council determination.

Finally, in July of 1987 plaintiff was restored to SSI benefits. Presumably, pursuant to the Appeals Council decision which reinstated plaintiff's benefits from July 1982, several checks were also issued to plaintiff by SSA totaling approximately $6100. These checks were sent in varying amounts over a period of months without any explanation as to what they were for. Because plaintiff believed that these checks were for retroactive payments and since the amount did not represent the full retroactive amount he believed was due him, he moved to hold defendant in contempt of our August Order and for an accounting. This motion was not adjudicated since there was definite movement by the parties toward settlement after the contempt motion was filed.

Plaintiff argues that the reductions in plaintiff's SSI benefits were in violation of our August Order and done without proper notice and opportunity to be heard or despite plaintiff's timely requests for waiver or appeal. Plaintiff now demands $4423.63 representing unpaid SSI retroactive benefits from July 1982 through July 1985 and $63.90 in computational errors in defendant's accounting filed with the court on September 14, 1988.*fn8 In addition, plaintiff asks for a penalty of $1000 for civil contempt of our remand Order and to compensate plaintiff for the delay in benefits. Finally, plaintiff requests that we issue an order enjoining future reduction or termination of plaintiff's SSI benefits.

Defendant counters that all retroactive benefits have been paid to plaintiff save $63.90 which it agrees was the result of a computational error in computing plaintiff's retroactive benefits. It contends that plaintiff's SSI benefits from July 1982 until July 1985 were correctly reduced because he "reported" in-kind support for that period. Thus, no further retroactive benefits are owed plaintiff. Moreover, even if the determination to reduce plaintiff SSI benefits to reflect any "reported" in-kind support was wrong, defendant avers that plaintiff has not exhausted his administrative remedies with respect to this determination. Therefore, defendant asserts that absent an agency "final decision" regarding whether plaintiff received in-kind support from July 1982 through July 1985 this court may not rule on his entitlement to SSI benefits.*fn9

Finally, the Secretary argues that the court is without jurisdiction to award injunctive relief of the type requested by plaintiff. Defendant asserts that to enjoin the Secretary from reducing or terminating plaintiff's benefits would enjoin the Secretary from doing what the Social Security Act (the "Act") requires the Secretary to do — i.e., determine eligibility for SSI benefits based on criteria articulated in the Act.


Because of the confused circumstances of this case and the relatively unusual posture of it, we begin with a brief overview of the applicable law. The Act limits judicial review to those cases in which an individual was a party to a hearing before the Secretary on his or her claim, a "final decision" has been rendered by the Secretary on the claim, and a timely action is brought in an appropriate district court to review that decision. See 42 U.S.C. § 405(g) and (h).*fn10 Central to the grant of a district court's subject matter jurisdiction is the requirement that there be a "final decision" by the Secretary after a hearing. See Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 899, 47 L.Ed.2d 18 (1975).

Construing the "final decision" requirement the Supreme Court has held that there are two conditions which must be satisfied to obtain judicial review under ยง 405(g). The first condition is that administrative remedies be exhausted. The second condition is that a claim for benefits shall have been presented to the Secretary. Id. at 328, 96 S.Ct. at 899. Exhaustion of remedies is waivable by the Secretary or in circumstances "where a claimant's interest in having a particular issue resolved promptly is so great that deference to the agency's judgment is inappropriate." Id. at 330, 96 S.Ct. at 900. However, a claim for benefits must be made upon the Secretary and is "an essential and ...

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