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LIEBERMAN v. SHALALA

March 15, 1995

JOYCE LIEBERMAN, Plaintiff, against DONNA E. SHALALA, SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant.

John E. Sprizzo, United States District Judge


The opinion of the court was delivered by: JOHN E. SPRIZZO

SPRIZZO, D.J.

 Plaintiff brings the instant action pursuant to§§ 405(g) and 1383(c)(3) of the Social Security Act (the "Act"), to challenge a final determination of the Secretary of Health and Human Services (the "Secretary") denying her request for a waiver of recovery of an overpayment of disability insurance benefits. Pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, both parties have moved for a judgment on the pleadings. For the reasons that follow, the action is remanded for further administrative proceedings.

 BACKGROUND

 Plaintiff Joyce Lieberman, a fifty year-old female, became unable to work due to a diabetic condition in March 1988. See Transcript of the Administrative Record ("Tr.") 19-21, 45. On July 28, 1988, Lieberman applied for disability insurance benefits. Id. at 57. In February 1989, she was awarded disability benefits, with her disability relating back to July 2, 1988. Id. at 46. On March 20, 1989, she commenced full-time employment with Telstar, as a telephone answering service operator. Id. at 22, 60-63. On May 11, 1989, she advised defendant of her employment activity by filing a work activity report. Id. at 60-63.

 By letter dated June 29, 1989, the Social Security Administration ("SSA") notified Lieberman that she was entitled to a nine-month trial work period, *fn1" which would expire in November 1989. Tr. 33-34. The notification further provided that her claim would be reviewed at that time. Id. On December 3, 1990, Lieberman filed another work activity report with defendant. Id. at 64-67. Following an inquiry by the SSA, Telstar confirmed her continued employment on December 7, 1990. Id. at 35-37.

 Through February 1990, Lieberman continued to be employed by Telstar and defendant continued to issue her disability benefits. Tr. 39. By letter dated January 28, 1991, however, the SSA informed her that she no longer qualified for disability benefits. Id. at 38-40, 42-45. By letter dated February 26, 1991, the SSA further advised her that, because she had been working full-time while receiving disability benefits for the eleven-month period of March 1990 through January 1991, she had received an overpayment of $ 5,153.80. Id. at 47-48.

 On March 19, 1991 and June 17, 1991, Lieberman requested that the SSA waive her obligation of repayment. Tr. 68-97. By letters dated May 11, 1991 and August 8, 1991, those requests were denied. Id. at 52-55. On September 24, 1991, a personal conference was held, and on October 11, 1991, the initial denial was determined to be correct. Id. at 56-58. At Lieberman's request, an administrative hearing was held before an administrative law judge ("ALJ") on June 23, 1992. Id. at 59. On August 17, 1992, the ALJ held that she was not entitled to a waiver of recovery of the overpayment. Id. at 10-13. Upon its affirmance by the Appeals Council, the ALJ's decision became the final decision of the Secretary. Id. at 3-4. *fn2"

 The sole issue before the Court is whether plaintiff is entitled to a waiver of recovery of the overpayment. For the reasons set forth below, this case is remanded to the Secretary for further proceedings. See Gold v. Secretary of Health, Educ. & Welfare, 463 F.2d 38, 44 (2d Cir. 1972).

 Pursuant to sections 405 and 1383 of the Act, the Secretary may recover an overpayment of disability insurance payments. The Act sets forth the framework for the recovery and waiver of overpayments, and provides in pertinent part:

 
The Secretary . . . shall make such provision as he finds appropriate in the case of payment of more than the correct amount of benefits with respect to an individual with a view to avoid penalizing such individual . . . who was without fault in connection with the overpayment, if adjustment or recovery on account of such overpayment in such case would defeat the purposes of this subchapter, or be against equity and good conscience . . .

 42 U.S.C. § 1383(b)(1)(B). Thus, in order to waive recovery under the Act, a recipient must demonstrate that he was without fault, and that recovery would defeat the purposes of the Act or would be inequitable. See Chlieb v. Heckler, 777 F.2d 842, 846 (2d Cir. 1985); Center v. Schweiker, 704 F.2d 678, 680 (2d Cir. 1983).

 Pursuant to its delegated rulemaking authority, the Secretary has promulgated regulations construing the term "fault" and has enumerated factors to be considered in determining whether an individual is "without fault." An individual is at fault where the overpayment resulted from "an incorrect statement made by the individual which he knew or should have known to be incorrect," 20 C.F.R. § 404.507(a), or from a "failure to furnish information which he knew or should have known to be material," Id. at § 404.507(b), or where the individual accepted "a payment which he either knew or could have been expected to know was incorrect, Id. at § 404.507(c). Moreover, because the term fault "applies only to the individual," even if the SSA "may have been at fault in making the overpayments, that fact does not relieve the overpaid individual . . . from liability for repayment if such individual is not without fault." Id. at § 404.507. Finally, in ...


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