SSR 76-20c: SECTIONS 202(d) and 204(b) (42 U.S.C. 402(d) and 404(b)) -- CHILD'S INSURANCE BENEFITS -- OVERPAYMENTS -- CHILD OVER AGE 18 NO LONGER STUDENT

20 CFR 404.506 and 404.507

SSR 76-20c

MUNCE v. MATHEWS, 1A Unempl. Ins. Rep. #14,611 (S.D. Ohio 1976)

The child's insurance beneficiary born in January 1953 was graduated from high school in June 1972 and did not continue in school after that date. Knowing that entitlement to child's insurance benefits terminates when a beneficiary over age 18 is no longer a full-time student, the plaintiff continued to accept monthly benefit payments in the belief that notification of these events was unnecessary and that payments would terminate automatically. Held, in continuing to accept such payments with the knowledge that entitlement had ceased, plaintiff was not without fault in causing the overpayment of benefits and recovery of the overpayment may not be waived pursuant to section 204(b) of the Social Security Act.

DUNCAN, District Judge:

This is an action under the Social Security Act, 42 U.S.C. Section 405(g), for review of a final decision of the Secretary of Health, Education and Welfare refusing to waive repayment of an overpayment of social security benefits. This matter is before the Court on plaintiff's motion for summary judgment.

Since 1959, plaintiff and her children have been receiving survivor benefits under the Social Security Act. A child is entitled to benefits until he reaches the age of 18. If a child continues in regular school attendance, he is entitled to benefits from age 18 to age 22. Plaintiff's daughter, Alice M. Estep, was born January 1, 1953. In June, 1972, she graduated from high school. She did not thereafter attend school; thus, she became ineligible for further benefits in June, 1972. Neither plaintiff nor her daughter notified the Social Security Administration of the daughter's ineligibility. An overpayment of $1,255.70 resulted.

The administrative law judge made the following findings of fact which are fully supported by the record before the Secretary:

During the oral hearing, at which the appellant, Ruth K. Munce, and her attorney, James W. Brown, appeared and participated on October 18, 1974, Mrs. Munce testified that she actually telephoned the Social Security District Office and informed them that Alice was no longer in regular school attendance. She stated that she was told by an individual to whom she talked on the telephone at the district office not to bother them with this information because they automatically adjust payments to children when they attain age 18, or when they stop going to school after age 18. She could not explain how anyone could expect the Social Security Administration to know that a child had discontinued school attendance, unless notification was given. In a questionnaire dated August 3, 1973, the appellant stated "I thought the Social Security Office made the adjustments themselves when a child reached 18 or finished school, as they did with the other children." Thus, the appellant's statements on August 3, 1973 and during the course of the hearing are to the effect that she believed that she was not required to notify the Social Security Administration that Alice was no longer in school attendance after June 1972.

The fact remains, however, that Mrs. Munce did send a notice in March of 1971 with respect to the school year ending June 1971. On that notice, she indicated that Alice was still in full time school attendance; that Alice intended to continue full time school attendance; and that she intended to continue in full time school attendance through the next school year ending June 1972. The next notice sent by Mrs. Munce to the Administration contains no dates and was received by the Administration in April 1973. It shows that Alice is not attending school and that she does not intend to attend school. Upon further inquiry, it developed that June 1972 was the last month in which Alice attended school, and that, therefore, she obtained a job.

On the basis of a refund questionnaire completed by Mrs. Munce, it is apparent that recovery of the overpayment of $1,255.70 would result in some financial hardship. However, I cannot, under the circumstances of this case, find that the appellant was without fault in causing the overpayment. On the contrary, I specifically find that the appellant knew of her obligation to notify the Administration that Alice discontinued regular school attendance after June 1972. I assign no credibility to her assertion that she was informed by employees of the District Office not to bother them with such information because they automatically took the proper action in such cases. The fact that she actually did send notices with respect to Alice's school attendance in March 1971 and in April 1973 clearly indicates that she knew of her obligation to report this event, and that she actually did report the events, but not in time to avoid the overpayment. Consequently, I am persuaded, and I so find, that the appellant was not without fault in this matter.

By reason of the foregoing, it is my decision that adjustment or recovery of the overpayment in this case may not be waived.

Under the provisions of 20 C.F.R. § 404.506 the Secretary will waive recovery of an overpayment if the recipient was "without fault" and the recovery would either "(1) Defeat the purpose of Title II of the Act of (2) Be against equity in good conscience." Fault is defined in 20 C.F.R. §404.507:

"Fault" as used in "without fault" . . . applies only to the individual. Although the Administration may have been at fault in making the overpayment, that fact does not relieve the overpaid individual or any other individual from whom the Administration seeks to recover the overpayment from liability for repayment if such individual is not without fault. In determining whether an individual is not without fault, the Administration will consider all pertinent circumstances, including his age, intelligence, education, and physical and mental condition. What constitutes fault . . . on the part of the overpaid individual . . . depends upon whether the facts show that the incorrect payment to the individual . . . resulted from:

(a) An incorrect statement made by the individual which he knew or should have known to be incorrect; or

(b) failure to furnish information which he knew or should have known to be material; or

(c) with respect to the overpaid individual only, acceptance of a payment which he either knew or could have been expected to know as incorrect.

The administrative law judge's determination that plaintiff was not without fault is supported by substantial evidence. Plaintiff's theory is that she thought the Social Security Administration would make the adjustments to the social security payments when the child reached age 18 or finished school. She further states that she was so informed by a local social security administration office. Assuming these facts to be true, plaintiff knew that her daughter's benefits should have been terminated in June, 1972 when she quit school. She was merely under the belief that the Social Security Administration would automatically terminate the payments. When the administration did not, plaintiff then, of necessity, knew that she had received an overpayment of social security benefits. Plaintiff, therefore, accepted, the payment on behalf of her daughter knowing it to have been incorrect.

WHEREUPON, the Court HOLDS that plaintiff's motion for summary judgment is without merit, and therefore it is DENIED. The decision of the Secretary of Health, Education and Welfare is AFFIRMED.