SSR 85-25a: SECTIONS 204(a)(1) AND (b) (42 U.S.C. 404(a)(1) AND (b)) OVERPAYMENT -- LIABILITY OF AUXILIARY BENEFICIARIES -- WAIVER OF RECOVERY AND ADJUSTMENT
20 CFR 404.502, 404.502a, 404.506, 404.507, AND 404.508
SSR 85-25a
- The claimant received wife's insurance benefits on her own behalf and child's insurance benefits on behalf of her children on the disabled worker's earnings record. When the Social Security Administration used a $1,564.87 underpayment that was due the claimant and her children to reduce the amount of an overpayment that the worker had incurred, the claimant appealed. Although the claimant and her children share liability with the worker under 20 CFR 404(a)(2) for repayment of his overpayment, they have a right to waiver consideration under 20 CFR 404.502a and 404.506, and recovery from benefits payable to them cannot be made if the conditions for waiver are met. The evidence of record showed that the claimant and her children were "without fault" with respect to the overpayment incurred by the worker and that it would "defeat the purpose" of title II of the Social Security Act to recover the overpayment from benefits payable to them. Held, (1) recovery of the overpayment incurred by the worker from benefits payable to claimant and her children is waived; (2) the $1,564.87 was incorrectly withheld from the claimant and her children to reduce the worker's overpayment and is payable to them; and (3) the balance of the overpayment subject to recovery from the worker is increased by $1,564.87.
The claimant received wife's insurance benefits on her own behalf and child's insurance benefits on behalf of her children on the disabled worker's earnings record. The issue before the Appeals Council (AC) was whether the Social Security Administration (SSA) had properly used a $1,564.87 underpayment that was otherwise due the claimant and her children to reduce the amount of an overpayment that had been incurred by the worker.
SSA initially withheld $6,952.89 in benefits from the worker, the claimant, and the children for possible payment of attorney fees. The attorney fees, however, were only $1,075.00. When SSA used the $5,877.89 underpayment ($6,952.80 - $1,075.00 = $5,877.89) to reduce a $9,999.99 overpayment that the worker had incurred to $4,122.10, the claimant appealed. She contended that the portion of the underpayment due her and the children ($1,564.87) should have been paid to them instead of being used to reduce the amount of the worker's overpayment.
Section 204(a)(1) of the Social Security Act (the Act) provides, in pertinent part, that --
- "Whenever the Secretary finds that more or less than the correct amount of payment has been made to any person under this title, proper adjustment or recovery shall be made, under regulations prescribed by the Secretary, as follows:
- (1) With respect to payment to a person of more than the correct amount, the Secretary will decrease any payment under this title to which such overpaid person is entitled or shall require such overpaid person or his estate to refund the amount in excess of the correct amount, or shall decrease any payment under this title payable to his estate or to any other person on the basis of the wages and self-employment income which were the basis of the payments to such overpaid person, or shall apply an combination of the foregoing. . . ."
Section 204(b) of the Act and § 404.506 of Regulations No. 4 provide that, 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 from, any person who is without fault if such adjustment or recovery would defeat the purpose of title II of the Act or would be against equity and good conscience.
Although the claimant and her children shared liability with the worker under § 404.502(a)(2) of Regulations No. 4 for repayment of his overpayment, they were still entitled to independent consideration for waiver under §§ 404.502a and 404.506 of Regulations No. 4, and no adjustment or recovery could be made against them if the conditions for waiver were met. The AC found that the claimant had her children had not received any of the benefits that were overpaid to the worker, that they had been separated from him since before he was overpaid, and that they would suffer undue financial hardship if the underpayment due them were applied towards his overpayment. On the basis of these findings, the AC concluded that neither the claimant nor her children were "at fault" with respect to the overpayment incurred by the worker and that applying the underpayment due them towards his overpayment would "defeat the purpose" of title II of the Act. Accordingly, the AC found that recovery of the worker's overpayment from benefits payable to the claimant and her children should be waived, that the $1,564.87 in benefits that had been withheld from the claimant and her children because of the worker's overpayment should be paid to them, and that the balance of the overpayment subject to recovery from the worker should be increased by $1,564.87.