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Mattern v. Mathews

decided: June 30, 1978.

ARLENE M. MATTERN, APPELLANT,
v.
F. DAVID MATHEWS, SECRETARY OF HEALTH, EDUCATION AND WELFARE, APPELLEE.



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA D.C. Civil No. 72-2522

Before Gibbons and Hunter, Circuit Judges and Stapleton, District Judge.*fn*

Author: Hunter

In this appeal we again examine the constitutionality of the procedures established by the Secretary of Health, Education and Welfare for recoupment of alleged overpayments under section 204 of the Social Security Act.*fn1 When this case was first presented to the district court, the administrative procedures were found to violate due process since they permitted an adjustment or reduction of social security payments without affording the beneficiary the right to a prior oral hearing. Mattern v. Weinberger, 377 F. Supp. 906 (E.D.Pa.1974). On review, we affirmed that decision with certain modifications. Mattern v. Weinberger, 519 F.2d 150 (3d Cir. 1975). The Supreme Court granted the Secretary's petition for certiorari, and vacated and remanded the case for reconsideration in light of its decision in Mathews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976). Mathews v. Mattern, 425 U.S. 987, 96 S. Ct. 2196, 48 L. Ed. 2d 812 (1976). We remanded the case to the district court, which reversed its earlier ruling and held the existing procedures satisfied the requirements of due process. Mattern v. Mathews, 427 F. Supp. 1318 (E.D.Pa.1977). We reverse, since we do not believe that Eldridge and subsequent cases substantially alter the result in our original decision.

I. THE STATUTORY BACKGROUND AND REGULATIONS

Section 204 of the Social Security Act permits the Secretary to recover overpayments of benefits paid under Title II of the Act, 42 U.S.C. §§ 401 Et seq., by withholding a portion of future benefits until the amount of the overpayment is recouped. Id. § 404(a). The right of recovery, however, is limited by section 204(b), Id. § 404(b). That section provides that there may be no recoupment when the overpaid beneficiary is "without fault"*fn2 and the recoupment either would "defeat the purpose" of Title II of the Act*fn3 or would be "against equity and good conscience."*fn4

The Secretary's regulations provide the procedure for recovery of overpayments made to recipients of old-age or disability benefits. First, an initial determination is made that an overpayment has occurred and that section 204(b) provides no basis for a "waiver" of recoupment (20 C.F.R. § 404.905). All recipients subject to recoupment are then sent letters which set forth the reasons for the proposed recoupment, the availability of reconsideration of the determination of overpayment, the conditions for "waiver" under section 204(b), and the need to consult with a local Administration office within thirty days if the recipient feels that circumstances would justify reconsideration or "waiver" (Social Security Claims Manual § 5503; 20 C.F.R. § 404.907). Full benefits are paid during the thirty day period (Claims Manual § 5503.3).

Once a request for reconsideration or "waiver" and supporting documents have been filed, the Secretary may further delay recoupment until the case has been reconsidered (Claims Manual §§ 5503.3, 5503.5). If the Secretary adheres to his initial determination after the reconsideration (20 C.F.R. § 404.914), the claimant is so notified and benefits begin to be withheld. Only at that time, after benefits have been reduced, does the claimant have the right to an evidentiary De novo hearing (20 C.F.R. § 404.917). At the hearing, the beneficiary has the right to introduce oral testimony and to cross-examine witnesses. (20 C.F.R. §§ 404.917-404.934). A request for a hearing does not delay recoupment. While the record in this case is not clear, it appears that a delay of several months usually occurs between the time benefits are withheld and the first opportunity for a hearing. The hearing is first reviewable by the Appeals Council of the Social Security Administration (20 C.F.R. § 404.945) and then by a federal district court under section 205(g) of the Act, 42 U.S.C. § 405(g).

II. FACTS

The facts giving rise to this case are fully described in our original opinion, 519 F.2d at 154-55. Briefly, the named plaintiff in this suit, Arlene Mattern, applied in 1971 for disabled widow's benefits under 42 U.S.C. § 402(e) (1)(B)(ii), based on the social security earnings of her husband. Her application was approved and benefits were scheduled to begin in December 1971, after the statutory waiting period of six months.*fn5

In January and February of 1972, plaintiff received two checks. She received her first regular benefits check in the amount of $119.30. Next, she received a special check for $1063.80 for benefits covering the period May to December, 1971. The latter check was erroneously issued.

The Social Security Administration contends that plaintiff was told to return the special check in a letter dated January 28, 1972 and in a telephone conversation on that day. District office records also show that the plaintiff's sister was told that plaintiff should return the special check. Plaintiff counters that the letter was ambiguous and was not understood to request the return of the $1063.80 check, and that she never received the phone calls. The check was never returned.

On July 14, 1972, plaintiff was sent a letter advising her that she had received $1063.80 more than she was entitled to and that an adjustment would be made in her forthcoming benefit payments. On August 7, 1972, plaintiff requested the Secretary to "waive" recoupment of the overpayment. "Refund" and "without fault" questionnaires were filed to support the request. Plaintiff listed her monthly expenses and stated that she had no other source of income, that she had been ill, that she had spent the proceeds of the check on her bills, and that she had never received any letter or phone call advising her that the $1063.80 check had been sent in error. The district office made an initial determination that Mrs. Mattern was not "without fault" and so denied the request for "waiver." The office relied on both the January 28 letter and office records of the phone calls. Plaintiff then filed a request for reconsideration, which was denied on January 3, 1973. The office determined that plaintiff's benefits amount would be reduced by $30 per month until the full amount of the overpayment was recovered.

Prior to the reconsideration, plaintiff filed this class action in the District Court for the Eastern District of Pennsylvania, seeking injunctive relief for her claim that the procedures followed by the Secretary violated due process by failing to provide for a hearing before the reduction of benefits. The district court originally held that the due process clause required a hearing prior to the adjustment of social security benefits. Mattern v. Weinberger, 377 F. Supp. 906 (E.D.Pa.1974). Appeals by the Secretary eventually resulted in the district court reconsidering its decision in light of Mathews v. Eldridge, supra. In this second decision, the district court found jurisdiction under either 28 U.S.C. § 1361 or 42 U.S.C. § 405(g), or both, and held that due process does not require a hearing before recoupment commences by the withholding of benefits. Accordingly, the court granted a motion by the Secretary for summary judgment. The court also denied plaintiff's renewed motion for class certification. Mattern v. Mathews, 427 F. Supp. 1318 (E.D.Pa.1977). Plaintiff filed a timely notice of appeal.

III. JURISDICTION

The Secretary argues that we are without jurisdiction to decide this case at this time. In our first opinion in this case, we found jurisdiction under the Mandamus Act.*fn6 519 F.2d at 155-57. In its reconsideration of the case, the district court found that Eldridge had lowered the jurisdictional barriers to review under section 205(g) of the Social Security Act,*fn7 thus casting doubt on the propriety of the extraordinary mandamus jurisdiction. It therefore assumed jurisdiction at least under section 205(g).

The Secretary argues that section 205(h) of the Act prohibits the exercise of mandamus jurisdiction by this court.*fn8 He interprets recent Supreme Court cases as indicating that section 205(g) is the exclusive avenue of judicial review of decisions and procedures of the Secretary. Califano v. Sanders, 430 U.S. 99, 109, 97 S. Ct. 980, 51 L. Ed. 2d 192 (1977); Weinberger v. Salfi, 422 U.S. 749, 764, 95 S. Ct. 2457, 45 L. Ed. 2d 522 (1975). See also Norton v. Mathews, 427 U.S. 524, 96 S. Ct. 2771, 49 L. Ed. 2d 672 (1976). The Secretary then concludes that plaintiff's case is not ripe for review under section 205(g).

At the outset, we would note that it is far from clear that section 205(h) bars mandamus jurisdiction in this case. Several other courts, after considering the Supreme Court cases cited by the Secretary, have found jurisdiction under section 1361 in cases involving Social Security procedures. See, e.g., Elliott v. Weinberger, 564 F.2d 1219, 1225-28 (9th Cir. 1977), Petition for cert. filed, 46 U.S.L.W. 3680 (U.S. April 21, 1978); White v. Mathews, 559 F.2d 852, 855-56 (2d Cir. 1977), Cert. denied, 435 U.S. 908, 98 S. Ct. 1458, 55 L. Ed. 2d 500 (1978); Caswell v. Califano, 435 F. Supp. 127, 131-33 (D.Me.1977). Like the district court below, however, we do not need to reach the question of mandamus jurisdiction.

We hold that we have jurisdiction over this case under section 205(g), as interpreted by our recent decision in Liberty Alliance of the Blind v. Califano, 568 F.2d 333 (3d Cir. 1977). Before we may take jurisdiction under this section, plaintiff must satisfy two conditions. First, a claim for benefits must have been presented to the Secretary. Second, there must have been a final decision after a hearing. 42 U.S.C. § 405(g); See Mathews v. Diaz, 426 U.S. 67, 75-77, 96 S. Ct. 1883, 48 L. Ed. 2d 478 (1976); Mathews v. Eldridge, supra, 424 U.S. at 328-29, 96 S. Ct. 893; Liberty Alliance of the Blind v. Califano, supra, 568 F.2d at 344.

The first requirement was met by the plaintiff. The second requirement, which is essentially an exhaustion requirement, was not met, but is waivable either by the Secretary, Mathews v. Diaz, supra, 426 U.S. at 76-77, 96 S. Ct. 1883, or by the court on its own determination, Mathews v. Eldridge, supra, 424 U.S. at 330-32, 96 S. Ct. 893. Liberty Alliance of the Blind v. Califano, supra, 568 F.2d at 344; See Weinberger v. Salfi, supra, 422 U.S. at 765-67, 95 S. Ct. 2457. In Eldridge the Court discussed two factors in reaching its conclusion that further exhaustion should not be required. First, the claim presented in that case, the right to a hearing before disability benefits are terminated, was said to be collateral to the substantive claim of entitlement to benefits. 424 U.S. 319 at 330, 96 S. Ct. 893, 47 L. Ed. 2d 18. We hold, and the Secretary concedes, that Mrs. Mattern's assertion of the right to a prior hearing is collateral to her claim for benefits. Second, the Supreme Court found that plaintiff had raised "at least a colorable claim . . . an erroneous termination (of disability benefits) would damage him in a way not recompensable through retroactive payments." 424 U.S. at 331, 96 S. Ct. at 901 (footnote omitted). We find that the plaintiff in this case, in light of the financial hardship she alleges as a basis for "waiver" of recoupment, has made a colorable showing of irreparable harm from the interim reduction of benefits. We therefore find that this is a case where the claimant's ...


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