Dockstader v. MillerDockstader v. Miller
Mahala Dockstader, on behalf of herself and all those similarly situated, brought this class action challenging the procedures by which the Social Security Administration (SSA) and the Department of the Treasury (Treasury) reclaimed certain erroneously paid social security benefits. The district court granted summary judgment in favor of SSA and Treasury and Mrs. Dockstader brought this appeal.
In 1968, Mahala Dockstader filed for and was found to be entitled to social security old-age insurance benefits. In 1972, her husband, Lawrence Dockstader, filеd for and began receiving social security old-age insurance benefits. Both Mahala and Lawrence continued to receive their separate benefits through June of 1976. In April of 1976, Lawrence and Mahala entered into an agreement with the Walker Bank and Trust Company of Salt Lake City, Utah. The agreement provided that the net amount of their individual monthly social security benefits would be deposited directly into their joint account with the Walker Bank.1 The reverse side of the agreement, Treasury Authorization Form 1199, provided that the agreement would be canceled upon the death of any payee or beneficiary of the payments. The agreement was in effect and the Dockstaders were receiving their payments by direct deposit into their joint account in June of 1976.
On June 25, 1976, Lawrence Dockstader died. On June 30, Mahala notified the SSA of Lawrence‘s death and filed an application for widow‘s benefits. In August of 1976, Mahala transferred ownership of her bank account to herself and her son. On October 14, 1976, SSA notified Mahala that she was entitled to combined widow‘s and retirement insurance benefits. On February 8, 1977, SSA first made an entry of termination of Lawrence‘s retirement benefits by reason of his death. It is unknown why no entry was made until this time, but because of the delay, SSA continued to certify payments to Lawrence through February of 1977. The Walker Bank continued to credit the erroneously certified payments to Mahala‘s account, even after she trаnsferred ownership of the account.
On May 26, 1977, SSA forwarded a standard form to Treasury, requesting it to reclaim the erroneously certified benefits. Pursuant to
Mahala Dockstader commenced this suit on behalf of herself and all other similarly situated persons.2 She never contended that she was entitled to the erroneous payments in the first instance; rather, she argued that the recovery procedures utilized here violated section 204 of the Social Security Act,
On appeal, Mahala contends that: (1) she was entitled to the procedural protections provided by
I.
In
the language [in
42 U.S.C. Sec. 405(h) ] prohibiting reliance on the federal question or mandamus provisions for any action “to recover on a claim arising under” the Act оnly applied to actual claims for benefits. We noted that “when suit is brought simply to vindicate an interest in procedural regularity, there is no statutory bar.”
Ringer v. Schweiker, 697 F.2d 1291, 1293-94 (9th Cir.1982) (quoting Daniel H. Freeman Memorial Hospital v. Schweiker, 656 F.2d 473, 476 (9th Cir.1981)). Accord Powderly v. Schweiker, 704 F.2d 1092, 1095 (9th Cir.1983); Humana of South Carolina, Inc. v. Califano, 590 F.2d 1070, 1080 (D.C.Cir.1978); White v. Mathews, 559 F.2d 852, 856 (2d Cir.1977), cert. denied, 435 U.S. 908, 98 S.Ct. 1458, 55 L.Ed.2d 500 (1978).
We are persuaded by the distinction the Ringer court and other courts have drawn between suits seeking to establish a right to benefits and suits requesting that SSA provide a procedure through which the right to benefits can be contested. Here, Mahala Dockstader has never claimed that she was entitled to the benefits erroneously credited to her bank account; she contends only that she had statutory and constitutional rights to notice and a hearing before the benefits were removed from her account. Accordingly, under the rationale of Ringer, we hold that the district court had mаndamus jurisdiction to hear this case.
II.
Mahala argues that under
The pertinent provisions of the statute state:
(a) Whenever the Secretary finds that more or less than the correct amount of payment has been made to any person under this subchapter, 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 Secretаry shall decrease any payment under this subchapter 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 subchapter payable to his estate or to any other person on the basis of the wages аnd self-employment income which were the basis of the payments to such overpaid person, or shall apply any combination of the foregoing.
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(b) 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 by the United States from, any person who is without fault if such adjustment оr recovery would defeat the purpose of this subchapter or would be against equity and good conscience.
The regulations also define “overpayment“:
As used in this subpart, the term “overpayment” includes a payment in excess of the amount due under Title II of the Act, a payment resulting from the failure to impose deductions or to suspend or reduce benefits ..., a payment resulting from the failure to terminate benefits, and a payment where no amount is payable under Title II оf the Act.
SSA contends, and the district court agreed, that the procedural protections of
In Powderly, the plaintiff received her deceased husband‘s social security benefit check after his death. She claimed that the local office of the SSA informed her that she could negotiate the check, and she did so. Plaintiff‘s bank accepted the check and forwarded it to the Treasury. When SSA informed the Treasury of the unauthorized endorsement, the Treasury initiated a recovery action against the bank. After it refunded the proceeds to the Treasury, the bank exercised its state statutory right of set-off against the plaintiff‘s bank account. At the same time, the plaintiff was attempting to obtain a hearing to determine if recovery could be waived. SSA, however, informed her that the payment was not an “overpayment“, so she was not entitled to a hearing on waiver.
The Ninth Circuit upheld SSA‘s interpretation of
The overall purpose of the social security program is to provide for the need of the beneficiaries. See Evelyn v. Schweiker, 685 F.2d 351, 353 (CA 9 1982). “Once the need of the beneficiary is extinguished, as by death ..., there is no longer a reason to pay the beneficiary.” Id. at 353. Moreover, there is no reason deriving from need or otherwise to allow someone other than the designated payee, including a surviving spouse, to retain the funds.
Powderly, supra, 704 F.2d at 1096 (footnote omitted). The court, of course, was influenced in part by the wrongful negotiation of the check, but we emphasize that plaintiff claimed she negotiated it on the advice of the local SSA office.
We believe that the reasoning in Powderly applies with equal force to this case. Here, Mahala did not actually negotiate any checks, and apparently was unaware that the funds were being plаced in her account. Nevertheless, she did not receive more benefits than those to which she was entitled; she received benefits to which she had no claim of entitlement. Since she was not the intended beneficiary of the payments, the purposes of the social security program would not be defeated by recovery of the payments, nor would such recovery be against equity and good conscience. The procedural protections of section 404(b) are unnecessary and do not apply to this type of erroneous payment. Here, SSA erroneously certified benefits to Lawrence after his death, and the benefits were then wrongfully deposited directly into the bank account of his surviving spouse, Mahala. We hold that it is consistent with the purpose of the Social Security Act for the SSA to determine that such erroneous payments are not “overpayments” within the meaning of
III.
Mahala next contends that SSA‘s method of reclamation was governmental action which deprived her of a property interest in violation of her
It is true that Treasury does instruct banks to debit the accounts of recipients who have received credit payments that should have been returnеd to the government. Under
We conclude, however, that the trial court correctly interpreted the regulations and instructions as applying only to the accounts of “recipients“. “Recipient” is defined as “a person entitled to receive recurring payments from the Government.”
The regulation directs the bank to withdraw the funds only from the account listed in the notice. That account is one belonging to the recipient or in which the recipient has an interest. No regulation or instruction directs banks to withdraw funds from the account of anyone other than the intended recipient. Here, the account belonged to Mahala and her son, neither of whom were entitled to the recurring payments and therefore were not the “recipients” of the pаyments. Accordingly, Mahala can not claim that Treasury authorized or directed the bank to withdraw the funds. Treasury determined that Walker Bank was accountable to it for the funds, but that was the extent of federal involvement. The bank, without authorization from Treasury, debited Mahala‘s account. Walker Bank‘s action may not “fairly be attributed” to Treasury. Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 157, 98 S.Ct. 1729, 1734, 56 L.Ed.2d 185 (1978). In the absence of аny federal involvement, there was no violation of Mahala‘s
IV.
Mahala‘s final argument is that the actions of SSA and Treasury violate the nonalienation provision of the Social Security Act:
The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
We hold that there was no “plainly defined and preemptory duty on the part of” SSA and Treasury to provide notice and a hearing to Mahala. Hadley Memorial Hospital, Inc. v. Schweiker, 689 F.2d 905, 912 (10th Cir.1982). Accordingly, the trial court properly refused to issue a mandamus order. Id.
The judgment of the district court is affirmed.