United States District Court, N.D. Alabama, Western Division
MICHAEL PUTNAM UNITED STATES MAGISTRATE JUDGE.
plaintiff, Shaula Lanear Allen, individually and as
representative payee and on behalf of J.L.,  appeals from the
decision of the Commissioner of the Social Security
Administration (“Commissioner”) finding that she
and J.L. received an overpayment based upon J.L.'s
available resources and denying her and J.L.'s requests
for a waiver of the overpayment of Supplemental Security
Income (“SSI”) benefits. Ms. Allen timely pursued
and exhausted her and J.L.'s administrative remedies, and
the decision of the Commissioner is ripe for review pursuant
to 42 U.S.C. §§ 405(g), 1383(c)(3). The parties have
consented to the exercise of dispositive jurisdiction by a
Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Doc.
J.L. was an infant, a pharmacy filled a prescription for him,
but labeled the prescribed medication with an incorrect
dosage instruction. (Tr. at 209-10). Consequently, J.L.
ingested four times the necessary dosage, suffered an injury,
and required emergency medical care. (Tr. at 210). In 2000,
Allen brought a lawsuit on behalf of J.L. in the Chancery
Court of Lowndes County, Mississippi (“the chancery
court”), and she settled his claim for $20, 000 in
2002. (Tr. at 209-211) (engagement letter dated 2000).
Pursuant to the court order approving the settlement, after
deduction attorney's fees and costs, Allen paid $13,
062.73 into “an F.D.I.C. insured account.” Allen
apparently opened a certificate of deposit with Cadence Bank
(“the account”) and deposited the settlement
proceeds. (See Tr. at 78-85, 212-13).
the court order directed Allen to retain the settlement
proceeds in the account “for the maintenance and
education of the minor child” and prohibited Allen from
withdrawing any of the proceeds “without the further
order of th[e] Court.” (Tr. at 210A; see also
tr. at 320 (letter from 2002 indicating that proceeds were to
be placed in “a frozen account”)). According to
Allen, the chancery court made clear to her that she
“was not to use” the proceeds deposited into the
account and that the “money was not to be used for
[J.L.] to take care of himself.” (Tr. at 333; see
also tr. at 426-27). On one occasion in 2006, she
petitioned the court for authority to withdraw $2, 000 from
the account because of her and J.L.'s “recent
relocation [from Mississippi to Alabama] and [J.L.'s]
dire need for medications and counseling not covered by
insurance.” (Tr. at 285). Because of the move, Allen
needed to schedule many doctor's appointments for her
son; in essence, she needed to find a new doctor to replace
each of his former doctors located in Mississippi.
(See tr. at 333). Therefore, she needed access to
the proceeds to be able to pay for the visits and
medications. (See tr. at 333). The petition was
granted by the Mississippi court.
petitioned the court once again to withdraw proceeds from the
account in 2010. (Tr. at 282, 334, 426-27, 435). The chancery
court denied her request to purchase a computer for
J.L.'s educational needs. (Tr. at 282, 334, 426-27, 435).
The chancery court explained to Allen's attorney that it
was Allen's responsibility “to take care of
[J.L.]” with her own resources, not with the settlement
proceeds. (Tr. at 426-27). The court intended the funds in
the account to be preserved for payment to J.L. upon his
becoming an adult.
July 2007 to September 2008, Allen was deployed to Iraq,
during which time she relinquished her role as J.L.'s
representative payee to her mother (J.L.'s grandmother).
She was not in control of the account during that time.
on behalf of J.L., initially applied for SSI benefits on
November 10, 2004. (Tr. at 126). Subsequently, on February
28, 2007, an ALJ awarded SSI benefits to J.L. (Tr. at 379).
Allen served as J.L.'s representative payee, except for
the period of time between July 3, 2007 and September 15,
2008, when Allen was deployed to Iraq. (Tr. at 304, 415).
J.L.'s grandmother served as representative payee during
the period that Allen served overseas. (Tr. at 304, 415).
Once she returned from Iraq and resumed her role as
representative payee, the Commissioner began a
redetermination of J.L.'s eligibility for SSI benefits.
(Tr. at 29). During this time, Allen first reported to the
Commissioner the existence of the account. (Tr. at 34).
December 9, 2009, the Commissioner informed Allen that
J.L.'s payments would stop in January 2010. (Tr. at 40).
The Commissioner determined that J.L. should have received no
SSI benefits from May 1, 2009 forward because he had
resources greater than $2, 000 in November 2009 and because
Allen's income was greater than the amount of SSI
benefits available to J.L. during the period from May 2009
through October 2009 and from December 2009 forward. (Tr. at
40-41, 51-60). The Commissioner determined that J.L. received
an overpayment of $5, 722.81 for the period from December
2008 to December 2009. (Tr. at 61).
February 23, 2010, the Commissioner further determined that
J.L. impermissibly received SSI benefits for a greater period
of time, specifically from December 2007 to December 2009.
(Tr. at 71). According to the Commissioner, J.L.'s SSI
benefits from December 2007 to April 2009 should have equaled
$0.00 because J.L.'s resources exceeded $2, 000 based on
the settlement proceeds deposited into the account. (Tr. at
78-85). On April 2, 2010, the Commissioner informed Allen
that J.L. was not entitled to SSI benefits because his
resources exceeded $2, 000. (Tr. at 96-97). The Commissioner
sent billing statements to Allen in the amount of $7, 030 on
March 19, 2010 (tr. at 87) and $8, 075 on June 14, 2010 (tr.
at 107). The Commissioner placed Allen on notice of the total
amount of the $15, 105 overpayment on April 9, 2010. (Tr. at
point, Allen requested the Commissioner to waive the
overpayment, and when the Commissioner denied the waiver
request, Allen requested the Commissioner to reconsider the
waiver request. (See tr. at 98). Additionally, on
April 7, 2010, Allen requested the Commissioner to reconsider
the fact of the overpayment by excluding the account. (Tr. at
101). The Commissioner denied reconsideration for the waiver
issue on April 9, 2010 (tr. at 98), and the overpayment issue
on April 14, 2010 (tr. at 101). Allen's Mississippi
attorney submitted a letter to the Commissioner on April 15,
2010, explaining that, based on Mississippi law, Allen did
not have a right to access the account to provide for
J.L.'s general support and maintenance. (Tr. at 283). On
April 28, 2010, Allen requested a hearing before an
administrative law judge (“ALJ”), disagreeing
with the Commissioner's initial determinations because
the “account was a restrictive account.” (Tr. at
twice appeared before an ALJ, once on April 25, 2011 (tr. at
327), and again on September 19, 2011 (tr. at 340).
Subsequently, on October 13, 2011, the ALJ notified Allen of
his unfavorable decision (tr. at 160), concluding that: (1)
J.L. received an overpayment in the amount of $15, 105; (2)
Allen was at fault; and (3) Allen was not entitled to a
waiver (tr. at 165-66). In effect, both Allen and J.L. were
liable for repayment. On November 29, 2011, the Commissioner
mailed Allen a new billing statement which reflected $15, 105
as the total amount due. (Tr. at 290). Allen requested the
Appeals Council to review the Hearing Decision on November
30, 2011, asserting that the unfavorable decision “does
not agree with the CD transcript of the hearing in which the
judge ruled differently.” (Tr. at 167). Allen was
referring to the hearing held on April 25, 2011, during which
the ALJ stated on the record that the account was not a
countable resource. (Tr. at 333) (stating “because
it's frozen, apparently, it doesn't count as a
resource . . . . Somebody counted it as a resource, and . . .
I don't really know [why] because the decree is pretty
clear on that.”).
August 28, 2018, the Appeals Council vacated the October 13,
2011, hearing decision and remanded the case back to the ALJ
“for further proceedings.” (Tr. at 186,
188). Allen appeared for a hearing before the
ALJ on February 4, 2014 (tr. at 355), and requested the
ALJ's recusal on March 3, 2014 (tr. at 264), which was
granted (see tr. at 406). On July 14, 2014, Allen
appeared before a new ALJ. (Tr. at 403). Subsequently, on
February 26, 2015, Allen again received an unfavorable
decision. (Tr. at 16-18). The new ALJ held that: (1) J.L.
received an overpayment totaling $15, 105 because the account
was a resource that excluded J.L. from receiving SSI benefits
for the period from December 2007 through December 2009; (2)
J.L. was liable for the overpayment even though he was not at
fault; and (3) Allen was both at fault and liable for the
overpayment. (Tr. at 21-26). Allen requested review of the
ALJ's decision, but the Appeals Council denied review on
March 17, 2017. (Tr. at 5).
Standard of Review
Court's role in reviewing claims brought under the Social
Security Act is a narrow one. The scope of its review is
limited to determining (1) whether there is substantial
evidence in the record as a whole to support the findings of
the Commissioner, and (2) whether the correct legal standards
were applied. See Richardson v. Perales, 402 U.S.
389, 390, 401 (1971); Wilson v. Barnhart, 284 F.3d
1219, 1221 (11th Cir. 2002).
Court approaches the factual findings of the Commissioner
with deference, but applies close scrutiny to the legal
conclusions. See Miles v. Chater, 84 F.3d 1397, 1400
(11th Cir. 1996). “Substantial evidence is more than a
scintilla and is such relevant evidence as a reasonable
person would accept as adequate to support a
conclusion.” Mitchell v. Commissioner, Soc. Sec.
Admin., 771 F.3d 780, 782 (11th Cir. 2014). The Court
may not decide facts, weigh evidence, or substitute its
judgment for that of the Commissioner. Id.
“The substantial evidence standard permits
administrative decision makers to act with considerable
latitude, and ‘the possibility of drawing two
inconsistent conclusions from the evidence does not prevent
an administrative agency's finding from being supported
by substantial evidence.'” Parker v.
Bowen, 793 F.2d 1177, 1181 (11th Cir. 1986) (Gibson, J.,
dissenting) (quoting Consolo v. Federal Mar.
Comm'n, 383 U.S. 607, 620 (1966)). Indeed, even if
this Court finds that the evidence preponderates against the
Commissioner's decision, the Court must affirm if the
decision is supported by substantial evidence.
Miles, 84 F.3d at 1400. “Speculation is, of
course, no substitute for evidence, and a decision based on
speculation is not supported by substantial evidence.”
White ex rel. Smith v. Apfel, 167 F.3d 369, 375 (7th
Cir. 1999); see also Lynch v. Astrue, 358 Fed.Appx.
83, 87 (11th Cir. 2009) (“Testimony that contains an
undue degree of speculation is not substantial
evidence.”); Bates v. Colvin, No.
6:14-cv-906-TMP, 2015 WL 3407539, at *6 n.3 (N.D. Ala. May
27, 2015). No. decision is automatic, however, for
“despite this deferential standard [for review of
claims] it is imperative that the Court scrutinize the record
in its entirety to determine the reasonableness of the
decision reached.” Bridges v. Bowen, 815 F.2d
622, 624 (11th Cir. 1987). Moreover, failure to apply the
correct legal standards is grounds for reversal. See
Bowen v. Heckler, 748 F.2d 629, 635 (11th Cir. 1984).
argues that substantial evidence does not support the
ALJ's determination that J.L.'s settlement-proceeds
account was an available resource and, therefore, that an
overpayment occurred because J.L.'s resources exceeded
the $2, 000 limit. The Commissioner contends that Allen
failed to exhaust administrative remedies by not obtaining a
final decision as to the fact and amount of the overpayment.
Even if Allen exhausted her administrative remedies as to the
overpayment issue, the Commissioner asserts that substantial
evidence supports the ALJ's determination that an
overpayment occurred due to the existence of the account.
Furthermore, the Commissioner maintains that substantial
evidence supports the ALJ's determination that (1) J.L.
was without fault; (2) the denial of a waiver does not defeat
the purposes or impede the efficient or effective
administration of Title XVI of the Social Security Act; (3)
the denial of a waiver for J.L. is not against equity and
good conscience; and (4) Allen was with fault. The court
finds that substantial evidence does not support the
ALJ's determination that an overpayment occurred, and
because of this fact, the court does not reach the merits of
whether substantial evidence supports the ALJ's denials
of a waiver for both Allen and J.L.
the Commissioner's argument to the contrary, Allen has
exhausted the administrative procedures related to the
overpayment issue. This court may review only the final
decisions of the Commissioner. See 42 U.S.C. §
405(g). To obtain a final decision, the claimant must
undertake a four-step administrative review process.
See 20 C.F.R. § 416.1400(a). First, the
Commissioner must make an initial determination affecting the
rights of the claimant. 20 C.F.R. §§
416.1400(a)(1); 416.1402 (listing actions that are initial
determinations). If the claimant is dissatisfied with the
Commissioner's initial determination, the claimant may
request the Commissioner to reconsider the initial
determination. 20 C.F.R. §§ 416.1400(a)(2);
416.1407. If the request for reconsideration is denied and
the claimant is still dissatisfied, the claimant may request
a hearing before an ALJ. 20 C.F.R. §§
416.1400(a)(3); 416.1429. If the claimant is dissatisfied
with the ALJ's hearing decision, the claimant may request
the Appeals Council to review the hearing decision. 20 C.F.R.
§§ 416.1400(a)(4); 416.1467. At this point, the
decision of the Appeals Council becomes a final decision when
the Appeals Council either denies review or enters a
decision. 20 C.F.R. §§ 416.1400(a)(5); 416.1481.
Commissioner concedes that Allen has obtained a final
decision as to the waiver issue, but the Commissioner asserts
that Allen has not obtained a final decision as to the fact
and amount of alleged overpayment. The Commissioner appears
to exalt form over substance. As explained more fully in
Section II, the Commissioner terminated J.L.'s SSI
benefits starting January 1, 2010, which constitutes an
initial decision. (Tr. at 40; see also 20 C.F.R.
§ 416.1402(b)). Allen requested the Commissioner to
reconsider the fact and amount of the overpayment on April 7,
2010. (Tr. at 101). After the Commissioner denied
reconsideration (tr. at 101), Allen requested a hearing
before an ALJ, asserting that the “account was a
restrictive account.” (Tr. at 106).
at this point, tracking the overpayment issue becomes
difficult because of the subsequent administrative
proceedings, but the Court believes that Allen did not fail
to exhaust the overpayment issue. The ALJ made an unfavorable
decision on October 13, 2011, finding an overpayment in the
amount of $15, 105. (Tr. at 165). Allen requested the Appeals
Council to review the ALJ's decision, arguing that
decision did “not agree with the CD transcript of the
hearing in which the judge ruled differently.” (Tr. at
167). During a previous hearing, the ALJ stated that the
account should not have counted as a resource. (Tr. at 333).
The Appeals Council reviewed the ALJ's decision and
vacated the decision in its entirety. (Tr. at 186). On
remand, a new ALJ issued a hearing decision on February 26,
2015, finding that the account was a countable resource and
that an overpayment occurred. (Tr. at 21-23). Then the ALJ
determined that Allen and J.L. were not entitled to waivers
of the overpayment. (Tr. at 23-26). Allen requested review of
February 26, 2015, hearing decision, and the Appeals Council
denied review on March 17, 2017, resulting in a final
decision. (Tr. at 5).
Commissioner makes much of the ALJ's framing of the issue
on remand. However, it seems clear that when the Appeals
Council vacated the earlier ALJ's decision, the entire
matter, not just the waiver, was put before the second ALJ.
On remand, the ALJ discussed extensively whether the account
counted as a resource. The Court finds that the ALJ made a
finding as to the fact and amount of overpayment in response
to Allen's original request for reconsideration.
Furthermore, even though the Appeals Council's
instructions to the ALJ on remand were limited to the waiver
issue, Allen adequately raised the overpayment issue when she
requested the Appeals Council to review the October 13, 2011,
hearing decision. Therefore, Allen received a final decision
either when the Appeals Council failed to additionally
instruct the ALJ to consider the overpayment issue on remand
(indicating that the Appeals Council denied review of the
overpayment issue) or when the Appeals Council denied review
of the February 26, 2015, hearing decision which extensively
discussed the existence of the account. In either
circumstance, Allen obtained a final decision as to the
Regulatory and POMS Framework
Commissioner and the ALJ determined that J.L.'s bank
account was a resource. An individual may not receive SSI
benefits if the individual's resources exceed $2, 000. 42
U.S.C. § 1382(a)(3)(B). Resources include “cash or
other liquid assets or any real or personal property that
individual (or spouse, if any) owns and could convert to cash
to be used for his or her support and maintenance.” 20
C.F.R. § 416.1201(a); see also §
416.1208(a). As defined by regulation, “[l]iquid
resources are cash or other property which can be converted
to cash within 20 days . . . [such as] stocks, bonds, mutual
fund shares, promissory notes, mortgages, life insurance
policies, [and] financial institution accounts (including
savings, checking, and time deposits, also known as
certificates of deposit) . . . .” 20 C.F.R. §
416.1201(b). “An account qualifies as one used for
‘support and maintenance' if money from the account
may be used for food or shelter.” Shields v.
Comm'r of Soc. Sec., No. 2:14-cv-226, 2015 WL
9238990, at *2 (W.D. Mich. Dec. 17, 2015) (citing 20 C.F.R.
the Social Security Administration's Program Operations
Manual System (“POMS”), a conservatorship account
may count as a resource in determining eligibility for SSI
benefits. A “‘conservatorship account' refers
to a financial account in which a person or institution has
been appointed by a court to manage and preserve the ...