Hunt v. Social Security Administration

          MEMORANDUM OPINION ^[1]

          STACI G. CORNELIUS, U.S. MAGISTRATE JUDGE

         The plaintiff, Beverly D. Hunt, filed this matter pursuant to 42 U.S.C. § 405(g), seeking review of a final decision of the Commissioner of Social Security ordering the offset of disability benefits due to a lump-sum workers’ compensation settlement. (Doc. 1). The plaintiff timely pursued and exhausted her administrative remedies, and the Commissioner’s decision is ripe for review. For the reasons explained below, the Commissioner’s decision is due to be reversed and remanded to recalculate the offset.

         I. BACKGROUND

         The plaintiff injured her back while working at Wal-Mart in 2006. (R. 182). The plaintiff filed a workers’ compensation claim in the Circuit Court of Marshall County, Alabama, in which she was represented by G. Douglas Benson. (R. 58, 68). Benson negotiated a $30, 000 lump-sum payment to settle the workers’ compensation claim during mediation. (R. 210). The Circuit Court set the settlement hearing for August 21, 2008. (See R. 58, 64-68). Because Benson had another hearing set for that date, he arranged for another attorney, Parker Edminston, to cover the settlement hearing. (R. 58, 68, 218). Although Benson regularly handled workers’ compensation and Social Security disability cases, Edminston did not. (R. 218, 221).

         Defense counsel prepared the settlement agreement (“Settlement Agreement”) and a proposed order for the settlement hearing with the Circuit Court. (R. 58, 68, 218-19). Immediately following the August 21, 2008 settlement hearing, the Circuit Court entered an order approving the Settlement Agreement. (R. 64-67). Neither the Settlement Agreement nor the Circuit Court’s order included any language specifying that the lump-sum settlement would be amortized over the plaintiff’s lifetime. (Id.). Benson apparently did not review the Circuit Court’s Order or the Settlement Agreement until 2011, as explained below.

         Meanwhile, in May 2007, the plaintiff had also filed for Social Security Disability Insurance Benefits (“DIB”). (See R. 176). After the denial of DIB at the initial level, the plaintiff requested a hearing before an Administrative Law Judge (“ALJ”). (See id.). During the hearing at which the plaintiff was represented by a non-attorney, Patrick Potter, ^[2] the ALJ heard testimony that the plaintiff had suffered herniated discs at ¶ 4, L5, and S1, causing debilitating pain. (R. 182). Initial conservative treatment was unsuccessful, and the plaintiff eventually underwent posterior lumbar interbody fusion surgery. (R. 182-91). The plaintiff testified the surgery had not alleviated her back pain and that her daily activities were extremely limited, even with opioid pain medication and muscle relaxers, which she took multiple times each day. (Id.). After hearing this evidence, the ALJ found the plaintiff’s testimony to be credible and supported by the medical records; he described the plaintiff as suffering from “failed back syndrome.” (R. 193). At the close of the hearing, the ALJ issued a fully favorable bench ruling, finding the plaintiff was disabled. (Id. at 193-94).

         On January 24, 2011, the Social Security Administration (“SSA”) sent the plaintiff a letter explaining that, due to the workers’ compensation settlement, the amount of her monthly DIB would be reduced from $625 to $104. (R. 17-19; see R. 21, 74). At this point, the plaintiff got in touch with Benson, and he reviewed the Settlement Agreement and the Circuit Court’s order for the first time. (R. 219). Upon this review, Benson realized the Settlement Agreement did not include language amortizing the lump-sum payment over the plaintiff’s lifetime. (R. 226). Because Benson was not licensed to practice law at the time, the plaintiff hired a new lawyer, who is also her counsel in the instant appeal. (R. 227).

         On February 24, 2011, the plaintiff filed an unopposed motion for relief from judgment with the Circuit Court. (R. 73-74). In addition to including the facts concerning the settlement hearing and the negotiation of the Settlement Agreement, the motion explained: (1) the parties intended to include language amortizing the lump-sum workers’ compensation settlement over the Plaintiff’s lifetime; (2) the amortization language was not included in the Settlement Agreement the defendant prepared. (Id.). The motion asked the court to relieve the plaintiff “from the onerous effects of the” original order adopting the Settlement Agreement, “by amending its order to accurately reflect the agreement of the parties.” (Id. at 74).

         On April 7, 2011, the Circuit Court granted the plaintiff’s motion for relief from judgment and entered an amended order (“Amended Order”), explaining the lump-sum the plaintiff would receive, after deducting attorney fees and expenses, was $22, 896.77. (R. 76). The Amended Order also incorporated the following language:

The $22, 896.77 to be paid under this settlement shall be paid without commutation of interest and shall represent the compromise agreement that the employee’s life expectancy of 2, 429.96 weeks forward from the date of the original agreement dated August 21, 2008 and that the settlement herein reached represents the payment of, to wit: $9.42 per week over the 2, 429.96 week period of life expectancy of the employee. Plaintiff was, at the time of the settlement on August 21, 2008, a 34 year old female. The Alabama Standard Mortality Table predicts that a 34 year old female will have 46.73 years to live. Fifty-two [] weeks per year at 46.73 years equals 2429.96 weeks.

(R. 76). After reviewing the Circuit Court’s Amended Order, the SSA denied the plaintiff’s request for reconsideration and stated it would continue to use the Circuit Court’s original order to calculate her DIB. (R. 52-54, 88-89).

         The plaintiff requested a hearing before an ALJ, which took place on July 21, 2016. (R. 93, 197-234). Benson and the plaintiff testified as witnesses during the hearing. (R. 195-234). The ALJ affirmed the agency’s denial of reconsideration in a decision issued on October 26, 2016; this decision is the subject of the instant appeal. (R. 13-16). In general terms, the ALJ concluded: (1) applying the terms of the Amended Order would circumvent the offset provisions of 42 U.S.C. § 424(a); and (2) under Social Security Ruling (“SSR”) 97-3, the terms of the Amended Order were not binding on the SSA. (R. 15-16). After exhausting her administrative remedies, the instant appeal followed.

         II. STANDARD OF REVIEW

         A 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 Stone v. Comm’r of Soc. Sec., 544 F.App'x 839, 841 (11th Cir. 2013) (citing Crawford v. Comm’r of Soc. Sec., 363 F.3d 1155, 1158 (11th Cir. 2004)). A court gives deference to the factual findings of the Commissioner, provided those findings are supported by substantial evidence but applies close scrutiny to the legal conclusions. See Miles v. Chater, 84 F.3d 1397, 1400 (11th Cir. 1996).

         Nonetheless, a court may not decide facts, weigh evidence, or substitute its judgment for that of the Commissioner. Dyer v. Barnhart, 395 F.3d 1206, 1210 (11th Cir. 2005) (quoting Phillips v. Barnhart, 357 F.3d 1232, 1240 n.8 (11th Cir. 2004)). “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. Fed. Mar. Comm'n, 383 U.S. 607, 620 (1966)). Indeed, even if a court finds that the proof preponderates ...