Slagle v. Saul, No. 4:2020cv05044 - Document 30 (E.D. Wash. 2021)
Court Description: ORDER GRANTING 25 PLAINTIFF'S SUMMARY-JUDGMENT MOTION AND DENYING 27 DEFENDANT'S SUMMARY-JUDGMENT MOTION; REVERSING and REMANDING the matter to the Commissioner of Social Security. Case closed. Signed by Senior Judge Edward F. Shea. (CIC, Case Administrator)
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Slagle v. Saul Doc. 30 FI LED I N THE U.S. DI STRI CT COURT EASTERN DI STRI CT OF WASHI NGTON 1 Jun 10, 2021 2 SEAN F. MCAVOY, CLERK 3 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 4 5 MATHEW S., 1 No. 4:20-CV-5044-EFS 6 Plaintiff, 7 v. 8 9 ANDREW M. SAUL, the Commissioner of Social Security, ORDER GRANTING PLAINTIFF’S SUMMARY-JUDGMENT MOTION AND DENYING DEFENDANT’S SUMMARY-JUDGMENT MOTION Defendant. 10 11 The Court is asked to determine whether the Social Security Administration 12 (SSA) appropriately seeks repayment of disability insurance benefits (DIB) paid to 13 Plaintiff in the amount of $18,650.00.2 Plaintiff agrees that he was partially 14 overpaid DIB due to his receipt of time-loss compensation from the State of 15 Washington’s workers’ compensation program for the period May 2011 to 16 December 2011, but Plaintiff disagrees that his lumpsum permanent partial 17 disability (PPD) award is subject to a federal offset, and, even if offset is required, 18 Plaintiff asks the Court to waive repayment. The Commissioner argues that offset 19 20 1 To protect the privacy of the social-security Plaintiff, the Court refers to him by 21 first name and last initial or as “Plaintiff.” See LCivR 5.2(c). 22 2 ECF Nos. 25 & 27. 23 ORDER RULING ON CROSS SUMMARY-JUDGMENT MOTIONS - 1 Dockets.Justia.com 1 is required for both Washington workers’ compensation benefits—the time-loss 2 compensation and the lumpsum PPD award—and, moreover, Plaintiff caused the 3 overpayment by not disclosing his PPD award. Given the Ninth Circuit’s approach 4 in Hodge v. Shalala,3 which focuses on whether the financial benefit was to 5 compensate the injured worker for lost earning capacity, the Court determines that 6 1) Plaintiff’s lumpsum PPD award did not compensate Plaintiff for lost earning 7 capacity, and 2) repayment related to Plaintiff’s time-loss compensation is waived. 8 I. 9 Background Plaintiff injured his low back while working. Plaintiff sought federal DIB 10 under Title 2, 42 U.S.C. § 401-433. After considering all of Plaintiff’s impairments, 11 the SSA found Plaintiff disabled and awarded him DIB beginning May 2011.4 12 As a result of the same workplace injury, a Washington state workers’ 13 compensation claim was also opened. Plaintiff received time-loss compensation 14 totaling $11,425.50 for the period May 1, 2011, through December 28, 2011. 15 Plaintiff’s workers’ compensation claim also involved a separate PPD claim related 16 to his low back. In 2012, Plaintiff entered into a confidential settlement agreement 17 relating to his PPD claim, awarding him $115,000.00, minus State child-support 18 payments. 5 19 20 3 27 F.3d 430, 432-34 (9th Cir. 1994). 4 AR 82-90. 5 AR 59-62. 21 22 23 ORDER RULING ON CROSS SUMMARY-JUDGMENT MOTIONS - 2 1 On his Title 2 social security application, Plaintiff notified the SSA that his 2 lower back injury was related to work and of his State time-loss compensation 3 claim. 6 Plaintiff did not notify SSA about the confidential PPD settlement award. 4 The SSA learned of the PPD award from the State. The SSA then notified Plaintiff 5 that, considering the State worker’s compensation time-loss compensation and the 6 PPD award, the SSA had overpaid him Title 2 benefits. After several revisions to 7 the claimed overpayment amount, the SSA claims that Plaintiff was overpaid 8 $18,650.00.7 Plaintiff sought relief from this claimed overpayment, highlighting 9 that the PPD settlement did not address lost wages and it contained a non- 10 disclosure provision. 11 The ALJ denied relief. The ALJ found, considering both the State time-loss 12 compensation and the PPD award, that Plaintiff was overpaid $18,650.00 in DIB.8 13 The ALJ found Plaintiff had not disclosed the workers’ compensation payments to 14 the SSA. The ALJ did not give Plaintiff’s allegations controlling weight because 15 Plaintiff knew or should have known that he was required to report all workers’ 16 compensation payments to the SSA, and he did not make the required report. The 17 ALJ therefore found Plaintiff’s DIB were subject to offset and Plaintiff was at fault 18 in causing the overpayment because he failed to furnish material information. 19 20 6 ECF No. 26 at 5. 7 AR 167-69. 8 AR 11-19. 21 22 23 ORDER RULING ON CROSS SUMMARY-JUDGMENT MOTIONS - 3 1 2 Plaintiff asks the Court to review the ALJ’s decision for legal error and lack of substantial evidence. 3 4 II. A. 5 Analysis Plaintiff’s PPD award is not subject to federal offset. The Social Security Act requires that disability insurance benefits (DIB) be 6 reduced when an individual is also entitled to “periodic benefits on account of his 7 total or partial disability (whether or not permanent) under a workmen’s 8 compensation law or plan of the United States or a State.” 9 The statutory intent for 9 this offset provision is to prevent duplication of state workers’ compensation and 10 social security disability benefits, as duplication may decrease a disabled worker’s 11 incentive to return to work.10 Certain benefits, such as medical, legal, or related 12 expenses in connection with the disability claim or injury, are not subject to the 13 federal offset provision.11 14 15 9 42 U.S.C. § 424a(a)(2)(A) (cleaned up). See also 20 C.F.R. § 404.408; Program 16 Operations Manual System (POMS) DI 52101.001. 17 10 See Richardson v. Belcher, 404 U.S. 78, 82-83 (1971) (discussing the offset 18 provision’s legislative history and seeking to ensure that the worker did not receive 19 compensation for his disability in excess of his take-home pay); Hodge v. Shalala, 20 27 F.3d 430, 432 (9th Cir. 1993) (“Congress intended [the offset provision] to 21 prevent double recovery.”). 22 11 20 C.F.R. § 404.408(d). 23 ORDER RULING ON CROSS SUMMARY-JUDGMENT MOTIONS - 4 1 In Hodge v. Shalala, the Ninth Circuit interpreted the federal offset law as 2 applying when a State benefit was issued, either as a periodic payment or as a 3 lumpsum payment, to compensate the recipient for an economic loss of earning 4 power. 12 At issue in Hodge was the Oregon workers’ compensation program. The 5 Ninth Circuit determined that Oregon’s lumpsum “scheduled” benefit payment 6 constituted a benefit intending to compensate the injured worker for the economic 7 loss of earning capacity. Therefore, the Ninth Circuit ruled that the Oregon 8 “scheduled” payment must be offset from federal disability benefits.13 9 Later, in an unpublished opinion, a Ninth Circuit panel analyzed the 10 relationship between the PPD component of the Washington workers’ 11 compensation law and the federal offset law. 14 In Sutton, the panel held that a 12 Washington PPD payment was not a benefit subject to federal disability offset. The 13 panel reached a different conclusion than that reached in Hodge because, as the 14 15 12 27 F.3d 430, 432-34 (9th Cir. 1994). 13 Id. at 432-34. 14 Sutton v. Berryhill, No. 15-35722, 677 Fed. Appx. 341 (9th Cir. 2017) 16 17 18 (unpublished opinion). The Commissioner highlights that the unpublished Sutton 19 decision is not binding. ECF No. 27 at 3-4. However, Sutton may still be cited for 20 its persuasive value. LCivR 7(g)(2). Because this case involves the interpretation of 21 the same Washington law as discussed in Sutton, the Court finds Sutton 22 persuasive. 23 ORDER RULING ON CROSS SUMMARY-JUDGMENT MOTIONS - 5 1 panel emphasized, a Washington PPD payment is not intended to cover the 2 recipient’s lost earning capacity. In reaching this ruling, the panel highlighted: 3 • Washington case law has recognized that Washington’s PPD 4 payments compensate for loss of bodily function, regardless of 5 whether that loss of bodily function has an effect on the recipient’s 6 wage-earning capacity. 7 • 8 wage earning power. 9 • 10 economic factors. 15 12 14 15 Here, the ALJ decided that Plaintiff’s federal DIB were to be offset by his PPD award. In making this finding, the ALJ simply labeled Plaintiff’s PPD award as a “lump sum workers’ compensation payment of $115,000,” without analyzing whether PPD payments in Washington are subject to federal offset. 16 16 17 a Washington regulation provides that PPD payments are based solely on the impaired body part/function without consideration of 11 13 the statutory purpose for PPD payments does not include considering As articulated in Sutton, Washington PPD payments are calculated based on a body part’s loss of existence or function, regardless of the impact on earning 18 19 15 Sutton, 677 Fed. Appx. at 342 (citing Willoughby v. Dep’t of Labor & Indus. of the 20 State of Wash., 147 Wn.2d 725, 736 (9th Cir. 2002) (abrogated on other grounds), 21 and McIndoe v. Dep’t of Labor & Indus., 144 Wn.2d 252, 261-62 (2001)). 22 16 AR 16. 23 ORDER RULING ON CROSS SUMMARY-JUDGMENT MOTIONS - 6 1 capacity. Accordingly, the PPD payment at issue here did not compensate Plaintiff 2 for wage loss. Moreover, the settlement agreement terms are consistent with 3 Washington’s PPD purpose, regulations, and case law. The settlement agreement 4 stated that Plaintiff’s pay, salary, and other compensation had already been earned 5 or awarded. Plaintiff’s PPD award was not a duplicative wage-compensation 6 benefit. Plaintiff’s social security disability benefits are not to be offset by the PPD 7 award. 8 B. 9 The time-loss overpayment need not be repaid. Plaintiff agrees that the $11,425.50 he received as time-loss compensation 10 from the State for the period of May 1, 2011 through December 28, 2011, is subject 11 to federal offset. But Plaintiff asks that repayment be waived because he was 12 clearly not at fault for the SSA’s overpayment of DIB. 13 Recovery of an overpayment may be waived if the beneficiary of the 14 overpayment is 1) without fault in causing the overpayment, and 2) recovery or 15 adjustment of the overpayment defeats the purpose of Title 2 or is against equity 16 and good conscience.17 A beneficiary is “at fault” when he caused or helped cause 17 the overpayment. 18 The fault depends on the degree of care the beneficiary took in 18 ensuring an overpayment would not be assessed. 19 Recovery defeats Title 2’s 19 20 17 POMS GN 02201.019. 18 POMS GN 02250.005. 19 POMS GN 02250.005. 21 22 23 ORDER RULING ON CROSS SUMMARY-JUDGMENT MOTIONS - 7 1 purpose when the beneficiary’s ordinary and necessary expenses meet or exceed his 2 income. 20 3 Although the ALJ found that Plaintiff was at fault for not disclosing the 4 settlement agreement’s PPD award, 21 the ALJ did not mention that Plaintiff did 5 disclose on his social security application that he had “been on time-loss with an 6 open L&I claim up until December 31, 2011.” 22 Accordingly, the ALJ’s finding that 7 Plaintiff was at fault because he failed to disclose State benefits does not apply to 8 the disclosed time-loss compensation. Given Plaintiff’s disclosure of his time-loss 9 compensation, Plaintiff was not at fault for the overpayment of DIB due to time- 10 loss compensation from the State. 11 The ALJ did not reach the question of whether Plaintiff’s repayment of his 12 time-loss compensation will defeat Title 2’s purpose. The record need not be further 13 developed in this regard. Plaintiff’s wife testified at the hearing as to Plaintiff’s 14 family’s financial situation. Their living expenses exceed the family’s income. For 15 that reason, repayment of DIB due to the $11,425.50 time-loss compensation will 16 defeat Title 2’s purpose. Therefore, Plaintiff’s repayment of DIB is waived. 17 18 19 20 20 POMS GN 02250.100. 21 AR 16-17. 22 ECF No. 26 at 5 (cleaned up). 21 22 23 ORDER RULING ON CROSS SUMMARY-JUDGMENT MOTIONS - 8 1 2 3 C. Remand This matter is reversed and remanded. Repayment of the PPD award is not required, and repayment of the time-loss compensation is waived. 4 III. Conclusion 5 Accordingly, IT IS HEREBY ORDERED: 6 1. 7 8 GRANTED. 2. 9 10 Plaintiff’s Motion for Summary Judgment, ECF No. 25, is The Commissioner’s Motion for Summary Judgment, ECF No. 27, is DENIED. 3. The Clerk’s Office shall enter JUDGMENT in favor of Plaintiff 11 REVERSING and REMANDING the matter to the Commissioner of 12 Social Security. Plaintiff is not required to repay social security 13 benefits. 14 4. 15 IT IS SO ORDERED. The Clerk’s Office is directed to file this Order and 16 17 The case shall be CLOSED. provide copies to all counsel. DATED this 10th __ day of June 2021. 18 19 20 _____________ EDWARD F. SHEA Senior United States District Judge 21 22 23 ORDER RULING ON CROSS SUMMARY-JUDGMENT MOTIONS - 9
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