SSR 75-20: SECTIONS 204 and 205(a) (42 U.S.C. 404 and 405(a)) -- REOPENING OF DETERMINATION -- ERROR ON THE FACE OF THE EVIDENCE

20 CFR 404.507, 404.508, 404.956 et seq.

SSR 75-20

The claimant filed an application for and was awarded retirement insurance benefits effective May 1970. The Social Security Administration included in the computation of his benefit an amount for self-employment income for 1958 even though the Internal Revenue Service had notified it in 1961 that claimant's income for 1958 had been adjusted to zero. The Social Security Administration discovered its error in 1973, reopened the initial determination and corrected the benefit rate. In December 1973, the claimant was notified of the recomputed rate and of the resultant overpayment whereupon he contended the Social Security Administration had no authority to revise the benefit rate at that date. Held, the revision of the benefit rate was proper since the error as to the initial computation of benefits was on the face of the evidence on which the computation was based. Further held, adjustment or recovery of any overpayment resulting from the revised benefit rate should be waived as the claimant was without fault and recovery would defeat the purpose of the Social Security Act.

Claimant filed an application for retirement benefits on April 21, 1970, and was awarded benefits effective May 1970. The evidence shows that self-employment income in the amount of $3,713.85 for the year 1948 was included in the computation of benefits. The evidence further shows that the Internal Revenue Service adjusted claimant's self-employment income for 1958 to zero in 1961 and that the Social Security Administration was notified of this adjustment in 1961. However, the Social Security Administration failed to correct its abstract of claimant's earnings record and erroneously included the 1958 self-employment income in its computation of claimant's benefits in 1970. The Social Security Administration discovered its error in 1973 and proceeded to correct claimant's benefit rates. Claimant was notified of this decision by a letter dated December 4, 1973. Claimant contends that the Social Security Administration had not authority to revise his benefit rate at this late date.

Section 404.9567 of Regulations No. 4 of the Social Security Administration provides in part:

"Except as otherwise provided in §§ 404.960 and 404.960a, an initial, revised, or reconsidered determination * * * may be revised by the appropriate unit of the Social Security Administration having jurisdiction over the proceedings * * *, on its own motion or upon the petition of any party for a reason, and within the time period prescribed in § 404.957."

Section 404.957 of Regulations No. 4 provides in part:

"An initial, revised, or reconsidered determination of the administration or a decision or revised decision of a hearing examiner of the Appeals Council which is otherwise final * * * may be reopened:

"(a) Within 12 months from the date of the notice of the initial determination * * * to the party to such determination, or

"(b) After such 12-month period, but within 4 years after the date of the notice of the initial determination * * * to the party to such determination, upon a finding of good cause for reopening such determination or decision * * *"

Section 404.958 of Regulations No. 4 provides in part:

"'Good cause' shall be deemed to exist where:

(a) New and material evidence is furnished after notice to the party to the initial determination;

(b) A clerical error has been made in the computation or recomputation of benefits;

(c) There is an error as to such determination or decision on the face of the evidence on which such determination or decision is based."

The error by the Social Security Administration was clearly "on the face of the evidence," since the Administration was in possession of the corrected earnings record for the year 1958 when the initial determination was made in 1970. The Administration properly acted within its authority when it revised claimant's benefit rate in 1973. Since the revised determination resulted in an overpayment to claimant, should there be a recovery of the overpayment by the United States?

Section 404.507 of Regulations No. 4 states in part:

"In determining whether an individual is at fault, the Administration will consider all pertinent circumstances, including his age, intelligence, education, and physical and mental condition. What constitutes fault * * * on the part of the overpaid individual or on the part of any * * * from whom the Administration seeks to recover the overpayment depends upon whether the facts show that the incorrect payment to the individual * * * resulted from:

(c) with respect to the overpaid individual only, acceptance of a payment which he either knew or could have been expected to know was incorrect."

"(a) General -- 'Defeat the purpose of Title II,' for purposes of this subpart, means defeat the purpose of benefits under this title, i.e., to deprive a person of income required for ordinary and necessary living expenses.

(b) When Adjustment or Recovery Will Defeat the Purpose of Title II -- Adjustment or recovery will defeat the purposes of Title II in (but is not limited to) situations where the person from whom recovery is sought needs substantially all of his current income (including Social Security monthly benefits) to meet current ordinary and necessary living expenses."

It is undisputed that claimant was without fault in receiving and accepting the incorrect payments. The evidence further shows that claimant required the total amount of his benefits to meet his necessary living expenses. He has no other income of any consequence, and owes a considerable amount of money against the farm land he owns. The evidence shows that claimant had to borrow money to meet his living expenses when his benefits were terminated in December 1973.

It is the decision of the Administrative Law Judge that the revised determination of benefits dated December 4, 1973, by the Social Security Administration was proper. It is the further decision of the Administrative Law Judge that any overpayments resulting through the revised determination shall be waived and claimant is entitled to be reimbursed for the amounts that were withheld from his benefits.

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