United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 15, 2010 Decided June 18, 2010
No. 09-5191
ACTION ALLIANCE OF SENIOR CITIZENS, ET AL.,
APPELLANTS
v.
KATHLEEN SEBELIUS, SECRETARY, DEPARTMENT OF HEALTH
AND HUMAN SERVICES AND MICHAEL J. ASTRUE,
COMMISSIONER OF THE SOCIAL SECURITY ADMINISTRATION,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:06-cv-01607-HHK)
Gill Deford argued the cause for appellants. With him on
the briefs were Judith Stein, Brad S. Plebani, Wey-Wey Kwok,
Vicki Gottlich, and Patricia B. Nemore.
Daniel Tenny, Attorney, U.S. Department of Justice,
argued the cause for appellees. With him on the brief were
Tony West, Assistant Attorney General, Channing D. Phillips,
Acting United States Attorney, Mark B. Stern and Alisa B.
Klein, Attorneys, David S. Cade, Acting General Counsel,
U.S. Department of Health & Human Services, Janice L.
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Hoffman, Associate General Counsel, Mark D. Polston,
Deputy Associate General Counsel, Lawrence J. Harder and
Marcus H. Christ, Supervisory Trial Attorneys, David Black,
General Counsel, Social Security Administration, Thomas
Crawley, Deputy General Counsel, Gwenda Jones Kelley,
Associate General Counsel, Jeff Blair, Deputy General
Counsel, and Eileen Farmer, Attorney.
Before: HENDERSON and KAVANAUGH, Circuit Judges,
and RANDOLPH, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge
KAVANAUGH.
KAVANAUGH, Circuit Judge: Sometimes the Government
mistakenly sends too much money to beneficiaries of federal
benefits programs. When that happens, the Government
naturally attempts to recover the money. But what if a
beneficiary already spent the money or otherwise would have
difficulty paying the Government back? Some benefits
statutes – such as the Social Security statute – allow
beneficiaries to obtain a waiver when repayment would
produce hardship. Other statutes – such as the Medicare
prescription drug statute – do not.
This case lies at the intersection of the Social Security
and Medicare programs. Like many others, plaintiffs paid
their Medicare prescription drug premiums by having them
deducted from their monthly Social Security benefits. The
issue here arises because, in late 2006, plaintiffs received
mistaken refunds of their Medicare premiums – and received
them from the Social Security Administration. When the
Government later sought to recover the mistaken Medicare
premium refunds, plaintiffs asked for a waiver, relying on the
fact that the Social Security Administration had made the
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overpayment and seeking to take advantage of the right to
waiver in the Social Security statute. But the Social Security
statute allows waiver from recovery of overpaid Social
Security benefits, not waiver from recovery of mistaken
Medicare Part D premium refunds. We therefore affirm the
District Court’s judgment dismissing plaintiffs’ complaint.
I
Title 42, Chapter 7 of the U.S. Code contains two
subchapters of relevance. Subchapter II governs the Social
Security program, and Subchapter XVIII covers the Medicare
program. For ease of reference, we refer to Subchapter II as
the “Social Security statute.”
Under the Social Security program, workers are required
to pay into the Social Security trust fund during their working
careers, and the Federal Government in turn provides money
to seniors, individuals with disabilities, and the survivors of
eligible beneficiaries. This assistance is sent to beneficiaries
in the form of monthly (or sometimes, lump-sum) benefits
payments via check or direct deposit.
The Medicare program provides, among other things,
prescription drug coverage to seniors and individuals with
disabilities. This is known as Part D of the Medicare
program. Part D participants pay a monthly premium for that
coverage. They may pay the premium in a variety of ways –
including deducting the amount from a bank account, credit
card, or debit card, or from their monthly Social Security
benefits.
This case involves Medicare Part D participants who pay
for their prescription drug coverage by having their monthly
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prescription drug premiums withheld from their monthly
Social Security benefits.
The Centers for Medicare and Medicaid Services, or
CMS, is a unit within the U.S. Department of Health and
Human Services. CMS administers the Medicare prescription
drug program. It coordinates with the Social Security
Administration to accommodate those beneficiaries who pay
their Medicare prescription drug premiums by way of
deductions from their Social Security benefits.
In August 2006, CMS determined that the Social Security
Administration had wrongly collected excessive Medicare
Part D premiums from approximately 230,000 Medicare Part
D participants. These affected beneficiaries had paid their
Part D premiums by having them deducted from their Social
Security benefits. CMS instructed the Social Security
Administration to issue refunds to the affected beneficiaries.
The Social Security Administration paid the refunds by check
or direct deposit. The average refund amount was $215, with
no single refund exceeding $750. In total, the Government
refunded approximately $47 million.
Several weeks later, CMS discovered that its initial
determination had resulted from a processing mishap, that the
premiums had not been wrongly withheld, and that the
refunds had been made in error. CMS sent a letter to the
participants asking them to return the refunds and detailing
the ways they could do so. The letter specified that
repayment could be made in installments. By the time of oral
argument in this case, more than 65% of the affected
beneficiaries had returned the erroneous refund; about $17
million was still unreturned. See Tr. of Oral Arg. at 14.
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Lucy Loveall is a Medicare Part D participant who pays
for her prescription drug coverage by having her premiums
deducted from her Social Security benefits. Loveall received
a refund of her Medicare Part D premiums in the amount of
$161.70 as part of CMS’s error. CMS then asked Loveall to
return the money. Loveall claimed that returning the payment
would cause hardship, as she had already applied the money
toward her monthly expenses. Along with the Action
Alliance of Senior Citizens and the Gray Panthers
(organizations whose membership includes similarly situated
senior citizens), Loveall sued the Secretary of Health and
Human Services and the Commissioner of the Social Security
Administration. As relevant here, plaintiffs sought
declaratory and injunctive relief on the basis that 42 U.S.C. §
404(b) – a provision in the Social Security statute – allows
them to obtain waiver from recovery of overpayments. The
Government moved to dismiss the case. Concluding that the
Social Security statute did not allow plaintiffs to obtain
waiver in these circumstances, the District Court granted the
Government’s motion to dismiss.1
II
When the Social Security Administration seeks to recover
overpayment of Social Security benefits, beneficiaries may
1
This case previously came before this Court in Action
Alliance of Senior Citizens v. Leavitt, 483 F.3d 852 (D.C. Cir.
2007). There, plaintiffs asserted a right to seek waiver under both
the Social Security waiver provision (42 U.S.C. § 404(b)) and the
Medicare waiver provision (42 U.S.C. § 1395gg(c)). We rejected
plaintiffs’ § 1395gg(c) claim, but we concluded that the district
court lacked jurisdiction to consider plaintiffs’ § 404(b) claim
because the claim had not been properly presented to the
Commissioner of Social Security. Plaintiffs have since cured the
jurisdictional defect.
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obtain a waiver from recovery if they show hardship. The
question here is whether Medicare Part D prescription drug
participants who receive erroneous premium refunds from the
Social Security Administration may also obtain such a waiver.
The answer is no.
The section of the Social Security statute codified at 42
U.S.C. § 404 addresses the adjustment or recovery of
overpayments and underpayments. Subsection (a) of § 404
provides: “Whenever the Commissioner of Social Security
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 . . . .” 42 U.S.C. §
404(a)(1) (emphasis added). Subsection (b) provides an
exception for certain cases: “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 or recovery would defeat the purpose of this
subchapter or would be against equity and good conscience.”
Id. § 404(b).
Plaintiffs argue that they are entitled to take advantage of
that Social Security waiver provision because they received
the overpayment here (a mistaken refund of their Medicare
Part D premiums) from the Social Security Administration.
We disagree: The text and structure of § 404 show that §
404(b) provides a right to waiver from recovery only for
overpayments covered by § 404(a) – that is, only for
overpayments of Social Security benefits. The Supreme
Court and courts of appeals have therefore long interpreted §
404(b) as providing an exception to subsection (a). See, e.g.,
Califano v. Yamasaki, 442 U.S. 682, 685 (1979) (§ 404(b)
“expressly limits the recoupment authority conferred by” §
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404(a)); Everhart v. Bowen, 853 F.2d 1532, 1535 (10th Cir.
1988) (the Social Security statute’s “waiver of recoupment
provision, § 404(b), qualifies the Secretary’s right to recovery
or adjustment under § 404(a)(1)(A).”) (footnote omitted),
rev’d on other grounds, 494 U.S. 83 (1990); Webb v. Bowen,
851 F.2d 190, 192 (8th Cir. 1988) (“section 404(b) only
grants an opportunity of waiver of the amount found to be
overpaid under section 404(a)”). Contrary to plaintiffs’
position, the waiver provision in the Social Security statute
does not apply to any Government overpayment that happens
to come through the Social Security Administration.
Indeed, plaintiffs’ position would produce an anomaly
that illustrates the flaw in their interpretation. Plaintiffs’
approach would allow waiver from recovery for those
Medicare prescription drug beneficiaries who pay their
premiums through Social Security deductions – but not for
those who pay their premiums by deductions from a bank
account, credit card, or debit card. That would make little
sense, and we see no evidence that Congress intended such a
half-baked waiver regime for recovery of mistaken Medicare
prescription drug premium refunds. 2
2
Because we agree with the Government’s interpretation of
the statute, we need not address whether the statute is ambiguous
for purposes of Chevron step one / step two analysis or whether the
Government’s interpretation, which was provided in a letter, would
be entitled to Chevron deference at step two. See Chevron, U.S.A.,
Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984).
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***
We have considered plaintiffs’ other arguments and find
them without merit. We affirm the judgment of the District
Court.
So ordered.