## Facts

- The Social Security Act authorized the Secretary to recover benefit overpayments by reducing future payments.
- The Act also barred recovery from a beneficiary who was “without fault” if recovery would defeat the program’s purpose or be against equity and good conscience.
- Under agency procedures, after an ex parte overpayment determination, the beneficiary received notice and could submit a written request for reconsideration of the overpayment determination or a written request for waiver of recoupment.
- If the agency denied relief on paper review, recoupment began; an oral hearing was available only if the beneficiary continued to object after recoupment started.
- Beneficiaries who exhausted administrative processes could seek judicial review in federal district court after a final agency decision made after a hearing.
- Beneficiaries brought actions challenging the recoupment procedures as inconsistent with the Act and as violating the Fifth Amendment Due Process Clause; they sought class certification, including a nationwide class in one action.
- District courts certified classes, found the procedures unlawful, and granted injunctive relief; the court of appeals largely affirmed and distinguished waiver claims from reconsideration claims.
- The Supreme Court reviewed statutory hearing requirements, due process, and the availability and scope of class-wide relief; Justice Powell did not participate.

## Issues

1. Whether beneficiaries seeking waiver of recoupment under § 204(b) must be given an opportunity for an oral hearing before recoupment begins.
2. Whether initiating recoupment after only written submissions violates due process when a beneficiary requests waiver under § 204(b).
3. Whether § 205(g) bars class actions or limits injunctive relief to individual claimants, and whether a nationwide class injunction is permissible.

## Decision

- The Court held that beneficiaries who request waiver under § 204(b) must be afforded an opportunity for a prerecoupment oral hearing.
- The Court held that beneficiaries who seek only reconsideration of the overpayment determination under § 204(a) are not entitled to a prerecoupment oral hearing when the dispute is documentary or computational and does not turn on credibility.
- The Court held that § 205(g) does not preclude Rule 23 class actions in Social Security cases.
- The Court held that nationwide class relief may be granted when consistent with Rule 23 and the statute.

## Legal Principles

- When a statute reasonably permits a construction that avoids serious constitutional questions, courts should adopt that construction.
- Section 204(b) waiver determinations—fault, hardship, and equity—are individualized and often credibility-dependent, requiring procedures that allow meaningful presentation of evidence, including an oral hearing opportunity before recoupment.
- For § 204(a) reconsideration disputes that are mechanical or record-based, written procedures may satisfy due process and do not require a prerecoupment oral hearing.
- Section 205(g)’s reference to judicial review by “any individual” does not, without clear congressional direction, bar use of Rule 23 to obtain class-wide relief, including injunctions with nationwide scope where appropriate.

## Conclusion

The Court required an opportunity for an oral hearing before benefit recoupment begins when a beneficiary seeks waiver under § 204(b), while allowing paper-based prerecoupment review for certain § 204(a) reconsideration disputes, and confirmed that Social Security claimants may proceed through Rule 23 class actions, including on a nationwide basis, in suits under § 205(g).


Califano v. Yamasaki, 442 U.S. 682 (1979)