## Facts

- Leonard Johnson received old-age insurance (Social Security retirement) benefits from the Social Security Administration (SSA).
- When Johnson first applied for Social Security, he disclosed that he worked for the United States Postal Service (USPS) and would receive a USPS pension upon retirement.
- Johnson acknowledged that once he began receiving the USPS pension, federal law would require a reduction in his Social Security payments to avoid receiving duplicative government retirement benefits.
- In February 1996, Johnson notified SSA that he planned to retire in March 1996 and would begin receiving the USPS pension.
- Despite that notice, SSA continued paying Johnson the same Social Security amount for approximately four years after his USPS pension began.
- In December 1999, SSA discovered the error and determined Johnson had been overpaid $8,618 in Social Security benefits.
- SSA sought recovery of the overpayment, and Johnson repaid the $8,618 under protest.
- Johnson filed an administrative claim seeking a waiver of recovery (and return of the amount recouped), arguing the overpayment resulted from SSA error because he had timely reported his retirement and pension.
- The Appeals Council denied waiver, concluding Johnson was not entitled to waiver of recovery because he failed to alert SSA to the continued full payments and therefore was partially at fault.
- Johnson filed suit in federal district court against the Commissioner of Social Security, Jo Anne Barnhart, seeking judicial review of the agency’s final decision.

## Issues

1. Whether the Commissioner properly denied a waiver of recovery of the $8,618 overpayment on the ground that Johnson was not “without fault,” even though he had notified SSA that he would retire and begin receiving a USPS pension.
2. If Johnson were “without fault,” whether recovery should be waived because repayment would defeat the purpose of the Social Security Act or be against equity and good conscience.

## Decision

- The district court upheld the Commissioner’s final decision denying waiver of recovery of the overpayment.
- The court agreed that the agency could find Johnson was not “without fault” based on his acceptance of continued unreduced payments and failure to notify SSA that the expected reduction had not occurred.
- Because a claimant must be without fault to obtain a waiver, the denial of waiver left SSA’s recovery of the $8,618 in place.

## Legal Principles

- Judicial review of a final SSA decision under 42 U.S.C. § 405(g) is limited; the court asks whether the agency applied the proper legal standards and whether the decision is supported by substantial evidence.
- Under 42 U.S.C. § 404(b) and related regulations, recovery of an overpayment may be waived only if (1) the beneficiary is without fault and (2) recovery would defeat the purpose of the Act or be against equity and good conscience.
- “Fault” is assessed by considering what the beneficiary knew or should have known; a beneficiary may be found at fault for accepting incorrect payments when the circumstances would prompt a reasonable person to question the amount or notify SSA.
- The fact that SSA made the payment error does not, by itself, require waiver if the beneficiary also bears responsibility for failing to report or question the incorrect payments.
- When the agency finds the beneficiary is not without fault, the waiver inquiry ends and the agency need not grant relief based on financial hardship or fairness considerations.

## Conclusion

In *Johnson v. Barnhart*, the court left intact SSA’s recovery of an $8,618 overpayment, holding that the agency could deny waiver because Johnson was not without fault where he understood his Social Security benefits would be reduced once his USPS pension started, yet continued to accept unreduced payments for years without alerting SSA.


Johnson v. Barnhart, 2006 WL 2329400 (W.D. Tex. 2006)