As a Social Security disability law office we get calls from prospective claimants who are asking for help with incidents where Social Security indicates the claimant was overpaid benefits and now the agency wants its money back. Unfortunately we have to turn many of these claimants away because we do not deal with overpayment issues, but this is a real problem for many Americans and many times it is through no fault of their own.
Overpayment issues can occur for a variety of reasons. Maybe a claimant has earned too much money to receive Social Security payments, or they should’ve been reduced for other circumstances, but the claimant has no idea. Typically overpayment issues come up within a few years of the payments actually being made, but sometimes overpayment issues go back 10 years or more.
In 2011 Social Security amended its regulations to eliminate a 10-year statute of limitations for collecting benefit overpayments. Prior to this Social Security waived any overpayment issues that were found if they went back 10 years or more, but no longer. During a two year stretch from 2012 to 2014 more than 250,000 individuals who had overpayment issues dating back more than a decade, were referred to the Treasury Department for potential withholding of federal tax refunds to satisfy the debt. The average overpayment estimate for these individuals was $2,100. Imagine opening your mail to find out the Treasury Department is seizing your tax refund to satisfy a debt incurred several decades ago and the mistake that result in the debt was made by the Social Security Administration.
Anyone with knowledge about the Social Security disability process understands that those who receive benefits receive modest compensation, which sometimes is barely enough to live off of. These are no wealthy individuals who can easily give up $2,100 for a mistake made 20 years ago because Social Security failed to do its job properly.
No one is suggesting that people should receive and spend money they are not entitled to, but for individuals who never received any indication that they were overpaid until decades later should not be made to pay the government money they don’t have.
It appears that Social Security’s efforts to collect overpayments from more than 10 years ago has backfired as claimants filed a lawsuit challenging Social Security’s authority to collect such overpayments based on the agency’s failures in notification and review.
Not all stories have happy endings or good outcomes, but if you believe Social Security has no right to collect thousands of dollars from hundreds of thousands of Americans after the agency realized mistakes were made decades ago, then this is a happy ending. During the early stages of this litigation Social Security seemed to get cold feet and returned the plaintiffs’ tax refunds and asked that the lawsuit be dismissed, but the district court denied the request to dismiss. The reason the court dismissed the request is that the overpayment issue had not been resolved just because Social Security issued refunds. The agency then decided to waive the overpayments and again asked the court to dismiss the lawsuit, which the court granted.
Unfortunately Social Security has not changed its amended regulations and still allows the agency to go after overpayments made more than 10 years ago. Unless Social Security goes back to its practices prior to 2011 this issue could continue to plaque Social Security disability claimants in the future. To learn more about this specific issue and how it was resolved click here.
