The opinion of the court was delivered by: s.AARON E. Goodstein U.S. Magistrate Judge
DECISION AND ORDER REVERSING THE DECISION OF THE COMMISSIONER AND REMANDING CASE
John Trossen ("Trossen") began receiving Social Security disability benefits on December 26, 1989, due to injuries he suffered in a motorcycle accident where his leg required amputation below the knee. On June 23, 1999, the Social Security SSA ("SSA") informed Trossen that it determined that he was no longer disabled, (Tr. 231), and informed him that his benefits would end as of September 1999, (Tr. 232). Trossen appealed, and Administrative Law Judge ("ALJ") Patrick D. Halligan determined that Trossen remained disabled. (Tr. 79.)
In January of 2003, Trossen began earning a significant income as the owner of a bait store and fishing guide. (Tr. 395-96.) Because of this substantial work activity, on April 20, 2005, the SSA informed Trossen that it appeared that he was no longer entitled to benefits as of April 2003, and it gave Trossen the opportunity to present information before it made a final determination. (Tr. 377.) Trossen' benefits were stopped in May of 2005. Because the SSA did not stop Trossen's benefits until May 2005 but Trossen had begun earning significant income in January of 2003, it determined that it had overpaid Trossen $25,806.60. (Tr. 400.)
Proceeding pro se, Trossen asked that this obligation to repay the overpayment be waived. (Tr. 403-11.) Trossen's request for a waiver was denied, (Tr. 413-19), and Trossen requested a hearing before an ALJ, (Tr. 420-22). Trossen appeared pro se at a hearing before ALJ Arthur Schneider on May 28, 2008. (Tr. 493-521.) ALJ Schneider denied the request for waiver, concluding that Trossen was not without fault in causing or accepting the overpayment. (Tr. 52-54.)
Trossen initiated a pro se appeal to the Appeals Council, but during the appeal, Trossen retained counsel. After some confusion about whether the record of the proceedings before the ALJ had been lost, (Tr. 30-36), on November 27, 2009, the Appeals Council ultimately denied Trossen's request for review, (Tr. 23-25). After numerous requests for extensions of time, (Tr. 6-7), proceeding with the assistance of counsel, Trossen filed the present action on May 3, 2010.
Upon all parties consenting to the full jurisdiction of magistrate judge, (Docket Nos. 4, 6), this matter was reassigned to this court for all further proceedings, (Docket No. 7). Trossen has submitted his initial brief, (Docket No. 10), to which the defendant has responded, (Docket No. 13), and Trossen has replied, (Docket No. 16). The pleadings in this matter are closed and the matter is ready for resolution.
Trossen does not disagree with the conclusion that he is no longer disabled or that he was overpaid benefits. Rather, the only dispute is whether the Commissioner erred in determining that Trossen is not eligible for a waiver of the obligation to repay this overpayment.
If the Social Security SSA overpays disability benefits to an individual, the overpaid individual must generally return the overpayment. However, overpaid individuals may be able to obtain a waiver of this repayment obligation under certain circumstances. First, the individual must demonstrate that he was not at fault for the overpayment. 42 U.S.C. § 404(b); Banuelos v. Apfel, 165 F.3d 1166, 1169-70 (7th Cir. 1999). Second, the individual must demonstrate that requiring him to repay the overpayment would defeat the purposes of the Act or be against equity and good conscience. 42 U.S.C. § 404(b); Banuelos, 165 F.3d at 1169-70. In the present case, ALJ Schneider found that Trossen was not without fault for the overpayment, and therefore the waiver was denied without ALJ Schneider addressing the second element of the waiver analysis. (Tr. 54.)
The Commissioner's decision denying a request for a waiver of recovery must be affirmed if it is supported by substantial evidence. 42 U.S.C. § 405(g). See also Banuelos v. Apfel, 165 F.3d 1166, 1169 (7th Cir. 1999), overruled on other grounds by Johnson v. Apfel, 189 F.3d 561, 562 (7th Cir. 1999). Evidence is considered substantial if a reasonable person would accept it as adequate to support the Commissioner's conclusion. Young v. Barnhart, 362 F.3d 995, 1001 (7th Cir. 2004). A reviewing court may not "reevaluate the facts, reweigh the evidence, or substitute [its] own judgment for that of the ." Knight v. Chater, 55 F.3d 309, 313 (7th Cir. 1995).
Bosnich v. Barnhart, 2006 U.S. Dist. LEXIS 55216 (N.D. Ill. 2006).
In challenging the decision of the Commissioner, Trossen contends that ALJ Schneider failed in his obligation to properly advise Trossen about the availability of counsel, and upon failing to properly advise Trossen, ALJ Schneider failed to properly develop the record. As for the merits, Trossen contends that administrative finality precludes the retroactive finding of overpayment and that the conclusion that he was not at fault for the overpayment is not supported by substantial evidence.
A. Administrative Finality
At the time of ALJ Halligan's decision in August of 2000 finding that Trossen remained disabled, the prospect of Trossen opening his own business was on the horizon. (Tr. 77-80.) Trossen's efforts to get his business running were discussed at length at the hearing and ALJ Halligan was clearly concerned about how terminating Trossen's benefits as he was trying to get this new business off the ground might derail Trossen's plans. (See Tr. 480-88.) Trossen spoke extensively of his desire to get off of Social Security and become financially independent as the owner of his own business. (Tr. 480.) Notably, Trossen stated, "And I promise, as soon as I'm making money I will let you know and I won't need this anymore." (Tr. 480.)
The rules of administrative finality generally preclude the SSA from re-opening a disability determination more than four years later. SSR 82-66. Trossen contends that ALJ Schneider necessarily reopened the 2000 determination by ALJ Halligan when ALJ Schneider found that Trossen completed a trial work period between September 1999 and May 2000. (Docket No. 10 at 6.)
The Commissioner responds that ALJ Schneider's determination did not require reopening ALJ Halligan's prior determination. (Docket No. 13 at 6.) ALJ Halligan determined only that Trossen had not engaged in substantial gainful activity ("SGA") since May 14, 1998 and thus remained disabled. (Docket No. 13 at 6.) ALJ Schneider's determination that Trossen commenced a trial work period prior to ALJ Halligan's decision is not inconsistent with ALJ's Halligan's finding that Trossen did not engage in SGA because there are numerous ways an individual might have commenced a trial work period without engaging in SGA. (Docket No. 13 at 6-7.)
Under the regulations in effect at the time of ALJ Halligan's determination in 2000, a self-employed person engages in SGA if he spends more than 45 hours a month managing a business, 20 C.F.R. § 404.1575(b)(1), and receives more than $700.00 a month in income from the business, 20 C.F.R. § 404.1574(b)(2). An individual need not engage in SGA to be considered in a trial work period. 20 C.F.R. § 404.1592(b). A trial work period will commence under the 2000 regulations when a self-employed individual earns more than $200.00 a month or works more than 40 hours a month. 20 C.F.R. § 404.1592(b). An individual has only one trial work period of 9 months, regardless of whether the 9 months are consecutive, during a period of entitlement to cash benefits.
20 C.F.R. § 404.1592(c). Thus, under the 2000 regulations, if a person earns more than $200.00 but not more than $700.00 a month, the disabled individual will be in a trial work period but not be engaged in SGA.
The issue before ALJ Halligan was not whether Trossen had begun a trial work period. The issue for ALJ Halligan was whether Trossen had engaged in SGA. As noted above, a finding that Trossen had not engaged in SGA does not necessarily mean that Trossen did not begin a trial work period. The court is presented with no reason to conclude that the rules of administrative finality forever bar the Commissioner from considering facts simply because they happened before a prior administrative decision. Rather, the rules of administrative finality merely limit the Commissioner's ability to upset determinations necerily made in a prior decision. The bar is upon re-considering facts, not considering facts for the first time. Thus, ALJ Schneider could not later determine that Trossen had, in fact, engaged in SGA prior to ALJ Halligan's decision. That determination was foreclosed by ALJ Halligan's decision. However, ALJ Halligan made absolutely no determination as to whether Trossen began a trial work period prior to his decision, and because ALJ Halligan did not make this determination, SSR 82-66 did not bar ALJ Schneider from subsequently so finding.
An individual is at fault for the overpayment if the overpayment resulted from:
(a) An incorrect statement made by the individual which he knew or should have ...