TN 7 (12-03)

Procedure — Overpayment issues in disability statutory benefit continuation cases

An overpayment to a beneficiary can be caused by the receipt of statutory benefit continuation payments during the appeal of a medical cessation. The overpayment procedures are applicable to both continuing disability review and childhood (or age 18) disability redetermination cases. The following instructions explain field office (FO) and teleservice center (TSC) processing of waiver requests as well as the issuance of the initial overpayment notice. The instructions in this section apply only to the portion of an overpayment resulting from a period of benefit continuation.

1. How to identify an overpayment caused by benefit continuation

• A B3 overpayment diary will be present with a diary date equal to the date of an OL transaction (see SM 01311.633, SM 01601.580).

• In the CMPH segment, there will be consecutive months where the payment status is N07/N08, there is a TOP, and the overpayment reason code is “XX” (see SM 01601.790).

• Effective June 2003 cases in benefit continuation are in CO1 with SBC data posted in the APPE (appeals) segment. See SM 01601.685.

  NOTE: Pipeline cases that were not converted in June 2003 will continue to be shown as N07 or N08.

• In PMTH, the payments for the overpaid months will show a G in PAYFLAG 3 (see SM 01601.835).

2. Processing waiver requests

a. Was the appeal pursued in good faith?

In a medical cessation case (including disability redetermination cases) involving an overpayment of statutory benefit continuation payments, the individual is entitled to waiver consideration if the cessation determination was appealed in good faith. The regulations state we will assume the appeal was made in good faith unless the individual fails to cooperate in connection with the appeal, e.g., if he/she fails, without good reason, to give us medical or other evidence we request, or go for a physical or mental examination when requested, in connection with the appeal.

In order to apply this, review the SSR to determine whether the cause of the overpayment is due to benefit continuation, i.e., PSY N07/N08. Next, review the file and any other available records and determine whether the appeal of the medical cessation was made in good faith. For those situations where the teleservice center is processing the waiver request, the TSC will have to contact the FO to secure any information they may need to process the waiver request. This is in keeping with current procedures in the Teleservice Center Operating Guide (TSCOG) (TC26010.130C.7.) . This section states, “If additional information is needed to support a waiver decision...contact the FO for any information they may have.” (NOTE: This section of the TSCOG includes an example of a benefit continuation situation.) If, based on the available information, the individual cooperated with the processing of the appeal, assume that the appeal was made in good faith. In this situation, the individual is entitled to waiver consideration.

b. Individual cooperates with the processing of the appeal

In most cases, it would be appropriate to find that where the individual acted in good faith to pursue the appeal the individual is without fault in causing the overpayment. For cases in which it is not appropriate to make this finding, see SI 02260.007, Item 2.c.

However, cooperation with the processing of the appeal does not require a finding of without fault when the overpayment is caused, in whole or in part, by a reason other than benefit continuation. An example of this would be a case of an individual cooperating with the processing of the appeal while withholding other information about resources, income, etc., thereby causing an overpayment for a reason other than benefit continuation.

The finding that the individual pursued the appeal in good faith does not end waiver development. To approve a request for waiver, recovery must also either “defeat the purpose of Title XVI” (i.e., the individual's income and resources are needed for ordinary and necessary living expenses), or “be against equity and good conscience” (see SI 02260.001).

To sum up, if the individual is without fault with respect to the overpayment and needs substantially all of his/her current income and resources to meet ordinary and necessary living expenses, SSA will waive recovery of the overpayment.

c. Individual fails to cooperate with the DDS

If a claimant fails to cooperate with the DDS in DHU processing of a reconsideration of a cessation, do not assume the appeal was made in good faith. Good faith cooperation with further levels of appeal will not change the determination based on a prior period of non-cooperation i.e., the individual can be found at fault in causing the overpayment. Nor will it change the determination based on a finding that the individual was at fault in causing the overpayment for another reason such as not reporting changes in resources, income, etc.

d. Full waiver development required

Do not end waiver development or approve a waiver based solely on the finding that an individual pursued the disability cessation appeal in good faith. In addition to a finding of good faith, determine whether recovery of the overpayment would also:

• “defeat the purpose of Title XVI” (to determine whether recovery would defeat the purpose of Title XVI of the Act, see SI 02260.020); or

• “be against equity and good conscience” (to determine whether recovery would be against equity and good conscience, see SI 02260.025); or

• “impede effective or efficient administration of Title XVI of the Act because of the small amount involved” (to determine whether recovery would impede effective or efficient administration of Title XVI of the Act because of the small amount involved, see SI 02260.030).

3. Delay the initial overpayment notice

POMS GN 02201.009H states “Do not send the initial overpayment notice until appeal of the medical cessation has been exhausted....” In such cases, do not send the overpayment notice during the 60-day appeal period, or when an appeal has been timely filed. Do not send the overpayment notice even when the title XVI case is listed on the “B3” diary list. Once the appeal period has expired and no appeal has been filed, or all appeals have been exhausted, follow normal overpayment notice procedures.

4. Examples

Listed below are six sample situations and the corresponding TSC or FO actions on when to send the overpayment notice where the overpayment was caused by the claimant's receipt of statutory benefit continuation (BC).

Example 1:

BC was received through the reconsideration level of appeal. The reconsideration determination affirms the medical cessation and no request for a hearing is filed during the 65 days after the date of the reconsideration affirmation notice.

TSC/FO Action:

Send the overpayment notice no earlier than 66 days after the date of the reconsideration affirmation notice.

Example 2:

BC was received through the reconsideration level of appeal. The reconsideration determination affirms the medical cessation. However, the claimant filed a request for a hearing. The hearing decision affirms the medical cessation and NO further appeal is filed during the 65 days after the date the claimant is notified of the hearing decision.

FO Action:

DO NOT send the overpayment notice while the request for a hearing is pending. Send the overpayment notice after the administrative law judge (ALJ)/Appeals Council (AC) returns the folder after the period for requesting further review expires (see GN 02201.009B.7.).

TSC Action:

At the time you discover that a hearing is pending, transfer the overpayment diary to the FO (see the Teleservice Center Operating Guide, OVERPAYMENTS (Title XVI--TSRs) chapter (TC 26010.030B), systems-identified exclusion number 17). The FO should control the overpayment diary for the return of the folder.

Example 3:

BC was received through the reconsideration level of appeal. The reconsideration determination affirms the medical cessation. However, the claimant filed a request for a hearing. The hearing decision affirms the medical cessation. The claimant then filed a request for review of the ALJ's decision with the AC.

TSC/FO Action:

DO NOT send the overpayment notice while the request for a hearing or the request for AC review is pending. Send the overpayment notice after the AC returns the folder after the period for requesting judicial review expires (see GN 02201.009B.7.).

The FO should control the overpayment diary for the return of the folder. If the TSC gets an overpayment diary, transfer it to the FO (see SI 02260.007, Item 4., Example 2).

Example 4:

BC was received through the hearing level of the administrative review process. The hearing decision affirms the medical cessation and no appeal is filed during the 65 days after the date of the hearing decision.

TSC/FO Action:

DO NOT send the overpayment notice while the request for a hearing is pending. Send the overpayment notice after the ALJ/AC returns the folder after the period for requesting further review has expired (see GN 02201.009B.7.).

The FO should control the overpayment diary for the return of the folder. If the TSC gets an overpayment diary, transfer it to the FO (see SI 02260.007, Item 4., Example 2).

Example 5:

BC was received through the hearing level of the administrative review process. The hearing decision affirms the medical cessation. However, the claimant filed an appeal to the AC level.

TSC/FO Action:

DO NOT send the overpayment notice while the request for a hearing or the request for AC review is pending. Send the overpayment notice after the AC returns the folder after the period for requesting judicial review expires (see GN 02201.009B.7.).

The FO should control the overpayment diary for the return of the folder. If the TSC gets an overpayment diary, transfer it to the FO (see SI 02260.007, Item 4., Example 2).

Example 6:

BC was received through the hearing level of the administrative review process. The hearing decision affirms the medical cessation. However, the claimant filed an appeal to the AC level. The AC denied the claimant's request for review of the ALJ's decision and the claimant requested judicial review by the Federal courts.

TSC/FO Action:

DO NOT send the overpayment notice while the request for a hearing or the request for AC review is pending. Send the overpayment notice after the court decision is received (see GN 02201.009B.7.).

The FO should control the overpayment diary pending the court decision. If the TSC gets an overpayment diary, transfer it to the FO (see SI 02260.007, Item 4., Example 2).

In addition, an overpayment notice SHOULD NOT be issued at the time the AC remands a case to the ALJ or the time the Federal court remands the case to the agency for further proceedings. In such a case, the administrative decision is not final, and the regulations provide that continued benefits are payable pending a new decision by the ALJ or final action is taken by the AC on the ALJ's recommended decision. The overpayment notice should be sent when proceedings on remand are completed, as outlined in SI 02260.007, Item 4., Example 1 through 6.