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Valentin Vallejo v. Michael J. Astrue

July 14, 2011


The opinion of the court was delivered by: Kendall J. Newman United States Magistrate Judge


The Commissioner of Social Security (the "Commissioner" or "defendant") denied plaintiff Valentin Vallejo's application for a waiver of the repayment of benefit payments improperly made to plaintiff during the period of August 1995 through March 1996 (the "overpayment period"). Plaintiff, a recipient of Disability Insurance Benefits under Titles II and XVI of the Social Security Act (the "Act"), seeks judicial review of the Commissioner's final decision.

In his motion for summary judgment, plaintiff principally contends that the Administrative Law Judge (the "ALJ") in this case erred by discrediting plaintiff's testimony. According to plaintiff, the ALJ discredited plaintiff's testimony due to a mistaken belief that various documents in the record predate the overpayment period, and by choosing to "assume" plaintiff's knowledge of Social Security work rules despite a lack of conflicting evidence in the record. (Pl.'s Mot. for Summ. J., Dkt. No. 16.) Plaintiff, a native Spanish speaker, also challenges the ALJ's decision on the grounds that the ALJ did not give appropriate weight to various items of evidence, including plaintiff's limited ability to comprehend English. (Id.) Plaintiff contends that these and other defects render the ALJ's decision unsupported by substantial evidence. (Id.) The Commissioner filed a cross-motion for summary judgment. (Def.'s Opp'n & Cross-Motion for Summ. J., Dkt. No. 18.)

For the reasons stated below, the court grants plaintiff's motion for summary judgment and denies the Commissioner's cross-motion for summary judgment.*fn1


A. Procedural Background

On October 3, 1996, the Social Security Administration (the "SSA") sent plaintiffa notice stating that his disability ended due to plaintiff's performance of substantial work from August 1995 to March 1996. (Administrative Record ("AR") 47.) The notice listed plaintiff's various months of work and explained the "trial work period" and "extended period of eligibility." (AR 47-49.)

More than nine years later, in September 2005, the SSA sent plaintiff a "Notice of Change in Benefits" that stated: "You should not have been paid for the months 08/1995 through 03/1996. Since you were paid when you should not have been, you have been paid $5,212.00 too much." (AR 130.)

Plaintiff filed a Request for Waiver of Overpayment on November 22, 2005. (AR 134-41.) That form, which was signed by plaintiff, states that "I was not at fault because I notified the Administration building on Folsom on 10/4/94 that I was employed. Susan told me my benefits would not be affected. On or about Nov. or Dec. my . . . SSI was stopped and I continued to receive my Social Security benefits." (AR 135, 140.)

Plaintiff's request was denied on January 12, 2006, by way of an "Overpayment Information" notice identifying the overpayment amount as $8,236. (AR 148.) On January 26, 2006, plaintiff had a personal conference with an SSA staff member regarding the overpayment. (AR 148-51.) At that conference, plaintiff signed a statement reflecting his agreement to repay the overpayment of $8,236 "by monthly offsets in the amount of $50.00 starting 3/06." (AR 150-51.) On February 7, 2006, the SSA issued another notice to plaintiff confirming the denial of his request for waiver of the repayment. (AR 154.) Plaintiff requested a hearing before an ALJ. (AR 156.)

On May 11, 2007, plaintiff participated in a hearing before the ALJ in Sacramento, California. (AR 207.) A Spanish language interpreter was present, and plaintiff was represented by counsel. (AR 19, 207.) On July 20, 2007, the ALJ issued a decision unfavorable to plaintiff. (AR 19-22.) Through his counsel, plaintiff filed a request for review by the SSA Appeals Council. After plaintiff's appeal was apparently misdirected at the office of the Appeals Council, ultimately, on September 11, 2009, the Appeals Council issued a notice denying review and the ALJ's decision became the final decision of the Commissioner. (AR 4-7.)

B. Summary of Facts*fn2

Plaintiff began receiving benefits in September of 1987. (AR 142.) In 1995,

plaintiff was receiving both Title II disability insurance benefits ("Title II benefits") and Title XVI Supplemental Security Income ("SSI"). (AR 142, 215, 219.) On two separate occasions plaintiff began working while he was receiving these benefits. First, plaintiff worked for Silkscape, Inc. in August and September 1992. (AR 45-47). Second, plaintiff worked for Sacramento Handicapped Parking Patrol from October 1994 through April 1996. (AR 41-44, 215.) Plaintiff's periods of employment are undisputed.

Within two weeks of starting his employment at Sacramento Handicapped Parking Patrol, plaintiff visited an SSA office and informed an SSA representative that he had become employed. (AR 55, 135-36, 215.) Plaintiff made this report to the SSA because, according to plaintiff, "[i]nitially when I applied for Social Security I had the responsibility that if I worked in the future I would have to let them know, and that's what I've done always." (AR 217.) Plaintiff testified that he thought that reporting his employment to the SSA would result in the cessation of his benefits checks. (AR 226.) However, plaintiff testified that he did not understand the benefits-related concepts of the "trial work period"*fn3 or the "extended period of eligibility." (AR 218.)

After plaintiff reported his employment to the SSA in October 1994, plaintiff stopped receiving SSI benefits. (AR 215.) Plaintiff believed that his SSI benefits stopped "[b]ecause I was working." (AR 217.) However, plaintiff continued to receive Title II benefits payments from August 1995 through March 1996, known herein as the "overpayment period." (AR 215.)

Plaintiff did not notify the SSA that he was continuing to receive Title II benefits. (AR 226.) Plaintiff testified that he did not do so because he believed his continued receipt of Title II benefits was permissible. (AR 55, 99, 135, 140, 217-18.) Plaintiff's belief arose from his assumption that the SSA reacted to his report of employment by intentionally ceasing some of his benefits payments and intentionally continuing to make others. (AR 55, 99, 135, 140, 217-18.)

In other words, plaintiff assumed that after he reported his employment, the SSA stopped his SSI benefits because plaintiff was no longer entitled to them, but continued his Title II payments because plaintiff remained entitled to them. (AR 55, 99, 135, 140, 217-18.)

Plaintiff's assumption was bolstered by his knowledge that some of his co-workers, who were also disabled, continued to receive their Social Security checks. (AR 217-18, 226.) Plaintiff's assumption was further bolstered by the fact that a representative of Sacramento Handicapped Parking Patrol, "Susan," told him that his benefits would not be affected by his being employed there. (AR 135, 140.)

It is undisputed that plaintiff received Title II benefits payments during the overpayment period. It is also undisputed that plaintiff's employment during that period rendered him ineligible to receive such payments, given that his total months of employment exceeded the "trial work period" starting in August 1995. The undisputed overpayment amount is $8,236. (AR 148, 150-51.)

C. Summary of the ALJ's Findings

Within his decision (the "ALJ's Decision"), the ALJ reached two primary conclusions and found that both of them supported an ultimate finding that plaintiff was at fault within the meaning of 20 C.F.R. 404.507.*fn4 (AR 19-22.)

First, the ALJ expressly concluded that he was "unable to credit" plaintiff's testimony. (AR 21.) Specifically, the ALJ was "unable to credit" plaintiff's representation that "he had to rely on friends and his employer for information on how working affects his receipt of disability insurance benefits, because Social Security failed to communicate with him in Spanish, which is the only language he understands." (Id.) The ALJ discredited this testimony because he found that "the evidence shows that [plaintiff] was able, in some way, to interpret notices from Social Security and to understand what the notices were saying. . . ." (Id.) The ALJ concluded that there was "no support" for plaintiff's testimony that "he did not understand what Social Security was informing him of and that he had to rely on friends or employers for information about Social Security." (Id.)

Second, the ALJ also determined that he was "unable to credit" plaintiff's testimony that "he was not informed by Social Security of what a trial work period or extended period of eligibility are." (AR 21.) The ALJ was also "unable to credit" plaintiff's testimony that he "had no idea that his work could affect his disability insurance benefits." (Id.) The ALJ discredited this testimony because, when someone had improperly reported earnings under plaintiff's Social Security Number, "the record shows that Social Security had contacted [plaintiff] in 1992, 1996, and in 1997, about work and earnings on his Social Security record and how these earnings affected his benefits." (Id. (citing Exhibits 7, 8, 9, 10, and 20).) The ALJ concluded that "[t]his evidence can reasonably be seen as showing [plaintiff knew] that his work and earnings did in fact affect his receipt of disability insurance benefits, separate from its affect on his receipt of SSI benefits." (Id.)

Based on these two adverse credibility determinations, the ALJ determined that plaintiff "cannot be found without fault in causing the overpayments" at issue. (Id.) The ALJ then concluded that "it is reasonable to assume that the appellant was informed about how his work and earnings affected his eligibility for disability insurance benefits." (Id. at 22.) The ALJ also concluded that plaintiff "could have been ...

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