SULLIVAN V. EVERHART, 494 U. S. 83 (1990)

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U.S. Supreme Court

Sullivan v. Everhart, 494 U.S. 83 (1990)

Sullivan v. Everhart

No. 88-1323

Argued Nov. 27, 1989

Decided Feb. 21, 1990

494 U.S. 83


The Social Security Act requires the Secretary of Health and Human Services, when he "finds that more or less than the correct amount" of "payment" has been made under the Old-Age, Survivors and Disability Insurance program, or of "benefits" has been paid under the Supplemental Security Income program, to make "proper adjustment or recovery." If less than the correct amount has been paid, the Secretary shall pay the balance due; if more than the correct amount has been paid, the Secretary shall reduce future payment or obtain a refund from the beneficiary. The Act prohibits, however, "adjustment of payments to, or recovery . . . from, any person who is without fault," if such adjustment or recovery would defeat the Act's purposes or be against equity and good conscience. Califano v. Yamasaki, 442 U. S. 682, 442 U. S. 697, interpreted that limitation as entitling the beneficiary to an oral hearing on waiver of recoupment. Pursuant to his authority to "fin[d] [whether] more or less than the correct amount" of payment has been made, and under his general rulemaking authority, the Secretary promulgated "netting" regulations. Under these regulations, the Secretary calculates the difference between the amount due and the amount paid for the period beginning with the first month for which there was a payment error and ending with the month of the "initial determination." If the beneficiary was overpaid in certain months and underpaid in others, the Secretary will net the errors (i.e., calculate the difference between the underpayments and the overpayments) and treat the netted amount as an overpayment or underpayment, as the case may be, for purposes of adjustment or recovery. In this case, after the Secretary made both underpayments and overpayments to each respondent, he netted the errors, paid the net underpayments, and offered recoupment waiver hearings as to the net overpayments. The District Court granted summary judgment to respondents in their ensuing lawsuit, ruling that the regulations violated the Act. The Court of Appeals affirmed.

Held: The netting regulations are facially valid. Pp. 494 U. S. 88-95.

(a) The regulations are based on a permissible construction of the Act. The Act authorizes the Secretary to determine whether "more or less than the correct amount" has been paid; and the "correct amount" can

Page 494 U. S. 84

reasonably be construed to mean the net amount owing as of the date of the determination, rather than the amount owing each month. The Act refers to the correct amount "of payment," not of "any payment" (as it does elsewhere), which suggests computation on a multipayment basis. Nor does the restriction on "adjustment or recovery" of overpayments foreclose the netting regulations. These terms do not necessarily embrace all collection methods. The Secretary has reasonably interpreted "adjustment" to mean a reduction in future payments, and "recovery" to mean refund. Pp. 494 U. S. 89-93.

(b) The method of computing the netting period does not make the regulations arbitrary and capricious. The inevitable delay between the discovery that something is amiss and the formal "initial determination" of error (which closes the netting period) is necessary to avoid spur-of-the-moment decisions. The Secretary's regulations limit delay, and the hypothesis that the Secretary will deliberately delay to net-in additional underpayments is implausible. The respondents' alternative regime of separate accounting would increase the administrative burden, and their alternative suggestion of delayed reimbursement of underpayments does not address the alleged delay problem. Pp. 494 U. S. 93-95.

853 F.2d 1532, (CA10 1988) reversed and remanded.

SCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C.J.,and WHITE, BLACKMUN, and O'CONNOR, JJ., joined. STEVENS, J., filed a dissenting opinion, in which BRENNAN, MARSHALL, and KENNEDY, JJ., joined,, post, p. 494 U. S. 96.

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