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5th Circuit finds Bankruptcy Court has jurisdiction to hear SSA overpayment case


The 5th Circuit, in Benjamin v. United States of America, (5th Circuit 07/26/2019), has ruled that the Bankruptcy Court has jurisdiction to hear a representative payee’s overpayment case. Benjamin, the plaintiff was the representative payee of his sister’s monthly disability benefits.  His sister returned to work and the SSA, in September 2013, determined she was no longer entitled to disability benefits beginning April 2012.  This left an overpayment of $19, 286, which the SSA stated Benjamin and his sister owed to the SSA. Benjamin reached an agreement with the SSA to withhold $536 a month from him to repay the money.

In this fashion, the SSA recovered  $6,000 from Benjamin until September 2015, when, without explanation, the SSA stopped collecting the overpayment money. Then, in July 2016, the SSA denied Benjamin’s request for a waiver of the overpayment. He asked for a personal conference with the SSA and the SSA ruled against him. He awaits a hearing.

Meanwhile, the SSA resumed collecting $536 a month from Benjamin. The burden soon became too much: In May 2017, Benjamin filed for Chapter 7 bankruptcy. He then filed an adversarial proceeding against the SSA in bankruptcy court. Benjamin alleged the SSA collected $6,000 from him illegally and in violation of its own regulations. He demanded repayment in full. Also, he demanded the return of the $536 collected from him in May due to the collection’s proximity to his bankruptcy filing.


The SSA moved to dismiss Benjamin’s claims for lack of subject matter jurisdiction, claiming Benjamin had failed to exhaust his administrative remedies through the appeal process. The SSA also argued Benjamin’s claims should be dismissed under Rule 12(b)(6). The bankruptcy court granted the SSA’s motion to dismiss for “the reasons stated in the [m]otion.” Benjamin appealed to the district court, which affirmed on jurisdictional grounds.


Then Benjamin appealed to the 5th Circuit, who stated that the bankruptcy court should examine Benjamin’s claims and determine whether they are primarily about his entitlement to benefits—that is, a payment of money because he (or his sister) is disabled—or claim for money because the SSA failed to comply with its own regulations in recouping the overpayment. The 5th Circuit further explains that if Benjamin’s claims show the SSA did not comply with its own regulations, then the bankruptcy court has jurisdiction under §1334 to hear Benjamin’s claims.  This case is without precedent. The SSA gives discretion to claims examiners in processing overpayment claims. That discretion results in thousands of overpayment cases against claimant’s which contain errors.


There are many rules regarding overpayment recovery and payment. It is important to appeal within the timeframe the SSA gives on their notice and also file a waiver of overpayment. Because the 5th Circuit allows for examination of the SSA’s process in a bankruptcy proceeding, it will motivate the SSA to follow their own regulations. It will also result in fewer overpayment errors. At Cannon Disability Law, we give our client’s the advice they need so they have the knowledge to help them from ever being charged with an overpayment from the SSA. SSA’s rules are hard to follow. If you have questions or concerns about your Social Security Disability case, contact us today.

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