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August 8, 1994

LOUIS W. SULLIVAN, M.D., Secretary of Health and Human Services, Defendant.

The opinion of the court was delivered by: JUNE L. GREEN

 This action is brought under 42 U.S.C. § 405(g) to review a final decision of the Secretary of Health and Human Services denying Plaintiff's request for a waiver of recovery of an overpayment of insurance benefits made under Title II of the Social Security Act. For the reasons stated below, the Court reverses the Secretary's decision.

 The Plaintiff, Azeal Villate, is an 84 year-old divorced widow who worked for the government for 30 years and who retired from her government position on disability. At the time she applied for Medicare and widow's benefits in February 1980, the Plaintiff was receiving workers' compensation for the injuries she sustained while on her government job. The Administrative Record ("R.") at 40, 96.

 Although eligible for a pension in January 1972, Plaintiff did not apply to receive her government pension until October 1980. R. at 96. After receipt of her pension payments, her widow's benefits should have been reduced pursuant to 42 U.S.C. § 402(e)(7)(A). The Social Security Administration claims it overpaid the Plaintiff $ 64,782.70, and made a demand upon her for reimbursement on August 6, 1990.

 The overpayment was the result of unclear information contained in Plaintiff's application for widow's benefits.

 The Administrative Record reflects that the widow's benefits application was filled out by a social security worker. R. 19, 39. The Plaintiff signed the application directly beneath a paragraph which, in part, states in small bold print: "I affirm that all information I have given in this document is true." R. 53.

 The application directs those applicants who respond "yes" to question 25(b) to go to question 25(c). R. 51. This question asks the claimant to enter the date when she expects to receive the government pension or to indicate "unknown". R. 51. Question 25(c) on the Plaintiff's application was left blank. R. 51.

 The Plaintiff's widow benefits were not reduced during the months she also received her government pension, apparently as a consequence of the SSA's interpretation of the Plaintiff's application as indicating that the Plaintiff did not expect to receive a government pension.

 At the time of her application for widow's benefits, the Plaintiff was receiving worker's compensation. R. 96. The Plaintiff was eligible to receive her government pension in January 1972, but elected to defer its payment until October 1980. R. 96.

 The SSA first notified the Plaintiff in November 1987 that she had been overpaid and that she was responsible for repaying the overpayment. The Plaintiff then requested the SSA to waive recovery of the overpayment, which was initially denied by the SSA in October 1989. After a personal conference between the Plaintiff and an SSA representative, the denial of the waiver request was affirmed in June 1990.

 Plaintiff then requested a hearing before an Administrative Law Judge ("ALJ"). On May 30, 1991, an administrative hearing was held before ALJ Friedenberg. Plaintiff was present and represented at this hearing by a paralegal employed by the American Association of Retired Persons.

 At the hearing, Plaintiff testified that she told a social security worker that she worked for the government for thirty years and that she had retired because of a work-related injury. R. 40. The Plaintiff also testified that she was aware of the pension offset, but believed that the offset had always been deducted from her widow's benefits. R. 40-41.

 The Plaintiff's testimony and the comments by the examiners at the hearing taken as a whole suggest that the Plaintiff, the American Association of Retired Persons paralegal, and the ALJ believed that the Plaintiff was receiving her government pension at the time she filed the application. However, the record also shows that the ALJ was in possession of information indicating that Plaintiff did not begin receiving her government pension until eight months after filing her application. See, R. 98.

 In a written decision, the ALJ found that the Plaintiff was receiving a government pension at the time of the application in February 1980. R. 19. However, it is undisputable that Plaintiff did not receive her pension until October 1980, eight months after the filing of the application. R.96. The ALJ also found that the initials of the Plaintiff beside the "no" box on question 25(b) indicated that the Plaintiff did not anticipate receiving a government pension. R.19. The ALJ drew this conclusion "particularly in view of the fact that the interviewer had originally checked "yes" but then the answer was changed to "no", and claimant specifically initialed this answer." R. 19. On these bases, the ALJ found that the Plaintiff was "not without fault" in connection with the overpayment because she provided incorrect information on her application. R. 19.

 Plaintiff requested a review of the ALJ's decision by the Appeals Council. On June 24, 1992, the Appeals Council denied Plaintiff's request for review of the ALJ's decision, making the ALJ's determination the final decision of the Secretary and thus reviewable by this Court.

 A. Scope of Review

 Judicial review of a final decision of the Secretary is limited to a determination of whether the decision, based on the entire record, is supported by substantial evidence and whether correct legal standards have been applied. 42 U.S.C. § 405(g). See Richardson v. Perales, 402 U.S. 389, 402, 28 L. Ed. 2d 842, 91 S. Ct. 1420 (1971). Substantial evidence is "such relevant evidence as a reasonable mind might accept to support a conclusion." Id. at 401 (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 83 L. Ed. 126, 59 S. Ct. 206 (1938)). The Court may not "decide the facts anew, reweigh the evidence, or substitute its judgment for that of the Secretary." Fulwood v. Heckler, 594 F. Supp. 540, 548 (D.D.C. 1984) (quoting Bloodsworth v. Heckler, 703 F.2d 1233, 1239 (11th Cir. 1983).

 The Court must give careful scrutiny to the entire record to determine if the ALJ "has analyzed all evidence and has sufficiently explained the weight he has given to obviously probative exhibits." Simms v. Sullivan, 278 U.S. App. D.C. 259, 877 F.2d 1047, 1050 (D.C.Cir. 1989) (citations omitted).

 B. Review of the Secretary's Decision

 The Social Security Act provides for a mandatory waiver of overpayments of insurance benefits if (1) the claimant is without fault in receiving the payment and (2) requiring a repayment would defeat the purpose of Title II or would be against equity and good conscience. 42 U.S.C. § 404(b).

 A showing of bad faith is not required to find an overpaid individual at fault. 20 C.F.R. § 404.507(a) (1992). *fn1" Rather, an individual is at fault if the overpayment resulted from:

(a) an incorrect statement made by the individual which he knew or should have known to be incorrect; or
(b) failure to furnish information which he knew or should have known to be material; or
(c) with respect to the overpaid individual only, acceptance of a payment which he either knew or could have been expected to know was incorrect.

 20 C.F.R. § 404.507 (1992). When determining fault, all pertinent conditions, including age, intelligence, education, and physical and mental ...

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