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Heard v. United States Social Security Administration

United States District Court, District of Columbia

March 15, 2016

TINA HEARD, et al., Plaintiffs,
v.
UNITED STATES SOCIAL SECURITY ADMINISTRATION, et al., Defendants.

MEMORANDUM OPINION

REGGIE B. WALTON UNITED STATES DISTRICT JUDGE

The plaintiffs, Tina Heard, Pearline Snow, and Carolyn Graham, filed this putative class action against the defendants-the United States Social Security Administration (“SSA”), the United States Department of the Treasury (“Treasury”), and the District of Columbia (“District”)-challenging the SSA’s referral of debts to Treasury for tax refund offsets, and Treasury’s and the District’s subsequent actions in effectuating the offsets. Complaint (“Compl.”) ¶ 1. Currently pending before the Court is the Federal Defendants’ Motion To Dismiss (“Fed. Defs.’ Mot.”), ECF No. 21, which seeks dismissal of the complaint pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), and the District of Colombia’s Motion To Dismiss (“District’s Mot.”), ECF No. 20, which seeks dismissal of the complaint pursuant to Rule 12(b)(6) only.[1] Also pending is the plaintiffs’ Motion for Class Certification (Deferred Consideration Requested) (“Class Cert. Mot.”), ECF No. 4. Upon careful consideration of the parties’ submissions, the Court concludes that it must grant the Federal Defendants’ motion to dismiss pursuant to Rule 12(b)(1), and deny all other pending motions as moot.[2]

I. BACKGROUND

Congress mandates that “[w]henever the Commissioner of Social Security finds that more or less than the correct amount of payment has been made to any person under this subchapter, proper adjustment or recovery shall be made . . . .” 42 U.S.C. § 404(a)(1) (2012). An overpayment occurs when beneficiaries receive payment in excess of the amount they were entitled to receive under the Social Security Act. See 20 C.F.R. § 404.501(a) (2015). Recovery methods for overpayments include “reduction in tax refunds based on notice to the Secretary of the Treasury as permitted under Section 3720A of Title 31.” 42 U.S.C. § 404(a)(1)(A). 31 U.S.C. § 3720A, the statute that permits a reduction in a person’s tax refund to satisfy outstanding debts to the SSA, is implemented through a government-wide program known as the Treasury Offset Program. See Fed. Defs.’ Mem. at 3 (describing the Treasury Offset Program). And, the District entered into a reciprocal agreement with Treasury under which the District withholds tax refunds owed to residents and remits the money to Treasury to offset a District resident’s debt. See D.C. Code § 47-143 (2012); District’s Mem. at 5.

Around the beginning of February 2014, Tina Heard did not receive her federal and state tax refunds. Compl. ¶ 42. Heard contacted the SSA, and was informed that her tax refunds had been intercepted by the SSA to satisfy an outstanding debt for overpayment of survivor benefits. Id. ¶¶ 47, 50. After providing the SSA with her current address, Heard received notices from Treasury and the SSA stating that prior notices regarding the debt and offsets had been mailed to her “last known address”-an address where Heard no longer resided. Id. ¶¶ 38, 45, 46. On February 19, 2014, Heard filed a request for reconsideration with the SSA, and Heard’s counsel later sent a demand letter to the SSA in May 2014. Id. ¶¶ 52, 54. As of the date of the filing of the complaint in this Court, the SSA had not contacted Heard about her reconsideration request or demand letter. Id. ¶ 55. After the plaintiffs filed the complaint, the SSA determined that it had mailed Heard’s pre-offset notice to the incorrect address, and on that basis, instructed Treasury to return her tax refund on March 2, 2015. Stricks Decl. ¶ 17 (“SSA instructed Treasury to refund the amount offset because Ms. Heard alleged non-receipt of the pre-offset notice and because a third party contacted SSA to report they had received mailings from SSA at the address the agency had used to send notices to Ms. Heard.”). The SSA then waived the underlying debt to the SSA. Id. ¶¶ 18-19 & Exhibit (“Ex.”) H-3 (“We are writing to tell you that we are waiving the collection of your Social Security overpayment of $3, 144.00. This means you will not have to pay this money back.”).

In early March 2014, Carolyn Graham did not receive the full amount of her tax refund from the District. Compl. ¶ 73. Graham then received notices from Treasury and the District that a portion of her tax refund was intercepted to satisfy an outstanding debt to the SSA for the overpayment of survivor’s benefits. Id. ¶¶ 74-77. The notices also stated that prior notices had been mailed to her “last known address”-an address where Graham no longer resided. Id. ¶ 75.

Graham then filed a request for a hearing, and after the SSA could not locate her hearing request, her counsel sent the SSA a demand letter on January 8, 2015. Id. ¶¶ 78, 81, 82. Graham had not received any payment in connection with the offset for her debt to the SSA as of the date of the filing of the complaint, id. ¶ 86; however, after the plaintiffs initiated this suit, the SSA instructed Treasury to return Graham’s tax refund and waived the underlying debt, see Stricks Decl. ¶¶ 8-10 (“SSA instructed Treasury to refund the amount [of the] offset because Ms. Graham provided evidence that her current address was different from the address where SSA mailed the pre-offset notice. . . . [O]n or about April 6, 2015, SSA made a determination to waive collection of the overpayment due to a lack of documentation, and because the cost of collecting the overpayment would likely exceed the total overpayment amount . . . .”)

Also in March 2014, Pearline Snow received a notice from the District that her tax refund had been intercepted and applied to a debt owed to the SSA. Compl. ¶ 60. Snow received an additional notice from Treasury on March 27, 2014, which stated that her federal tax refund had also been intercepted, and that the SSA previously mailed a notice to her “last known address”- an address where Snow no longer resided. Id. ¶¶ 62-63. On April 23, 2014, Snow’s counsel sent a demand letter to the SSA. Id. ¶ 64. When the complaint was filed in this case, the SSA had not made a decision on Snow’s demand letter. Id. ¶ 66. However, after the complaint was filed, Treasury refunded the amount of the offset and the SSA waived the overpayment.[3] Stricks Decl. ¶¶ 26, 31.

II. STANDARD OF REVIEW

The Federal Defendants’ motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) presents “a threshold challenge to the [C]ourt’s jurisdiction.” Morrow v. United States, 723 F.Supp.2d 71, 75 (D.D.C. 2010) (Walton, J.) (quoting Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987)). While the court must “assume the truth of all material factual allegations in the complaint and ‘construe the complaint liberally, granting [the] plaintiff the benefit of all inferences that can be derived from the facts alleged, ’” Am. Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011) (quoting Thomas v. Principi, 394 F.3d 970, 972 (D.C. Cir. 2005)), the plaintiff nonetheless bears the burden of establishing by a preponderance of the evidence that the court has subject matter jurisdiction, Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). Accordingly, “the [p]laintiff’s factual allegations in the complaint . . . will bear closer scrutiny in resolving [a 12(b)(1) motion].” Grand Lodge of the Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13-14 (D.D.C. 2001). Moreover, “the court need not limit itself to the allegations of the complaint.” Id. at 14. Instead, “a court may consider such materials outside the pleadings as it deems appropriate to resolve the question [of] whether it has jurisdiction [in] the case.” Scolaro v. D.C. Bd. of Elections & Ethics, 104 F.Supp.2d 18, 22 (D.D.C. 2000).

III. ANALYSIS

The plaintiffs initiated this putative class action to challenge the SSA’s collection of their social security overpayments through the referral of debts to the Treasury Offset Program. See generally Compl. ¶¶ 89-141. Before the Court can reach the merits of the dispute, it must first consider the threshold issue of whether it has jurisdiction over the plaintiffs’ claims. NO Gas Pipeline v. Fed. Energy Regulatory Comm’n, 756 F.3d 764, 767 (D.C. Cir. 2014) (“It is fundamental to federal jurisprudence that Article III courts such as ours are courts of limited jurisdiction. Therefore, ‘we must examine our authority to hear a case before we can determine the merits.’” (quoting Wyo. Outdoor Council v. U.S. Forest Serv., 165 F.3d 43, 47 (D.C. Cir. 1999))). The Federal Defendants put forth two grounds why this Court lacks jurisdiction: first, they argue that the plaintiffs’ claims are moot due to the SSA’s post-filing refund of the amounts that were allegedly seized improperly, and second, that the applicable statutory and regulatory scheme does not permit the Court to review the plaintiffs’ challenge to the agencies’ actions. See generally Fed. Defs.’ Mem. at 8-11. As explained further below, the Court concludes that it lacks jurisdiction over the plaintiffs’ claims because no case or controversy exists, and as a result, the complaint must be dismissed in its entirety. Accordingly, the Court does not reach the Federal Defendants’ second argument for dismissal for lack of subject matter jurisdiction. Further, because the Court lacks jurisdiction over this dispute, the Federal Defendants’ motion to dismiss Counts IV and V of the complaint, the District’s motion to dismiss, each pursuant to Rule 12(b)(6), and the pending motion for class certification shall be denied as moot.[4]

A. Mootness

“Federal courts lack jurisdiction to decide moot cases because their constitutional authority extends only to actual cases or controversies.” Iron Arrow Honor Soc’y v. Heckler, 464 U.S. 67, 70 (1983); see also Leonard v. U.S. Dep’t of Defense, 598 F. App’x 9, 10 (D.C. Cir. 2015) (“Article III, Section 2 of the Constitution permits federal courts to adjudicate only actual, ongoing controversies.” (quoting Daimler Trucks N. Am. LLC v. EPA, 745 F.3d 1212, 1216 (D.C. Cir. 2013))). The case-or-controversy requirement dictates that “throughout the litigation, the plaintiff must have suffered, or be threatened with, an actual injury traceable to the defendant and likely to be redressed by a favorable judicial decision.” Spencer v. Kemna, 523 U.S. 1, 7 (1998). A court must therefore “refrain from deciding [a controversy] if events have so transpired that the decision will neither presently affect the parties’ rights nor have a more-than- speculative chance of affecting them in the future, ” Am. Bar Ass’n v. Fed. Trade Comm’n, 636 F.3d 641, 645 (D.C. Cir. 2011), because otherwise, “any opinion as to the legality of the challenged action would be advisory, ” City of Erie v. Pap’s A.M., 529 U.S. 277, 287 (2000). ...


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