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Recipients who file a written request for waiver under § 204(b) of the Social security Act, 42 U.S.C.S. § 404(b) are entitled to the opportunity for a pre-recoupment oral hearing. Those recipients who merely request reconsideration under § 204(a) of the Social security Act, 42 U.S.C.S. § 404(a) are not so entitled.
The Secretary of the Department of Health, Education and Welfare was authorized by 204(a)(1) of the Social Security Act (42 USCS 404(a)(1)) to recoup erroneous overpayments made to a beneficiary under the old-age, survivors', or disability insurance program by decreasing future payments to which the overpaid person was entitled, but 204(b) of the Act (42 USCS 404(b)) barred recoupment from any person who was without fault if recoupment would defeat the purpose of the Act or would be against equity and good conscience. Under Department procedures, after a recipient was notified of the ex parte determination that an overpayment has been made, the recipient may file a written request either seeking reconsideration of that determination or asking the Secretary to waive recovery in accordance with 204(b), with recoupment beginning after a decision on the papers went against the recipient, and an oral hearing being granted only if the recipient thereafter continued to object to recoupment. Several recipients of benefit payments brought suit in the United States District Court for the District of Hawaii and the United States District Court for the Western District of Washington, alleging that recoupment procedures violated 204 and the due process clause of the Fifth Amendment. The District Court in Hawaii, after certifying a class of all recipient residents in Hawaii who were or would be subject to recoupment, held that due process required that the Secretary provide an opportunity for an informal hearing before an independent decision maker prior to recoupment. The District Court in Washington, after certifying a nationwide class of beneficiaries whose benefits had been or would be recouped, enjoined the Secretary from ordering recoupment without having provided recipients with a prior opportunity for an informal hearing before an independent decision maker. The appellate court held that when a waiver was requested, the due process clause required that the recipient be given an oral hearing before recoupment began, but that a prior hearing was not required in 204(a) reconsideration cases if the dispute was a routine one centering on a computational error or a payment problem that did not demand an evaluation of credibility. Certiorari was granted.
The court ruled that pre-recoupment oral hearings were not required under § 204(a) actions because those actions involved relatively straightforward matters of computation for which written review was ordinarily an adequate means to correct prior mistakes. According to the court, neither 204(a) nor the standards of the due process clause require pre-recoupment oral hearings for recipients who request reconsideration to contest the accuracy of the overpayment determination under 204(a). However, the court held that actions under § 204(b), which involved a determination of fault, required pre-recoupment oral hearings.