Why Did This Case Have To Go To The Court Of Appeals?

From Costello v. Astrue, ___ F.3d ____ (7th Cir. 2007)

Florine Costello visited her local Social Security office in 1994 with a straightforward question: from which of her two ex-husbands could she collect the largest monthly benefit check? (Divorcees can draw retirement benefits on their former spouses’ earnings records. 42 U.S.C. §402(b).) Based on the advice she received, she applied for (and received) benefits for which, it turns out, she was ineligible. The SSA eventually discovered the error and demanded repayment of eight years’ benefits. Costello seeks to offset this amount by the benefits she would have received had she applied under the other ex-husband’s account. An administrative law judge concluded that such an offset is unavailable because the situation does not fall within 42 U.S.C. §402’s “misinformation” provision, which allows applications to be granted retroactively in some circumstances. After the Appeals Council declined Costello’s request for review, she brought this suit, in which the district court granted summary judgment for the agency.

The Seventh Circuit Court of Appeals, in a decision by Judge Easterbrook reversed and allowed Ms. Costello the offset she requested.

I have a hard time understanding how the Administrative Law Judge, Appeals Council and District Court all ruled against Mrs. Costello. As described, her case is extremely sympathetic.

In addition to the theory Mrs. Costello used, there is at least one other theory that could have been used (and maybe it was used, but was not an issue presented to the Court of Appeals), a theory which I find more compelling than the one used. When Mrs. Costello filed that claim for survivor's benefits, the claim form said that she was applying for all benefits under Title II of the Social Security Act to which she might be eligible. That is what all Title II claim forms say and that language is there for a reason -- to take care of cases in which, by mistake, the wrong claim is taken, which happens to be exactly Mrs Costello's situation. There is nothing in this language that limits the claim to the Social Security number listed on the claim form. Therefore, Mrs. Costello did file a claim for benefits on the account under which she was eligible and has no need to establish the claim filing date based upon misinformation.

Also, Mrs. Costello should have been granted waiver of the overpayment if she had asked. Obviously, she was without fault and probably has nowhere near enough money to repay. In any case, it would be against equity and good conscience to ask her to repay under these circumstances, which would make her financial status irrelevant.