A $500,000 Underpayment?

    From Newsweek:

A Kentucky woman said she is owed more than $500,000 after the Social Security Administration began underpaying her in the 1990s.

Wyonia Butler, 65, worked as a nurse in the 1990s, but at the young age of 32, she was injured on the job and wound up unable to work. ...

While Butler said she initially received workers' compensation, the payments ceased after just seven months. ...

In June of 1997, Butler received a letter saying she would get only 80 percent of her earnings due to the workers' compensation, despite the payments having stopped. That totaled $1,620 taken out of her benefits, which has easily surpassed $500,000 in lost money today.

While Butler immediately went to correct the error, confirming that she did not receive any workers' compensation anymore, the past 27 years have left her without answers and a heavy hit to her financial situation. ...

She initially received a letter saying they needed to secure more information and she needed to complete a few forms. She mailed them out and followed up but was told the forms were in backlog. The SSA representatives she spoke to said they weren't sure why her account still said she receives workers' compensation. ...

"I did as I was asked," Butler said. "However, to this date, it's never been done or addressed. They are still withholding $1,625 out of my check every month. I called, of course, and was told each time to be patient, it's being worked up."

After five years of failing to get answers, Butler said she stopped. It was affecting her health, but 27 years later, she still is unsure where a half-million dollars is and why it's been withheld from her. ...

In the meantime, Butler said she has been deprived of at least $500,000 in payments and lost her farm. ...

"I should have continued every day until I got an answer," Butler said. "I should have called more. Due to health reasons, I had to stop. I did call last year and this year. The line just rings and rings."

She received a denial of reconsideration after five months despite having immediately corrected the Social Security error. ...

    What happened here? I think the most likely explanation is that Ms. Butler was receiving her full, unreduced benefits. She thought her payment was reduced by the workers compensation offset but she was just confused about how much she was owed each month. She was certainly confused about what that 80% that she heard something about meant. It's complicated but while 80% is part of the workers compensation offset, it doesn't mean that there's an 80% reduction. The actual reduction could be more or less than that. Even though Ms. Butler seems confused -- as well she should be since this is all so complicated -- there is the real possibility that she has been underpaid all these years. Social Security has a hard time administering the complex workers compensation offset. I don't think that Social Security would deny that they make a lot of workers compensation offset mistakes but 27 years of mistakes is at the extreme end of what would be imaginable.

    If I were representing her, I'd like to see that reconsideration determination she received and I'd like to know what she did after receiving it. I'd like to see any other paperwork she has. Was there a settlement of her workers compensation case with a lump sum benefit payment? Was this paid by an annuity? Did her benefit payments change when she turned 62? If it did, that would suggest that the agency was still applying the workers compensation offset until then. I'm not going to explain why age 62 matters other than to say that I'm talking about the RIB-DIB election. If you don't know what the RIB-DIB election is, you don't know enough to be commenting on any of this.