Justices OK Social Security Seizure of Overpayments

A sharply divided Supreme Court today upheld Social Security regulations involving overpayment and underpayment of benefits, despite objections that the rules could leave some people facing severe financial problems.

The court, in a 5-4 ruling written by Justice Antonin Scalia, said the government could deal with such payments as one item--a system that dissenting judges argued could have a sharp impact on the elderly who might not be able to pay bills because their benefits are suddenly reduced.

However, Scalia said that in the Social Security Act the word adjustment “can be read to mean decreasing future payments, payments” in order and recovery to mean obtaining to obtain a refund from the beneficiary.”

Justice John Paul Stevens, joined by Justices William J. Brennan Jr., Thurgood Marshall and Anthony M. Kennedy, said in dissent that the majority’s ruling delegates the “kingly power to rewrite history” to the government.

“A needy person who unknowingly receives an overpayment may spend it, not realizing that the government will later take back money by reducing needed benefits, or by refusing to compensate for a prior overpayment,” Stevens said. “The beneficiary may be left without money essential to pay monthly bills.”

The case deals with a complex system used by Social Security to handle erroneous payments. Under the system, when an error, whether an overpayment or underpayment, is discovered, the agency reviews all payments to the person to determine how long the error went on and whether it was offset by other errors.

For example, if a person has received too small a check, the agency will see if the person has been overpaid at some time and deduct that amount from whatever is due.

However, that system was challenged in December, 1986, by a group of Colorado Social Security recipients who argued that the accounts should be kept separate.

Under other Social Security procedures, if the accounts were kept separate those who received both underpayments and overpayments could end up with more money than is actually due them. The agency has a procedure by which it will waive repayment of some overpayments.

The challenge was upheld in lower federal courts and the government appealed to the Supreme Court.