Langenbach v. Comm'r of Soc. Sec.

526 F.Supp.3d 1177

Klaus Josef LANGENBACH, Plaintiff,

v.COMMISSIONER OF SOCIAL SECURITY, Defendant.

Case No.: 2:19-cv-586-FtM-MRM

United States District Court, M.D. Florida, Fort Myers Division.

Signed March 15, 2021

Erik William Berger, Osterhout Berger Disability Law, Jacksonville, FL, for Plaintiff.

John F. Rudy, III, US Attorney's Office, Tampa, FL, for Defendant.

OPINION AND ORDER

Mac R. McCoy, UNITED STATES MAGISTRATE JUDGE

Plaintiff Klaus Josef Langenbach filed a Complaint on August 20, 2019, (Doc. 1), and an Amended Complaint on August 27, 2019, (Doc. 10). Plaintiff appeals from the Social Security Administration's ("SSA") decision finding that he has been overpaid Social Security Retirement Insurance Benefits ("RIB") based upon the application of the Windfall Elimination Provision ("WEP"). (Docs. 1, 23).

Specifically, Plaintiff argues that the Commissioner improperly concluded that Plaintiff's German social security benefits necessitated the application of the WEP to his United States RIB. (Docs. 23 at 5-7, 24 at 1-2). Plaintiff requests that the Court remand this matter to the Commissioner for further proceedings. (Id. ).

The Commissioner asserts that the Administrative Law Judge ("ALJ") evaluated the evidence of record and properly applied the law to determine that the SSA has overpaid Plaintiff $30,967.60 through application of the WEP to Plaintiff's German social security benefits and United States RIB. (Doc. 23 at 7-15).

On December 4, 2019, the Commissioner filed the transcript of the administrative proceedings (hereinafter referred to as "Tr." followed by the appropriate page number) (Doc. 18), and the parties filed a joint memorandum detailing their respective positions on April 15, 2020. (Doc. 23). Additionally, on April 16, 2020, Plaintiff filed Plaintiff's Reply Memorandum – Social Security. (Doc. 24).

For the reasons set forth herein, the decision of the Commissioner is REVERSED AND REMANDED pursuant to § 205(g) of the Social Security Act, 42 U.S.C. § 405(g).

I. Background

Plaintiff lived and worked in Germany until roughly 1994 when he came to the United States. (Tr. at 140). Plaintiff estimates that he paid into the Germain Social Security system for roughly 23 years. (Id. at 141-42). In 1994, when Plaintiff moved to the United States, he began paying into the United States Social Security system. (Id. at 146-47). While working in Germany, Plaintiff paid German social security taxes; while working in the United States, Plaintiff paid United States social security taxes. (Id. at 147).

Beginning in January 2006, Plaintiff was awarded monthly RIB of $345.00 by the United States SSA under Title II (Federal Old-Age, Survivors, and Disability Insurance) of the Social Security Act. (Id. at 25). Notably, Plaintiff's work in the United States was sufficient for him to qualify for United States RIB without the application of the Totalization Agreement between the United States of America and the Federal Republic of Germany on Social Security (the "U.S.-German Totalization Agreement"). (See id. at 18 n.1, 25-27); see also U.S. Soc. Sec. Admin., U.S.-German Social Security Agreement , https://www.ssa.gov/international/agreement_texts/germ_agt.html (visited Jan. 29, 2021). In addition to his monthly United States RIB, Plaintiff began receiving a monthly pension of €493.79 from Germany (the "German Pension") in May 2006. (Tr. at 45, 143).

Plaintiff collected both payments until September 2015, when he received a "Notice of Change in Benefits" letter from the SSA informing him that he had been overpaid $30,967.60 from May 2006 through August 2015. (Id. at 45). The SSA determined that Plaintiff's United States RIB were subject to a reduction based on the WEP because he was receiving additional benefits through his German Pension. (Id. ).

Plaintiff timely sent a request for reconsideration to the SSA arguing that: (1) he was not at fault for the $30,967.60 overpayment because the United States SSA had not informed him that he had to report the German Pension; and (2) the WEP should not apply in his case because his foreign employer withheld social security taxes. (Id. at 49). The SSA scheduled a personal conference on November 17, 2015, and issued a decision on December 5, 2015, finding that Plaintiff was at fault for the alleged overpayment because he had failed to disclose the German Pension in his original application for United States RIB. (Id. at 55, 59-60).

Following this, Plaintiff requested a hearing before an ALJ and argued that: (1) he was not at fault for the overpayment; and (2) the WEP could not apply to the portion of the German Pension that was awarded pursuant to voluntary payments. (Id. at 61-62). On March 9, 2017, ALJ Duane Young held a hearing that Plaintiff attended pro se. (Id. at 15, 133). The ALJ entered an unfavorable decision on December 13, 2017, finding that: (1) Plaintiff was overpaid RIB in the amount of $30,967.60 during the period from May 1, 2006, through August 1, 2015; (2) Plaintiff was at fault for causing the overpayment; (3) the WEP properly applies to Plaintiff's German Pension to reduce the United States RIB; and (4) recovery of the overpayment is not waived by the SSA and Plaintiff is liable for repayment of $30,967.60. (Id. at 15-19). The Appeals Council subsequently denied Plaintiff's request for review on June 26, 2019. (Id. at 1-4, 129-30).

Thereafter, Plaintiff filed a Complaint with this Court. (Doc. 1). The Commissioner filed an Answer (Doc. 16) and the Transcript (Doc. 18). The parties consented to proceed before a United States Magistrate Judge for all proceedings. (Docs. 17, 20). The parties then filed their Joint Memorandum (Doc. 23) and Plaintiff filed a reply brief to the Joint Memorandum (Doc. 24). The case is, thus, ripe for review.

II. Calculation of Social Security Benefits

"As a general rule, workers in the United States are taxed to support the payment of social security benefits to the retired and to individuals with disabilities." Eshel v. Comm'r , 831 F.3d 512, 514 (D.C. Cir. 2016). The Social Security Act distinguishes between "covered" and "noncovered" employment. Martin v. Soc. Sec. Admin., Comm'r , 903 F.3d 1154, 1156 (11th Cir. 2018) (citing 20 C.F.R. § 404.1001(2018) ). "Covered employment" is subject to various social security taxes, and "noncovered employment" is exempt from social security taxes. Id. ; see also Stroup v. Barnhart , 327 F.3d 1258, 1259 (11th Cir. 2003).

Many noncovered employment positions include a separate annuity or pension. Id. Similarly, an individual who works in a foreign country and pays into that country's social security system may become entitled to a pension or benefit from that foreign government. Hawrelak v. Colvin , 667 F. App'x 161, 162 (7th Cir. 2016). Moreover, a foreign pension or benefit may be based on a totalization agreement, or a foreign pension may not be based on a totalization agreement. See Programs Operation Manual System (POMS) GN 01701.301, GN 01701.310.

A retired worker is entitled to United States RIB based on the number of calendar quarters during which the person earned wages from employment subject to social security contribution requirements, "covered employment," over the course of the person's career, provided the person has accrued a minimum number of quarters of coverage. Beeler v. Berryhill , 381 F. Supp. 3d 991, 995 (S.D. Ind. 2019), aff'd sub nom. Beeler v. Saul , 977 F.3d 577 (7th Cir. 2020) (citing 42 U.S.C. §§ 402(a), 414(a) ).

Based on how the SSA calculates RIB,¹ an individual who works in a foreign country and receives a pension from the individual's noncovered employment in that country may also be awarded a higher percentage of United States RIB than would generally be awarded. See id.

In 1983, Congress enacted the WEP formula, which applies to social security benefits "to eliminate the unintended ‘double dipping’ that accrued to workers who split their careers between employment taxed for social security benefits (‘covered’) and employment exempt from social security taxes (‘noncovered’)." Stroup , 327 F.3d at 1259. The WEP, as codified in 42 U.S.C. § 415(a)(7)(A), modifies the default formula for individuals who receive a monthly payment in whole or in part based upon earnings for noncovered work. Martin , 903 F.3d at 1157. A pension paid by a foreign government is an example of a monthly payment that may be based, in part, on noncovered work. Hawrelak , 667 F. App'x at 162.

The WEP formula, however, has exceptions. The exception relevant to this case is subsection 415(a)(7)(A)(ii)(II), which provides that any "payment by a social security system of a foreign country based on [a totalization agreement] concluded between the United States and such foreign country" will not cause the WEP to apply. 42 U.S.C. § 415(a)(7)(A)(ii)(II). Generally, totalization agreements allow individuals who split their careers between two member countries, and who would otherwise lack sufficient periods of coverage to qualify for each country's retirement system, to combine their periods of coverage to establish entitlement to social security benefits. See 42 U.S.C. § 433 ; U.S. Soc. Sec. Admin., U.S. International Social Security Agreements , https://www.ssa.gov/international/agreements_overview.html (visited Jan. 29, 2021); see also Hawrelak , 667 F. App'x at 163.

The U.S.-German Totalization Agreement falls within the category of agreements referenced in the above exception to the WEP. See id. ; U.S. Soc. Sec. Admin., U.S.-German Social Security Agreement , https://www.ssa.gov/international/agreement_texts/germ_agt.html (visited Jan. 29, 2021); see also U.S. Soc. Sec. Admin., Totalization Agreement with Germany , https://www.ssa.gov/international/agreement_pamphlets/germany.html (visited Jan. 29, 2021). Accordingly, an individual can simultaneously be entitled to regular, non-totalization United States RIB and a foreign pension based on a totalization agreement with the United States without the...