Social Security Act does not bar bankruptcy court from hearing SSA claims
Tuesday, June 18, 2019

Social Security Act does not bar bankruptcy court from hearing SSA claims

By Payroll and Entitlements Editorial Staff

The Social Security Act generally curtails the federal courts’ ability to hear claims arising under the Act. Here, the agency sought to recoup an overpayment from a designated beneficiary. The beneficiary requested reconsideration of the overpayment determination and a waiver of the overpayment. After the agency denied the waiver request, it resumed monthly withholding from the beneficiary’s check to satisfy the overpayment. Subsequently, the beneficiary filed for bankruptcy and lodged an adversarial proceeding against the Social Security Administration in bankruptcy court. He claimed that the monthly withholding was illegal and demanded a repayment of the amount collected. The agency argued that the bankruptcy court did not have jurisdiction to hear the case. The agency contended that 42 U.S.C. §405(h), which states that no claim arising under the Act can be brought under 28 U.S.C. §§1331 and 1346, also bars bankruptcy courts from exercising their jurisdiction under §1334 to hear Social Security claims. On appeal, the court noted a split among the circuits as to whether the Act bars bankruptcy courts from hearing such claims. The Fifth Circuit reasoned that by applying the plain meaning of the text of the statute, there was no bar to the bankruptcy court asserting jurisdiction. Although the court declined to side with the majority of circuit courts on the issue, it determined that the challenged text was unambiguous and not susceptible to another plausible construction. Thus, the district court erred by concluding that the statute barred the bankruptcy court’s jurisdiction. Its judgment was reversed and the case was remanded to the bankruptcy court for further proceedings (Kenneth Wayne Benjamin v. USA, SSA, CA-5, No. 18-20185, May 10, 2019).

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