Allen v. Social Security Administration, Commissioner
MEMORANDUM OPINION. Signed by Magistrate Judge T Michael Putnam on 8/10/18. (MRR, )
2018 Aug-10 AM 11:17
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SHAULA LANEAR ALLEN,
NANCY A. BERRYHILL,
Deputy Commissioner for
Operations of the Social Security
Case No. 7:17-cv-00831-TMP
The plaintiff, Shaula Lanear Allen, individually and as representative payee
and on behalf of J.L., 1 appeals from the decision of the Commissioner of the Social
Security Administration (“Commissioner”) finding that she and J.L. received an
overpayment based upon J.L.’s available resources and denying her and J.L.’s
requests for a waiver of the overpayment of Supplemental Security Income (“SSI”)
benefits. Ms. Allen timely pursued and exhausted her and J.L.’s administrative
remedies, and the decision of the Commissioner is ripe for review pursuant to 42
J.L. is the plaintiff’s disabled son born on January 19, 1999. (Tr. at 279, 379-80). Since
the filing of the complaint in the above-styled action, J.L. has reached the age of majority in the
State of Alabama. However, at the time of the filing of the complaint and at all relevant times
during the administrative proceedings below, J.L. was a minor child. Accordingly, the court will
continue to refer to J.L. by his initials.
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U.S.C. §§ 405(g), 1383(c)(3).2 The parties have consented to the exercise of
dispositive jurisdiction by a Magistrate Judge pursuant to 28 U.S.C. § 636(c).
I. Factual Background
When J.L. was an infant, a pharmacy filled a prescription for him, but
labeled the prescribed medication with an incorrect dosage instruction. (Tr. at 20910). Consequently, J.L. ingested four times the necessary dosage, suffered an
injury, and required emergency medical care. (Tr. at 210). In 2000, Allen brought
a lawsuit on behalf of J.L. in the Chancery Court of Lowndes County, Mississippi
(“the chancery court”), and she settled his claim for $20,000 in 2002. (Tr. at 209211) (engagement letter dated 2000). Pursuant to the court order approving the
settlement, after deduction attorney’s fees and costs, Allen paid $13,062.73 into
Contrary to the Commissioner’s assertion, the court finds that it has jurisdiction to review
not only the denial of waiver, but also the Commissioner’s determination of the fact and amount
of the alleged overpayment. The February 26, 2015, findings by the ALJ clearly involved not
just the question of the claimant’s request for waiver of the overpayment, but also the fact and
amount. After the Appeals Council vacated the earlier findings and remanded the matter for
further hearing, apparently on all issues, the ALJ undertook to examine once again the
fundamental question whether the settlement funds in an account for J.L. should be counted as
resources for SSI purposes and, if so, the correct amount of such purported resources. Indeed,
the ALJ himself understood that was what he was doing. He wrote, “As a result [of the Appeals
Council’s vacating remanding the earlier determinations], the current proceedings represent a de
novo hearing on the issues, and the undersigned is not bound by any previous findings made
regarding those issues.” The ALJ also considered whether the Commissioner should waive
repayment of the alleged overpayment. Two full pages of the ALJ’s written findings dealt with
the plaintiff’s argument that the funds were not countable as resources because they were in a
“special needs” account. This means that the February 26, 2015 determination is the operative
order for review, and it included both the waiver issue and the fact and amount of the alleged
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“an F.D.I.C. insured account.” Allen apparently opened a certificate of deposit
with Cadence Bank (“the account”) and deposited the settlement proceeds.
(See Tr. at 78-85, 212-13).
Initially, the court order directed Allen to retain the settlement proceeds in
the account “for the maintenance and education of the minor child” and prohibited
Allen from withdrawing any of the proceeds “without the further order of th[e]
Court.” (Tr. at 210A; see also tr. at 320 (letter from 2002 indicating that proceeds
were to be placed in “a frozen account”)). According to Allen, the chancery court
made clear to her that she “was not to use” the proceeds deposited into the account
and that the “money was not to be used for [J.L.] to take care of himself.” (Tr. at
333; see also tr. at 426-27). On one occasion in 2006, she petitioned the court for
authority to withdraw $2,000 from the account because of her and J.L.’s “recent
relocation [from Mississippi to Alabama] and [J.L.’s] dire need for medications
and counseling not covered by insurance.” (Tr. at 285). Because of the move,
Allen needed to schedule many doctor’s appointments for her son; in essence, she
needed to find a new doctor to replace each of his former doctors located in
Mississippi. (See tr. at 333). Therefore, she needed access to the proceeds to be
able to pay for the visits and medications. (See tr. at 333). The petition was
granted by the Mississippi court.
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Allen petitioned the court once again to withdraw proceeds from the account
in 2010. (Tr. at 282, 334, 426-27, 435). The chancery court denied her request to
purchase a computer for J.L.’s educational needs. (Tr. at 282, 334, 426-27, 435).
The chancery court explained to Allen’s attorney that it was Allen’s responsibility
“to take care of [J.L.]” with her own resources, not with the settlement proceeds.
(Tr. at 426-27). The court intended the funds in the account to be preserved for
payment to J.L. upon his becoming an adult.
From July 2007 to September 2008, Allen was deployed to Iraq, during
which time she relinquished her role as J.L.’s representative payee to her mother
(J.L.’s grandmother). She was not in control of the account during that time.
II. Administrative History
Allen, on behalf of J.L., initially applied for SSI benefits on November 10,
2004. (Tr. at 126). Subsequently, on February 28, 2007, an ALJ awarded SSI
benefits to J.L. (Tr. at 379). Allen served as J.L.’s representative payee, except for
the period of time between July 3, 2007 and September 15, 2008, when Allen was
deployed to Iraq. (Tr. at 304, 415). J.L.’s grandmother served as representative
payee during the period that Allen served overseas. (Tr. at 304, 415). Once she
returned from Iraq and resumed her role as representative payee, the Commissioner
began a redetermination of J.L.’s eligibility for SSI benefits. (Tr. at 29). During
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this time, Allen first reported to the Commissioner the existence of the account.
(Tr. at 34).
On December 9, 2009, the Commissioner informed Allen that J.L.’s
payments would stop in January 2010. (Tr. at 40). The Commissioner determined
that J.L. should have received no SSI benefits from May 1, 2009 forward because
he had resources greater than $2,000 in November 2009 and because Allen’s
income was greater than the amount of SSI benefits available to J.L. during the
period from May 2009 through October 2009 and from December 2009 forward.
(Tr. at 40-41, 51-60).
The Commissioner determined that J.L. received an
overpayment of $5,722.81 for the period from December 2008 to December 2009.
(Tr. at 61).
On February 23, 2010, the Commissioner further determined that J.L.
impermissibly received SSI benefits for a greater period of time, specifically from
December 2007 to December 2009. (Tr. at 71). According to the Commissioner,
J.L.’s SSI benefits from December 2007 to April 2009 should have equaled $0.00
because J.L.’s resources exceeded $2,000 based on the settlement proceeds
deposited into the account. (Tr. at 78-85). On April 2, 2010, the Commissioner
informed Allen that J.L. was not entitled to SSI benefits because his resources
exceeded $2,000. (Tr. at 96-97). The Commissioner sent billing statements to
Allen in the amount of $7,030 on March 19, 2010 (tr. at 87) and $8,075 on June
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14, 2010 (tr. at 107). The Commissioner placed Allen on notice of the total
amount of the $15,105 overpayment on April 9, 2010. (Tr. at 98).
At some point, Allen requested the Commissioner to waive the
overpayment, and when the Commissioner denied the waiver request, Allen
requested the Commissioner to reconsider the waiver request.3 (See tr. at 98).
Additionally, on April 7, 2010, Allen requested the Commissioner to reconsider
the fact of the overpayment by excluding the account.
(Tr. at 101).
Commissioner denied reconsideration for the waiver issue on April 9, 2010 (tr. at
98), and the overpayment issue on April 14, 2010 (tr. at 101). Allen’s Mississippi
attorney submitted a letter to the Commissioner on April 15, 2010, explaining that,
based on Mississippi law, Allen did not have a right to access the account to
provide for J.L.’s general support and maintenance. (Tr. at 283). On April 28,
2010, Allen requested a hearing before an administrative law judge (“ALJ”),
disagreeing with the Commissioner’s initial determinations because the “account
was a restrictive account.” (Tr. at 106).
Allen twice appeared before an ALJ, once on April 25, 2011 (tr. at 327), and
again on September 19, 2011 (tr. at 340). Subsequently, on October 13, 2011, the
ALJ notified Allen of his unfavorable decision (tr. at 160), concluding that: (1) J.L.
From the transcript, it is unclear to the court when these three events occurred. The
Commissioner did request further information from Allen regarding the waiver request on
March 17, 2010. (Tr. at 86).
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received an overpayment in the amount of $15,105; (2) Allen was at fault; and (3)
Allen was not entitled to a waiver (tr. at 165-66). In effect, both Allen and J.L.
were liable for repayment. On November 29, 2011, the Commissioner mailed
Allen a new billing statement which reflected $15,105 as the total amount due.
(Tr. at 290). Allen requested the Appeals Council to review the Hearing Decision
on November 30, 2011, asserting that the unfavorable decision “does not agree
with the CD transcript of the hearing in which the judge ruled differently.” (Tr. at
167). Allen was referring to the hearing held on April 25, 2011, during which the
ALJ stated on the record that the account was not a countable resource. (Tr. at
333) (stating “because it’s frozen, apparently, it doesn’t count as a resource . . . .
Somebody counted it as a resource, and . . . I don’t really know [why] because the
decree is pretty clear on that.”).
On August 28, 2018, the Appeals Council vacated the October 13, 2011,
hearing decision and remanded the case back to the ALJ “for further proceedings.”
(Tr. at 186, 188). 4 Allen appeared for a hearing before the ALJ on February 4,
Although the Appeals Council found that “the record shows that the claimant was not
eligible for benefits December 2007 through December 2009 due to his mother’s income and
veteran benefits[,]” substantial evidence does not support this statement. (Tr. at 189). The
record contains evidence detailing the alleged amount of income earned by Allen only for the
period of December 2008 through October 2009 and December 2009. (Tr. at 61-70). During
this period, the Commissioner initially determined that J.L. received an overpayment totaling
$5,722.81. (Tr. at 61). The record does not contain any evidence concerning her income from
December 2007 through November 2008.
Furthermore, the issue of income was not determined by the ALJ in his October 13, 2011,
hearing decision. (Tr. at 163-166). While the ALJ found that Allen failed to accurately report
her income, the ALJ held that the overpayment totaled $15,105 (tr. at 163-66), matching the
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2014 (tr. at 355), and requested the ALJ’s recusal on March 3, 2014 (tr. at 264),
which was granted (see tr. at 406). On July 14, 2014, Allen appeared before a new
ALJ. (Tr. at 403). Subsequently, on February 26, 2015, Allen again received an
unfavorable decision. (Tr. at 16-18). The new ALJ held that: (1) J.L. received an
overpayment totaling $15,105 because the account was a resource that excluded
J.L. from receiving SSI benefits for the period from December 2007 through
December 2009; (2) J.L. was liable for the overpayment even though he was not at
fault; and (3) Allen was both at fault and liable for the overpayment. (Tr. at 2126). Allen requested review of the ALJ’s decision, but the Appeals Council denied
review on March 17, 2017. (Tr. at 5).
amount of the purported overpayment due to the existence of the account as a resource for the
period of December 2007 through December 2009, not because of Allen’s alleged income for the
period of December 2008 through October 2009 and December 2009. (See Tr. at 21-22 for
further explanation of the “confusion”). Accordingly, because the ALJ neither explained Allen’s
purportedly inaccurate income reporting nor established an accurate overpayment total based on
her purportedly inaccurate income reporting, the ALJ’s finding is not based on substantial
evidence and is not entitled to any deference. More fundamentally, the ALJ’s hearing decision is
not entitled to any weight because it was vacated by the Appeals Council.
On remand, the ALJ acknowledged the initial income determination by the
Commissioner in his February 26, 2015, hearing decision, but the ALJ did not make any factual
findings about the accuracy of Allen’s reported income and whether the reported income resulted
in an overpayment. (Tr. at 19-26). The ALJ focused exclusively on whether the account
counted a resource and whether Allen and J.L. were entitled to a waiver. Therefore, there has
not been a final decision as to whether Allen inaccurately reported her income for the period of
December 2008 through October 2009 and December 2009 that resulted in an overpayment of
$5,722.81. The statement made by the Appeals Council in its decision (tr. at 189) is not
supported by substantial evidence.
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I. Standard of Review
This Court’s role in reviewing claims brought under the Social Security Act
is a narrow one. The scope of its review is limited to determining (1) whether
there is substantial evidence in the record as a whole to support the findings of the
Commissioner, and (2) whether the correct legal standards were applied. See
Richardson v. Perales, 402 U.S. 389, 390, 401 (1971); Wilson v. Barnhart, 284
F.3d 1219, 1221 (11th Cir. 2002).
The Court approaches the factual findings of the Commissioner with
deference, but applies close scrutiny to the legal conclusions. See Miles v. Chater,
84 F.3d 1397, 1400 (11th Cir. 1996). “Substantial evidence is more than a scintilla
and is such relevant evidence as a reasonable person would accept as adequate to
support a conclusion.” Mitchell v. Commissioner, Soc. Sec. Admin., 771 F.3d 780,
782 (11th Cir. 2014).
The Court may not decide facts, weigh evidence, or
substitute its judgment for that of the Commissioner.
evidence standard permits administrative decision makers to act with considerable
latitude, and ‘the possibility of drawing two inconsistent conclusions from the
evidence does not prevent an administrative agency’s finding from being supported
by substantial evidence.’” Parker v. Bowen, 793 F.2d 1177, 1181 (11th Cir. 1986)
(Gibson, J., dissenting) (quoting Consolo v. Federal Mar. Comm’n, 383 U.S. 607,
620 (1966)). Indeed, even if this Court finds that the evidence preponderates
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against the Commissioner’s decision, the Court must affirm if the decision is
supported by substantial evidence. Miles, 84 F.3d at 1400. “Speculation is, of
course, no substitute for evidence, and a decision based on speculation is not
supported by substantial evidence.” White ex rel. Smith v. Apfel, 167 F.3d 369,
375 (7th Cir. 1999); see also Lynch v. Astrue, 358 F. App’x 83, 87 (11th Cir. 2009)
(“Testimony that contains an undue degree of speculation is not substantial
evidence.”); Bates v. Colvin, No. 6:14-cv-906-TMP, 2015 WL 3407539, at *6 n.3
(N.D. Ala. May 27, 2015). No decision is automatic, however, for “despite this
deferential standard [for review of claims] it is imperative that the Court scrutinize
the record in its entirety to determine the reasonableness of the decision reached.”
Bridges v. Bowen, 815 F.2d 622, 624 (11th Cir. 1987). Moreover, failure to apply
the correct legal standards is grounds for reversal. See Bowen v. Heckler, 748 F.2d
629, 635 (11th Cir. 1984).
Allen argues that substantial evidence does not support the ALJ’s
determination that J.L.’s settlement-proceeds account was an available resource
and, therefore, that an overpayment occurred because J.L.’s resources exceeded the
The Commissioner contends that Allen failed to exhaust
administrative remedies by not obtaining a final decision as to the fact and amount
of the overpayment. Even if Allen exhausted her administrative remedies as to the
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overpayment issue, the Commissioner asserts that substantial evidence supports the
ALJ’s determination that an overpayment occurred due to the existence of the
Furthermore, the Commissioner maintains that substantial evidence
supports the ALJ’s determination that (1) J.L. was without fault; (2) the denial of a
waiver does not defeat the purposes or impede the efficient or effective
administration of Title XVI of the Social Security Act; (3) the denial of a waiver
for J.L. is not against equity and good conscience; and (4) Allen was with fault.
The court finds that substantial evidence does not support the ALJ’s determination
that an overpayment occurred, and because of this fact, the court does not reach the
merits of whether substantial evidence supports the ALJ’s denials of a waiver for
both Allen and J.L.
Despite the Commissioner’s argument to the contrary, Allen has exhausted
the administrative procedures related to the overpayment issue. This court may
review only the final decisions of the Commissioner. See 42 U.S.C. § 405(g). To
obtain a final decision, the claimant must undertake a four-step administrative
review process. See 20 C.F.R. § 416.1400(a). First, the Commissioner must make
an initial determination affecting the rights of the claimant.
§§ 416.1400(a)(1); 416.1402 (listing actions that are initial determinations). If the
claimant is dissatisfied with the Commissioner’s initial determination, the claimant
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may request the Commissioner to reconsider the initial determination. 20 C.F.R.
§§ 416.1400(a)(2); 416.1407. If the request for reconsideration is denied and the
claimant is still dissatisfied, the claimant may request a hearing before an ALJ.
20 C.F.R. §§ 416.1400(a)(3); 416.1429. If the claimant is dissatisfied with the
ALJ’s hearing decision, the claimant may request the Appeals Council to review
the hearing decision. 20 C.F.R. §§ 416.1400(a)(4); 416.1467. At this point, the
decision of the Appeals Council becomes a final decision when the Appeals
Council either denies review or enters a decision. 20 C.F.R. §§ 416.1400(a)(5);
The Commissioner concedes that Allen has obtained a final decision as to
the waiver issue, but the Commissioner asserts that Allen has not obtained a final
decision as to the fact and amount of alleged overpayment. The Commissioner
appears to exalt form over substance. As explained more fully in Section II, the
Commissioner terminated J.L.’s SSI benefits starting January 1, 2010, which
constitutes an initial decision. (Tr. at 40; see also 20 C.F.R. § 416.1402(b)). Allen
requested the Commissioner to reconsider the fact and amount of the overpayment
on April 7, 2010. (Tr. at 101). After the Commissioner denied reconsideration (tr.
at 101), Allen requested a hearing before an ALJ, asserting that the “account was a
restrictive account.” (Tr. at 106).
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Admittedly at this point, tracking the overpayment issue becomes difficult
because of the subsequent administrative proceedings, but the Court believes that
Allen did not fail to exhaust the overpayment issue. The ALJ made an unfavorable
decision on October 13, 2011, finding an overpayment in the amount of $15,105.
(Tr. at 165). Allen requested the Appeals Council to review the ALJ’s decision,
arguing that decision did “not agree with the CD transcript of the hearing in which
the judge ruled differently.” (Tr. at 167). During a previous hearing, the ALJ
stated that the account should not have counted as a resource. (Tr. at 333). The
Appeals Council reviewed the ALJ’s decision and vacated the decision in its
entirety. (Tr. at 186). On remand, a new ALJ issued a hearing decision on
February 26, 2015, finding that the account was a countable resource and that an
overpayment occurred. (Tr. at 21-23). Then the ALJ determined that Allen and
J.L. were not entitled to waivers of the overpayment. (Tr. at 23-26). Allen
requested review of February 26, 2015, hearing decision, and the Appeals Council
denied review on March 17, 2017, resulting in a final decision. (Tr. at 5).
The Commissioner makes much of the ALJ’s framing of the issue on
remand. However, it seems clear that when the Appeals Council vacated the
earlier ALJ’s decision, the entire matter, not just the waiver, was put before the
second ALJ. On remand, the ALJ discussed extensively whether the account
counted as a resource. The Court finds that the ALJ made a finding as to the fact
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and amount of overpayment in response to Allen’s original request for
reconsideration. Furthermore, even though the Appeals Council’s instructions to
the ALJ on remand were limited to the waiver issue, Allen adequately raised the
overpayment issue when she requested the Appeals Council to review the October
13, 2011, hearing decision. Therefore, Allen received a final decision either when
the Appeals Council failed to additionally instruct the ALJ to consider the
overpayment issue on remand (indicating that the Appeals Council denied review
of the overpayment issue) or when the Appeals Council denied review of the
February 26, 2015, hearing decision which extensively discussed the existence of
the account. In either circumstance, Allen obtained a final decision as to the
1. Regulatory and POMS Framework
The Commissioner and the ALJ determined that J.L.’s bank account was a
resource. An individual may not receive SSI benefits if the individual’s resources
exceed $2,000. 42 U.S.C. § 1382(a)(3)(B). Resources include “cash or other
liquid assets or any real or personal property that individual (or spouse, if any)
owns and could convert to cash to be used for his or her support and maintenance.”
20 C.F.R. § 416.1201(a); see also § 416.1208(a).
As defined by regulation,
“[l]iquid resources are cash or other property which can be converted to cash
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within 20 days . . . [such as] stocks, bonds, mutual fund shares, promissory notes,
mortgages, life insurance policies, [and] financial institution accounts (including
savings, checking, and time deposits, also known as certificates of deposit) . . . .”
20 C.F.R. § 416.1201(b). “An account qualifies as one used for ‘support and
maintenance’ if money from the account may be used for food or shelter.” Shields
v. Comm’r of Soc. Sec., No. 2:14-cv-226, 2015 WL 9238990, at *2 (W.D. Mich.
Dec. 17, 2015) (citing 20 C.F.R. § 416.1157(b)(3)).
Under the Social Security Administration’s Program Operations Manual
System (“POMS”), a conservatorship account may count as a resource in
determining eligibility for SSI benefits. A “‘conservatorship account’ refers to a
financial account in which a person or institution has been appointed by a court to
manage and preserve the assets of an individual which are held in the account.”
POMS SI 01140.215(A)(1). 5 Under the POMS,
If State law requires that funds in a conservatorship account be made
available for the care and maintenance of an individual, [the Social
Security Administration] assume[s], absent evidence to the contrary,
that funds in such an account are available for the individual’s support
and maintenance and are, therefore, that individual’s resource.
A State statute may not specifically address the issue of whether funds
in a conservatorship account must be made available for the care and
maintenance of the individual. Other State statutes or case law may
“Although the POMS is not published in the Federal Register, and does not have the
force of law, it is entitled to persuasive authority.” Frerks by Frerks v. Shalala, 848 F. Supp.
340, 350 (E.D.N.Y. 1994).
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specifically prohibit the use of funds held in the conservatorship
account for general support of the individual in certain circumstances.
Field office (FO) adjudicators should follow regional instructions
regarding availability presumptions that apply in those States.
POMS SI 01140.215(B)(1) (italics added for emphasis).
“Evidence to the
contrary” includes, but is not limited to: “restrictive language in the court order
that established the account or in a subsequent court order; state or local procedural
rules for the withdrawal of funds from the account; and local court practices
regarding withdrawal of funds.” POMS SI 01140.215(B)(2). However, “the fact
that an individual or his or her agent must petition the court for withdrawal of
funds does not mean that the funds may be assumed to be unavailable for the
individual’s support and maintenance (and, therefore, not a resource for SSI
purposes)[, and a] . . . [d]enial by the court of a request for withdrawal of funds
does not necessarily mean that funds in the account are unavailable for the
individual's support and maintenance.” POMS SI 01140.215(B)(3) (emphasis in
Admittedly, there is no binding authority and “a dearth of [persuasive] case
law” to help determine when funds in a conservatorship account should be counted
as a resource. See White ex rel. Smith v. Apfel, 167 F.3d 369, 374 (7th Cir. 1999).
In White, a Missouri minor qualified for SSI benefits in 1990 based on injuries
sustained in a car accident. The minor’s mother brought a personal injury lawsuit
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on his behalf and secured a settlement in December 1991. The settlement proceeds
were “placed in a restricted trust pursuant to a court order.” White, 167 F.3d at
370. The probate court “stressed to [the mother] that she remained primarily
responsible for [the minor’s] needs, . . . that the trust was to remain untouched until
[the minor] reached the age of eighteen[, and] . . . that court approval was required
before she did anything with money . . . .” Id. Subsequently, in 1995, the mother
and minor moved to Illinois. After the mother completed the required forms, the
Commissioner determined that the minor was no longer entitled to receive SSI
benefits because of the settlement proceeds and that the minor “had not been
eligible since January 1992.” Id. at 371. During the course of administrative
proceedings, the mother petitioned the probate court “to release $500 per month for
Stanley’s support and maintenance, for both current support and support
retroactive to the date of the . . . settlement” because she was disabled and
unemployed. Id. The probate court denied her request. The ALJ found that the
settlement proceeds counted as a resource, and the Appeals Council agreed. The
district court held that, even though “a court order was required to access the
funds[,] . . . the possibility of receiving approval for a reasonable disbursement . . .
was enough to uphold the decision of the Appeals Council.” Id. at 372. The
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The Seventh Circuit Court of Appeals reversed, holding that the mother
presented sufficient evidence “contradicting the presumption [under Missouri law]
that the funds in the conservatorship account [were] available for [the minor’s]
care.” Id. at 375. “Once [the mother] rebutted the presumption . . . the onus was
on the SSA to show that she still had access to the funds.” Id. at 376. The
Commissioner “failed to adequately counter” the mother’s rebuttal of the
presumption. Id. The court reasoned that the Commissioner’s argument rested on
speculation: “the probate court might have ruled differently had [the mother]
informed the court of the termination of SSI benefits.” Id. at 375. The probate
court’s decision to deny the request was within in its sound discretion, and a
reviewing court “would have been obliged to affirm.” Id. After the probate court
denied her request, she “no longer had the right, power or authority to liquidate the
funds for [the minor’s] care and maintenance.” Id.
In Shields v. Comm’r of Soc. Sec., No. 2:14-cv-226, 2015 WL 9238990
(W.D. Mich. Dec. 17, 2015), a minor sustained injuries during a car accident in
1998, resulting in her disability. As the result of a lawsuit, the minor received a
settlement in 2000, with the proceeds deposited into a conservatorship account that
could not be accessed by the minor without court approval until she turned
eighteen. The minor began receiving SSI benefits approximately 1.5 years after
the settlement was approved. However, in 2012, the Commissioner terminated the
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minor’s SSI benefits because of the account and determined that an overpayment
of $17,858.96 occurred.
Over the course of several years, the minor’s conservator received courtapproved access to the account on multiple occasions to purchase items for the
minor. When the minor’s home burned in 2003, the minor’s conservator petitioned
the court for access to the account to purchase the minor new clothes, which the
court granted. In 2005, the court likewise granted the conservator’s petition to buy
the minor additional new clothes after she outgrew the previous clothes.
Subsequently, the court approved access for the conservator to purchase the minor
a computer and a replacement computer. Finally, the court granted access to the
conservator to pay for the minor’s driver’s education class.
The United States District Court for the Western District of Michigan
reversed the decision and remanded the case for further proceedings. Shields, 2015
WL 9238990, at *4.
The plaintiff argued that, because “the funds in her
conservatorship account were not used for her support and maintenance, . . . the
account was an excludable resource.” Id. at *2. The court held that the “question
of whether the conservatorship account could be (or was) used for [the minor’s]
support and maintenance remain[ed] unanswered.” Id. at *3. The court reasoned
that “[t]he ALJ’s decision focuse[d] entirely on whether [the minor] had access to
the funds within the conservatorship account[, but] . . . the ALJ did not discuss
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whether the funds in [the minor’s] account were used for her ‘support and
maintenance.’” Id. According to the court, “the ALJ assumed that the funds in the
account were used for her ‘support and maintenance[,]’” but the evidence in the
record did not support such an assumption. Id.
Conversely, in Frerks by Frerks v. Shalala, 848 F. Supp. 340 (E.D.N.Y.
1994), the minor began receiving SSI benefits in June 1988 because of his mental
handicap. Furthermore, his parents, serving as his guardians, could not “dispose of
their son’s property ‘without’ further order’ of the Surrogate’s Court.” Frerks, 848
F. Supp. at 345. Subsequently, the minor received a settlement in September 1988.
His parents deposited the settlement proceeds into four accounts, and the
Surrogate’s Court explained to Secretary of Health and Human Services (“HHS
The guardian must apply to the court for an order to withdraw funds.
All funds are held in joint control and cannot be withdrawn without a
court order. The court will only release funds held in guardianship
accounts that the court deems necessary for the support, education and
medical needs of the respondent.
Frerks, 848 F. Supp. at 345. The parents began to withdraw $700 per month from
the settlement proceeds with court approval in July 1990. The HHS Secretary
terminated the minor’s SSI benefits in March 1990 “because of excess
resources[,]” with the termination retroactive to September 1988. Id. The ALJ
Page 20 of 40
found that the settlement proceeds were available as a resource, but did not order
repayment of the overpayment.
The United States District Court for the Eastern District of New York
affirmed, holding that substantial evidence supported the ALJ’s decision because
“the Surrogate has allowed disbursements of $700 per month . . . to be applied
towards Frerks’ support and education.” Frerks, 848 F. Supp. at 349. The court
reasoned that, “when determining an individual’s SSI eligibility, any assets and
other funds readily available to that person for support and maintenance should be
applied towards those purposes before the state must intervene to provide minimal
financial support to that person.” Id. The court also found that the HHS Secretary
and the ALJ applied the correct legal standards. Finally, the court distinguished
Navarro by Navarro v. Sullivan, 751 F. Supp. 349 (E.D.N.Y. 1990). According to
the court in Frerks, the court in Navarro found that the settlement proceeds
deposited into an account did not count as a resource “because the specific
language of the settlement order precluded the availability of the funds for the
plaintiff's support and maintenance.” Frerks, 848 F. Supp. at 351. The language of
the order before the court in Frerks allowed the parents to use the funds for the
minor’s support and maintenance. Id. Consequently, the minor appealed. The
Second Circuit Court of Appeals affirmed, holding that substantial evidence
Page 21 of 40
supported the “ALJ’s determination that [the minor] had resources in excess of the
statutory limits.” Frerks v. Shalala, 52 F.3d 412, 414 (2d Cir. 1995).6
2. February 26, 2015, Hearing Decision
The ALJ concluded that the settlement proceeds deposited into the account
were excess resources that rendered J.L. ineligible for SSI benefits. Specifically,
the ALJ held that
1. The beneficiary, [J.L.], was overpaid Title XVI benefits in the
amount of $15,105 during the period from December 2007
through December 2009 (20 CFR 416.537(a)).
There appears to have been some confusion, regarding the amount of
the overpayment. Ms. Allen was initially notified that [J.L.] had been
overpaid a total of $5,722.81 for the period from December 2008
through December 2009 because she (Ms. Allen) had not reported all
of her income for that period (Exhibit 4). Based on a redetermination
that included the additional income, it was determined that [J.L.]
should have received $508.17 for December 2008, $545.17 for
January and February 2009, $376.84 for March and April 2009, and
$0.00 from May 2009 through December 2009-a total of $2352.19 for
that period (Exhibit 3). Because he had received $587.00 for
December 2008 and $624.00 for January 2009 through December
2009—a total of $8075.00—his overpayment was thought to be the
$5,722.81 cited in the January 5, 2010 letter. Ms. Allen requested that
the overpayment be waived; however, while the request for waiver
was still pending, it was discovered that [J.L.] had an additional bank
account that had never been reported. The bank account housed funds
awarded as the result of a medical malpractice suit and had been in
existence since May 2002–prior to the date of [J.L.’s] SSI application
(Exhibit 5). Because those funds (over $13,000 at the time) were well
Additionally, at the requests of the minor’s parents, the Surrogate created a special needs
trust in 1995, but the creation of the trust was not retroactive to the date of the accounts’ creation
in 1988. Frerks v. Shalala, 52 F.3d at 413.
Page 22 of 40
over the SSI program’s resource limit, [J.L.] was never eligible [for]
SSI payments and was not due the more than $24,000.00 in SSI
payments he received (Exhibit 10). However, it was determined at the
lower level that administrative finality applied to monies paid prior to
December 2007 and that only those payments made from December
2007 forward would be recoverable as an overpayment. [J.L.] had
been paid a total of $7030.00 during the period from December 2007
through November 2008 ($573.00 for December 2007 and $587.00
for January 2008 through November 2008). In addition, because he
was not due any payments during the period from December 2008
through December 2009, he was overpaid the entire $8075.00 he
received for that period rather than the $5,722.81 calculated
previously. His total overpayment for the period from December
2007 through December 2009 was $15,105. Any confusion as to the
correct amount of the overpayment resulted directly from Ms. Allen’s
failure to report income and resources timely and correctly.
It is Ms. Allen’s contention that the malpractice settlement funds
constitute a special needs trust and, as such, should not be counted as
a resource. In support of that argument, Counsel has referenced an
Amended Decree Authorizing Settlement of Minor’s Claim filed on
March 26, 2010, in the Chancery Court of Lowndes County
Mississippi in which Ms. Allen, as [J.L.’s] guardian, is ordered to
deposit the settlement funds “into a trust account with a federally
insured institution” where it was “to remain until further order of the
Court; once the ward arrives at the age of twenty-one (21) years and
the court grants a discharge of the guardianship” (Exhibits 22, 33, 43).
In a letter dated April 15, 2010, [J.L.’s] former attorney, Curtis
Austin, characterizes the account as a “restrictive account,” arguing
that state law prohibits Ms. Allen from using the settlement funds “for
what would normally constitute the duties of the parent to provide
room, board, shelter, clothing, and education” (Exhibits 33, 35).
Counsel has also provided evidence that Ms. Allen must petition the
court before she can withdraw funds and that not all of her requests
have been granted. On October 4, 2006, Ms. Allen was allowed with
[sic] withdraw $2000 from the account for her son’s “support and
care” because she had recently relocated from Mississippi to Alabama
and reported that [J.L.] was in “dire need for medications and
counseling not covered by insurance” (Exhibit 43). According to a
letter dated February 23, 2010, her subsequent request for funds that,
Page 23 of 40
according to her testimony, would have been used to purchase a
computer was reportedly denied (Exhibit 43).
As indicated by its title, the March 2010 decree is an amended decree
and was established after the overpayments occurred. The decree that
was enforceable at the time the SSI payments were made, dated
May 31, 2002, specifically states that the funds were to be retained
“for the maintenance and education of the minor child” (Exhibit 35).
Per CFR 416.1208, funds held in a financial institution account
(including savings, checking, and time deposits, also known as
certificates of deposit) are considered resources if the individual owns
the account and can use the funds for his or her support and
maintenance. Based on information reflected in the Program
Operations Manual System (POMS)—a primary source of policy and
procedures for SSA-related issues—the account in question was a
conservatorship account rather than a special needs trust account.
POMS SI 01140.215 defines a conservatorship account as “a financial
account in which a person or institution has been appointed by a court
to manage and preserve the assets of an individual which are held in
the account.” The fact that the court had to be petitioned before funds
could be withdrawn or that some requests for funds were denied does
not mean that the funds were unavailable for [J.L.’s] support and
maintenance. The language of the decree establishes that the funds
were, in fact, for his “maintenance and education.” Thus, the
evidence of record establishes that during the months [J.L.] was
receiving SSI payments, the funds in the account were available for
his care and maintenance and, therefore, his resource for SSI
purposes. As a result, [J.L.] was not eligible for SSI payments at any
time through December 2009—the last month for which payments
were made—and was overpaid for those months.
Ms. Allen contends that the account was found to be excluded from
[J.L.’s] income and resources at both of the previous hearings before
an administrative law judge and, further, that a portion of the $15,105
overpayment was waived at one of those hearings (Exhibits 49, 51).
She also contends that the Appeals Council agreed that the account
should not be counted in its August 28, 2013 Remand Order. The
evidence shows otherwise. The decision of the administrative law
judge who presided over those hearings, dated October 13, 2011, did
not find the account to be a non-countable resource and did not waive
Page 24 of 40
recovery of any of the $15,105 overpayment (Exhibit 31). More to
the point, Ms. Allen appealed that decision and in the August 2013
order, the Appeals Council vacated the October 13, 2011 decision. As
a result, the current proceedings represent a de novo hearing on the
issues, and the undersigned is not bound by any previous findings
made regarding those issues. Her contention regarding the remand
order is erroneous as well. That order specifically states that the court
ordered trust “does not meet the requirements for the Special Needs
Trust exceptions” (Exhibit 34).
(Tr. at 20-23). With the ALJ’s determinations in mind, the court turns to whether
the ALJ committed an error of law and whether substantial evidence supports the
3. Error of Law
When the ALJ applied the POMS presumption of availability of the account
as a countable resource to terminate J.L.’s SSI benefits,7 the ALJ either ignored or
overlooked clear federal and state legal precedent. Under the POMS regarding
conservatorship accounts, if the presumption of availability applies, Allen was
tasked to overcome the presumption by submitting “evidence to the contrary.”
POMS SI 01140.215(B)(1); see also White, 167 F.3d at 376. Only when Allen
successfully rebutted the presumption of availability was the ALJ required to
Admittedly, based upon the ALJ’s February 26, 2015, decision (tr. at 21-23), it is not
clear to the court whether the ALJ determined that the presumption of availability under POMS
SI 01140.215(B)(1) applied. The Commissioner suggests that the ALJ did determine that the
presumption applied. See Doc. 15, pp. 15-17. Based on the Commissioner’s representations to
this court, the court concludes that the ALJ determined that the presumption applied, but he
failed to consider whether the presumption was rebutted by “evidence to the contrary.” POMS
Page 25 of 40
counter the rebuttal.
White, 167 F.3d at 376.
Allen attempted to rebut the
presumption, in part, by pointing to the highly restrictive way local Mississippi law
treated such accounts.
Before applying the presumption of availability, the ALJ should have
referred to state law. The relevant POMS specifically directs the Commissioner to
consider local law when assessing the availability funds in such an account. Social
Security adjudicators must take into account that “State statutes or case law may
specifically prohibit the use of funds held in the conservatorship account for
general support of the individual in certain circumstances.”
01140.215(B)(1). Under longstanding Mississippi law, access to funds set aside
for a minor are severely restricted by the court practice and by statute. A court
may appoint a guardian for a minor and that “guardian is the legally recognized
custodian of the person [and] property of [the minor] with prescribed fiduciary
duties and responsibilities under court authority and direction.” Harvey v. Meador,
459 So. 2d 288, 291 (Miss. 1984). The Mississippi Supreme Court succinctly
described the fiduciary relationship between a guardian and her ward:
A minor under guardianship is a ward of the Chancery Court. All
receipts and disbursements of his estate are required to be under the
authority and direction of the Chancery Court . . . The object of the
law is to guard against dishonesty and mismanagement of the estate
by the guardian. . . . The law does not leave the amount of the
expenditures by the guardian for the maintenance, support and
education to his discretion. “The sum must be fixed by the court.” If
Page 26 of 40
the guardian contracts therefor without the sanction of the Chancery
Court . . . , the liability therefor is personal to him, and he cannot be
allowed for it in his accounts for the ward. The guardian has no
power to bind the estate of his ward without the sanction of the
Chancery Court . . . .
Welch v. Childers, 195 Miss. 415, 15 So. 2d 690, 691 (1943). A guardian has a
duty “to improve the estate committed to his charge, and to apply so much of the
income, profit or body thereof as may be necessary for the comfortable
maintenance and support of the ward . . . after obtaining an order of the court
fixing the amount.” Miss. Code Ann. § 93-13-38; see also Matter of Atkins’
Estate, 422 So. 2d 754, 757 (Miss. 1982) (“This corresponds with the duty of a
guardian as it has existed for a long time.”). Specifically, “[t]he chancery court . . .
may, at discretion, settle the sum to be expended in the maintenance and education
of a ward, having regard to his or her station, future prospects and destination.”
Miss. Code Ann. § 93-13-35.
However, “[n]o guardian shall make any
expenditure in excess of his ward’s income for the ward’s support and education
without a previous court order of the court . . . .” Miss. Code Ann. § 93-13-35. 8
Importantly, the Commissioner agrees with this longstanding Mississippi precedent.
Under POMS SI ATL01140.215,
Based on Mississippi law, do not assume the funds in a conservatorship account
are available for the support and maintenance of the SSI claimant or recipient.
Review the court order establishing the conservatorship and any subsequent court
orders concerning the authority of the conservator to use the funds of the SSI
claimant or recipient. The review should determine if the funds in conservatorship
Page 27 of 40
Because Mississippi statutes and case law do not affirmatively mandate “that
funds in a conservatorship account be made available for the care and maintenance
of an individual,” see Miss. Code. Ann. §§ 93-13-35 and -38, 9 the POMS required
the ALJ to “follow regional instructions regarding availability presumptions that
apply in those States.” POMS SI 01140.215(B)(1). In other words, the ALJ could
not have applied the presumption of availability unless a regional instruction
required otherwise. In the absence of such a regional instruction, 10 the ALJ should
not have applied the presumption of availability, but collected evidence as
necessary to make a “determination as to whether the funds in the
[conservatorship] account are a resource for SSI purposes.”
Essentially, the POMS precluded application of the
presumption of availability without clear direction from a Mississippi statute or a
account is available for support and maintenance of the SSI claimant or recipient,
and is a countable resource.
Although recently enacted in September 2017, POMS SI ATL01140.215 embodies the state of
Mississippi guardianship law as it has existed for many decades.
Although Mississippi law appears to suggest that a court may require a guardian to use
the account’s funds for the minor’s maintenance and education, the statutes do not compel this
result in every situation. Indeed, the statute equally allows the chancery court to prohibit the use
of the ward’s funds for maintenance and support. In this light, it is clear that the presumption of
availability simply does not apply to such accounts in Mississippi. Each must be individually
considered, based on the evidence regarding the creation and administration of the account.
It appears that a regional instruction is guidance promulgated by the Social Security
Administration in the form of POMS to assist field office adjudicators in determining whether a
conservatorship account is available under the relevant state’s law. See, e.g., POMS SI
Page 28 of 40
regional instruction. It was a legal error to use the presumption to make that
determination in this case.
Nothing in the record demonstrates that the ALJ consulted Mississippi law
to determine whether a conservatorship account can be presumed available as a
resource. Therefore, the ALJ applied the presumption of availability in
contravention of the POMS. Application of the presumption here allowed the ALJ
to shift the burden of proof to Allen, and the ALJ’s determination that the account
was a resource is based Allen’s purported failure to rebut the presumption. The
ALJ did not adequately determine the availability of the account as a resource
because he impermissibly applied the presumption and did not undertake his own
required factual analysis regarding the resource’s availability to pay for J.L.’s
maintenance and support.
Additionally, the ALJ failed to follow POMS SI 01140.215(C)(1)-(4), which
failure constitutes a legal error requiring reversal.
After recognizing that the
chancery court denied Allen’s request to purchase J.L. a computer with funds from
the account, the ALJ failed to cite evidence from the chancery court explaining its
reasons for doing so. The ALJ needed to know whether the chancery court denied
the request because Allen sought access to the account in order to purchase a nonessential item, or because the purpose of the account was to preserve the funds
Page 29 of 40
until J.L. obtained adulthood. Without that evidence, the ALJ could only make the
unwarranted assumption that the request was for a non-essential.
On remand, the ALJ must determine whether the account was a resource and
whether Allen requested to purchase a non-essential item (namely, the computer).
The ALJ cannot rely on the presumption of availability contained in the POMS or
assume that Allen requested to purchase a non-essential item.
4. Lack of Substantial Evidence
Assuming arguendo that, correctly, the ALJ did not apply the presumption
that the funds in the account were available for J.L’s maintenance and support, but
actually determined that the account was a resource that could be used for J.L.’s
support and maintenance, substantial evidence does not support that determination.
As discussed previously, in the absence of a regional instruction, the ALJ should
have collected evidence as necessary to make a “determination as to whether the
funds in the [conservatorship] account are a resource for SSI purposes.” POMS SI
01140.215(C)(1)-(4); see also 20 C.F.R. § 416.1208. A reasonable person could
not accept the 2002 court order relied upon by the ALJ as “adequate to support”
the ALJ’s determination that the account was an available resource when analyzed
in light of Allen’s allegations and the other evidence in the record. In other words,
based on the 2002 court order, the ALJ assumed that the account could be used for
J.L.’s maintenance and support; that assumption is not supported by the substantial
Page 30 of 40
evidence in the record. The ALJ based his decision on two faulty assumptions:
(1) that the account was an available resource and (2) that the proceeds in the
account were used for J.L’s support and maintenance. As discussed previously,
assumptions and speculation do not establish substantial evidence. See White, 167
F.3d at 375-76; Shields, 2015 WL 9238990, *3-4.
First, the ALJ made the faulty assumption that the settlement proceeds in the
account “were available for his [support] and maintenance” based on the 2002
Decree Authorizing Settlement of Minor’s Claim (“2002 decree”). (Tr. at 23).
The ALJ asserted that “[t]he fact that the court had to be petitioned before funds
could be withdrawn or that some requests for funds were denied does not mean
that the funds were unavailable for [J.L.’s] support and maintenance.” (Tr. at 2223).
In making this assumption, the ALJ wrongly concluded that the 2002 decree
was the only operative decree to determine whether the account was a resource,
failing to consider the effect of the 2010 Amended Decree Authorizing Settlement
of Minor’s Claim (“2010 decree”). Although the 2002 decree asserted that the
“remaining proceeds . . . be retained by [Allen] for the maintenance and education
of [J.L.]” (tr. at 210A), the 2010 decree omitted this statement (tr. at 324), and
instead declared that the proceeds “are to remain until further order of the Court
[or,] once the ward arrives at the age of twenty-one (21) years[,] . . . the Court
Page 31 of 40
grants a discharge of the guardianship.” (Tr. at 324). Even though the 2010 decree
was entered after the Commissioner terminated J.L.’s SSI benefits, nothing in the
order suggests that the amended decree did not apply retrospectively or that it did
not reflect the actual manner in which the account was administered. In fact, the
2010 decree contained virtually the same granting language as the 2002 decree;
both orders required Allen to accept the settlement proceeds from Fireman’s Fund
less expenses and attorney’s fees. (See tr. at 210A, 324). If the 2010 decree did
not apply retroactively, the chancery court did not need to include virtually the
same granting language as the 2002 decree because Allen had already accepted
payment of the proceeds from the Fireman’s Fund less expenses and attorney’s
fees. Therefore, the 2010 decree was not simply a prospective amendment of the
existing 2002 degree; it was intended by the chancery court to more accurately
embody the chancery court’s and Allen’s understanding of the restricted nature of
the account. (See tr. at 333, 426-27). Indeed, the Mississippi attorney’s letter to
the ALJ (Tr. at 283) makes this point—the account was always intended to
preserve the funds for J.L’s adulthood and not as a resource for his maintenance
and support as a minor.
Likewise, the chancery court’s miserly handling of
requests by Allen to access the funds is evidence that it was not intended or
allowed by the court to be used as a resource for J.L.’s ordinary maintenance and
support. The court allowed access to the funds only in the most dire circumstances
Page 32 of 40
of J.L’s need for medical treatment.
All of this evidence established that,
notwithstanding the contrary language of the 2002 degree, neither court nor Allen
understood the funds in the account to be available for the ordinary maintenance
and support of J.L.
At this point, the court finds it helpful to distinguish Frerks on the facts.
Although the court order in Frerks is very similar to the 2002 decree here, the
court in Frerks permitted the minor’s parents to withdraw regularly $700 per
month from the “accounts to pay for the support and education of” the minor.
Frerks, 848 F. Supp. at 345. Unlike the facts in the instant case, the court in
Frerks did not intend to restrict access to the minor’s account for purposes of
support and maintenance. Here, by contract, the chancery court granted Allen’s
one-time request to withdraw $2,000 to pay emergency medical expenses, but
denied a subsequent request to purchase a computer. The access to the accounts
and the use of the funds in Frerks was materially different from the potential
access to the account and the use of the funds here. In Frerks, the language of the
order creating the accounts and the language of the order granting the parents the
authority to withdraw $700 per month establish that the accounts were intended by
the court to be available as a resource for the minor’s support and maintenance.
While the 2002 decree contained similar language to the order in Frerks, the
chancery court’s actual supervision of the account and its subsequent amendment
Page 33 of 40
of the 2002 decree to establish explicitly the account’s restrictions are powerful
and substantial evidence of the original understanding of the restricted nature of
the funds at the time of the creation of the account in 2002.
Furthermore, Mississippi statutory and case law strongly indicate that the
proceeds were not available for J.L.’s support and maintenance. As previously
discussed, under Mississippi law, the chancery court has complete discretion to
deny a very reasonable request for access to the settlement proceeds. See Welch,
195 Miss. 415, 15 So. 2d at 691. The ALJ could easily have consulted Mississippi
law to discover that access to the account was severely restricted. Importantly,
Allen’s Mississippi attorney submitted a letter to the SSA in 2010, which indicated
In the state of Mississippi, a child under the age of 21 years old cannot
access funds, until the child is 21 years of age. The guardian or natural
parents cannot use these funds to supplement their income or
otherwise use the funds for what would normally constitute the duties
of the parent to provide room, board, shelter, clothing, and education.
(Tr. at 283). This letter corroborates the perception of Mississippi law as it relates
to a court’s restrictive control of an account maintained by a guardian on behalf of
a minor, and it supports the conclusion that the 2010 decree applied retroactively
as a clarification of the actual restrictions on J.L’s account. Therefore, this letter
undercuts the ALJ’s speculation that the chancery court would have granted
Page 34 of 40
Allen’s reasonable request; in fact, this letter indicates the opposite result would
To find the account available as a resource required the ALJ to speculate as
to whether the chancery court would have granted an additional reasonable request.
See White, 167 F.3d at 375-76.
For the same reasons the court in White did not
speculate as to the probate court’s possible alternative actions, this court cannot
speculate as to whether the chancery court would have granted Allen’s reasonable
request to access the proceeds for J.L.’s support and maintenance. In White, the
probate court admonished that the parent “remained primarily responsible for [the
minor’s] needs, [and] . . . that the trust was to remain untouched until [the minor]
reached the age of eighteen. . . .” White, 167 at 370. Here, the chancery court
similarly admonished Allen and amended the decree to prohibit access to the
account until J.L. reaches the age of twenty-one.
While the ALJ may have
believed that the chancery court would have granted Allen’s reasonable requests
for support money, the ALJ could only have speculated about the chancery court’s
actions based on the language of the 2002 decree and the previous grant of limited
access in 2006.
As announced in White, speculation does equal substantial
evidence. See White, 167 F.3d at 375-76. The ALJ should not have speculated in
this manner given Mississippi law as it relates to guardian access to a minor’s
funds and the entry of the 2010 decree.
Page 35 of 40
Even with these restrictions in place by the chancery court, the ALJ wrongly
assumed that the account was available based on the chancery court’s previous
order granting Allen access to the account for emergency medical treatment for
J.L. In 2006, the chancery court granted Allen access to the settlement proceeds to
help pay for relocation expenses and J.L.’s emergency medical expenses. This
grant is the only time that the chancery court permitted Allen to access the account.
In fact, the chancery court subsequently denied Allen’s request to purchase a
computer for J.L.’s education and subsequently amended the original settlement
decree in 2010 in response to make plain what it had intended all along—that the
funds were to be preserved for J.L. until his adulthood. In conjunction, these two
facts indicate that Allen did not have access to the settlement proceeds for J.L.’s
support and maintenance.
Like the probate court’s denial in White, the chancery court here denied
Allen’s last request for access to the account.
Because Allen has requested
authority to access the account only twice, the court’s denial of her second request
is significant. In White, the probate court’s denial stripped the plaintiff of “the
right, power or authority to liquidate the funds for [her son’s] care and
maintenance.” White, 167 F.3d 376. Similarly, Allen did not have a right to
liquidate the account for J.L.’s support and maintenance without the court’s prior
approval. Even though the court previously granted her access to the account, the
Page 36 of 40
court granted her access because of an emergency unlikely to repeat itself. This
fact does not negate the inference that Allen did not have a right to access the
account for ordinary support and maintenance, given the court’s subsequent denial
of Allen’s second and last request. The ALJ did not possess any evidence on
which to base a finding that the chancery court would have granted a third or any
future requests after the court denied the second request and entered the amended
decree in 2010. The second denial indicated that the court sought to enforce its
restrictive control of the account, and importantly, the court entered the amended
decree in 2010 to reflect its restrictive control of the account.
Thus, the ALJ
impermissibly speculated that the account was an available resource based on the
chancery court’s first and only grant of access.
Second, the ALJ based his decision on the faulty assumption that the
proceeds withdrawn from the account in 2006 were used for J.L.’s “support and
care.” (Tr. at 22). Specifically, the court granted Allen access to the account in
2006 so that she could pay for J.L.’s emergency medical expenses.11 In Shields,
the court remanded the case to the ALJ because “the ALJ assumed that the funds in
the account were used for [the minor’s] ‘support and maintenance’ since money
from the account was spent on clothes, computers, and a driver’s education class.”
To be clear, Allen and J.L. moved to Alabama in 2006, and it became necessary to locate
new doctors for J.L. in Alabama. Because health insurance would not cover these initial
consultations, Allen need money to contact and set up J.L. as a patient of doctors needed to treat
J.L.’s disability in Alabama.
Page 37 of 40
Shields, 2015 WL 9238990, at *3.
The court found it problematic that “there
[was] no evidence in the record to support the ALJ’s assumption that such items
constitute ‘support and maintenance.’” Id.
Here, the same concern as in Shields rings true. The ALJ has impermissibly
assumed that the funds were used for J.L.’s support and maintenance. In fact,
while the ALJ recognized that the chancery court granted access to the account in
2006 because of J.L’s relocation and emergency medical expenses, the ALJ
unfairly focused on the relocation aspect to determine that the proceeds were used
for J.L.’s “support and care.” (See tr. at 22). Because of the relocation, Allen did
not have insurance in place to cover the costs of the medications and counseling
that J.L. needed. The funds were not used for ordinary relocation expenses, but for
medical expenses caused by the relocation. It is unlikely and speculative that
Allen will move again and be in the same situation. So the use of the funds to pay
for J.L.’s emergency medical expenses do not indicate that the funds were
available for J.L.’s ordinary support and maintenance; the funds were used to pay
for his emergency medical expenses, not for food, clothing, or shelter. See POMS
Notably, the chancery court denied access to the settlement proceeds to purchase a
computer, an item that arguably can be considered necessary for J.L.’s support and maintenance.
Even then, a computer is not food, clothing, or shelter, which are items that qualify as support
and maintenance. See POMS SI 01140.215(D)(2); see also Shields, 2015 WL 9238990, at *2.
The Commissioner argues that, despite a court’s denial to access the funds, an account
may still be considered a resource if the court denied a request for a “non-essential” item. (See
Page 38 of 40
Therefore, the court believes that the account was not an available resource
as defined by 20 C.F.R. § 416.1208 and POMS SI 01140.215, because the
proceeds could not be used for J.L.’s support and maintenance.
determination that the account is a resource and that account was used for J.L.’s
“support and care” (tr. at 22) is not supported by substantial evidence. The ALJ
unreasonably relied on the 2002 decree alone while ignoring or giving little weight
to the rest of the evidence indicating that the chancery court always intended the
funds to be preserved and not used for ordinary support. A reasonable person
would not accept the 2002 decree (and the inferences that flowed from it) “as
adequate to support [the ALJ’s] conclusion.” Mitchell, 771 F.3d at 782. In effect,
because the ALJ misplaced reliance on the 2002 decree, the ALJ impermissibly
speculated as to the account’s availability and assumed that the withdrawn
proceeds were actually used for J.L.’s support and maintenance. Because, as
discussed above, the presumption of availability did not apply to this account in the
unique circumstances of Mississippi law, the ALJ and the Commissioner had the
burden of establishing that the account was available for J.L.’s support and
doc. 15, pp. 16-17; POMS SI 01140.215(B)(3)). The Commissioner appears to assume that the
chancery court denied Allen’s request for access to the settlement proceeds because a computer
is a non-essential item. However, the record does not indicate why the chancery court denied
Allen’s request. Even in 2009 or 2010, when the denial occurred, it is difficult for the court to
conclude that a computer is a non-essential item for a child’s education. In any event, the court
gives little weight to this argument. It is equally likely that the court denied the request because
the funds were not intended for even essential support, but were to be preserved until J.L.
reached adulthood. The crucial point is that the ALJ had no substantial evidence on which to
reach the conclusion he did.
Page 39 of 40
The record does not contain substantial evidence to make that
determination. In fact, because of the very nature of Mississippi law, the ALJ and
the Commissioner have a high burden in establishing that the account was an
available resource. On remand, the ALJ cannot speculate as to the account’s
availability, but instead must identify substantial evidence that demonstrates that
the account is available, if possible.
Upon review of the administrative record, and considering all of Allen’s
arguments, the court finds that the Commissioner’s decision is not supported by
substantial evidence and, therefore, is due to be remanded for further proceedings
not inconsistent with this opinion to determine (1) whether an overpayment
occurred and (2) if an overpayment did occur, the amount of the overpayment. 13 A
separate order will be entered.
DONE this 10th day of August, 2018.
T. MICHAEL PUTNAM
UNITED STATES MAGISTRATE JUDGE
Additionally, the court concludes that substantial evidence does not support the resource
determination for November 2009. The Commissioner did not adhere to 42 U.S.C. § 1382b,
which requires the Commissioner to exclude one automobile in determining an individual’s
amount of resources. In November 2009, the Commissioner counted two vehicles as resources
in error. Only one vehicle should have been counted. 42 U.S.C. § 1382b(a)(2)(A). Therefore,
the Commissioner did not correctly calculate J.L.’s ineligibility in November 2009.
Page 40 of 40
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