Staar v. Colvin

Filing 25

MEMORANDUM DECISION AND ORDER RE: 21 MOTION for Summary Judgment of Review - Petitioners request for review is GRANTED, pursuant to sentence four of 42 U.S.C. § 405(g). On remand, the ALJ shall consider whether, in light of 20 C.F.R. § 416.1212(e), Petitioners understood intent to sell the Arizona Residence for the purposes of purchasing a new residence in Idaho affected her claim to disability benefits and, if so, to what degree. The ALJ is encouraged to prioritize such a review as expeditiously as possible, given the procedural delays to this point in time. Signed by Judge Ronald E. Bush. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
DISTRICT OF IDAHO
JENNIFER L. STAAR,

Case No.: 2:14-cv-00033-REB

Petitioner,

MEMORANDUM DECISION AND
ORDER RE:

vs.
CAROLYN W. COLVIN, Acting Commissioner of
Social Security,
Respondent.

Pending before this Court is Petitioner Jennifer L. Staar’s Complaint/Petition for Review
(Docket No. 2) and related Motion for Summary Judgment (Docket No. 21). Having carefully
considered the record and otherwise being fully advised, the undersigned enters the following
Memorandum Decision and Order:
I. RELEVANT BACKGROUND
In 2001, Petitioner was awarded Supplemental Security Income disability benefits under
Title XVI of the Social Security Act. At that time (and until July 2007), Petitioner lived in
Oracle, Arizona (the “Arizona Residence”), caring for her elderly mother. While living there, the
Arizona Residence was excluded as a resource under the Social Security Act because it
represented Petitioner’s primary residence.
However, on July 13, 2007, Plaintiff moved to Idaho to live with her brother, describing
the circumstances surrounding the move in the following exchange with Administrative Law
Judge James W. Sherry during (“ALJ”) during the April 22, 2010 hearing:
ALJ:

And at the time before you moved, your mother was living with you
and you were taking care of her?

MEMORANDUM DECISION AND ORDER - 1

A:

She was in hospice in my home.

ALJ:

Right.

A:

They were giving my mom approximately three months to live.

ALJ:

And I understand that you needed help with your mother, and that’s
what caused you to move to Idaho with your brother?

A:

Yes. And my mom is in an infant state. She needs feeding, bathing,
changing, you need to position her, she needs to be lifted from the
bed to her wheelchair. And my dad had been assisting me with this.
My dad is now 85 years old. But he had developed a severe hernia,
and he could not help –

ALJ:

Couldn’t do the heavy –

A:

Right.

ALJ:

Stuff.

A:

And he needed surgery. And there was just no option – no option.
It – I could no longer take care of my mom by myself. My dad was
going to also need help. So all the family got together and they
decided that was the only option open.

(AR 393-94). Relevant here, Petitioner intended to sell the Arizona Residence and use the
proceeds from the sale to purchase a new home in Idaho to be closer to her family. Petitioner
claims to have attempted to sell the Arizona Residence (both on her own and via a realtor), but,
to date, has been unsuccessful – all the while, Petitioner continues to pay expenses related to the
Arizona Residence.
In any event, following the move to Idaho, on July 9, 2008, the Social Security
Administration (SSA) conducted a Redetermination Application to determine Petitioner’s
continued eligibility to receive disability benefits. (AR 19-23). Of note, in August 2008, the
SSA determined that, once Petitioner moved to Idaho, the Arizona Residence became a
countable/nonexcludable resource under the Act. (AR 47-62, 83-92). Accordingly, because the
MEMORANDUM DECISION AND ORDER - 2

value of Petitioner’s countable/nonexcludable resources (which now included the Arizona
Residence) exceeded the $2,000.00 threshold, Petitioner was no longer eligible for disability
benefits; indeed, the SSA (1) informed Petitioner that, from July 1, 2007 through August 2008
and continuing, her benefits were being suspended due to excess resources, and (2) notified
Petitioner of an overpayment in the amount of $7,029.12. See id.
Although there are many moving parts to the back-and-forth correspondence between
Petitioner and the SSA leading up to this point (and beyond, with significant temporal gaps
throughout), suffice it to say, Petitioner disagreed that her move to Idaho to help care for her
mother, meant that the Arizona Residence was no longer an excludable resource. To this end,
Petitioner filed a Request for a Hearing before an Administrative Law Judge, a Request for
Reconsideration, and a Request for Waiver of Overpayment Recovery. (AR 225-42).
On April 22, 2010, a hearing before ALJ Sherry then took place in Spokane, Washington.
At that time, ALJ Sherry understood the issues before him to be (1) whether “there has been an
overpayment of supplemental security income benefits, and if so, for what month(s)”; and (2) if
an overpayment occurred, whether “adjustment or recovery of the incorrect payment should be
waived.” (AR 15); see also (AR 405) (ALJ Sherry characterizing issues as: “But the – my job is
to decide, one, did they correctly apply the rules in terms of creating the overpayment. I also
have to address the ISM. And then if I decide that they were correct in the way they applied that
in establishing the overpayment, then I decide if the waiver is applicable because you, number
one, weren’t at fault and, number two, there’s good reasons why the waiver should be applied in
your case.”). On May 12, 2010, ALJ Sherry issued his “Decision,” answering both of these
questions in the affirmative – specifically, (1) that Petitioner was overpaid benefits from July

MEMORANDUM DECISION AND ORDER - 3

2007 to August 2008 in the amount of $7,029.12; but (2) that recovery of the overpayment
amount is waived because Petitioner was without fault, recovery of the overpayment would
defeat the purpose of the Act, and recovery of the overpayment would be against equity and
good conscience. (AR 17-18) (citing 20 C.F.R. §§ 416.552, 416.553, 416.554).
At first blush, one might think that ALJ Sherry’s Decision was well-received by
Petitioner. Alas, it was not. While the fact that any overpayment was waived was no doubt a
relief,1 the additional fact that the ALJ still found that Petitioner was overpaid benefits in the first
instance essentially amounted to an endorsement of the SSA’s previous conclusions concerning
the Arizona Residence – namely, that it morphed into a countable/nonexcludable resource under
the Act once Petitioner moved to Idaho. Once again, Petitioner disagreed and, on July 14, 2010,
requested a review of the ALJ Sherry’s Decision by the Appeals Council. (AR 352).2
On August 23, 2012, the Appeals Council granted Petitioner’s request for review under
the substantial evidence provisions of the SSA regulations. (AR 355). In a somewhat unusual
twist, the Appeals Council vacated the Decision and remanded the case to an ALJ for further
proceedings, including a new decision because the underlying record could not be located. See
id. (“The Appeals Council has been unable to locate or redevelop the evidence. Because of this,
the Appeals Council is unable to determine whether the decision is supported by substantial
evidence. Accordingly, the Appeals Council finds that the claimant should have the opportunity
for a new hearing and decision on the issues raised by the application.”).

1

In this respect, within the SSA’s Notice of Decision, ALJ Sherry characterizes his
Decision as “fully favorable.” (AR 12) (“I carefully reviewed the facts of your case and made
the enclosed fully favorable decisions.”). Even so, Petitioner was provided with an opportunity
to appeal the Decision with the Appeals Council if she disagreed with it. See id.
2

Though submitted on July 14, 2010, it does not appear that the SSA received
Petitioner’s request for review until a full two years later, on July 14, 2012. (AR 352).
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But then, on December 17, 2012, the Appeals Council vacated its prior order of remand,
stating that, “[s]ubsequent to the remand, the missing recording was located and associated with
the record, which is now complete.” (AR 357-60). In doing so, the Appeals Council reinstated
Petitioner’s earlier request for review. See id.
On March 1, 2013, the Appeals Council notified Petitioner that it had denied her request
for review, concluding that Petitioner’s reasons for challenging ALJ Sherry’s Decision “d[id] not
provide a basis for changing the [ALJ’s] Decision.” (AR 368-71).3 Still, on April 4, 2013, the
SSA invited Petitioner to submit any new evidence “material to the issues considered in the
hearing decision dated March 1, 2013.” (AR 363-64).4 On April 30, 2013, Petitioner then
submitted a “Continuation of Request for Appeals Council Review Dated July 14, 2010 of
Administrative Law Judge’s Decision Dated May 12, 2010,” arguing that ALJ Sherry’s Decision
should be reversed and remanded for the immediate reinstatement of benefits. (AR 374-80).
Treating Petitioner’s latest salvo as a request to re-open the case and change ALJ
Sherry’s Decision, on November 29, 2013, the Appeals Council found no basis to change its
March 1, 2013 denial of Petitioner’s request for review. (AR 3). This made ALJ Sherry’s
Decision the final decision of the Commissioner of Social Security. See id.; see also 20 c.F.R.
§ 416.1481. Now, through the instant action and at-issue Motion for Summary Judgment,
Petitioner seeks review of ALJ Sherry’s Decision and the Appeals Council’s denial of

3

The record indicates that Petitioner understood this letter to have been issued by
mistake owing to a March 5, 2013 telephone call she received from Mary Hunter. (AR 361-62)
(Petitioner confirming in letter with SSA that its March 1, 2013 letter was sent in error and
should be disregarded).
4

Though unclear, it is assumed that the “hearing decision dated March 1, 2013" is the
March 1, 2013 Notice of Appeals Council Action denying Petitioner’s request for review
referenced above. (AR 368-71).
MEMORANDUM DECISION AND ORDER - 5

Petitioner’s request for review, claiming that she should not have been denied disability benefits
in the first instance, such that an overpayment (even if waived) should not have been assessed
against her. See generally Compl. (Docket No. 2); Mot. for Summ. J. (Docket No. 21).
II. LEGAL STANDARDS
District courts have jurisdiction to review the final decisions of the Commissioner of
Social Security and have the power to affirm, modify, or reverse the Commissioner’s decisions,
with or without remanding for further hearings. See 42 U.S.C. § 405(g); see also 42 U.S.C.
§ 1383(c)(3). When asked to review the Commissioner’s decision, the court takes as conclusive
any findings of the Commissioner which are free from legal error and supported by “substantial
evidence.” 42 U.S.C. § 405(g). Substantial evidence is “such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion,” and it must be based on the record as a
whole. Richardson v. Perales, 402 U.S. 389, 401 (1971). Substantial evidence means “more
than a mere scintilla,” but “less than a preponderance.” Id.; Desrosiers v. Sec’y of Health and
Human Servs., 846 F.2d 573, 576 (9th Cir. 1988). Even if the Commissioner’s findings are
supported by substantial evidence, they should be set aside if proper legal standards were not
applied when weighing the evidence and in reaching a decision. See Benitez v. Califano, 573
F.2d 653, 655 (9th Cir. 1978). In reviewing the record, the Court must consider both the evidence
that supports and detracts from the Commissioner’s conclusion. See Smolen v. Chater, 80 F.3d
1273, 1279 (9th Cir. 1996) (citing Jones v. Heckler, 760 F.2d 993, 995 (9th cir. 1985)). If the
evidence is susceptible to more than one rational interpretation, the ALJ’s conclusion must be
upheld. See Gallant v. Heckler, 753 F.2d 1450, 1452-53 (9th Cir. 1984). If the Court identifies
defects in the administrative proceeding or the ALJ’s conclusions, the Court may remand for

MEMORANDUM DECISION AND ORDER - 6

further proceedings or for a calculation of benefits. See Garrison v. Colvin, 759 F.3d 995, 101921 (9th Cir. 2014).
III. ANALYSIS
The sole issue before the Court is whether substantial evidence exists to support ALJ
Sherry’s conclusion that Petitioner was overpaid benefits because she was not eligible for
Supplemental Security Income benefits due to the fact that her countable resources (which,
according to ALJ Sherry, included the Arizona Residence) exceeded $2,000.00. On this
lynchpin issue, Petitioner argues that the ALJ erred in concluding that the Arizona Residence
became a countable/nonexcludable resource under the Act once she moved to Idaho to care for
her mother.
Under the Act, an individual is eligible for Social Security Income benefits if (1) she is
aged, blind, or disabled, and (2) her countable income and resources fall below $2,000.00. See
42 U.S.C. § 1382(a); 20 C.F.R. § 416.1205(c) (setting limit for individuals not residing with
spouse). An individual’s home is not considered a countable resource. See 20 C.F.R. §§
416.1210(a), 416.1212(b). A “home” is defined as “any property in which an individual . . . has
an ownership interest and which serves as the individual’s principal place of residence.” 20
C.F.R. § 416.1212(a). However, if a claimant moves out of her home “without the intent to
return, the home becomes a countable resource because it is no longer the individual’s principal
place of residence.” 20 C.F.R. § 416.1212(c).
Here, in determining that Petitioner was overpaid benefits from July 2007 to August
2008, ALJ Sherry necessarily concluded that, once Petitioner moved in with her brother in
Idaho, she never intended to return to the Arizona Residence, thus transforming the Arizona

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Residence into a countable resource following the move. See (AR 17) (“The claimant’s primary
residence for many years was in Arizona until she moved to Idaho. At that point, the claimant’s
property in Arizona became a resource.”) (emphasis added). Respondent’s briefing endorses
such a conclusion. See Resp’t Brief, p. 6 (Docket No. 22) (“Because she put her Arizona home
up for sale, this demonstrates she did not intend to return. Given the lack of intent to return to
her home in Arizona, the home because a ‘countable resource’ for title XVI purposes.”).
It is against this backdrop that Petitioner brings the instant action – namely, that her move
from Arizona to live with her brother in Idaho was only a temporary one, made in order to care
for their ailing mother. On this point, Petitioner argues that she intended to sell the Arizona
Residence before purchasing a new residence in Idaho (where Petitioner and her mother would
then live). See Pet.’s Brief, p. 9 (Docket No. 21, Att. 2) (“Plaintiff reported that if her Arizona
home had not sold prior to Plaintiff having to leave in July 2007, Plaintiff would list the home
with a realtor and she and her parents would have to temporarily stay at her brother’s home in
Idaho, until the A[rizona] home was sold and Plaintiff could purchase a home in Idaho where
Plaintiff and her parents would live.”). According to Petitioner, these circumstances do not
reflect an intent not to return to the Arizona Residence (so as to render the Arizona Residence a
countable resource under 20 C.F.R. § 416.1212(c)), particularly when considering its possible
interplay with 20 C.F.R. § 416.1212(e), which provides in pertinent part:
The proceeds from the sale of a home which is excluded from the individual’s
resources will also be excluded from resources to the extent they are intended to be
used and are, in fact, used to purchase another home, which is similarly excluded,
within 3 months of the date of receipt of the proceeds.
20 C.F.R. § 416.1212(e)(1). In this respect, Petitioner not only claims to have listed the
previously-excluded Arizona Residence for sale (intending to formally purchase a new residence
in Idaho with the proceeds of any such sale), but also to have reported to the SSA these same

MEMORANDUM DECISION AND ORDER - 8

intentions all along. See Pet.’s Brief, p. 11 (Docket No. 21, Att. 2). The legal consequence, if
any, surrounding the fact that the Arizona Residence has not yet sold is unclear; regardless,
based upon the above-referenced regulatory framework, Petitioner argues that it would be
unreasonable to interpret her actions as manifesting a move out of the Arizona Residence
“without the intent to return.” See id. at pp. 11-12.
Of note, ALJ Sherry explicitly acknowledged Petitioner’s efforts in these regards, and did
so in more-or-less complimentary terms, stating:
The claimant testified she continues to own her home in Oracle, Arizona. This
property was excluded as a resource for many years because it was her primary
residence. The claimant moved to Athol, ID, in July 2007. The claimant moved to
Idaho to live with her brother because she needed assistance taking care of her
mother who was living with her in Idaho. The claimant has consistently maintained
and testified that she contacted the Social Security office in April 2007 to let them
know she was moving from Arizona. She said she was putting her house up for sale
by owner until July 2007. If her house did not sell before she left, she would list the
house with a realtor. The claimant testified she asked very detailed questions
regarding the sale of her house. She said she was told there would be no change in
her benefits. She was told to keep all her receipts and she would have 90 days from
the sale of her home to purchase a new home. The claimant was again informed in
April 2008, that there would be no change in benefits although her home still had not
sold. . . . .
(AR 17). He then went on to find that Petitioner was without fault in accepting the presumed
overpayment of benefits and that, as such, any recovery of that overpayment was waived. See id.
at (AR 17-18). In doing so, however, ALJ Sherry never analyzed, or even considered, whether
20 C.F.R. § 416.1212(e) applied to Petitioner’s situation – specifically, whether Petitioner’s
understood intent to sell the Arizona Residence for the purposes of purchasing a new residence
in Idaho affected her claim to disability benefits and, if so, to what degree. It may well be the
case that, in such a setting, 20 C.F.R. § 416.1212(e) does not apply to prevent the Arizona
Residence from becoming a countable resource; but that issue was neither addressed by ALJ
Sherry, nor by Respondent in their briefing on this nuanced issue.
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In this setting, it cannot be said that substantial evidence exists to support ALJ Sherry’s
decision that Petitioner was overpaid benefits from July 2007 to August 2008. Petitioner’s
Motion for Summary Judgment is therefore granted, but only to the extent that the matter is
remanded for further consideration by the ALJ.
III. ORDER
Based on the foregoing, Petitioner’s request for review is GRANTED, pursuant to
sentence four of 42 U.S.C. § 405(g). On remand, the ALJ shall consider whether, in light of 20
C.F.R. § 416.1212(e), Petitioner’s understood intent to sell the Arizona Residence for the
purposes of purchasing a new residence in Idaho affected her claim to disability benefits and, if
so, to what degree. The ALJ is encouraged to prioritize such a review as expeditiously as
possible, given the procedural delays to this point in time.
DATED: February 25, 2017

Honorable Ronald E. Bush
Chief U. S. Magistrate Judge

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