COLLINS v. ASTRUE

Filing 36

ENTRY ON JUDICIAL REVIEW - The Court AFFIRMS the Commissioner's decision. Signed by Judge Tanya Walton Pratt on 12/30/2013.(JD)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
TONIA J. COLLINS,

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Plaintiff,
v.
CAROLYN W. COLVIN,
Defendant.

Case No. 1:12-cv-01761-TWP-MJD

ENTRY ON JUDICIAL REVIEW
Plaintiff, Tonia J. Collins (“Ms. Collins”), requests judicial review of the decision of the
Commissioner of the Social Security Administration (“Commissioner”) regarding the calculation
of Ms. Collins’ Supplemental Security Income (“SSI”) benefits. For the following reasons, the
Court AFFIRMS the Commissioner’s decision.
I.
A.

BACKGROUND

Procedural History
Ms. Collins was born December 20, 1965 and she has the following severe impairments:

degenerative joint disease, borderline intellectual functioning, depression/anxiety/posttraumatic
stress syndrome and fibromyalgia. On April 3, 2008 she applied for SSI and was awarded
benefits on May 20, 2010. Tr. at 24-32. After Ms. Collins’ benefit was computed to be less than
the full amount, Tr. at 35-38, she requested reconsideration, which was denied, and on April 22,
2011, the Administrative Law Judge (“ALJ”) affirmed the computation after a hearing. Tr. at 915. The ALJ’s decision was affirmed by the Appeals Council, Tr. at 3-6, and on November 30,
2012, a complaint was filed in this Court requesting review of the agency’s computation.

B.

Factual Background1
If a claimant receives in-kind support and maintenance, the Social Security

Administration counts on-third of the federal benefit rate as additional income. C.F.R.
§416.1131(a). Ms. Collins’ benefit was reduced because the ALJ found that she received in-kind
support and maintenance from her children, did not contribute towards their household expenses,
and did not have a bona fide loan agreement with her children sufficient to qualify the agreement
as a loan for the purposes of benefit calculation.
In her initial application for SSI, filed on April 3, 2008, Ms. Collins reported living with
her daughter, Candace Collins. Tr. at 16-17. Specifically, Ms. Collins reported “I do not make
payments toward the household expenses,” and “I am not receiving any food or shelter from the
people I live with for which I have an agreement to repay.” Tr. at 17. Under penalty of perjury,
Ms. Collins declared the information provided to be true and correct to the best of her
knowledge. Id. At Ms. Collins’ pre-effectuation review, Candace Collins denied the existence
of any loan agreement, and James Collins, Ms. Collins’ son, did not mention any such
agreement. Tr. at 13-14.
On June 22, 2013, after her past due benefits had been reduced to account for in-kind
support and maintenance, Ms. Collins submitted a signed agreement between herself and her
children stating that she had an agreement with them to repay the support received for the
previous five years. Tr. at 81. When confronted with the agreement’s explicit contradiction of
the testimony at her pre-effectuation review, Ms. Collins stated, candidly, that her “kids did not
realize that saying there was no loan agreement would cause her to receive less back pay.” Tr. at
34.

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Ms. Collins adopts the ALJ’s recitation of the facts in her brief, Dkt. 25 at 2, and thus, facts are cited to the ALJ’s
April 22, 2011 decision, Tr. at 12-15.

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At her hearing before the ALJ on February 25, 2011, Ms. Collins testified that she had
entered into a verbal agreement to repay her children for any support provided during the
application process and that she would pay them back out of her past due benefits when her SSI
was approved. Tr. at 124. She testified that, since receiving her benefits, she had paid back
$1,000.00 to both children, but also testified that she had only given her son $220.00 for
Christmas presents and taken her granddaughter shopping one time. Tr. at 125. James Collins
agreed that his mother had paid him some monies, though the amount was unclear. Tr. at 128-29.
II.
A.

LEGAL STANDARD

Standard of Review
In reviewing the ALJ’s decision, this Court must uphold the ALJ’s findings of fact if the

findings are supported by substantial evidence and no error of law occurred.

Dixon v.

Massanari, 270 F.3d 1171, 1176 (7th Cir. 2001); see also 42 U.S.C. § 405(g). “Substantial
evidence means such relevant evidence as a reasonable mind might accept as adequate to support
a conclusion.” Dixon, 270 F.3d at 1176. Further, this Court may not reweigh the evidence or
substitute its judgment for that of the ALJ. Overman v. Astrue, 546 F.3d 456, 462 (7th Cir.
2008). While the Court reviews the ALJ’s decision deferentially, the Court cannot uphold an
ALJ’s decision if the decision “fails to mention highly pertinent evidence, . . . or that because of
contradictions or missing premises fails to build a logical bridge between the facts of the case
and the outcome.” Parker v. Astrue, 597 F.3d 920, 921 (7th Cir. 2010) (citations omitted).
B.

Benefit Calculation
SSI benefit eligibility is determined based on a claimant’s income and resources. 42

U.S.C. § 1382; 20 C.F.R. § 416.1100. In calculating income, in-kind support and maintenance is
also accounted for. 20 C.F.R. § 416.1130. “In-kind support and maintenance means any food or

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shelter that is given to you or that you receive because someone else pays for it.” Id. If a
claimant lives in another person’s household and receives both food and shelter from said
person, one-third of the Federal benefit rate is counted as income in the form of in-kind support
and maintenance. 20 C.F.R. § 416.1131. However, money borrowed as a loan does not qualify
as income. 20 C.F.R. § 416.1103(f). Thus, under certain circumstances, in-kind support and
maintenance may be considered a loan and not income.
A loan means an advance from lender to borrower that the borrower must repay,
with or without interest. A loan can be cash or an in-kind advance in lieu of cash.
For example, an advance of food or shelter can represent a loan of the pro rata
share of household operating expenses. This applies to any commercial or
noncommercial loan (between relatives, friends or others) that is recognized as
enforceable under State law. The loan agreement may be oral or written, as long
as it is enforceable under State law.
Title XVI: SSI Loan Policy, Including Its Applicability to Advances of Food &/or Shelter, SSR
92-8P (S.S.A Sept. 8, 1992).
Under Indiana law, contracts based on past consideration are generally unenforceable.
If a person has been benefited in the past by some act or forbearance for which he
incurred no legal liability and afterwards, whether from good feeling or interested
motives, he makes a promise to the person by whose act or forbearance he has
benefited, and that promise is made on no other consideration than the past
benefit, it is gratuitous and cannot be enforced; it is based on motive and not on
consideration.
Brown v. Addington, 52 N.E.2d 640, 641 (Ind. Ct. App. 1944) (internal citations omitted); see
also 6 Ind. Law Encyc. Contracts § 19 (“As a general rule, past consideration that imposed no
obligation when it was furnished will not support a subsequent promise. A distinction must be
made between consideration and motive.

A mere moral obligation, without more, is not

consideration, and although a person has benefited in the past by some act or forbearance for
which he or she incurred no legal liability, his or her later promise, whether made from good

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feeling or interested motives, to the person by whose act or forbearance the promisor has
benefited is not enforceable.”).
Further, the Social Security Administration’s Program Operations Manual System
(“POMS”) is a primary source of information used by Social Security employees to process
claims for Social Security benefits.2 Though the manual is not a product of formal rulemaking, it
nevertheless warrants respect in evaluating benefits claims. See Washington State Dep't of Soc.
& Health Servs. v. Guardianship Estate of Keffeler, 537 U.S. 371, 385 (2003). The POMS lists
five requirements that must be met in order for a loan agreement to be a bona fide loan for the
purposes of benefit calculation; the loan must: 1) be enforceable under state law; 2) be in effect
at the time the in-kind support and maintenance is provided; 3) contain an acknowledgment of an
obligation to repay the loan that is unconditional and not dependent on an individual’s receipt of
benefits; 4) include a plan or schedule for repayment; and 5) repayment of the loan must be
feasible. POMS SI 00835.482.
III. THE ALJ’S DECISION
On April 22, 2011, the ALJ’s determination found that Ms. Collins and her children did
not have a qualifying loan agreement for the repayment of the in-kind support and maintenance
she received prior to her pre-effectuation review. Tr. at 12-15. To reach this conclusion, the
ALJ found that Ms. Collins’ statements subsequent to her pre-effectuation review were not
credible in light of their conflict with the unequivocal assertions in her initial application and at
her pre-effectuation review. Tr. at 14. The ALJ highlighted the fact that every relevant action
and statement by Ms. Collins prior to the reduction of her benefits expressly denied the existence
of such an agreement. Tr. at 14. In addition to finding Ms. Collins to not be credible, the ALJ

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An electronic version of POMS is available online at https://secure.ssa.gov/poms nsf/home!readform.

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held the loan agreement to be invalid because it was conditioned upon Ms. Collins’ receipt of
SSI benefits. Tr. at 14.
Because she found the loan agreement was not in place at or prior to the time Ms. Collins
received the in-kind support, and because the agreement was contingent upon Ms. Collins’
receipt of SSI benefits, the ALJ held that the loan agreement was invalid. Therefore, the ALJ
declined to recalculate Ms. Collins’ past due benefits.
IV. DISCUSSION
A.

The ALJ Did Not Err in Determining That Ms. Collins and Her Children Did Not
Make a Valid Contract to Repay Them for the In-Kind Support And Maintenance
That She Received.
Ms. Collins does not dispute the ALJ’s description of the facts or that she received in-

kind support and maintenance from her children. Instead, Ms. Collins argues that the ALJ erred
in her determination that Ms. Collins and her children did not have a valid contract for the
repayment of the in-kind support and maintenance that she received. Ms. Collins posits two
errors of law that she believes warrant reversal of the ALJ’s decision: 1) the ALJ ignored Indiana
law holding that past consideration is sufficient consideration upon which to base a binding
contract; and 2) the ALJ ignored Indiana law allowing for conditional performances.
Importantly, Ms. Collins fails to cite to a single case or statute supporting her arguments, and
instead relies on excerpts from the Indiana Law Encyclopedia.
The loan agreement between Ms. Collins and her children fails to meet the requirements
of POMS because it was not in place at the time that the in-kind support and maintenance was
received and also because it was conditioned on Ms. Collins’ receipt of SSI benefits. Both of
these requirements are necessary in order to find that a bona fide loan agreement exists. POMS
SI 00835.482 (available at https://secure.ssa.gov/apps10 /poms.nsf/lnx/ 0500835482).

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Further, even if this Court were to ignore the requirements established by POMS and
simply determine whether the alleged loan agreement is enforceable under Indiana law, Ms.
Collins’ claims would still fail. The ALJ found that no loan agreement was in place at or prior to
the time Ms. Collins received in-kind support and maintenance from her children. This finding
of fact is based on substantial evidence, and therefore will not be disturbed. In her initial
application, Ms. Collins reported “I do not make payments toward the household expenses,” and
“I am not receiving any food or shelter from the people I live with for which I have an agreement
to repay.” Tr. at 17. Under penalty of perjury, Ms. Collins declared the information provided to
be true and correct to the best of her knowledge. Id. At Ms. Collins’ pre-effectuation review,
Candace Collins denied the existence of any loan agreement, and James Collins stood by without
mention of any agreement and without correcting Candace Collins. Tr. at 13-14. After the
receipt of benefits, Ms. Collins claimed for the first time that there was a verbal agreement
between her and her children. When confronted with the agreement’s explicit contradiction of
the testimony at her pre-effectuation review, Ms. Collins stated that her “kids did not realize that
saying there was no loan agreement would cause her to receive less back pay.” Tr. at 34.
Finally, at the February 25, 2011 hearing, Ms. Collins testified that she had entered into a verbal
agreement to repay her children for any support provided during the application process and that
she would pay them back out of her past due benefits when her SSI was approved. Tr. at 124.
Additionally, in her Response, Ms. Collins argues that her verbal agreement was to pay her
children back out of her back pay from Social Security disability. Dkt. 34-3. Ms. Collins asserts
that the verbal agreement was in place when she received the in-kind support and maintenance.
However, even if there was a verbal loan agreement in place at the time of the hearing, it
is undisputed that the agreement was based on past consideration. Ms. Collins fails to cite any

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case law which suggests this agreement should be excluded from the general rule in Indiana,
which holds that past consideration is insufficient to establish an enforceable contract. For all of
these reasons, the ALJ’s finding that the alleged loan agreement did not constitute an enforceable
agreement for the purposes of benefit calculation will not be disturbed.
V. CONCLUSION
Accordingly, the Court AFFIRMS the Commissioner’s decision.

SO ORDERED.
12/30/2013
Date: ___________

________________________
Hon. Tanya Walton Pratt, Judge
United States District Court
Southern District of Indiana

DISTRIBUTION:
Patrick Harold Mulvany
[e-mail]
Thomas E. Kieper
UNITED STATES ATTORNEY’S OFFICE
[e-mail]

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