Jensen et al v. Minnesota Department of Human Services et al

Filing 144

ORDER 1. Solely to the extent necessary to maintain Class Members' eligibility for governmental benefits, including but not limited to Social Security benefits, the apportioned settlement funds to each Class Member shall be considered a blocked account or conservatorship account consistent with applicable Social Security regulations, applicable Social Security Administration guidance, including Program Operating Manual System (POMS) SI 01140.215, the decision of Navarro by Navarro v. Sulliv an, 751 F. Supp. 349 (E.D.N.Y. 1990), and other applicable law, including this Courts broad equitable powers to render complete justice, see Crawford, et al. v. Janklow, et al., 733 F.2d 541, 542 (8th Cir. 1984); see also White ex rel. Smith v. Apfel , 167 F.3d 369, 375 (7th Cir. 1999) (court's denial of petition to release conservatorship funds rebutted presumption that funds were available for care or maintenance); POMS SI CHI01140.215 (In Minnesota, it cannot be presumed that funds are co nsidered accessible and a countable resource; and any presumption of availability of funds can be nullified if the court order establishing the conservatorship specifically blocks the account from use for food, clothing or shelter). This Court's prior Orders precluding the expenditure of Settlement Funds for costs of care, unpaid bills or rent, and noting that the settlement funds are not a resource, are consistent with the use of a conservatorship account or blocked account, and mean that the Settlement Funds shall not be available or used for support or maintenance, including expenditures for food, clothing or shelter. See Navarro, 750 F. Supp. at 350 (construing social security regulation defining resources as assets that can be liq uidated for support and maintenance and determining settlement award does not constitute a resource, noting: However the items for which the Settlement Order permits use of the funds may be characterized, they are not fairly denominated support and m aintenance.); 20 C.F.R. § 416.1121(h) and § 416.1130(b) (defining support and maintenance as food, or shelter furnished to you); 20 C.F.R. § 416.1157(b) (Support and maintenance assistance means cash provided for the purpose of meeting food or shelter needs....); cf. Brown ex. rel. Brown v. Day, 555 F.3d 882, 885-86 (10th Cir. 2009) (under Social Security regulations and guidance, if an individual has no authority to compel use of trust assets for her own support and maintenance, assets are not considered an available resource); Seidenberg v. Weil, No. Civ. A. 95-WY-2191-WD, 1996 WL 33665490, at *7 (D. Colo. Nov. 1, 1996) (counting trust as available resource where beneficiary cannot compel trustee to use assets for beneficia ry's support and maintenance violates federal Medicaid statute). With this further clarification on the limitation of the use of the settlement funds, expressly precluding expenditure of the Settlement Funds for support or maintenance, Class Me mbers may use their apportioned settlement amounts as a supplement to enhance the quality of their lives consistent with this Courts Orders in this matter without jeopardizing eligibility for ongoing benefits. This is based on the Courts review of al l submissions and the status of the above matter to date, as well as discussions and communication with counsel, including counsel for the United States and the Social Security Administration. Nothing stated in this Order contradicts, or is any way inconsistent with, the Social Security Act and its regulations. (See Order for additional details.)(Written Opinion). Signed by Judge Donovan W. Frank on 4/23/2012. (BJS)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

James and Lorie Jensen, as parents,
guardians and next friends of Bradley J.
Jensen, et. al,

Civil No. 09-1775 (DWF/FLN)

Plaintiffs,
v.

ORDER

Minnesota Department of Human Services,
et. al,
Defendants.

The above referenced matter came before this Court on April 20, 2012, for a status
conference. The Settlement Class and the State of Minnesota and Minnesota Department
of Human Services were represented by counsel of record. Counsel for the United States
and the Social Security Administration also appeared by telephone. The Court has
reviewed this matter with counsel and considered all submissions and the status of the
matter to date.
The Court has recently become aware that local federal government
representatives have expressed positions to some Class Members and their guardians that
Class Member eligibility for governmental benefits will be jeopardized if Class Members
receive apportioned Settlement Funds. These positions have been asserted despite this
Court’s Orders explicitly stating that Settlement Funds apportioned to Class Members
shall not adversely affect their eligibility for governmental benefits and this Court’s

explicit requirement that any agency taking a contrary position must file a motion with
this Court. (See Doc. No. 136, December 5, 2011, Final Approval Order (“December 5
Order”) ¶ 7 (“The Court finds and concludes that, both legally and as a matter of equity
and fairness, the individual settlement amount being awarded to each individual Class
Member is not a resource for eligibility purposes and, consequently, an individual
settlement amount will not affect, in any way, a Class Member’s eligibility for disability
benefits or other related benefits, or otherwise jeopardize the Class Member’s benefits or
programming. This provision contemplates that if any agency, entity, or individual,
private or public, disputes the Court’s jurisdiction to make this finding, both as a matter
of law and equity; or, contends that a Class Member’s eligibility should be affected, the
entity or individual must file a motion and come before this Court to address the claim.”);
Doc. No. 140, January 30, 2012, Order at n.2 (quoting same and stating: “The Court
expressly finds that the apportioned amounts are not deemed income, a tax liability, or a
resource to any Class Member. To treat the individual awards as such would be contrary
to the December 5 Order and the intent of all parties to the Settlement Agreement.”))
In addition, this Court has received letters from attorneys for the United States
which contain certain statements that contradict this Court’s Orders expressly protecting
Class Member eligibility for governmental benefits. The Court has advised counsel for
the United States that there is a mandated process under the Court’s Orders should any
entity question the provisions regarding eligibility and resources with respect to benefits,
that the United States has not invoked that process, and, therefore, there is nothing before
the Court to address the merits of the statements in the letters.
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The Court has communicated with Settlement Class counsel, counsel for the State
of Minnesota, and counsel for the United States and the Social Security Administration
regarding the Unites States’ letters, the Court’s Orders and responses to these letters, and
the further clarification of the use of the Settlement Funds by Class Members for
purposes of ensuring Class Member eligibility for governmental benefits and the intent of
the parties to this class action settlement. This Order is the result of these substantive
communications.
In light of the positions taken by federal government representatives as noted
above, and consistent with this Court’s broad equitable powers to render complete justice,
see Brown v. Plata, 131 S. Ct. 1910, 1944 (2011) (“Once invoked, the scope of a district
court’s equitable powers is broad, for breadth and flexibility are inherent in equitable
remedies.”) (internal quotations omitted); Crawford, et al. v. Janklow, et al., 733 F.2d
541, 542 (8th Cir. 1984) (“Acting in equity, courts have broad power to fashion a remedy
which does complete justice.”); Final Approval Order ¶ 7 (“The Court finds and
concludes that, both legally and as a matter of equity and fairness . . .”), and in express
recognition of the importance of these issues to Class Members, who are people with
developmental disabilities, and to their families, including important federal protections
afforded people with developmental disabilities, see generally 42 U.S.C. § 12101(a)
Americans with Disabilities Act of 1990, as amended, and in recognition of the interests
of all parties herein, and the process articulated in this Court’s Orders relative to the use
of the Settlement Funds (see generally Doc. No. 141, February 14, 2012, Order
(describing use of funds, that settlement funds shall not be used to pay costs of care or
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unidentified or unpaid bills, and ongoing Court involvement and jurisdiction)), it has
become necessary to reaffirm and clarify this Court’s Orders. IT IS THEREFORE
ORDERED:
1.

Solely to the extent necessary to maintain Class Members’ eligibility for

governmental benefits, including but not limited to Social Security benefits, the
apportioned settlement funds to each Class Member shall be considered a “blocked
account” or “conservatorship account” consistent with applicable Social Security
regulations, applicable Social Security Administration guidance, including Program
Operating Manual System (“POMS”) SI 01140.215, the decision of Navarro by Navarro
v. Sullivan, 751 F. Supp. 349 (E.D.N.Y. 1990), and other applicable law, including this
Court’s broad equitable powers to render complete justice, see Crawford, et al. v.
Janklow, et al., 733 F.2d 541, 542 (8th Cir. 1984); see also White ex rel. Smith v. Apfel,
167 F.3d 369, 375 (7th Cir. 1999) (court’s denial of petition to release conservatorship
funds rebutted presumption that funds were available for care or maintenance); POMS SI
CHI01140.215 (In Minnesota, it cannot be presumed that funds are considered accessible
and a countable resource; and any “presumption of availability of funds can be nullified if
the court order establishing the conservatorship specifically blocks the account from use
for food, clothing or shelter”). This Court’s prior Orders precluding the expenditure of
Settlement Funds for “costs of care,” unpaid bills or rent, and noting that the settlement
funds are not a “resource,” are consistent with the use of a conservatorship account or
blocked account, and mean that the Settlement Funds shall not be available or used for
“support or maintenance,” including expenditures for food, clothing or shelter. See
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Navarro, 750 F. Supp. at 350 (construing social security regulation defining “resources”
as assets that can be liquidated for “support and maintenance” and determining settlement
award does not constitute a resource, noting: “However the items for which the
Settlement Order permits use of the funds may be characterized, they are not fairly
denominated support and maintenance.”); 20 C.F.R. § 416.1121(h) and § 416.1130(b)
(defining “support and maintenance” as “food, or shelter furnished to you”); 20 C.F.R.
§ 416.1157(b) (“Support and maintenance assistance means cash provided for the
purpose of meeting food or shelter needs . . . .”); cf. Brown ex. rel. Brown v. Day, 555
F.3d 882, 885-86 (10th Cir. 2009) (under Social Security regulations and guidance, if an
individual has no authority to compel use of trust assets for her own support and
maintenance, assets are not considered an “available resource”); Seidenberg v. Weil, No.
Civ. A. 95-WY-2191-WD, 1996 WL 33665490, at *7 (D. Colo. Nov. 1, 1996) (counting
trust as available resource where beneficiary cannot compel trustee to use assets for
beneficiary’s support and maintenance violates federal Medicaid statute).
With this further clarification on the limitation of the use of the settlement funds,
expressly precluding expenditure of the Settlement Funds for support or maintenance,
Class Members may use their apportioned settlement amounts as a supplement to
enhance the quality of their lives consistent with this Court’s Orders in this matter
without jeopardizing eligibility for ongoing benefits. This is based on the Court’s review
of all submissions and the status of the above matter to date, as well as discussions and
communication with counsel, including counsel for the United States and the Social

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Security Administration. Nothing stated in this Order contradicts, or is any way
inconsistent with, the Social Security Act and its regulations.
2.

This Order shall not alter the parties’ agreement that this Court’s

December 5 Order “shall preclude the State and DHS from seeking to recover any of the
Settlement Amount from Plaintiffs and the Class Members for cost of care charges for
residing at METO or participation in any other State program involving people with
developmental disabilities, or any other attempt by the State or DHS to recover any of the
Settlement Amount from Plaintiffs or Class Members, and that the State and DHS shall
be relieved of any obligations to initiate any proceedings to recover any of Settlement
Amount from Plaintiffs and Class Members” (Doc. No. 104, Stipulated Class Action
Settlement Agreement § XIV ¶ D), and this Order shall not otherwise adversely affect
Class Members’ eligibility for governmental benefits.
3.

The Court apportioned the Settlement Funds to Class Members based on

documented incidents of restraint or seclusion, including personal injuries sustained, and
for the deprivation of Class Members’ civil and personal rights. As such, the settlement
amounts are not income to Class Members. See, e.g., Lindsey v. C.I.R., 422 F.3d 684,
688 (8th Cir. 2005) (excluding settlement proceeds received as damages for personal
physical injury or sickness); Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 432 n.8
(1955); Roemer v. Commissioner, 716 F.2d 693, 696 (9th Cir. 1983) (tort compensation
excluded from income); Grunfeder v. Heckler, 748 F.2d 503, 508 (9th Cir. 1984)
(reparation payments paid for deprivation of personal rights excluded from income for
determining Social Security Income eligibility); Grunfeder, 748 F.2d at 510 (Judge
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Ferguson, concurring) (“This analysis does not depend on the status of the recipient but
instead rests on the status of the funds received. Tort compensation traditionally has been
excluded from the definition of income and, unless Congress specifically states
otherwise, the Social Security Act . . . should not be construed as modifying this
longstanding definition. Because the reparations payments at issue here are in the nature
of tort compensation . . . , they neither constitute ‘income’ under the income tax
laws . . . , nor under the Act for purposes of determining eligibility for supplementary
security income”); (see also Final Approval Order ¶ 5 (“By separate Order, the Court
shall determine how the reduced Settlement Amount, minus attorneys’ fees and costs
awarded below, shall be apportioned amongst Plaintiffs and those Class Members who
submitted Claim Forms, and further determine how any remaining amounts shall be
distributed in accordance with the terms of the Agreement.”); January 30, 2012, Order at
2 (“The Settlement Agreement established the procedure by which apportionment of
individual Class Member settlement amounts would be determined . . . . Specifically, in
addition to basing the apportioned amount on the number of documented times a Class
Member was ‘Restrained/Secluded,’ the Settlement Agreement states: ‘The Court may
also utilize other factors for apportionment which in the interest of justice it believes
should be considered, including, but not limited to, demonstrated serious physical
injury.’”); January 30, 2012, Order at 3 (“Moreover, in evaluating the ‘other factors’ for
apportionment as contemplated by Section XIV, Paragraph A, Subparagraph 3 of the
Settlement Agreement, the Court evaluated the following: causation issues in those cases
in which a death occurred, whether that death occurred at the facility, and the date on
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which the death occurred; and conduct outside the class period relevant to conduct that
occurred during the class period. The Court also carefully scrutinized the totality of the
circumstances, as the interests of justice required, relating to the length of time each Class
Member was in the facility and the overall effect of restraints on the Class Member,
consistent with the Settlement Agreement.”); February 14, 2012, Order at 6 (“The true
measure of a civilized and democratic society is the way each of us treats those
individuals most in need and the most vulnerable amongst us. That, of course, means that
all people are entitled to be treated with patience, dignity, and respect, and to be extended
kindness, whoever they may be, regardless of their social standing in the community and
especially if they have special needs. In this case, individuals with intellectual and
developmental disabilities are being compensated for what they have been subjected to
and the manner in which they have been treated or mistreated. Individuals with
intellectual and developmental disabilities have the same hopes and dreams as all citizens
in the United States. Some of those hopes and dreams are to live a good life, have some
fun, enjoy some recreational activities, and to do so with family and friends, and to do so
with dignity.”)).
4.

Class Members, their legal guardians, or legal representatives may provide

a copy of this Order to any agency, governmental entity, or its representatives, or any
other entity or individual who may assert a position contrary to this Order.
5.

Settlement Class Counsel shall provide a copy of this Order to Class

Members or their legal guardians with a brief summary of this Order.

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6.

In the December 5 Order, the Court concluded, both legally and as a matter

of equity and fairness, that the individual settlement amount being awarded to each
individual Class Member would not affect in any way the Class Member’s eligibility for
disability benefits or other related benefits, or otherwise jeopardize the Class Member’s
benefits or programming. That Order also required that if any agency, entity, or
individual, private or public, disputes the Court’s jurisdiction to make this finding, both
as a matter of law and equity, or contends that a Class Member’s eligibility should be
affected, the entity or individual must file a motion and come before this Court to address
the claim. This provision and the prior Orders of this Court remain in full force and
effect.

Dated: April 23, 2012

s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge

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