Elias v. Colvin
MEMORANDUM (Order to follow as separate docket entry)For the reasons discussed above, we conclude remand is warranted for further consideration and Plaintiffs appeal is granted to the extent she seeks such reconsideration. An appropriate Order is filed simultaneously with this Memorandum.Signed by Honorable Richard P. Conaboy on 7/27/15. (cc)
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
:CIVIL ACTION NO. 3:15-CV-263
Acting Commissioner of
Here we consider Plaintiff’s appeal of the Acting
Commissioner’s decision to discontinue Social Security Supplemental
Income (“SSI”) benefits for which Plaintiff was found eligible in
(Doc. 11 at 2.)
February 6, 2015.
Plaintiff filed her appeal (Doc. 1) on
She filed her supporting brief on May 26, 2015.
Defendant filed her opposition brief on June 26, 2015
(Doc. 12), and Plaintiff filed her reply brief on July 6, 2015
Therefore, this matter is fully briefed and ripe for
For the reasons discussed below, we conclude remand
Factual and Procedural History
At a hearing held on November 7, 2007, the ALJ found Plaintiff
disabled for SSI purposes as of April 21, 2006.
(Doc. 11 at 2.)
The ALJ determined that Plaintiff met Social Security listings 8.05
and 14.02 for “Lupus.”
On November 19, 2008, Plaintiff and her ex-husband established
a trust as a result of a divorce settlement.
(Doc. 12 at 3.)
trust was titled “Irrevocable Special Needs Trust” (“Trust”) which
was set up for Plaintiff to receive her ex-husband’s pension and
still meet SSI income requirements.
Plaintiff was the sole
beneficiary, and her father, Aglae Elias, was named the trustee
with her daughter, Dana Kubiak, named as the successor trustee.
Upon Plaintiff’s death, the Trust would distribute to the
Department of Public Welfare the remaining principal and
accumulated income in an amount equal to the medical assistance
that the Pennsylvania Department of Public Welfare had paid on
Without objection from Plaintiff, Defendant describes the
Trust as follows:
The trust provided that Plaintiff was to
receive a monthly sum from her ex-husband’s
New York Police Department Pension Plan. The
monthly sum would constitute the principal of
the Trust. The trustee was required to use
the trust to maintain and support Plaintiff’s
health, safety, welfare, education, and
treatment (when not otherwise provided by a
public agency or government program). The
trustee was permitted to apply the income as
he deemed necessary and appropriate for
Plaintiff’s special needs and comfort. He
could apply the principal only if
specifically permitted by the court and if he
notified the Pennsylvania Department of
Public Welfare and the Social Security
Administration. The trust further provided
that “no part of the principal or income
shall be considered available to the
(Doc. 12 at 4 (citing R. 100-02).)
Defendant notes that, according
to a letter from Plaintiff’s attorney who drafted the trust
instrument, the monthly sum was $765.
(Doc. 12 at 4 n.1.)
In March 2011, the Social Security Administration field office
contacted Mr. Elias and determined that Plaintiff’s access to the
Trust rendered it a countable resource.
(Doc. 12 at 5.)
of this, the field office sent Plaintiff a letter on April 7, 2011,
stating that her income (i.e., her monthly pension and the value of
food and shelter) exceeded her SSI payments as of January 2009 and,
therefore, she was ineligible for benefits beginning January 2009.
Plaintiff testified that she did not receive a Social
Security check after April 2011.
Plaintiff filed a request for reconsideration on April 13,
(R. 15, 96-107.)
She attached a copy of the Trust
instrument, a letter dated November 26, 2008, indicating that a
copy of the Trust was provided to the Social Security
Administration, and a letter from the Commonwealth of Pennsylvania
dated January 6, 2009, stating that the Trust would not be
considered a countable resource based on a review of the Trust
The field office sent Plaintiff a letter on April 29, 2011,
explaining that her SSI benefits had been overpaid in the amount of
$18,137 for the period of January 1, 2009, through April 1, 2011,
because the agency had not been aware of all of her income,
specifically her pension payments.
Plaintiff filed another request for reconsideration on May 24,
2011, which was denied with the explanation it was considered a
countable resource because Plaintiff had direct access to the
(R. 96-107, 203.)
On January 19, 2012, Plaintiff filed a
written request for a hearing.
On June 2, 2011, Plaintiff requested a waiver of overpayment
stating that she was not at fault in causing the overpayment.
Plaintiff submitted an affidavit from her father, the
trustee, in which he attested that the only addition to the Trust
was a monthly pension fund payment of approximately $590 (not
including a deduction for federal withholding of $180 per month and
an annual payment to the Trust of $2,000 pursuant to the Court of
Approved Domestic Relations Order) and also stated that “[s]ince
the Trust was established the only expenditures from the Trust have
been consistent with the terms of the Trust Agreement.”
The field office denied the waiver request on July 13, 2012.
A hearing was held before ALJ Timothy Wing on April 22, 2013,
at which Plaintiff was represented by an attorney.
her daughter, Dana Kubiak, testified.
Plaintiff testified that she had increased access to the
account when her father became ill in 2009 and that she used the
Trust only to pay an occasional doctor’s bill and three regular
bills: telephone, electric and insurance.
(R. 19, 297, 310-11.)
She stated that otherwise, she “never used the Trust to pay for
anything else” but acknowledged that there was a debit card for the
(R. 307, 309-13.)
The ALJ questioned Plaintiff about
bank statement transactions indicating the Trust had been used for
(See, e.g., R. 319.)
For the most part, Plaintiff
provided vague responses to the ALJ’s inquiries about unauthorized
or questionable expenditures.
Plaintiff also testified that when her daughter became
trustee, she used the Trust to pay the three bills identified and
Plaintiff did not have direct access to the Trust account.
Dana Kubiak testified similarly.
At the hearing, Plaintiff’s attorney brought up the issue of
cessation–-arguing that going forward Plaintiff should not be
denied benefits due to a finding that the Trust temporarily
operated outside the permitted parameters.
(R. 297, 345.)
argued that benefits should be reinstated either from the time of
notification of a problem in April 2011 when the debit card was
destroyed or, at the latest, when Dana Kubiak became trustee in
September 2012, because, even if the Trust was improperly used
before, the operation of the Trust came into compliance with the
requirements of a special needs trust and was therefore excludable
income as of those dates.
ALJ Wing rendered his decision on April 25, 2013.
He identified the two issues before him as follows: 1) “Whether the
trust disbursement made from a document, entitled Special Needs
Trust is a countable resource, which could result in an overpayment
to the claimant”; and 2) “If an overpayment has occurred, whether
claimant was with or without fault in determining whether waiver of
an overpayment should be allowed.”
Regarding the second
issue, the ALJ noted that waiver of adjustment or recovery of an
overpayment of Title XVI benefits may be granted when the claimant
was without fault, “and adjustment or recovery . . . would defeat
the purpose of Title XVI, be against equity and good conscience, or
impede efficient or effective administration of the Title XVI due
to the small amount involved.”
(R. 17 (citing 20 C.F.R. §§
ALJ Wing determined that the Trust did not meet the
requirements of a special needs trust because the evidence
established that Plaintiff directly accessed the Trust which showed
that the Trust was a countable resource pursuant to the guidance
provided in SSA’s Program Operations Manual System (“POMS”) SI
After noting that POMS SI 01120.200
directs that “if the individual can direct use of the trust
principle for her support or maintenance, the trust principle is a
resource for SSI purposes,” the ALJ found that “[t]he evidence of
record indicates that not only did claimant direct the use of the
trust principle and have access to the funds, the disbursements
made were for expenses which were not consistent with the purpose,
intent and terms of the trust.”
In turn ALJ Wing concluded that, with the Trust counted as a
resource, Plaintiff did not meet the income requirements for
He also concluded that Plaintiff was
not without fault in causing the overpayment. (R. 22-23.)
Regarding the issue of the propriety of cessation, ALJ Wing
stated that the authority he relied upon “indicates that having
access to and direction of use of the funds results in the trust
principle being considered a resource for SSI purposes.”
He therefore found
no merit to or authority for the claimant’s
position that if the trust payments are
considered countable income, it is income
only during the months she used the debit
card to access money, and that eligibility
should be reinstated once she did not have
direct access to the money. That is,
claimant claims there should only be a
temporary cessation of benefits until the
debit card she used to access funds was
In sum, the ALJ determined that Plaintiff was not eligible for
SSI benefits after January 2009 and that she owed the overpayment
Standard of Review
Although this case differs from the normal appeal of the
denial of benefits, the parties do not dispute that the substantial
evidence standard applies here.
(Doc. 11 at 6; Doc. 12 at 2.)
Thus, this Court’s review of the Acting Commissioner’s decision in
this matter is limited to determining whether there is substantial
evidence to support the decision.
42 U.S.C. § 405(g); Hartranft v.
Apfel, 181 F.3d 358, 360 (3d Cir. 1999).
means “more than a mere scintilla.
It means such relevant evidence
as a reasonable mind might accept as adequate to support a
Richardson v. Perales, 402 U.S. 389, 401 (1971); see
also Cotter v. Harris, 642 F.2d 700, 704 (3d Cir. 1981).
Plaintiff’s Alleged Errors
Plaintiff identifies the following errors: 1) the ALJ
“improvidently decided” that the Trust was not a proper “special
needs trust”; 2) the ALJ “improvidently decided” that the Trust was
not exempt and therefore not excludable as a resource even though
the corpus or principal never exceeded $2,000; 3) the misuse of the
Trust should only be considered for the duration of the initial
administration and not after the change in administration; and 4)
the record does not contain any reviewable decision on “cessation”
of SSI benefits beyond April 25, 2013, and there is no substantial
proof that Plaintiff’s medical condition changed, that the Trust
itself was improper, or that any misuse of the Trust continued
beyond the date of the substitution of trustee in September 2012.
(Doc. 11 at 5.)
Plaintiff provides the following explanation of a special
In 1993, Congress established a general
rule that trusts would be counted as assets
for the purpose of determining Medicaid
eligibility. Consolidated Omnibus Budget
Reconciliation Act of 1993, Pub. L. No. 10366, title XII § 1361 (d)(1)(C), 107 Stat. 312
(Aug. 10, 1993). However, Congress excepted
from that rule three types of trusts meeting
certain requirements. Taken together, these
are generally called “special needs trust” or
“supplemental needs trust.” “A supplemental
needs trust is a discretionary trust
established for the benefit of a person with
severe and chronic or persistent disability
and is intended to provide for expenses that
assistance programs such as Medicaid do not
cover.” Sullivan v. Cnty. of Suffolk, 174
F.3d 282, 284 (2d Cir. 1999) (internal
quotation mark omitted). These expenses,
such as books, television, internet, travel,
and even such necessities as clothing and
toiletries, “would rarely be considered
extravagant.” Lewis v. Alexander, 68 F.3d
325 (3rd Cir. 2012).
(Doc. 11 at 6-7.)
As a general matter, SSI is a program based on financial need,
the underlying purpose “is to assure a minimum level of income for
people who are age 65 or older, or who are blind or disabled and
who do not have sufficient income or resources to maintain a
standard of living at the established Federal minimal level.”
C.F.R. § 416.110.
Pursuant to 42 U.S.C. § 1382(a)(3)(B), if such a
person is unmarried and her countable income exceeds $2,000, she
loses eligibility for SSI benefits.
The monthly SSI rate is
reduced by the amount of an individual’s countable income.
C.F.R. §§ 416.410, 416.420; see also 20 C.F.R. § 416.1100.
A trust is generally counted as a resource for SSI benefits,
with any additions to the trust in a given month being counted as
income for that month.
42 U.S.C. § 1382b(e); 20 C.F.R. § 416.1208
et seq.; Program Operations Manual System (“POMS”) SI
An exception to this rule is where an
irrevocable special needs trust meeting certain criteria has been
42 U.S.C. § 1396p(d)(4)(A), (C); POMS SI 01120.203.
U.S.C. § 1396p(d)(4)(A) provides that a trust is not countable
income for SSI benefits purposes if it is a “trust containing the
assets of an individual under age 65 who is disabled . . . and
which is established for the benefit of such individual by a
parent, grandparent, legal guardian, or a court if the State will
receive all amounts remaining in the trust upon the death of such
individual up to the total of medical assistance paid on behalf of
See also POMS SI 01120.203.2
to POMS SI 1120.200(D)(1)(a), if an individual can direct the use
of the trust principal for support and maintenance, the trust
principal is a resource for SSI purposes.3
Special Needs Trust Decision
Plaintiff first argues the ALJ “improvidently decided” that
the Trust was not a proper “special needs trust.”
(Doc. 11 at 5.)
We conclude the ALJ’s decision was appropriate in part.
Plaintiff summarizes the ALJ’s finding on the issue of whether
it was a countable resource:
The ALJ analyzed the Trust and found
that the access and directing of funds for a
limited time “negate[d] the irrevocable
special needs trust as an excludable
countable resource.” (Tr. 21). The ALJ
concluded that creating a special needs trust
and funding it does not conclusively
establish that it is excluded as a “countable
resource.” The ALJ reasoned that a properly
created special needs trust which is an
excludable resource under 42 U.S.C.A. §
1396(d)(4)(A) is transformed by acts of
administration not only during the commission
of the acts, but even after the
administrative operation changes. (Tr. 21).
The ALJ found that purchases made with the
trust money were not consistent with trust
purposes and did not “increase [Claimant’s]
quality of life.” (Tr. 21).
(Doc. 11 at 8-9.)
The ALJ relied on POMS SI 01120.203 and SI 01120.200.
Plaintiff criticizes the ALJ’s reliance because these provisions
“do not have the force of law.
It is only a means for the
Commissioner to issue Social Security policy and operating
See Edelman v. Commissioner, 83 F.3rd 68 (3rd Cir.
See also Schweiker v. Hansen, 450 U.S. 785, 789 (1981).”
Plaintiff acknowledges that the instructions at issue “indicate
that if the individual can direct the principal for her support and
maintenance, the trust principal is a resource for SSI purposes.”
(Doc. 11 at 9.)
The United States Supreme Court made note of the deference due
POMS in Washington State Dep’t of Social and Health Services v.
Guardianship Estate of Danny Keffeler, 537 U.S. 37 (2006): “While
these administrative interpretations are not products of formal
rulemaking, they nevertheless warrant respect.”
Id. at 385-86; see
also Kelly v. Commissioner of Social Security, 566 F.3d 347, 350
n.7 (3d Cir. 2009).
We apply this standard here.
Plaintiff cites no authority addressing facts similar to this
case or the impropriety of the ALJ’s reliance on the provisions
cited by the ALJ.
Her reliance on the DPW letter for support is
misplaced in that determinations of other agencies are not binding
on Social Security administration matters.
While the ALJ’s
adherence to agency policy instructions in the factual context
presented here may be seen as evidence “a reasonable mind might
accept as adequate to support a conclusion,”
Richardson, 402 U.S.
at 401, the precise wording of POMS SI 01120.200 gives us pause.
POMS SI 01120.200, the main provision relied upon by the ALJ,
provides in pertinent part:
If an individual (claimant, recipient, or
deemor) has legal authority to revoke or
terminate the trust and then use the funds to
meet his food or shelter needs, or if the
individual can direct the use of the trust
principal for his or her support and
maintenance under the terms of the trust, the
trust principal is a resource for SSI
POMS SI 01120.200(D)(1)(a) (emphasis added).
Here the Trust does not give Plaintiff the legal authority to
revoke or terminate the trust, nor do the terms of the trust allow
her to direct the use of the trust principal.
(See R. 100-05.)
Rather, Trustee Aglae Elias and Plaintiff acted contrary to the
terms of the Trust.
Therefore, this situation does not precisely
fit those addressed in POMS SI 01120.200(D)(1)(a).
Despite this distinction, we have no hesitation in concluding
that substantial evidence supports ALJ Wing’s determination that
during the period January 1, 2009, to April 1, 2011, the misuse of
the Trust rendered it a countable resource.
The period thereafter
will be discussed below.
Principal Amount of Trust
Plaintiff’s second claimed error is that the ALJ
“improvidently decided” that the Trust was not exempt and therefore
was not excludable as a resource even though the corpus or
principal never exceeded $2,000.
(Doc. 11 at 5.)
Plaintiff has not shown the ALJ erred on this basis.
As noted above, if countable income exceeds $2,000, a claimant
loses eligibility for SSI benefits.
More importantly here, the
monthly SSI rate is reduced by the amount of an individual’s
20 C.F.R. §§ 416.410, 416.420; see also 20
C.F.R. § 416.1100.
Plaintiff asserts that there is no testimony or evidence of
record to support the conclusion that the principal balance
exceeded the $2,000 limit.
(Doc. 11 at 11.)
Defendant sets out in detail the accounting which resulted in
the loss of Plaintiff’s SSI benefits showing that Plaintiff’s
countable income exceeded the monthly SSI payment.
& n.4, 18-21 & n.7.)
her reply brief.
(Doc. 12 at 15
Plaintiff does not dispute this accounting in
(See Doc. 13.)
As Defendant’s accounting is
undisputed and appears to be consistent with relevant regulatory
provisions, we conclude Plaintiff has not shown the ALJ erred on
the basis asserted.
Temporary Misuse of Trust
Plaintiff next argues that the misuse of the Trust should only
be considered for the duration of the initial administration of the
(Doc. 11 at 5.)
We conclude this issue warrants remand for
As noted above, the ALJ relied on POMS SI 01120.200(D)(1)(a)
to conclude that the Trust was a countable resource.
relied on it in determining that a temporary cessation of benefits
was not appropriate and the Special Needs Trust was permanently
negated by the misuse.
In his discussion, the ALJ
addressed only the period of time until the debit card was
destroyed (about April 2011).
He does not address the
period of time after Dana Kubiak became Trustee in September 2012–a period about which he found Ms. Kubiak’s testimony credible
regarding her actions in carrying out her duties as trustee.
Because POMS SI 01120.200(D)(1)(a) does not precisely address
the situation presented here and because the ALJ did not discuss
the period of time during which the Trust may have been properly
administered, we conclude the purposes of the Act are best served
by remand for further consideration of this issue.
In making this determination, we have considered Defendant’s
argument that Plaintiff’s position is “essentially . . . that a
trust may be both a special needs trust and not be a special needs
(Doc. 12 at 17.)
We make no such finding.
However, we do
conclude that the ALJ has not adequately discussed the issue of
whether temporary misuse and improper administration of a properly
formed Special Needs Trust must forever negate consideration of the
trust as an excludable resource if the administrative problems and
misuse are rectified.
Cessation of Benefits
Plaintiff’s final asserted error is that the record does not
contain any reviewable decision on “cessation” of SSI benefits
beyond April 25, 2013, and there is no substantial proof that
Plaintiff’s medical condition changed, that the Trust itself was
improper, or that any misuse of the Trust continued beyond the date
of the substitution of trustee in September 2012.
(Doc. 11 at 5.)
This issue is closely related to whether the misuse of the trust
can be considered temporary.
Because we have remanded for further
consideration of that issue, which is to include consideration of
the period beyond September 2012, further discussion of the
cessation of benefits is not necessary.
For the reasons discussed above, we conclude remand is
warranted for further consideration and Plaintiff’s appeal is
granted to the extent she seeks such reconsideration.
appropriate Order is filed simultaneously with this Memorandum.
S/Richard P. Conaboy
RICHARD P. CONABOY
United States District Judge
DATED: July 27, 2015
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