Kimmes v. Harris, 79-1961

• Decision Date: 22 April 1981
• Docket Number: No. 79-1961,79-1961
• Citation: 647 F.2d 1028
• Parties: Zella KIMMES, Plaintiff-Appellee, v. Patricia Roberts HARRIS, Secretary of Health and Human Services, Defendant- Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1028

647 F.2d 1028

Zella KIMMES, Plaintiff-Appellee, v. Patricia Roberts HARRIS, Secretary of Health and Human Services, Defendant- Appellant.

No. 79-1961.

United States Court of Appeals Tenth Circuit.

Argued Jan. 29, 1981.

Decided April 22, 1981.

Lenny L. Croce, Atty., Rural Legal Services of Tennessee, Oak Ridge, Tenn. (Jeffery Link, Attorney, Jefferson County Legal Aid, Golden, Colo., with him on the brief), for plaintiff-appellee.

Verrell L. Dethloff, Jr., Atty., Baltimore, Md. (Randolph W. Gaines, Chief of Litigation, Social Security Division, Dept. of Health, Education, and Welfare, Baltimore, Md., and Alice Daniel, Acting Asst. Atty. Gen., Washington, D. C., and Joseph F. Dolan, U. S. Atty., Denver, Colo., with him on the brief), for defendant-appellant.

Before SETH, Chief Judge, and McWILLIAMS and LOGAN, Circuit Judges.

McWILLIAMS, Circuit Judge.

This is a Supplemental Security Income (SSI) case. The Secretary of the Department of Health, Education and Welfare (HEW) ¹ held that Zella Kimmes' rental arrangement with her daughter caused her to receive "in-kind" income, which, in turn, raised her income to a level so high that she became ineligible for SSI benefits. The District Court, on review, held that Mrs. Kimmes did not receive in-kind income as a result of her rental arrangement, and, accordingly, reversed and set aside the Secretary's decision. Kimmes v. Califano, 472 F.Supp. 474 (D.Colo.1979). The Secretary appeals. We reverse the District Court.

This appeal requires consideration of a statute and certain implementing regulations. The statute involved is set forth in Appendix I, and the implementing regulations in Appendix II. The immediate issue is whether, under the statute and the implementing regulations, the rental arrangement between Mrs. Kimmes and her daughter Mrs. Kimmes received SSI benefits from July, 1975, to August, 1976. She was notified by letter dated August 13, 1976, that her benefits were being terminated. On request for reconsideration, the determination of ineligibility was allowed to stand. Subsequently, an Administrative Law Judge held that Mrs. Kimmes was not entitled to SSI benefits, and the HEW Appeals Council affirmed the Administrative Law Judge (ALJ).

results in the receipt by Mrs. Kimmes of in-kind income. If, as the Secretary found, Mrs. Kimmes receives in-kind income, then she is ineligible for SSI benefits.

Mrs. Kimmes is a widow, now 60 years of age, who is disabled because of a heart condition. At the time her SSI benefits were terminated, she was receiving $143.20 monthly as disability insurance benefits under the Social Security Act, and $44.60 in SSI benefits, for a total of $187.80 monthly in federal welfare payments.

At the time her SSI benefits were terminated, Mrs. Kimmes lived by herself in a small, one-bedroom trailer owned by her daughter, LaDonna M. Lee. The trailer was owned outright by Mrs. Lee, who received it in a divorce property settlement. The trailer was too small for the daughter and her child to live in, so the daughter allowed her mother, Mrs. Kimmes, to live in the trailer. Mrs. Kimmes paid no rent for her use of the trailer. Mrs. Kimmes did pay the rental on the space where the trailer sat, as well as licensing fees and taxes, which the ALJ found totalled about $70 per month. It would appear that Mrs. Kimmes also paid her own utilities and was obligated to pay for repairs or maintenance on the house trailer, although there had been no such expenses. The ALJ found the current rental value of the house trailer to be $150 monthly, and, as we understand it, there is no challenge made to that particular finding.

Based on the foregoing facts and figures, the ALJ found that Mrs. Kimmes received in-kind income of $80 per month as a result of her rental arrangement with her daughter. This amount was arrived at by subtracting the amount paid per month by Mrs. Kimmes for space rental, licensing fees, and taxes, namely $70, from the current monthly rental value of the trailer itself, namely $150. ² This in-kind income of $80 per month caused Mrs. Kimmes to become ineligible for SSI benefits. It was on this basis that the Secretary terminated Mrs. Kimmes' SSI benefits, although the disability insurance benefits under the Social Security Act continued. ³

The precise problem which now confronts us has been considered by several other federal courts. The Ninth Circuit Court of Appeals and United States District Courts for the District of Maryland, the Western District of Tennessee, the Northern District of Indiana, and the Eastern District of California have upheld the Secretary's determination that a housing arrangement of the present type does constitute in-kind income. On the other hand, United States District Courts for the District of Massachusetts and the Middle District of Pennsylvania, as well as the United States District Court for the District of Colorado in the instant case, have reached an opposite conclusion when faced with essentially the same facts. The United States District Court for the District of Oregon upheld the Secretary's interpretation In Antonioli v. Harris, 624 F.2d 78 (9th Cir. 1980), the SSI recipient lived alone in a house owned by his father. The recipient paid no rent for the house, but did assume responsibility for payment of property taxes and maintenance expense. The Secretary held that the difference between the current rental value of the house, and the taxes and expenses paid by the recipient, constituted in-kind support from the recipient's father. On review, a District Court granted summary judgment in favor of the Secretary. On appeal, the Ninth Circuit Court of Appeals affirmed. In so doing, the Court of Appeals held that the Secretary's decision was a reasonable construction of the enabling legislation and was based on a valid regulation which had been appropriately applied. The Court rejected the recipient's argument that he did not receive any unearned income and observed that by not paying his father any rent, "he thus fared better and had more resources available than an SSI recipient forced to locate and finance housing in the open market."

of the applicable statute and implementing regulations, but reversed her decision on the ground that the Secretary's finding as to the current rental value of the house there involved was not supported by substantial evidence. There may be other courts which have considered this precise problem, but none have been brought to our attention, nor have we discovered any in our own research. A review of the cases will place our particular problem in better focus.

In Herndon v. Harris, Civil No. S-79-462 (E.D.Cal. Dec. 8, 1980), and Young v. Califano, Civil No. S-79-225 (E.D.Cal. Dec. 8, 1980), the District Court, in unpublished opinions, upheld the Secretary's decision on the ground that such was required by Antonioli. In each case the District Judge, however, clearly indicated his personal dissatisfaction with the result which he felt compelled to reach.

The recipient in Herndon lived in a house owned by her son. She paid $50 per month rent, which was all she could afford. The fair market rental value of the property was $150 per month. The District Court, as indicated, reluctantly upheld the Secretary's determination that there was in-kind income, based on Antonioli.

The recipient in Young lived in a house owned by her son, paying him $140 monthly as rent. The Secretary determined the fair market value of the house to be $225 per month and reduced the recipient's SSI benefits by $79.26 per month. The recipient then voluntarily increased her rent payments to $200 per month. The Secretary still found in-kind income in the amount of $25. The upshot was that the recipient later moved out of the house owned by her son and into a government subsidized senior citizens housing project. Again, the District Court begrudgingly upheld the Secretary's action on the basis of Antonioli.

Styles v. Harris, 503 F.Supp. 125 (D.Md.1980), is a case in which the United States District Court for the District of Maryland upheld the Secretary's determination of in-kind income. In Styles, the recipient rented an apartment from her son for $80 per month. The current market value of that apartment was $100 per month, and the Secretary held that the difference between what the recipient was paying for the apartment and its current market value, i. e., $20, constituted in-kind income. In affirming the Secretary, the District Court concluded that the regulations involved did not contravene the enabling legislation and rejected the contention that the in-kind income was not actually available to the recipient.

In Wynn v. Harris, 494 F.Supp. 878 (W.D.Tenn.1980), the recipients lived in a home owned by their children and paid no rent, although they were to pay upkeep expenses. The Secretary found in-kind income and, on review, the District Court affirmed. In thus affirming, the District Court concluded that the regulation in question is reasonably related to the purposes of the relevant statutory provisions and is neither arbitrary nor irrational. The District Court rejected the argument that the in-kind rent subsidy was not "actually available" to the recipients by In Jackson v. Harris, No. S 79-213 (N.D.Ind. Jan. 15, 1981), the recipient was renting a home from her sister for $145 per month. The sister contacted the Social Security Administration to inquire as to whether the recipient's SSI benefits could be raised so that the sister could, in turn, raise the rent on the home to $250 per month, which the sister said was the fair rental value on the home. Based on the sister's representation, the Social Security Administration determined that the recipient was receiving in-kind income in the amount of $105 per month, which meant that the recipient was no longer eligible and her SSI benefits were terminated. On review, the District Court, in an unpublished opinion,...