Usher v. Schweiker, 81-1181
| Citation | 666 F.2d 652 |
| Decision Date | 04 December 1981 |
| Docket Number | No. 81-1181,81-1181 |
| Parties | Delma USHER, et al., Plaintiffs, Appellees, v. Richard S. SCHWEIKER, Secretary of Health and Human Services, Defendant, Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (1st Circuit) |
Carlene V. McIntyre, Atty., Civ. Div., Dept. of Justice, Washington, D. C., with whom Edward F. Harrington, U. S. Atty., Boston, Mass., Stuart E. Schiffer, Acting Asst. Atty. Gen., and Anthony J. Steinmeyer, Atty., Civ. Div., Dept. of Justice, Washington, D. C., were on brief, for defendant, appellant.
Mark S. Coven, Boston, Mass., with whom Howard Friedman, Washington, D. C., was on brief, for plaintiffs, appellees.
Before BOWNES and BREYER, Circuit Judges, and MURRAY, * Senior District Judge.
This case concerns the constitutionality of a Supplemental Security Income (SSI) 1 regulation that governs payments made to certain SSI recipients who rent living accommodations. The regulation provides that the Secretary will consider significant differences between the fair market value of the accommodation and a lower rental payment to be part of the SSI recipient's "income." The Secretary, in appropriate cases, will reduce the SSI payment accordingly. 20 C.F.R. § 416.1125(d) (1980). The district court found, 506 F.Supp. 1230, that this regulation violated the equal protection of the laws guaranteed by the federal constitution. 2 We disagree and reverse the judgment of the district court.
SSI pays benefits to those blind, aged, or disabled applicants whose income and resources fall below certain specified levels. 42 U.S.C. §§ 1382, 1382a, 1382b. Essentially, the Secretary computes an SSI payment by deducting the claimant's income (as defined by statute and regulation) 3 from the SSI "standard payment." The difference between the two amounts is the level of benefits that the claimant will receive. Congress has provided that for purposes of making this calculation "income" is to include "both earned and unearned income, and ... unearned income means all other income, including ... support and maintenance furnished in cash or in kind...." 42 U.S.C. § 1382a(a)(2)(A). 4
The Secretary, pursuant to his general rulemaking authority, 5 has promulgated numerous regulations that define and describe the treatment accorded "income ... in kind." Thus, income includes "the receipt by any individual of any property or service which he can apply either directly or by sale or conversion to meeting his basic needs for food, clothing, and shelter." 20 C.F.R. § 416.1102. Moreover, "support and maintenance in kind encompasses food, clothing, and shelter or any portion of any ... such items." 20 C.F.R. § 416.1125(a). Further, "the value of in-kind support and maintenance refers to its current market value...." Id. The regulations go on to define precisely how food or shelter received "in kind" is to be valued in a variety of situations. These situations include the case of a claimant who lives with his children or other family and receives food or housing. 20 C.F.R. § 416.1125(d)(1). They also include the circumstance at issue here-the receipt of assistance in the form of a reduced rental.
In the "reduced-rental" situation an SSI claimant typically lives in a house or apartment owned by a friend or relation and pays a rent below current market value. The relevant regulation treats this claimant by and large like a claimant who lives with his children. 6 It provides that when "an individual ... lives in his own household, including a commercial establishment, and receives support and maintenance in kind ...," the "maximum value of such support and maintenance is presumed to be (an amount equal roughly to slightly more than one-third of the standard SSI payment, but the presumption may be) ... rebutted by the individual's establishing that the current market value of such support and maintenance, less any payment he makes therefor, is lower than the presumed value...." 20 C.F.R. § 461.1125(d). 7 Under this regulation, the Secretary will count the difference between the fair market value of the accommodation and the amount the claimant pays for it as "in-kind" income. The Secretary will value this "income" as equal to no more than about one-third of the standard SSI payment; and the Secretary will value this "income" at a lesser amount if the claimant can show that it is worth less.
Plaintiffs receive, or have received, SSI benefits. They live in apartments owned by their children. They pay rent in amounts significantly less than fair market value. 8 In each case, the Secretary has reduced or terminated the plaintiffs' benefits in accordance with § 461.1125(d). Plaintiffs sued in the federal district court challenging these reductions. Passing upon cross-motions for summary judgment, the court found (1) that the regulation at issue is authorized by statute, but (2) that it unconstitutionally discriminates between those in plaintiffs' circumstances and others who either have formal leases or who live in federally subsidized housing. The Secretary has appealed. After considering the arguments of both the Secretary and the plaintiffs-appellees, we agree with the district court's holding on the first of these questions but disagree with its holding on the second.
We begin with plaintiffs' claim that the Secretary is not authorized by Congress to consider a "reduced rental" as income received in kind. The argument is difficult to reconcile with the plain language of the statute, which instructs the Secretary to include as "unearned" income "all other income" and specifically refers to "support and maintenance furnished ... in kind." Plaintiffs, however, seek to circumvent this language as follows.
First, they point to a longstanding welfare policy that "only such net income as is actually available for current use on a regular basis" will be counted in determining a welfare claimants "income." See 45 C.F.R. § 233.20(a)(iii) (C). 9 They state that it was Congress' intent that this policy be reflected in the statute and they argue that the income at issue here is not "actually available" because it cannot "readily be converted into cash."
Plaintiffs' argument is unsound, however, for income in kind can be "actually available" to a person without being convertible into cash. When one receives food, or clothing, or shelter, one receives an actual benefit whether or not there is a market in which one might sell that benefit. Indeed, in the very statute at issue, Congress referred to one form of "in-kind" income-the provision of shelter in the home of a relative-that is ordinarily not convertible into cash. 42 U.S.C. § 1382a(a)(2)(A). The Secretary has embodied the ordinary English meaning of the term "actually available" when he defines "income" as the receipt of "any property or services" which the recipient can "apply either directly or by sale or conversion" to meet "basic need for food, clothing, and shelter." 20 C.F.R. § 416.1102. (Emphasis added.) In this case, plaintiffs received the income "directly."
None of the cases that plaintiffs cite suggests the contrary. Those cases involve, for example, (1) the question of whether the income of a "man in the house" without legal obligation to support a child shall be counted as part of the income of a child who does not receive it, 10 (2) the question of whether income for a welfare family shall be calculated by averaging past income despite the fact that their present income may well be lower, 11 and (3) the question of whether mortgaged assets shall be valued at gross market value without considering that the value of the equity in the assets was far lower. 12 In all of these cases the courts rejected rules or practices that would have counted as income or assets benefits or funds that a welfare claimant did not receive. On the other hand, when courts have considered the type of income at issue here, they have held that it is "actually available" to the SSI claimant because the claimant did receive an actual economic benefit. Kimmes v. Harris, 647 F.2d 1028 (10th Cir. 1981), rev'g Kimmes v. Califano, 472 F.Supp. 474 (D.Colo.1979); Antonioli v. Harris, 624 F.2d 78 (9th Cir. 1980); Styles v. Harris, 503 F.Supp. 125 (D.Md.1980); and Wynn v. Harris, 494 F.Supp. 878 (W.D.Tenn.1980). 13
We note that this is not a case in which the Secretary has been hypertechnical or stingy in his application of the regulation. He has not imputed benefits to the plaintiffs on the basis of fluctuating market values or the debatable opinions of expert real estate appraisers. Four of the five plaintiffs have stipulated that the assessed values are correct, and each of the "fair market values," as determined by the Secretary, suggests to us that plaintiffs are receiving real and tangible benefits.
Plaintiffs' second argument is that Congress, by referring to some types of "in-kind" income in the statute, meant to exclude others from consideration. In the statutory provision here at issue Congress, after stating that support and maintenance furnished in cash or kind would be included in income, wrote: "except that in the case of any individual ... living in another person's household and receiving support and maintenance in kind ... the dollar amounts otherwise applicable ... shall be reduced by 331/3 percent...." 42 U.S.C. § 1382a(a)(2)(A). (Emphasis added.) The language quoted, however, does not purport to define all "in-kind" income. To the contrary, by using the words "except in the case of," the statute specifically suggests an awareness that other types of "in-kind" income exist. Moreover, subsequent Congresses have confirmed this understanding. In 1974, even before the regulation here at issue was promulgated, a House Conference Report on an amendment to the SSI statute stated:
Under the SSI program for the aged, blind and disabled, all forms of income-including room and board furnished for less than cost -are...
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