995 F.2d 28 (4th Cir. 1993), 92-2303, Kennedy v. Shalala

Docket Nº:92-2303, 92-2304.
Citation:995 F.2d 28
Party Name:Barbara KENNEDY, on behalf of herself and all others similarly situated, Plaintiff-Appellee, v. Donna E. SHALALA, Secretary of Health and Human Services, Defendant-Appellant. Barbara KENNEDY, on behalf of herself and all others similarly situated, Plaintiff-Appellant, v. Donna E. SHALALA, Secretary of Health and Human Services, Defendant-Appellee.
Case Date:June 01, 1993
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 28

995 F.2d 28 (4th Cir. 1993)

Barbara KENNEDY, on behalf of herself and all others

similarly situated, Plaintiff-Appellee,

v.

Donna E. SHALALA, Secretary of Health and Human Services,

Defendant-Appellant.

Barbara KENNEDY, on behalf of herself and all others

similarly situated, Plaintiff-Appellant,

v.

Donna E. SHALALA, Secretary of Health and Human Services,

Defendant-Appellee.

Nos. 92-2303, 92-2304.

United States Court of Appeals, Fourth Circuit

June 1, 1993

Argued April 2, 1993.

Jennifer Hay Zacks, argued (Stuart M. Gerson, Asst. Atty. Gen., William A. Kolibash, U.S. Atty. and William Kanter, on brief), Civ. Div., U.S. Dept. of Justice, Washington, DC, for defendant-appellant.

Gill Wylie Deford, Nat. Sr. Citizens Law Center, Los Angeles, CA, argued (Mary A. Kenney, North Cent. West Virginia Legal Aid Soc., Morgantown, WV, on brief), for plaintiff-appellee.

Before HALL and LUTTIG, Circuit Judges, and HILTON, United States District Judge for the Eastern District of Virginia, sitting by designation.

OPINION

LUTTIG, Circuit Judge:

On behalf of herself and all others similarly situated, Barbara Kennedy brought this suit against the Secretary of the Department of Health and Human Services challenging Social Security Ruling 82-31, which treated as unearned income to her that portion of her husband's Veteran's Affairs benefit payment designated for her support, with the result that Kennedy's Supplemental Security Income

Page 29

benefits were reduced by that amount. The district court invalidated the ruling as violative of Title XVI of the Social Security Act. We conclude that the ruling constitutes a reasonable interpretation of that Act and therefore reverse.

I.

Because the Supplemental Security Income ("SSI") program is intended merely to ensure subsistence, the amount of benefits paid under the program is inversely proportional to an eligible recipient's income. Generally, the amount of SSI benefits paid equals a periodically determined subsistence level of income, less a recipient's income from sources other than SSI. Among the types of other income that figure in this calculation is "unearned income," which Congress has defined to include "any payments received as an annuity, pension, retirement, or disability benefit, including veterans' compensation and pensions...." 42 U.S.C. § 1382a(a)(2)(B) (emphasis added).

Kennedy's husband receives Veteran's Affairs benefits, comprising his base benefits plus an amount paid to him for the support of Kennedy, his dependent (the "augmented portion" or "augmentation"). The Secretary has determined that, for SSI purposes, the augmented portion of a veteran's benefits constitutes unearned income to the dependent on whose behalf they are paid. See Title XVI: SSI Treatment of Veterans Administration Payments to SSI Eligibles/Fiduciaries, 82-31 S.S.R. 291 (Cum.Ed.1982) [hereinafter SSR 82-31]. This determination was made in response to Whaley v. Schweiker, 663 F.2d 871 (9th Cir.1981), Tsosie v. Califano, 651 F.2d 719 (10th Cir.1981), and Webster v. Califano, No. 78-3492 (6th Cir. July 10, 1980), which invalidated the Secretary's then existing position that all VA benefits, including the augmented portions, constituted unearned income to the veteran for SSI purposes. Pursuant to SSR 82-31, the Social Security Administration informed Kennedy that her SSI benefits would be reduced in the amount of her husband's VA benefits augmentation.

An administrative law judge upheld the agency's determination, and Kennedy filed a class action in federal district court. After waiving the exhaustion requirement and equitably tolling the applicable statute of limitations, the district court certified a class of all persons similarly situated and residing in the Northern District of West Virginia and referred the matter to a magistrate-judge. 138 F.R.D. 484. The district court thereafter accepted the magistrate-judge's recommendation that SSR 82-31 was invalid because it counted as unearned income to SSI beneficiaries payments that they had never actually received, assertedly in violation of Title XVI of the Social Security Act. The district court entered summary judgment for Kennedy, and the Secretary appealed. 1

II.

The dispute between the parties, at bottom, is quite simple. The Secretary argues that although Kennedy might not actually receive the augmentation of her husband's VA benefits, she constructively receives that augmentation, and that constructively received VA payments constitute unearned income "received" within the meaning of section 1382a(a)(2)(B). Kennedy responds that section 1382a(a)(2)(B) requires that she actually receive the payments (or at a minimum that they be actually available to her) before they can be counted as unearned income to her. While we do not believe that the Secretary's construction is compelled by the statute's language, we believe that it represents a reasonable interpretation of an ambiguous provision.

We cannot conclude, as Kennedy would have us do, that the language of section 1382a(a)(2)(B) unambiguously evinces a congressional intent to count as unearned income for SSI purposes only those VA benefits actually received by the SSI beneficiary. As a general matter, "receipt" can reasonably be understood to include not only actual,

Page 30

but constructive receipt. See, e.g., United States v. Ladd, 877 F.2d 1083, 1087-88 (1st Cir.1989) ("The firearm cases, as we read them, show that receipt may be actual or constructive."); Baxter v. Commissioner, 816 F.2d 493, 494-95 (9th Cir.1987) (constructive receipt of income under the Internal Revenue Code). Indeed, no fewer than five other courts of appeal have held that the term "received" in section 1382a(a)(2)(B) itself includes constructive receipt, see Martin v. Sullivan, 932 F.2d 1273, 1278 (9th Cir.1990), cert. denied, --- U.S. ----, 112 S.Ct. 648, 116 L.Ed.2d 665 (1991); Healea v. Bowen, 871 F.2d 48, 51 (7th Cir.1988); Szlosek v. Secretary of Health & Human Servs., 861 F.2d 13, 13 (1st Cir.1988); Robinson v. Bowen, 828 F.2d 71, 72 (2d Cir.1987); Lyon v. Bowen, 802 F.2d 794, 798 (5th Cir.1986). 2 Of course, when we are confronted with a statutory provision that is silent or ambiguous with respect to the specific issue at hand, we must defer to a reasonable interpretation of the agency charged with administering that law. See generally Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). 3

The reasonableness of the Secretary's interpretation is underscored by the unreasonableness of Kennedy's purported...

To continue reading

FREE SIGN UP