Berryhill v. Shalala
| Citation | 1993 WL 361792,4 F.3d 993 |
| Decision Date | 16 September 1993 |
| Docket Number | No. 92-5876,92-5876 |
| Parties | NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit. Clara Blanche BERRYHILL, Plaintiff-Appellant, v. Donna E. SHALALA, Secretary of Health and Human Services, 1 Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Before: JONES and GUY, Circuit Judges; and LIVELY, Senior Circuit Judge.
Plaintiff-Appellant Clara Blanche Berryhill appeals the district court's grant of summary judgment affirming the Health and Human Services Secretary's (Secretary) decision to reduce the amount of Berryhill's supplemental security income (SSI) benefits. For the reasons stated herein, we remand this case to the Secretary for further consideration in accordance with this opinion.
Berryhill applied for SSI benefits on August 5, 1987. Although the claim was denied initially, an administrative law judge (ALJ) subsequently concluded, in a decision dated December 19, 1988, that Berryhill was disabled and eligible for SSI benefits.
Following that decision, Berryhill completed a financial form detailing her family income and resources. In a letter dated February 1, 1989, the Social Security Administration advised Berryhill that her SSI benefits level was being reduced because she and her late husband were receiving shelter valued at fifty dollars a month from their son.
Berryhill sought reconsideration. Reconsideration was denied because the administration determined that she and her husband were staying at their son's house, they were paying $100 cash a month in rent to their son, and the fair market value (FMV) for the house if rented was $150 a month. The administration rejected the claim that in lieu of paying rent up to the FMV, she and her husband were rendering services to her son by maintaining his house. On July 11, 1989, Berryhill requested an administrative hearing.
After considering written evidence submitted by Berryhill, an ALJ issued a decision on December 27, 1989. The ALJ concluded that Berryhill and her husband had paid $100 a month in rent when the FMV of the shelter was $150 per month. The ALJ also held that Berryhill and her husband did perform maintenance services for their landlord, but the ALJ felt that he was bound by the Program Operations Manual which stated that services performed for the benefit of the landlord do not constitute rent. As a result, the ALJ held that the fifty dollar difference between paid rent and the FMV of the house when rented was a rental subsidy. Thus, the decision reducing Berryhill's benefits level was affirmed.
Berryhill sought review of the ALJ's decision with the Appeals Council. In a letter dated October 9, 1990, the Appeals Council advised Berryhill that, although not bound by the directives of the Program Operations Manual, it was prepared to issue a decision finding that services which Berryhill performed "do not constitute additional rental payment." Berryhill submitted additional evidence explaining what services were performed by her and her late husband. 2 3 Upon further consideration of this additional evidence, the Appeals Council changed its tentative determination. In a final decision issued on January 25, 1991, the Appeals Council concluded that Berryhill and her late husband had indeed performed maintenance services and that the difference between the FMV of the shelter and the rent paid in cash was compensation for those maintenance services performed. The Appeals Council then went on to conclude, however, that the compensation was unearned income. Based on the finding that the compensation was unearned income, the Appeals Council affirmed the decision which reduced Berryhill's monthly SSI benefits.
Berryhill appealed the Appeals Council decision to the United States District Court on April 30, 1991. The case was referred to a magistrate judge. After the transcript of the administrative proceedings was filed in the district court, Berryhill moved for summary judgment. She asserted that the decision of the Appeals Council was in error.
The Secretary, through a United States Attorney, also filed a motion for summary judgment. In his supporting argument, the Secretary conceded that the Appeals Council had made an error of law. At the same time, however, the Secretary claimed, using an alternative rationale, that the ultimate conclusion was correct.
In his report and recommendation issued on December 11, 1991, the magistrate judge concluded that the Secretary's action, as explained by the United States Attorney rather than according to the rationale delivered by the Appeals Council, was reasonable. Thus, the magistrate judge recommended that the Secretary be granted its summary judgment motion. The district court accepted the magistrate judge's report and recommendation and issued an order granting summary judgment in favor of the Secretary.
Whether the fifty dollars difference between cash rent paid and the FMV value of the shelter is considered earned or unearned income is of substantial importance in this case. The regulations governing the two types of income allow greater exclusions for earned income. The exclusions from unearned income are specified in 20 C.F.R. Sec. 416.1124(c) (1993). Relevant to this claim, subsection (c)(12) provides that, subject to certain limitations, the first $20 of any unearned income a month are not counted against monthly SSI benefits. The exclusions from earned income are listed at 20 C.F.R. Sec. 416.1112(c) (1993). Subsection (c)(4) provides that "$65 of earned income in a month" will not be counted. Thus, if the $50 per month rent reduction were identified as earned income, Berryhill would not have exceeded the $65 per month exclusion and her SSI benefits would not have been subject to reduction.
In 42 U.S.C. Sec. 1382a(a) (1988), and as is pertinent to this case, earned and unearned income are defined as follows:
(1) earned income means only--
(A) wages as determined under section 403(f)(5)(C) of this title (B) net earnings from self-employment, as defined in section 411 of this title; ...
(2) unearned income means all other income, including--
Section 1382a(a)(1)(A) references 42 U.S.C. Sec. 403(f)(5)(C) (1988), which states:
For purposes of this subsection, an individual's wages shall be computed without regard to the limitations as to amounts of remuneration specified in subsections (a), (g)(2), (g)(3), (h)(2), and (j) of section 409 of this title; and in making such computation services which do not constitute employment as defined in section 410 of this title, performed within the United States by the individual as an employee or performed outside the United States in the active military or naval service of the United States, shall be deemed to be employment as so defined if the remuneration for such services is not includible in computing his net earnings or net loss from self-employment.
"Wages" are defined in 42 U.S.C. Sec. 409 (Supp.III 1991), and as is relevant to this case, means "remuneration paid after 1950 for employment, including the cash value of all remuneration (including benefits) paid in any medium other than cash...." Section 409 details types of remuneration which are not wages, and as is relevant to this case, 42 U.S.C. Sec. 409(a)(6)(A) provides the following exclusion:
Remuneration paid in any medium other than cash to an employee for service not in the course of the employer's trade or business or for domestic service in a private home of the employer....
42 U.S.C. Sec. 410(a) (Supp.III 1991) defines employment as:
The term "employment" means any ... service, of whatever nature, performed after 1950 (A) by an employee for the person employing him ... except that, in the case of service performed after 1950, such term shall not include--
Section 42 U.S.C. Sec. 411 (Supp.III 1991) defines net earnings from self-employment to mean "the gross income, as computed ..., derived by an individual from any trade or business carried on by such individual, less the deductions allowed...."
The Secretary has promulgated regulations which further define earned and unearned income. 20 C.F.R. Sec. 416.1110 (1993) defines earned income stating, in pertinent part:
Earned income may be in cash or in kind.... Earned income consists of the following types of payments:
(a) Wages. Wages are what you receive (before any deductions) for working as someone else's employee. Wages are the same for SSI purposes as for the earnings test in the social security retirement program. (See Sec. 404.429(c) of this chapter.) Wages include salaries, commissions, bonuses, severance pay, and any other special payments received because of your employment. They may also include the value of food, clothing, or shelter, or other items provided instead of cash. We refer to this as in-kind earned income. However, if you are a domestic or agricultural worker, the law requires us to treat your in-kind pay as unearned income.
(b) Net earnings from self-employment. Net earnings from self-employment are your gross income from any trade or business that you operate, less allowable deductions for that trade or business. Net earnings also include your share of profit or loss in any partnership to which you belong. These are the same net earnings that we would count under the social security retirement insurance program and that you would report on your Federal income tax return.
20 C.F.R. Sec. 404.429(c) (1993) cross-references subpart K for an explanation of how wages are determined. Under subpart K are 20 C.F.R. Sec....
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