Ford v. Shalala, CV-94-2736CPSSMG.

• Court: United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
• Citation: 87 F.Supp.2d 163
• Docket Number: No. CV-94-2736CPSSMG.,CV-94-2736CPSSMG.
• Parties: Robert FORD, Etc., Plaintiff, v. Donna SHALALA, Secretary of the United States Department of Health and Human Services, Defendant.
• Decision Date: 29 September 1999

87 F.Supp.2d 163 Robert FORD, Etc., Plaintiff,
v.
Donna SHALALA, Secretary of the United States Department of Health and Human Services, Defendant. No. CV-94-2736CPSSMG. United States District Court, E.D. New York. September 29, 1999.

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Peter Vollmer, Vollmer & Tank, Uniondale, NY, Whitney North Seymour, Jr., Craig A. Landy, Landy & Seymour, Christopher James Bowes, Jill Ann Boskey, Center for Disability Advocacy, New York, NY, for Plaintiff and Plaintiff-Intervenors.

Loretta E. Lynch, Acting United States Attorney, Eastern District of New York, By Kathleen A. Mahoney, Assistant United States Attorney, for Defendant.

MEMORANDUM DECISION AND ORDER

SIFTON, Chief Judge.

This is an action brought by plaintiff, Robert Ford, individually and on behalf of all others similarly situated, against defendant Secretary of the United States Department of Health and Human Services ("HHS"),¹ alleging due process violations due to inadequacies in written notices to

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Supplemental Security Income Program ("SSI") beneficiaries and equal protection violations said to be the result of defendant's failure to promulgate regulations requiring that SSI beneficiaries receive information in their benefit notices equivalent to that received by beneficiaries of other federal entitlement programs. The matter was tried before the undersigned sitting without a jury. For the reasons set forth below, I conclude that defendant's current notices are constitutionally defective because they violate plaintiffs' rights to due process of law. What follows sets forth the findings of fact and conclusions of law on which this determination is based, as required by Fed.R.Civ.P. 52(a). Plaintiffs' claim that defendant's notices violate plaintiffs' equal protection rights is dismissed because a rational basis exists that distinguishes the differences between the notices at issue.

BACKGROUND

The SSI program was created by Congress in 1972 to provide a national program, administered by the Social Security Administration ("SSA"), to provide supplemental security income to individuals who have attained the age of 65 or are blind or disabled. See 42 U.S.C. § 1381. The SSI program replaced various state programs providing assistance to the aged, blind, and disabled ("AABD"). See Pub.L. No. 92-603 § 303(b).

In order to be entitled to benefits, applicants for SSI must show (1) their "categorical" eligibility, i.e., their status within the statutory categories of aged, blind, or disabled, and (2) their financial eligibility. See 42 U.S.C. §§ 1382, 1382a, 1382b, 1382c; 20 C.F.R. §§ 416.202, 416.202 Subparts K and L. Once SSI benefits are awarded, the SSI recipient must periodically demonstrate continuing eligibility in order to retain them. See 42 U.S.C. §§ 1382 et seq.

The amount of SSI benefits payable to an SSI claimant² is determined by SSA based on the claimant's income, resources,³ and other relevant characteristics.⁴ See 42 U.S.C. § 1382(c)(1). SSI payments are made up of a federal benefit, plus an optional state supplement available in many states, less the amount of non-excluded or "countable" income a claimant receives. See 42 U.S.C. §§ 1382(b)(1), 1382a(a), 1382e(a). A claimant's SSI eligibility for a given month is generally based on his or her income, resources, and other characteristics for that month, but the amount of SSI benefits is usually determined based on income in the immediately preceding month. See 42 U.S.C. § 1382(c); Tr. at 66, 209.⁵ Other characteristics that can affect a claimant's eligibility for, and the amount of, SSI benefits include the claimant's living arrangements, for example, whether a claimant is staying in a hospital or nursing home, is an inmate in a prison or other public institution, is outside the United States, or is living in a homeless shelter. See 42 U.S.C. §§ 1382(e), (f).

To qualify for SSI, an individual claimant cannot possess resources in excess of $2,000, and a claimant couple cannot possess resources in excess of $3,000. (Tr. at 18, 24, 202.) SSA is required by statute to exclude from resource calculations the full value of a claimant's homestead, the value of household goods and personal effects up to $2,000, the value of an automobile up to $4,500 (or the full value of the automobile if it is necessary for employment or medical

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treatment or if it is modified for operation by a handicapped person), the cash surrender value of life insurance policies if their total face value does not exceed $1,500, the value of burial funds up to $1,500, and the full value of property used for self-support. See 42 U.S.C. §§ 1382b(a), (d); 20 C.F.R. § 416.1218(b).

For certain claimants, the resources of other persons are deemed to be available to the claimant whether or not the claimant actually owns or has access to these resources. See 42 U.S.C. § 1382c(f). Thus, the resources of a cohabiting spouse are deemed to be available to the claimant spouse, and the non-excluded resources of a cohabiting parent and/or parent's spouse are deemed to be available to a claimant child. See 42 U.S.C. § 1382c(f)(1).

In 1997, SSA denied 40,500 SSI applications and suspended 35,500 claimants from continued receipt of SSI benefits on the basis of excess resources. (Ex. 24A at 29, 32.)⁶ Given the number of factors that may be considered in determining financial eligibility, the amount and extent of a claimant's countable resources is an eligibility factor that is subject to frequent change, thereby affecting the level of payments on a regular basis. (Tr. at 26, 27; Ex. 24A at 10.)

SSA is, by statute, required to provide "reasonable notice" to claimants of any determination regarding the claimant's eligibility for, or regarding the amount of, the claimant's benefits. 42 U.S.C. § 1383(c)(1)(A). SSI notices must, again by statute, be written in simple and clear language. See 42 U.S.C. § 1383(o). Regulations issued by SSA require that SSA give the claimant written notice of any initial determination of eligibility or amount of benefits and the reasons for the determination. 20 C.F.R. § 416.1404. The initial determination must state the "important" facts and the reasons for the SSA's conclusions regarding eligibility for, and amount of, benefits regarding any suspension, reduction or termination thereof. See 20 C.F.R. § 416.1402. A claimant who disagrees with the initial determination is entitled to seek reconsideration from the agency. See 20 C.F.R. §§ 416.1407, .1408.

The SSA is required by its regulations to notify a claimant in writing of any decision on reconsideration, "stating the specific reasons for the determination." 20 C.F.R. § 416.1422. A claimant who disagrees with the SSA's determination on reconsideration may request a hearing, and such requests must state why the claimant disagrees with the determination. See 20 C.F.R. § 416.1433.

SSI claimants are entitled to "reasonable" notice. Claimants seeking AABD or AFDC benefits⁷ also receive notices about their eligibility for, and the amount of, their benefits. AABD and former AFDC claimants are entitled, pursuant to regulation, to "adequate" notice of any determination affecting eligibility for, and the amount of, benefits. Compare 42 U.S.C. § 1383(c)(1)(A) and 20 C.F.R. §§ 416.1404, 416.1422 with 45 C.F.R. §§ 205.10(a)(4)(i)(B) and 206.10(a)(4). In addition, AABD or former AFDC claimants are entitled to be notified of their right to full access to case records and relevant policy materials to determine whether to request and prepare for an administrative appeal. See 45 C.F.R. §§ 205.10(a)(13)(i) and 205.70(c).

As described in SSA's 1998 Annual Report to Congress, SSI recipients "are among the most vulnerable Americans,

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who have little in the way of income or resources. For them, SSI is truly the program of last resort and is the safety net that protects them from complete impoverishment." (Ex. 24A at 4.)

In 1997, 6.5 million claimants received SSI benefits through SSA. (Tr. at 8, 443.) Of that number, 4.4 million claimants qualified on the basis of blindness or disability and 2.05 million claimants qualified on the basis of advanced age. (Tr. at 8.) The average monthly SSI payment to blind claimants was $381.65. The average monthly SSI payment to disabled claimants was $372.52, and for aged claimants, $286.46. (Ex. 24A at 7.) Fifty-nine per cent of the under 65 population receiving SSI (who are, accordingly, not in the aged category) are mentally disabled. (Ex. 24A.)

Financial Eligibility

SSA determines the amount of monthly income in order to assess an applicant's eligibility for SSI benefits and to compute the amount of an eligible claimant's monthly SSI payment. See 42 U.S.C. § 1382(a). SSA defines income as anything a claimant receives in cash or in-kind that can be used to meet the claimant's needs for food, clothing, and shelter. See 20 C.F.R. § 416.1102.

As countable income increases, a claimant's SSI payment amount decreases. (Ex. 24A at 9.) A claimant becomes ineligible for SSI benefits if his or her countable monthly income exceeds a monthly SSI benefit rate, which varies from state to state. (Tr. at 24, 29-30.) SSA makes the determination of what portion of a claimant's income is countable for SSI purposes and what portion of a claimant's income is excluded. The amount and extent of a claimant's countable income is, accordingly, a major factor in determining SSI eligibility and benefit amounts. (Tr. at 26-27).

SSA classifies income as earned income, unearned income, deemed income or in-kind income. Earned income includes claimant's gross wages and income from self-employment. SSA is required by statute to exclude the first $65 per month plus one-half of the remainder of the earned income in determining countable income. See 42 U.S.C. § 1382a(b).

Unearned income is defined as all income of a claimant that is not earned income. See 42 U.S.C. § 1382a(a)(2). Unearned income includes annuities, pensions, social...