Gutierrez v. Bowen
| Decision Date | 03 January 1989 |
| Docket Number | No. 87 Civ. 0952 (MBM).,87 Civ. 0952 (MBM). |
| Parties | Maria GUTIERREZ and Ramon Gutierrez, Plaintiffs, v. Otis R. BOWEN, M.D., Secretary of Health and Human Services, Defendant. |
| Court | U.S. District Court — Southern District of New York |
COPYRIGHT MATERIAL OMITTED
Marc Finkelstein, Jorge Luis Vitureira, Law Student Intern, BLS Legal Services Corp., Senior Citizen Law Office, New York City, for plaintiffs.
Kathleen A. Zebrowski, Sp. Asst., U.S. Atty., Annette H. Blum, Chief Counsel-Region II, Peter G. O'Malley, Asst. Regional Counsel, New York City, for defendant.
Plaintiffs Maria and Ramon Gutierrez have sued under §§ 205(g) and 1631(c)(3) of the Social Security Act, as amended, 42 U.S.C. §§ 405(g) and 1383(c)(3) (1982 & Supp. III (1985)), to undo defendant Secretary of Health and Human Services' determination that plaintiffs are not eligible for Supplemental Security Income ("SSI") benefits because they have excess resources. Both sides now move for judgment on the pleadings, pursuant to Fed.R.Civ.P. 12(c). For the reasons set out below, I grant defendant's motion, finding that the Secretary's decision comports with due process and is based on substantial evidence.
The factual controversy here is straightforward, but it raises a hornet's nest of legal issues. On November 8, 1984, plaintiffs filed an application for SSI benefits based on their age. Plaintiffs received SSI benefits amounting to $12 a month, plus Medicaid eligibility and payment of their Medicare premiums, until a computer check of records maintained by the Internal Revenue Service led to the discovery of previously undisclosed assets. The search uncovered a money market account in Maria Gutierrez's name worth over $11,000. As SSI provides a ceiling of $2,400 in resources, plaintiffs' SSI benefits were halted beginning February 1986.
Thereafter, plaintiffs sought reconsideration of the December 18, 1985 decision, contending that the money belonged to Mrs. Gutierrez's sister, Maria Hernandez Mallol, who lives in the Dominican Republic, and that she never used the money. This petition was also denied. Plaintiffs then requested a hearing, which was held on May 1, 1986 before Administrative Law Judge ("ALJ") Henry L. Pfeiffer. At the hearing, documentary evidence on the money market account showed that on December 24, 1982 funds from plaintiffs' joint account were transferred to a money market account in Maria Gutierrez's name. The activity in this account was as follows:
Date Transaction Amount
12/24/82 Deposit $5,000.00
2/10/83 Deposit $3,037.18
9/12/84 Deposit $2,500.00
11/13/84 Withdrawal $ 700.00
12/03/84 Withdrawal $1,000.00
1/04/85 Withdrawal $ 500.00
1/04/85 Deposit $ 257.00
5/24/85 Deposit $1,100.00
6/25/85 Deposit $ 20.00
7/12/85 Deposit $ 20.00
8/03/85 Deposit $ 50.00
8/14/85 Deposit $ 20.00
9/04/85 Deposit $ 20.00
9/12/85 Deposit $ 20.00
9/30/85 Deposit $ 10.00
10/03/85 Deposit $ 20.00
10/11/85 Deposit $ 20.00
10/23/85 Deposit $ 20.00
11/02/85 Deposit $ 20.00
11/10/85 Withdrawal $ 450.00
11/21/85 Withdrawal $9,000.00
11/22/85 Withdrawal $2,397.44
On November 22, 1985, Maria Gutierrez closed the money market account and opened a savings account of $1,400 in trust for her daughter, Elba Gutierrez.
At the hearing, plaintiffs presented a letter dated December 6, 1985, from Maria Hernandez Mallol to her sister, acknowledging receipt of $11,362.74 and thanking Mrs. Gutierrez for depositing the money for her. (Administrative Transcript ("Tr.") at 101) By letter dated March 31, 1986, Ms. Petronila Gomez stated that she gave Mrs. Mallol the amounts of $700.00 and $1800.00 in cash, sent by Mrs. Mallol's sister, Mrs. Gutierrez, thus accounting for two of the several withdrawals made before the money market account was closed.
Furthermore, Maria Gutierrez testified that she opened the money market account for her sister and that various people would bring money from Mrs. Mallol for deposit. She testified that the reason her sister wanted her money in an American bank was that she had been planning to come to the United States and that it was unsafe to keep money in one's home in Santo Domingo. (Tr. at 29, 35) She stated that her sister got this money from her children. (Tr. at 27) When questioned by the ALJ why her sister would send her money through friends in amounts of $20, she responded that her sister "had to wait until her friends came because this situation is banned in Santo Domingo." (Tr. at 26-27)
Mrs. Gutierrez explained that she never withdrew money from the account for herself, but, rather, withdrew the money when her sister needed it. She did not know why her sister requested the withdrawals; she simply gave Ms. Gomez the cash to bring to her sister whenever requested. She testified that she gave Ms. Gomez $700 in November 1984, $1,800 in December 1984 and approximately $11,000 when the account was closed in November 1985. She could not, however, remember the $500 withdrawal on January 4, 1985. She stated that she closed the account because the Social Security Administration ("SSA") had notified her of this problem. Plaintiffs not only lost their SSI benefits for the period the money market account was open, but also, because they transferred the money to Mrs. Mallol without receiving fair value in return, were precluded from receiving SSI benefits for an additional period of 24 months pursuant to 20 C.F.R. § 416.1246 (1988).
(Tr. at 173) Plaintiffs submitted a brief in opposition to the reopening, contending, inter alia, that the Council had no authority to reopen a decision beyond the sixty-day review period following the ALJ decision, as set forth in the regulations. Thereafter, on December 12, 1986, the Council issued its final decision reversing the ALJ's determination.
Plaintiffs then filed this suit. They now contend: (1) the Secretary has not demonstrated the requisite "good cause" under the regulations; (2) the Secretary has no statutory authority to reopen decisions past the sixty-day review period; (3) such reopening violates substantive and procedural due process because of lack of finality and inadequate notice; (4) if the reopening was proper, the Secretary's decision lacked substantial evidence because (a) the documentary evidence did not rebut Mrs. Gutierrez's testimony, and (b) the Secretary failed to apply the appropriate state law on ownership of an individual account.
The first task here is to decide whether the Council's action complies with the regulation's requirement that a reopening for "good cause" involve a situation where "the evidence that was considered in making the determination or decision clearly shows on its face that an error was made." 20 C.F.R. § 416.1489(a)(3). If the error in the ALJ's determination was not error on the face of the record, then I need not decide whether the regulations in fact allow such reopenings and whether the regulations are constitutional. In reviewing the Council's determination that the ALJ's decision was erroneous on the face of the record, this court undertakes plenary review of the administrative record, just as, in an analogous situation, the Court of Appeals would review de novo a determination by the district court that an administrative decision was based on substantial evidence. Cf. Havas v. Bowen, 804 F.2d 783, 785 (2d Cir.1986).
Plaintiffs first claim that the Council's reopening violated 20 C.F.R. § 416.1489(b), which provides that a change in legal interpretation is not good cause for reopening a previous decision. In its opinion, the Council contended that, while 20 C.F.R. § 416.1201(a), which provides that a resource is counted if the individual has the "right, authority or power to liquidate" it, may be open to interpretation when resources are jointly owned, the regulation is not open to interpretation when an account is individually owned. Plaintiffs claim...
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