Whaley v. Schweiker

• Decision Date: 23 November 1981
• Docket Number: No. 79-4210,79-4210
• Citation: 663 F.2d 871
• Parties: Hugh WHALEY, Plaintiff-Appellee, v. Richard S. SCHWEIKER, * Secretary of Health and Human Services, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 871

663 F.2d 871

Hugh WHALEY, Plaintiff-Appellee, v. Richard S. SCHWEIKER, ^* Secretary of Health and Human Services, Defendant-Appellant.

No. 79-4210.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 10, 1980.

Decided Nov. 23, 1981.

Robert V. Varnum, Washington, D. C., argued for defendant-appellant; Stuart E. Schiffer, Asst. Atty. Gen., Washington, D. C., on brief.

Darcie Reid, Fresno, Cal., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of California.

Before HUG and TANG, Circuit Judges, and MURRAY, ^** District Judge.

HUG, Circuit Judge:

The opinion of April 6, 1981, 650 F.2d 181 (9th Cir. 1981), is hereby withdrawn and the following opinion is substituted.

This case concerns the computation of benefits under the Social Security Act. The issue is whether increased pension benefits paid to a disabled veteran for the support of his minor children under the Veterans' Act constitute income to the veteran so as to disqualify him from receiving supplemental income benefits under the Social Security Act, 42 U.S.C. § 1382a. We hold that such increased pension benefits provided to the veteran for the purpose of supporting his minor children should not serve to reduce his individual entitlement under the Social Security Act.

At the time this action was commenced, plaintiff Hugh Whaley was a 68-year-old veteran with two minor children. Whaley received a monthly veterans' pension, based on a non-service-connected disability, for support of himself and the children. In addition, Whaley qualified for Supplemental Security Income ("SSI") benefits under the Social Security Act.

In August, 1976, the Social Security Administration ("SSA") advised Whaley that he no longer was eligible for benefits because he had income in excess of statutory limits. In determining Whaley's income, the SSA included the dependents' benefits portion of his veterans' pension. This computation was made pursuant to a policy set out in the Social Security Claims Manual, § 12343(b)(1). ¹ If the dependents' benefits were excluded from the computation, Whaley's income level would have made him eligible for SSI benefits. Because of the decision to include them, Whaley lost not only his SSI benefits, but several other state-provided benefits, including medical care.

After exhausting his administrative remedies, Whaley brought this action for review of denial of benefits under 42 U.S.C. § 405(g). The case was referred to a magistrate, who concluded the SSA's policy is unreasonable and "does violence to" Congress's intent to aid the needy. The district court concurred with the magistrate's recommendation and ordered reinstatement of Whaley's SSI benefits.

I

The Secretary contends that he is authorized under 42 U.S.C. § 1382a and its interpretive regulations to determine what constitutes income for SSI purposes. 42 U.S.C. § 1382a(a)(2)(B) identifies "veterans' compensation and pensions" as unearned income of the benefit recipient. 20 C.F.R. § 416.1102 (1981) defines income in terms of availability to meet the recipient's basic needs. Relying on these provisions, the Secretary argues that the entire veterans' pension is available to the veteran, including increased benefits based on the needs of dependent children. He contends that the delivery to the veteran of one unapportioned check leaves the veteran "legally free to use the money for anything he wants." Because the veteran can apply the pension to his own needs, rather than spend it for the benefit of his dependents, the Secretary concludes the entire pension is income to the veteran.

We acknowledge the Secretary's claim that an agency's interpretation of a statute it administers is entitled to deference. Udall v. Tallman, 380 U.S. 1, 16-17, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965); Brubaker v. Morton, 500 F.2d 200, 202 (9th Cir. 1974). However, that principle has no application in this case. The Secretary purports to interpret the statutes and regulations governing the interests and obligations of veterans' pension recipients. The interpretation of the Veterans' Administration regulations by the Secretary of Health and Human Services is not entitled to deference.

Furthermore, the source of the Secretary's interpretation is not a regulation, but the Social Security Claims Manual. The Manual is not subject to the procedural protections inherent in the drafting of regulations. "It has no legal force, and it does not bind the SSA." Schweiker v. Hansen, --- U.S. ----, 101 S.Ct. 1468, 67 L.Ed.2d 685 (1981). This court need not defer to an interpretative policy included in the Manual. We therefore turn to an examination of the pertinent benefit provisions.

II

Whaley qualified as a benefit recipient under two provisions of the Social Security Act. He received $161.90 per month in retirement benefits pursuant to 42 U.S.C. § 402(a). In addition, he qualified for Supplemental Security Income under 42 U.S.C. § 1382. That statute provides supplemental benefits for qualified individuals who are aged, blind or disabled. The purpose of the program is to assure that recipients' income is maintained at a level viewed by Congress as the minimum necessary for the subsistence of that individual. Because Whaley was unable to maintain his income at that minimal level, he received a monthly SSI benefit of $30.17 under § 1382.

42 U.S.C. § 1382e makes state government programs for income maintenance available to SSI recipients, and provides that these state benefits are not income affecting SSI eligibility. Under California's supplementary program, Whaley received food stamps, complete Medi-Cal coverage, and benefits under the Aid to Families with Dependent Children Program. Receipt of each of these supplements was entirely dependent upon Whaley's eligibility for SSI.

The final Social Security benefit provision affecting Whaley and his family was 42 U.S.C. § 402(d), pursuant to which his children received $97.60 per month. This amount was delivered to Whaley in a check payable to him and separate from that remitting his individual benefits. The source of the children's eligibility was their father's qualification for retirement benefits. The children's payments were for the purpose of their support and maintenance, and were thus not considered by the SSA as income to Whaley in determining his eligibility for SSI.

Whaley, as a veteran with a non-service-connected disability, qualified for a pension under 38 U.S.C. § 521. He received $103.93 per month under this provision. In addition, Whaley's children were eligible for benefits under section 521(c). As with payments to dependents under the Social Security Act, the source of their eligibility was their father's qualification for benefits. The monthly amount of the children's benefit under the Veterans' Act was $51.11. It was combined with the benefit due Whaley and paid in one check payable to him.

In calculating Whaley's eligibility for SSI, the Secretary correctly added to the $161.90 in personal benefits received by Whaley under the Social Security Act the personal veterans' benefits in the amount of $103.93 paid under the Veterans' Act. That portion of the calculation is specifically required under 42 U.S.C. § 1382a(a)(2)(B). However, the Secretary also counted as Whaley's income the $51.11 in benefits paid for the children under the Veterans' Act. That phase of the calculation was made without statutory support. We must reject it as a complete vitiation of the purpose supporting both of these statutes-the intent to help families like Whaley's to maintain minimally adequate income levels.

The Secretary justifies...