The opinion of the court was delivered by: STEWART
The plaintiff, Edward Singer ("Singer"), brought this action pursuant to sections 1631(c)(3) and 205(g) of the Social Security Act, as amended, 42 U.S.C. § 1383(c)(3) (1976) and 42 U.S.C. § 405(g) (1976 and Supp. IV 1980), for review of a May 1980 final determination of the Secretary of Health and Human Services ("the Secretary"). The Secretary declared Singer ineligible for Supplemental Security Income ("SSI") benefits on the grounds that Singer had resources in excess of the amount allowable, and that inter vivos trust instruments, both executed and proposed, would not divest plaintiff of his resources for SSI eligibility purposes. On April 16, 1981, this court granted the Secretary's motion to remand for the purpose of reconstructing the administrative record or to make additional factual findings. Upon remand, the Secretary made additional findings that resulted in a final determination that the plaintiff had been overpaid SSI benefits and that recovery of the overpayment could not be waived. The plaintiff renews his action to set aside the Secretary's finding of ineligibility and also contests the Secretary's most recent determination as to overpayment. The Secretary has submitted a motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) and 42 U.S.C. § 405(g).
Singer was converted from the New York State Welfare Plan to SSI on January 1, 1974. He had been saving money from his welfare payments, a practice permissible under the New York Plan and had accumulated approximately $2200.00 at the time of conversion. In September 1975, Singer reported to the Social Security Administration ("the SSA") that he had continued to save from his SSI checks and had accumulated a total of $4100.00. SSA determined that he was still eligible for SSI benefits.
In September 1976, Singer's savings totaled approximately $5500.00. At this point Singer was found ineligible for SSI due to excess countable resources. Mr. Singer appealed the determination and at a hearing in December 1976, an Administrative Law Judge ("ALJ") deferred cessation of benefits pending a policy clarification as to how the resources of former welfare recipients were to be treated for SSI eligibility purposes. Singer was subsequently found eligible for SSI in April 1977, by which time he had accumulated approximately $7,000.
In November 1978, Singer was again declared ineligible for SSI benefits due to excess resources which now totaled $11,000.00. Singer appealed this latest declaration of ineligibility at a hearing before an ALJ in February 1979. This time the ALJ upheld the finding of ineligibility, and the SSA Appeals Council affirmed the ALJ's decision in April 1979.
The ALJ again "deferred" a decision as to one question, however. At the eligibility hearing Singer had offered for the first time an unexecuted inter vivos trust instrument which he proposed as a means of divesting himself of his excess resources and sought the ALJ's approval of the instrument. Because the SSA had not ruled upon the effect of this trust previously, the ALJ declined to pass on its validity for SSI eligibility purposes pending a ruling by the SSA. Tr. 397-98. In August 1979, the General Counsel's office determined that the trust corpus would be a countable resource, Tr. 505, and a Notice of Decision was sent to Singer. Tr. 489. Singer pursued his administrative remedies and a hearing was held in February 1980 on the validity of the trust. By this time, Singer had actually executed one trust, see Tr. 126, and proposed several other versions for the ALJ's consideration. The ALJ reviewed the case de novo, again found Singer ineligible for SSI as of November 1978, due to excess countable resources, and declared all versions of the trust inadequate to divest Singer of his resources. The trusts provided for return of the corpus to Singer in the event he became ineligible for SSI in the future. Tr. 423. Because the corpus could become available to the plaintiff, the ALJ held it to be a countable resource within the meaning of SSI regulation 20 C.F.R. § 416.1201. Tr. 424. Singer appealed the ALJ's decision to the Appeals Council which affirmed. The Council's final determination of May 2, 1980, is the subject of this action.
In April 1981, we granted the Secretary's motion to remand to reconstruct the record or make additional findings. In June 1981, the Appeals Council in turn remanded the case to an ALJ who found that Singer had been ineligible for SSI since August 1975, due to excess resources. The ALJ also concluded that the SSA should waive recovery because no fault of Singer caused the overpayment which occurred between August 1975 and November 1978 (at which point SSI benefits were discontinued), and because it would be against equity and good conscience to recover the overpayment. Tr. 175-80. In April 1982, the Appeals Council modified the ALJ's decision to the extent that it found that Singer was not without fault in accepting the overpayment, and that recovery of the overpayment could not be waived. The Appeals Council found that the period of overpayment from which payments would have to be recovered was October 1976 to December 1978. Tr. 160-63.
In reviewing a final determination of the Secretary, a federal court may review the Secretary's application of the law to the facts. See 42 U.S.C. § 405(g). The Secretary's findings of fact will be conclusive if they are supported by substantial evidence. Id. Substantial evidence means relevant evidence, "more than a mere scintilla . . . . [that] a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401, 28 L. Ed. 2d 842, 91 S. Ct. 1420 (1975) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 83 L. Ed. 126, 59 S. Ct. 206 (1938)). The issues before us here are whether (1) the plaintiff's SSI benefits were properly terminated in November 1978, due to excess countable resources, (2) an overpayment to the plaintiff was made between the months of October 1976, and December 1978, and (3) recovery of the overpayment is proper.
PLAINTIFF'S ELIGIBILITY FOR SSI BENEFITS
In order to be eligible for SSI an individual must be aged, blind or disabled and have income and "countable resources" below specified statutory amounts. 42 U.S.C. 1382(a). Countable resources, which are limited to a value of $1500.00,
include cash, or other liquid assets that an individual could convert to cash to be used for his support. 20 C.F.R. § 416.1201(a). If the individual has the "right, authority or power to liquidate the property," it is a countable resource. Id. Liquid resources include assets in cash or "financial instruments which are convertible to cash . . . or checking accounts, stocks, bonds, mutual fund shares . . . and similar properties." 20 C.F.R. § 416.1201(b) (emphasis added).
It is undisputed that since September 1976, Singer has had resources in excess of $1500.00. Singer argues, however, that since his assets generally have been held in short term certificates of deposit, which may not be liquidated before the maturity date without the imposition of a penalty, they are non-liquid assets and therefore excludable as countable resources. We reject this argument since a similar rationale is just as applicable in many cases to stocks, bonds, or mutual fund shares and these instruments are specifically enumerated as countable resources in the regulations. See 20 C.F.R. § 416.1201(b). More importantly, the owner of certificates of deposit has the "right, authority or power to liquidate the property." In short, we agree with the Secretary, that certificates of deposit are similar to the properties enumerated, and are countable resources within the meaning of the regulation.
In order to come within the resource limitations of the SSI program, Singer next proposes placing his accumulated savings in an inter vivos trust that would be revocable only if he became ineligible for SSI. It appears that Singer actually executed one version of the trust in January 1980, see Tr. 126, although the Secretary's unfavorable rulings on the acceptability of all versions of the trust for SSI eligibility purposes have apparently discouraged him from placing his savings in any trust. The Secretary claims that the plaintiff's failure to fund any version of the trust makes the issue of the trust's validity "moot". We do perceive ripeness problems in reaching the merits, but putting such concerns aside, we agree with the findings below that the trusts would not sufficiently divest Singer of his assets to make him eligible for SSI. The mechanism chosen by Singer, if allowable, would permit any otherwise qualified person with ...