The opinion of the court was delivered by: PLATT
Plaintiff, Lula Carter, challenges the determination of the Secretary of Health and Human Services that her Supplemental Security Income ("SSI") benefits be suspended for the first quarter of 1980.
Plaintiff is a sixty-three year old woman who applied for Social Security Disability Insurance ("Disability") and SSI on October 4, 1978. Her application was denied initially but on November 14, 1979, after a hearing, an Administrative Law Judge found plaintiff to have been disabled as of September 22, 1978. Plaintiff was thus entitled to retroactive Disability and SSI benefits. She received a lump sum Disability payment on January 17, 1980. The lump sum SSI payment went to the New York City Department of Social Services, to reimburse them for providing plaintiff with public assistance while her Disability claim was pending.
Plaintiff spent at least $1400.00 of her Disability lump sum payment discharging debts incurred during the time her Disability application was pending. (Tr. at 63-67). Nonetheless, plaintiff was informed in January of 1980 that receipt of the Disability lump sum payment caused her unearned income for the quarter to exceed the statutory maximum, and that she would therefore receive no SSI benefits for the first quarter of 1980, although she would continue to receive her Disability benefits for that period.
SSI is a needs based benefits program designed by Congress to insure a basic level of benefits to the aged, blind and disabled. See generally H.R. Rep. No. 231, 92d Cong., 2d Sess., reprinted in 1972 U.S. Code Cong. & Ad. News 4989, 5132-38. Towards this end, eligibility for SSI benefits is determined by calculating an applicant's quarterly income and resources, and comparing these with the statutory level SSI is designed to maintain. SSI payments make up the shortfall, if any.
In this case the Secretary considered plaintiff's entire lump sum Disability payment to be unearned income for the first quarter of 1980. When so considered, plaintiff's quarterly income was above the statutory minimum and thus SSI payments were suspended for that quarter.
The Secretary does not dispute that plaintiff incurred debts while awaiting the disposition of her Disability application. Nor does she dispute that plaintiff paid these debts out of her lump sum Disability payment. The Secretary, however, argues that the entire amount of plaintiff's lump sum payment was available for living expenses during the quarter when received. We think that the Secretary's regulations, and the cases thereunder, prevent the Secretary from considering this plaintiff's entire lump sum Disability payment when calculating her eligibility for SSI.
The Secretary's regulations state that
"In determining the amount of unearned income, the amount actually available to the individual is considered.The gross amount is reduced by any ordinary and necessary expenses incurred in getting or receiving the unearned income."
20 C.F.R. § 416.1120 (1980).* While the second sentence would appear to limit those deductions permissible to items such as attorneys fees or filing fees, we do not think that the regulation should be read so narrowly.
Courts have consistently held that in computing unearned income the Secretary cannot consider funds which are not ...