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MCDERMOTT v. SECRETARY OF HHS

June 25, 1985

GEORGANA McDERMOTT, on behalf of JASON SKYE, Plaintiff,
v.
SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant.



The opinion of the court was delivered by: CURTIN

Jason Skye is the natural son of Georgiana McDermott and the stepson of Bryan McDermott. Bryan and Georgiana were married on May 12, 1979. Jason is severely disabled, and the extent of his disability is not an issue in this case. The issue here is whether certain portions of Bryan McDermott's income are to be "deemed" as income to Jason, thus disqualifying Jason as a recipient of Supplemental Security Income benefits. In a proper case, the regulations promulgated pursuant to the Social Security Act permit attributing the income of another to one who claims benefits under the Act. See, 20 C.F.R. §§ 416.1160-1169.

I.

 Prior Proceedings

 The plaintiff's eligibility for benefits was twice considered by an Administrative Law Judge [ALJ]. A hearing was held on April 20, 1980, and the ALJ's first decision was issued eight days later. The ALJ found that, pursuant to 42 U.S.C. § 1382c (f) (2), it would be "inequitable under the circumstances" to attribute Bryan McDermott's income to the plaintiff. Record at 10.

 The Appeals Council reversed the ALJ's decision. The Appeals Council rejected the ALJ's interpretation of the statutory language "inequitable under the circumstances" (42 U.S.C. § 1382c (f) (2)). Whereas the ALJ cited the particular hardships endured by Jason Skye and the strains put upon his stepfather's small income, the Appeals Council stated that the "circumstances" making income attribution inequitable are limited to those listed in the regulations. Applying the regulations, the Appeals Council held that some of Bryan McDermott's income must be attributed to Jason. The result was a finding that Jason was ineligible to receive benefits. Record at 5-6. The plaintiff appealed from that decision.

 In an order dated June 9, 1983, the court remanded the case to the Secretary. The regulations (i.e., 20 C.F.R. §§ 416.1161(a)) provide for deductions from a parent's income which is attributable to a claimant. The ALJ's decision in favor of the plaintiff merely stated that attribution would be inequitable. No findings were made concerning the applicability of the exceptions listed in 20 C.F.R. § 416.1161(a). The Appeals Council also failed to make such findings. The court remanded the case to the Secretary so that she could determine if any of Bryan McDermott's income should be exempted pursuant to the regulations.

 On remand, a supplemental hearing was held by the same ALJ on October 5, 1983. On November 15, 1983, the ALJ found that Bryan McDermott was required to make alimony and child support payments under a state court order and decided that the amounts of these payments should be excluded from the income deemed to Jason. The ALJ also decided that amounts garnished from Mr. McDermott's wages under state court judgments should not be deemed to Jason. Finally, the ALJ held that 1) the basis for determining Jason's deemed income should be Mr. McDermott's net income and 2) that Mr. McDermott's payment of medical expenses for Jason and for a son by a previous marriage was not supported by sufficient evidence. Record at 126.

 The Appeals Council modified the ALJ's recommended decision. It adopted the finding that alimony and child support payments should not be deemed to Jason. It also adopted the finding that there was insufficient evidence to substantiate certain medical expenses. However, the Appeals Council held that other amounts garnished from Mr. McDermott's wages should not be excluded for deeming purposes and that the basis for calculating deemed income in Bryan McDermott's gross wages. Record at 119. The plaintiff appeals from this decision pursuant to sections 205 (g) and 1631 (c) (3) of the Social Security Act (42 U.S.C. §§ 405 (g), 1383 (c) (3)).

 II.

 Discussion

 The aspects of the Secretary's decision which are challenged here are: 1) her conclusion that the deeming regulations list all of the items excludable from the income deemed to a plaintiff, thus making individualized determinations of "inequity" unnecessary; 2) her finding that the medical expenses for Jason and a son by a previous marriage were unsupported; 3) use of gross income as the basis for calculating deemed income; and 4) the conclusion that amounts garnished from wages are not excludable from the income deemed to Jason.

 A. Effect of Regulations

 Recent case law developments have supported the Secretary's position that 42 U.S.C. § 1382c (f) (2) does not require the Secretary to consider factors other than those listed in the regulations when determining whether deeming income to a claimant would be "inequitable under the circumstances." Fleshman On Behalf of Fleshman v. Heckler, 709 F.2d 999 (5th Cir. 1983), cert. denied, 464 U.S. 1049, 104 S. Ct. 727, 79 L. Ed. 2d 188 (1984); Hammond v. Secretary of Health, Education, and Welfare, 646 F.2d 455 (10th Cir. 1981); Kollett v. Harris, 619 F.2d 134 (1st Cir. 1980). These cases are consistent with the principle that the Secretary's broad authority to promulgate regulations implementing such imprecise statutory language as "inequitable" allows her to rely exclusively upon reasonable ...


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