United States District Court, Eastern District of New York
December 3, 1990
HOWARD NAVARRO, BY HIS GUARDIAN AND FATHER, MURRAY NAVARRO, PLAINTIFF,
LOUIS W. SULLIVAN, M.D., SECRETARY OF HEALTH AND HUMAN SERVICES, DEFENDANT.
The opinion of the court was delivered by: Nickerson, District Judge.
MEMORANDUM AND ORDER
Plaintiff brought this action contesting the government's
determination that Howard Navarro is no longer eligible for
Supplemental Security Income (SSI) benefits under the Social
Security Act, 42 U.S.C. § 301 et seq., because he has "excess
resources." The government has moved for judgment on the
pleadings arguing that the decision is supported by substantial
evidence and should be affirmed.
The facts are not in dispute. Howard Navarro is a
developmentally disabled adult who lives at the Maryhaven
Congregate Care Facility in Suffolk County, New York. He has
been receiving SSI since 1983.
In June 1988, plaintiff's father and guardian agreed to
settle a medical malpractice action brought on plaintiff's
behalf in New York State Supreme Court, Kings County. The
court, at the guardian's request, included in the Settlement
Order limitations on the use of the funds in the settlement
award of $133,333.
The Settlement Order stated, in pertinent part, that the
funds awarded plaintiff
shall be available only for a limited use which .
. . specifically shall not include the cost of
home or residence upkeep, medical costs or
maintenance needs for which public funds are
available . . . but said funds may be [used]
subject to specific Court approval, for such
personal items [for plaintiff] as a purchase or
capital investment in or lease of a physical
facility for mentally handicapped adults;
non-medical transportation; a (sic) personal
non-public funded items such as clothing, T.V.,
computer, or a vacation, or such similar
The parties do not dispute that the purpose of the
limitations was to prevent the discontinuance of plaintiff's
SSI and Medicaid benefits.
In November 1988, the Social Security Administration notified
plaintiff that his benefits were being terminated because the
settlement award constituted a resource in excess of the
maximum of $1900. Plaintiff requested reconsideration of the
decision, and later a hearing before an Administrative Law
Judge, and appealed the Administrative Law Judge's adverse
decision to the Appeals Council, all without success.
The issue is whether the settlement award constitutes a
"resource" of plaintiff as that word is defined by the Social
Security Administration regulations.
The Administrative Law Judge determined that the funds of the
award constitute a resource because 1) the restrictions placed
on them in the Order do not bind the federal government, 2)
even if the restrictions were given effect, the funds were
still available to plaintiff for certain purposes, and 3) once
a determination were made that the SSI payments were not
payable due to "excess resources" the terms of the Order would
not prohibit use of the funds for plaintiff's support.
20 C.F.R. § 416.1201 defines the term resource as
. . cash or other liquid assets or any real or
personal property that an individual . . . owns
and could convert to cash to be used for his
support and maintenance. If the individual has the
right, authority or power to liquidate the
property . . . it is considered a resource. If a
property right cannot be liquidated, the property
will not be considered a resource.
The regulation by referring to property that an individual
"owns" or "has a right, authority or power" to liquidate
plainly refers to the individual's rights under state law. The
regulations do not purport to define plaintiff's property
rights as a matter of federal law. See Buchbinder v. Bowen,
709 F. Supp. 389 (S.D.N.Y. 1989) and Cannuni on Behalf of Cannuni v.
Schweiker, 740 F.2d 260
(3rd Cir. 1984).
The fact that the award funds are available to the plaintiff
for purchases of some specific items does not mean the award
constitutes a resource. The regulation defines "resources" as
assets that can be liquidated for plaintiff's support and
maintenance. However the items for which the Settlement Order
permits use of the funds may be characterized, they are not
fairly denominated support and maintenance.
This court finds nothing in the Settlement Order that
supports the Administrative
Law Judge's conclusion that if SSI payments are withheld, the
funds are automatically usable for plaintiff's support.
The government argues here that to permit plaintiff to retain
his eligibility will encourage wealthy individuals to qualify
for SSI by placing their assets in trusts irrevocable except
with the approval of a state court. No doubt this is true, and
there is something unfair about the state court imposing costs
on the federal government without the government being heard.
But this court must follow the federal regulations. The court
has been presented with nothing to suggest that the government
could not amend the regulations to prevent what has been done
Singer v. Secretary of Health and Human Services, 566 F. Supp. 204
(S.D.N.Y. 1983) is not on point. There the court considered
an inter vivos trust revocable by the recipient only if he
became ineligible for SSI. The present Settlement Order
contains no such provisions.
The decision terminating plaintiff's Supplemental Security
Income benefits is reversed.
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