United States District Court, Eastern District of New York
March 20, 2001
ROBIN HOROWITZ, BY HER GUARDIAN, MARTIN HOROWITZ, PLAINTIFF,
KENNETH APFEL, COMMISSIONER OF SOCIAL SECURITY, DEFENDANT.
The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM OF DECISION AND ORDER
This case presents an appeal from a determination of the
Social Security Commission dated December 7, 1999, finding the
Plaintiff ineligible for Supplemental Security Income ("SSI")
The Plaintiff suffers from cerebral palsy, a seizure disorder,
blindness, and has an amputated left leg. On July 31, 1992,
shortly before her 18th birthday, the Plaintiff applied for SSI
benefits, stating that she did not have any bank accounts. The
Plaintiff was initially found to be both disabled and eligible
for benefits. However, on May 18, 1994, the Social Security
Administration notified the Plaintiff that her SSI payments were
being suspended because the Plaintiff was found to have
resources in excess of $2,000, and was thus ineligible for
benefits. 42 U.S.C. § 1382(a)(1)(B). The resources in question
were funds totaling approximately $500,000 and were proceeds
from the settlement of personal injury lawsuits by the
Plaintiff. The various settlements had been approved by several
state courts between 1992 and 1994, provided that they "remain
on deposit until further order of this Court or until a
Conservator is appointed for Robin Stacy Horowitz."
The Social Security Administration requested repayment of the
$11,464 in benefits paid to the Plaintiff from September 1992
through June 1994. Upon an application by the Plaintiff for a
hearing, on January 26, 1996, a Social Security ALJ determined
that the Plaintiff was ineligible for benefits because of her
resources. In addition, the ALJ held that the Plaintiff was
required to repay the benefits previously received. The
Plaintiff appealed, and on May 9, 1997, the Appeals Council held
that it could not review the ALJ's decision because the case
file had been inadvertently destroyed. The Appeals Council
remanded the case to the ALJ for rehearing, and on June 21,
1999, the ALJ issued a new determination, finding that the
Plaintiff was ineligible for benefits but reversing his earlier
determination that the Plaintiff was obligated to repay the
benefits she had received. On December 7, 1999, the Appeals
Council denied review of the ALJ's
second decision, and thereby adopted it. This appeal by the
On May 6, 1996, during the pendency of the appeals process,
the New York Supreme Court, Suffolk County, granted a petition
by the Plaintiff to establish a Supplemental Needs Trust, into
which the settlement proceeds were deposited. On June 23, 1997,
the Plaintiff reapplied for SSI benefits, and because property
in a Supplemental Needs Trust is not considered in evaluating an
applicant's resources, 42 U.S.C. § 1396p(d)(4)(a), the
Plaintiff's application was granted. Accordingly, because the
Plaintiff is not required to repay the benefits received from
September 1992 through June 1994, and began receiving benefits
again in June 1997, this appeal concerns only the Plaintiffs
entitlement to benefits from June 1994 through June 1997.
The sole question to be decided on this appeal is whether
funds on deposit in an applicant's name but subject to
pre-withdrawal approval by a court constitute resources
available to an applicant for purposes of determining
eligibility under 42 U.S.C. § 1382(a)(1)(B). The Plaintiff did
not submit papers in opposition to the Commissioner's motion for
judgment on the pleadings, but provided extensive citation to
authority in her complaint.
An aged, blind, or disabled individual "whose resources" do
not exceed $2,000 is eligible for SSI benefits.
42 U.S.C. § 1382(a)(1)(B), (a)(3)(B). The criteria for determining an
individual's "resources" are primarily set forth in Subpart L of
the regulations of the Social Security Administration dealing
with SSI benefits. 20 C.F.R. § 416.1201 et seq. "Resources"
are defined 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 or her support and maintenance."
20 C.F.R. § 416.1201(a). "Liquid resources," in turn, are defined
as "cash or other property which can be converted to cash within
20 days." 20 C.F.R. § 416.1201(b). On facts effectively
identical to this case, the Second Circuit has determined that
funds in an applicant's name that are disbursable only upon
approval of the court constitute "resources" that may be
considered in evaluating an applicant's eligibility for SSI
benefits. Frerks v. Shalala, 52 F.3d 412, 414 (2d Cir. 1995).
In Frerks, the court stated:
Frerks argues that the settlement funds were not
available for his support and maintenance because he
could not convert them into cash in hand absent a
court order, the grant of which was beyond his
control. Yet the fact that Frerks may neither draw on
nor dispose of the funds at will does not negate the
fact that the funds can be released and used for his
support and maintenance as the need arises. We
therefore find the ALJ's determination that Frerks
had resources in excess of the statutory limits to be
supported by substantial evidence.
52 F.3d at 414; see also Cuomo v. Chater, 1995 WL 479713
(E.D.N.Y. 1995) (citing same).
While the Plaintiff cites Frerks in her complaint, she fails
to offer an explanation as to why it should not be controlling
in this matter. In addition, she erroneously relies on the
Seventh Circuit's decision in White ex. rel. Smith v. Apfel,
167 F.3d 369 (7th Cir. 1999), for the proposition that "funds in
an account subject to the Order of a State Court Judge could not
be presumed to be an available resource in rendering an SSI
eligibility determination." In White, the plaintiff also had
funds available in an account subject to the court's approval of
any disbursement. 167 F.3d at 370. However, the court there had
denied the plaintiffs guardian's only application for a
disbursal of funds, and the
uncontradicted evidence in the record indicated that the
plaintiff lacked the resources to seek a review of that denial,
or to otherwise access the funds. 167 F.3d at 371-73. The court
found that the plaintiffs guardian's difficulties in obtaining a
release of the funds was sufficient to rebut the presumption
that the funds were available, and held that he was eligible for
benefits. Id. at 375.
Nothing in White contradicts the holding of Frerks.
Indeed, the court in White expressly cites Frerks without
commenting on the soundness of the Second Circuit's holding. 167
F.3d at 374. Given that the decision in White was clearly the
result of a factual finding that the funds there were not
available to the plaintiff because the court had refused to
release them — a fact not alleged by the Plaintiff in this case
— this Court is rejects the Plaintiffs argument that the result
here should be controlled by White, and not Frerks.
The Plaintiffs complaint further belabors the factually
distinguishable White case by attempting to relate it to a
1987 Executive Order issued by President Reagan regarding issues
of federalism. E.O. 12612, 52 Fed. Reg. 41685 (Oct. 26, 1987);
Complaint, ¶ 40 (White provided "the standard that should
have been applied to the facts of [this] case based on President
Reagan's Executive Order 12612 which stated the federal
government's federalism policy.") The precise connection between
the Executive Order, which makes no mention whatsoever of the
Social Security Administration, SSI benefits, or
court-supervised bank accounts, and the issues before the Court
in this matter is decidedly unclear.
In any event, this Court is bound by the applicable law of the
Second Circuit. Nothing in the record indicates that the
Plaintiff was denied access by the courts to the funds; in fact,
the Plaintiffs guardian testified before the ALJ that he had
made several applications to the court to release funds for
various purposes, including the Plaintiffs support and
maintenance, and all of those applications were granted. Under
these circumstances, the holding in Frerks is applicable and
binding. The decision of the ALJ, adopted by the Appeal Council,
is supported by substantial evidence in the record, and is
consistent with the law of this circuit.
Accordingly, the decision of the Appeals Council is AFFIRMED.
The Clerk of the Court is directed to close this case.
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