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CALEF v. BARNHART

March 24, 2004.

KATHLEEN CALEF, o/b/o HEATHER CALEF, Plaintiff, -against- JO ANNE B. BARNHART, as Commissioner of Social Security, Defendant


The opinion of the court was delivered by: ARTHUR SPATT, District Judge

MEMORANDUM OF DECISION AND ORDER

Kathleen Calef (the "plaintiff") commenced this action on behalf of her daughter Heather Calef ("Heather"), pursuant to the Social Security Act, 42 U.S.C. § 405(g) (the "Act"), seeking review of a final administrative determination of the Commissioner of the Social Security Administration (the "Commissioner") which determined that the Page 2 disbursements to the plaintiff from a Supplemental Needs Trust ("SNT") constituted unearned income reducing Heather's supplemental security income ("SSI") benefits.

  Presently before the Court are (1) the Commissioner's motion for judgment affirming its decision and its motion to dismiss the plaintiff's complaint for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure; and (2) the plaintiff's cross-motion for a remand.

  I. BACKGROUND

  Since June 1992, the plaintiff has received SSI benefits on behalf of her daughter Heather who had been rendered disabled. On October 15, 1998, the plaintiff filed a petition to the Supreme Court of the State of New York, County of Suffolk to transfer a putative tort settlement into a SNT fund. The petition requested, among other things, that the SNT be amended to provide the plaintiff with monthly stipends in the sum of $1,000 because she could not work steadily because of her daughter's medical needs.

  On December 17, 1998, the Court of Claims of the State of New York issued an Infant's Compromise Order which settled the state court action. The Infant's Compromise Order provided, in part, for an initial payment of $437,377.45 to the plaintiff as trustee of a SNT on behalf of Heather. On March 1, 1999, the Supreme Court of Suffolk County entered an order and judgment appointing the plaintiff co-guardian for property management and guardian of the personal needs of Heather. The court ordered that the plaintiff be paid Page 3 an amount of $1,000 per month from the SNT as a stipend. On March 19, 1999, the plaintiff and the other co-guardian executed the amended SNT, which was then submitted, together with the court order, to the Social Security Administration ("SSA").

  On September 30, 1999, SSA determined that the plaintiff's monthly stipend of $1,000, which she began receiving in March 1999, was unearned income and should have been "deemed" or attributed to Heather. As a result, SSA concluded that these payments reduced Heather's SSI payments to a sum of $63 per month from her regularly monthly payment of $523 and that she received an overpayment in the sum of $2,300 from May 1999 through September 1999 because of the monthly unearned income of $1,000 received by the plaintiff.

  The plaintiff requested reconsideration, arguing that her monthly stipend was earned income and that Heather's SSI benefits were therefore correct. On October 15, 1999, the Commissioner issued a reconsideration decision which stated, in relevant part:
You have requested that we reconsider our determination that the monthly stipend of $1000.00 you receive from Heather Calef's Supplemental Needs Trust is unearned income. Your Reconsideration Request states that it is earned income. To qualify as "earned" income, income must be from wages or employment. The stipend is not a wage, as you are Heather's custodial parent, not her employee. She does not have the authority to direct your work. You are not self-employed as your minor child's care-giver. As you are receiving neither a wage, nor income from self-employment, the stipend you receive from the trust fund is "unearned." Our prior decision regarding this matter is affirmed.
  On October 25, 1999, the plaintiff requested a hearing before an administrative law judge ("ALJ"). In her application, the plaintiff argued that her monthly stipend was earned Page 4 income because she was employed by Heather and was paid by Heather's SNT. On January 28, 2000, ALJ Sy Rayner conducted a hearing at which the plaintiff was represented by counsel. At the hearing, the plaintiff testified that in 1999 her daughter's SSI benefits were in the amount of $523 per month until SSA reduced the benefit amount to $63 a month because of the monthly stipend she was receiving from Heather's SNT. The plaintiff argued that the stipend is a salary paid to her for services rendered to her daughter. As such, she stated that the monthly stipend should be characterized as earned income and not unearned income. In a decision dated February 8, 2000, the ALJ reversed the reconsideration decision and determined that the plaintiff's monthly stipend of $1,000 was earned income because the plaintiff received the stipend from the SNT for services that she performed on Heather's behalf that a hired caretaker would be paid to perform.

  On March 30, 2000, the Appeals Council advised the plaintiff of its intent to review, on its own motion, the ALJ's decision under the error of law provision pursuant to 20 C.F.R. § 416.1469 and 416.1470. In a letter dated June 6, 2000, the Appeals Council notified the plaintiff of its intention to find the monthly stipend constituted as unearned income for deeming purposes, and it offered the plaintiff an opportunity to respond. On August 10, 2000, the Appeals Council issued the Commissioner's final decision, finding that the plaintiff's monthly stipend from the SNT was not earned income because it was neither wages nor self-employment income. Page 5

  The plaintiff then commenced this action on October 3, 2000. In the complaint, the plaintiff alleged that, (1) the Commissioner breached the Due Process Clause of the Constitution by denying the plaintiff SSI benefits without providing notice with citations to the applicable regulations and the standards used in computing benefits as required by Ford V. Shalala, 87 F. Supp.2d 163 (E.D.N.Y. 1999); (2) the Commissioner has a policy and practice of not acquiescing to state court orders, thereby violating Executive Order 12612; (3) the Commissioner has breached her "duty of care that the laws be faithfully executed" by implementing a "nonacquiescence policy whereby he does not follow the holding in Christensen v. Harris, 529 U.S. 576, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000) that a letter-opinion by Executive Branch counsel does not have the force of law"; (4) the Commissioner has violated the "the Equal Protection clause of the Constitution by denying the severely disabled plaintiff SSI benefits because her Guardian-mother has been paid compensation to be her caretaker and provide for all of the plaintiff's activities of daily living, rather than a third party being paid compensation to be her caretaker and provide care of all of the plaintiff's activities of daily living"; (5) the Commissioner "implemented an arbitrary and capricious policy and practice not to apply his own earned income regulations by not including Court ordered compensation for providing all of the activities of daily living for a severely disabled minor child as being considered `earned' income"; and (6) the Commissioner "violated the federal statutory rights of the plaintiff and thereby committed a Page 6 `Bivens' tort." The plaintiff seeks, among other things, an award of full benefits retroactive to the initial date of her application and an order directing the Commissioner to comply with the Ford order, Executive Order 12612, and the Christensen holding.

  The Commissioner now moves for judgment on the pleadings affirming the final decision by the SSA and to dismiss the plaintiff's complaint for failure to state a claim. The plaintiff moves for a remand.

  II. DISCUSSION

 A. Standard of Review

  To review the Commissioner's decision, the Court must determine whether (1) the Commissioner applied the correct legal standard, see Tejada v. Apfel, 167 F.3d 770, 773 (2d Cir. 1999); and (2) the decision is supported by substantial evidence, see 42 U.S.C. § 405(g); Brown v. Apfel, 174 F.3d 59, 61-62 (2d Cir. 1999). Substantial evidence is "more than a mere scintilla." Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). Rather, substantial evidence requires enough evidence that a reasonable person "might accept as adequate to support a conclusion." Brown, 174 F.3d at 62-63.

  In determining whether the Commissioner's findings are supported by substantial evidence, "the reviewing court is required to examine the entire record, including Page 7 contradictory evidence and evidence from which conflicting interferences can be drawn." Id. at 62 (quoting Mongeur v. Heckler, 722 F.2d 1033, 1038 (2d Cir. 1983) (per curiam)). In addition, new evidence submitted to the Appeals Council may be considered as part of the record for the purpose of judicial review. Brown v. Apfel, 174 F.3d 59, 62 (2d Cir. 1999).

  Furthermore, the Court is mindful that "it is up to the agency, and not this court, to weigh the conflicting evidence in the record." Clark v. Commissioner of Soc. Sec., 143 F.3d 115, 118 (2d Cir. 1998). Indeed, in evaluating the evidence, "`the court may not substitute its own judgment for that of the Secretary, even if it might justifiably have reached a different result upon de novo review.'" Jones v. Sullivan, 949 F.2d 57, 59 ...


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