A federal district court concludes that the Social Security Administration's decision to permanently discontinue a recipient's SSI benefits because of temporary mismanagement of a special needs trust requires remand to the agency for reconsideration of whether the trust is forever an includable resource. Elias v. Colvin (M.D. Pa., No. 3:15-CV-263, July 27, 2015).
In 2007, the Social Security Administration determined that Carolyn Colvin was disabled as a result of lupus. In 2008, as a part of Ms. Colvin's divorce settlement, a special needs trust was established for her benefit to receive her ex-husband's pension benefits in trust while allowing her to continue to meet the income limitations for receipt of Supplemental Security Income (SSI).
In March 2011, the agency determined that Ms. Colvin had access to the trust funds -- making them a countable resource -- and found her ineligible for benefits as of January 2009. The agency determined that Ms. Colvin had received an overpayment of $18,137 in benefits. The agency upheld its decision over Ms. Colvin's requests for reconsideration and also denied her request for a waiver of the requirement that she repay the overpayment. Ms. Colvin requested a hearing.
At the hearing, Ms. Colvin admitted she had used a debit card drawn against trust funds to pay bills and other expenditures after her father, the first trustee, became ill. However, she asserted that after being alerted by the agency that this was improper, the debit card was destroyed and the trust was properly managed by a successor trustee starting in September 2012. Ms. Colvin argued that her benefits should be reinstated from either the time when she no longer had access to the trust because the debit card had been destroyed or when the trust was being properly administered as a special needs trust. Ultimately, the administrative law judge (ALJ) affirmed Ms. Colvin's ineligibility for SSI benefits and the agency's determination that she owed the overpayment. Ms. Colvin appealed to the federal district court.
The United States District Court, Middle District of Pennsylvania, remands to the agency for reconsideration, concluding that “the ALJ has not adequately discussed the issue of whether temporary misuse and improper administration of a properly formed Special Needs Trust must forever negate consideration of the trust as an excludable resource if the administrative problems and misuse are rectified.”
To read the court's opinion, click here.
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