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Contents
• Three POMS• Three Emergency Messages• One Chief Judge Bulletin• Two Old POMS to defend your SNT• Five Legal Opinions from SSA Regional Chief
Counsel• New CFR on “Rules of Conduct” for attorneys
SSI Income and Resource Rules on IRS Tax Credits (pages 2-8)
SSI Income Rules• Tax Refunds• Earned Income Tax Credits• First Time Home Buyer
SSI Resource Rules – • Not counted for 12
months if retained• Practice suggestion:
Identify the account separately
State Supplementary Payments(page 8-47)
• 15 States supplement the SSI Federal Benefit Rate
• Amount of supplement varies
• States are withdrawing support as state tax receipts shrink
• Changes include not only how much, but who and under what conditions
New POMS: When to Charge ISM (Pages 47-49)
• Third party payor (e.g. SNT) pays for ISM• Example: Mr. Shagg charges food in August of
$150 • Son (or SNT) pays $100 in Sept, leaving a $50
unpaid balance• How much ISM to charge Mr. Shagg• Answer: $100; Mr. Shagg still owes $50 and
loans are not income
Emergency Messages (EMs)And
Chief Judge Bulletins(CJB)
Subsequent Disability Application Filed While Prior Disability Claim Pending
• EM 11072 and EM 11052 Rev2 (Pages 50-60)
• CJB 11-03 (Page 64)
Effective July 28, 2011, field offices will not longer take a new disability application if a prior claim is pending at any level of administrative review
Limited exception:
1. The claimant has additional evidence that does not relate to the period on or before the hearing decision and shows a new critical or disabling condition, AND
2. The claimant says he or she wants to file a new claim, AND
3. The AC agrees that the new disability claim should be filed before action on the request for review is completed.
SSA finally gets it right on Contesting SSI overpayments
GOOD NEWS!! EM-10092 TO THE RESCUE
SSA staff instructed to process Request for Reconsideration on Overpayments (pages 61-63)
Appealing SSI denials of
Your SNTs
BAD NEWS!!
NOTICE FROM THE SOCIAL SECURITY ADMINISTRATION
“Your SSI benefits have been terminated because of excess resources, but we won’t tell you why.”
The Problem of Questionably Bad Trusts – appeal or re-draft
• SSA does make mistakes – sometimes in your favor
• Usually a large overpayment looms
• New POMS make the course less certain(pages 50-61, 63-65)
ANALYSIS: Should you appeal or Should you Modify or Reform the Trust?
Appeal:• SSA may pass the “bad”
SNT and eliminate the overpayment
• Challenging and losing the appeal possibly sets up the legal malpractice lawsuit against the drafting attorney
Modify the SNT:• If the window to
challenge at Recon is lost, ODAR hearings and AC Appeals can take 2-4 years
• Fixing the trust could reinstate benefits sooner
David’s Non-hypothetical, real life pending case
• Fact Pattern. Alexander is age 11, developmentally disabled, living with his mother, Cris, who is legally divorced from the father, but they are friendly, working in conjunction with each other, with the Dad, Marco, continuing to be the SSA Representative Payee. Alexander is on SSI. SSA determined that his First Party d4A SNT, drafted by another attorney, was defective, terminated Alexander’s SSI which caused automatic loss of Medicaid, and declared that Alexander owes an Overpayment of $17,000+ for the SSI benefits received.
• Alexander was awarded a medical malpractice settlement in 2005. The
attorney drafting the SNT appointed the parents of the minor child as the co-trustees. The attorney failed to notify SSA of the change of circumstances (a violation of SSI rules) at the time the $300,000 net settlement was awarded to the child and placed in the 2005 SNT.
More and worser facts:
• My review of the SNT confirms that the trust is defective
• Dad, as Rep Payee, filed the Request for Recon but failed to check box requesting a “Formal or Informal Conference”
• The SSA Claims Rep particularly, and the Delray Beach SSA District Office, in general, is extremely hostile
More worstest facts:The SSA Claims Rep informed the father (with me on the father’s cellphone listening in) that :1. “just do a new trust; your old trust is no good”2. “we at SSA will not let you know the reasons why we find the trust
defective” 3. “we will set your Informal Conference for March 16, 2012, at 1 pm”,
but 4. “you will not be able to review the file, and 5. “we will rule against you again so I don’t know why you are coming
to this conference; it has already been determined that you will lose.”
6. “We don’t care how other SSA offices do it. We have our own private set of rules at the Delray Beach SSA Office.”
ISSUES?
• Can she refuse to let us see the file?• Is this a “fair hearing” meeting Goldberg v. Kelly
standards? If not, what will we do about it?• Why do we want to challenge that this trust
comports with SSA rules, when in our own opinion it is a defective d4A SNT?
• If we do in fact lose at Recon, what will be our next step?
An Old POMS to the rescue!
POMS SI 04020.050 “Reconsideration
Conferences”
The rules (pages 65-89)
Stop in the name of the law, SSA lady!
The POMS SI 04020.050 on Reconsideration Conferences (pages 65-89) says:
• Right to a face-to-face conference - see C.2
• Conf to be set in 15 days – D.1
• Claimant allowed to review the folder – D.1
• “Permit the claimant to examine the evidence on which determination was made” – E.4
• Atty rights – E.8• AND MORE…
Regional Chief Counsel Precedents2011-2012
Five RCC Precedents in 2011-2012
Colorado – same guy two times, multiple errors
Florida - amending trust nunc pro tunc is a no-go
South Dakota – 2 cases, one on pooled trusts
Colorado - Poor Ronald L. S----
Round One (pages 94-101) In December 2010, Ronald’s SNT is invalid because:
• The Trust is not for Ronald’s sole benefit, because of an invalid early termination provision (in Articles VIII and IX) could allow other individuals or entities to benefit from the trust during Ronald’s lifetime;
• The Trust was not established through the actions of a parent, grandparent, legal guardian or a court, because Ronald’s mother did not create a “seed” trust using a nominal amount of her own money, and Colorado does not allow empty or dry trusts;
• The Trust limits Medicaid reimbursement upon termination of the trust to the state of Colorado.
Colorado - Poor Ronald L. S----
Round Two (pages 94-101) In August 2011, Ronald’s SNT is STILL invalid because:
• Attempt to amend the trust was itself invalid, because the language of the trust document itself limited the modification to the trust to amendment by a court
• The early termination provision is still invalid – provides that if a court terminates the trust, the funds go not to Ronald, but to other living persons
Florida - Joan’s dad’s testamentary trust - Good news/Bad news
November 2011 decision (pages 101-107) :
Dad’s Last Will left share in trust for Schizophrenic Joan for her “support and maintenance”
Petition to Modify approved [excellent discussion of Restatement of Trusts on when you can modify – see page 104 – and Florida Trust Code]
SSA reviewed and approved the Reformed TP-SNT as complying with Third Party SNT rules – POMS SI 01120.200
However – SSA denied the retroactive effect – nunc pro tunc to 2004 based on Florida caselaw, but approved only as of May 18, 2011 forward
South Dakota - Stephany’s First Party d4A SNTJanuary 2012 decision (pages 107-112) :
Good news: This RCC Precedent is a roadmap of how to draft a good SNT in South Dakota
Bad news: Trust was not properly “established” by the parent for two reasons:
1. Parents had a power of attorney to exercise on behalf of Stephany, which means that Stephany, the principal, was establishing the trust for herself; and
2. If the parents were establishing the trust as “parent”, they had to supply $10 of their own funds to do so as “seed money,” since South Dakota does not recognize unfunded “dry trusts”
South Dakota - Isaac’s Participation in defective Pooled d4C SNTDecember 2011 decision (pages 112-120) :
South Dakota Guardianship Program Trust Master Trust Agreement had multiple problems:
• Violates the sole benefit rule• Fails to repay Medicaid on early termination• Definition of “disabled” not consistent with Social Security Act• Doesn’t limit grantor/trustor to individual, parent, grandparent, legal
guardian or court – allows “any individual or entity” to establish SNT
ALJ at ODAR denied P-SNT, but suggested nunc pro tunc order
Amendments to Trust would be modifications, not reformations, and therefore not entitled to retroactive effect through nunc pro tunc
It’s not just about fees!
Attorney Regulation
Don’t let this be you!
Rules of Conduct and Standards of Responsibility for Representatives
20 C.F.R. 404.1740 and 20 C.F.R. 416.1540
In Three Parts :(a) Purpose and Scope(b) Affirmative duties(c) Prohibited actions
(a) Purpose and scope.
(1) All attorneys or other persons acting on behalf of a party seeking a statutory right or benefit shall, in their dealings with us, faithfully execute their duties as agents and fiduciaries of a party. A representative shall provide competent assistance to the claimant and recognize the authority of the Agency to lawfully administer the process. The following provisions set forth certain affirmative duties and prohibited actions which shall govern the relationship between the representative and the Agency, including matters involving our administrative procedures and fee collections.
(2) All representatives shall be forthright in their dealings with us and with the claimant and shall comport themselves with due regard for the nonadversarial nature of the proceedings by complying with our rules and standards, which are intended to ensure orderly and fair presentation of evidence and argument.
(b) Affirmative duties
(1) Act with reasonable promptness to obtain the information and evidence that the claimant wants to submit in support of his or her claim…
(2) Assist the claimant in complying, as soon as practicable, with our requests for information or evidence at any stage of the administrative decisionmaking process
(3) Conduct his or her dealings in a manner that furthers the efficient, fair and orderly conduct of the administrative decisionmaking process, including
(i) Provide competent representation to a claimant. Competent representation requires the knowledge, skill, thoroughness and preparation reasonably necessary for the representation. This includes knowing the significant issue(s) in a claim and having a working knowledge of the applicable provisions of the Social Security Act,…
(ii) Act with reasonable diligence and promptness in representing a claimant….
(c) Prohibited actions. A representative shall not:
(1) In any manner or by any means threaten, coerce, intimidate, deceive or knowingly mislead a claimant, or prospective claimant or beneficiary, regarding benefits or other rights under the Act; (2) Knowingly charge, collect or retain, or make any arrangement to charge, collect or retain, from any source, directly or indirectly, any fee for representational services in violation of applicable law or regulation;(3) Knowingly make or present, or participate in the making or presentation of, false or misleading oral or written statements, assertions or representations about a material fact or law concerning a matter within our jurisdiction;
The Seven Deadly Sins
Prohibitions , cont.
(4) Through his or her own actions or omissions, unreasonably delay or cause to be delayed, without good cause (see § 404.911(b)), the processing of a claim at any stage of the administrative decisionmaking process;
(5) Divulge, without the claimant's consent, except as may be authorized by regulations prescribed by us or as otherwise provided by Federal law, any information we furnish or disclose about a claim or prospective claim;
(6) Attempt to influence, directly or indirectly, the outcome of a decision, determination or other administrative action by offering or granting a loan, gift, entertainment or anything of value to a presiding official, Agency employee or witness who is or may reasonably be expected to be involved in the administrative decisionmaking process, except as reimbursement for legitimately incurred expenses or lawful compensation for the services of an expert witness retained on a non-contingency basis to provide evidence; or
Prohibitions, cont.
(7) Engage in actions or behavior prejudicial to the fair and orderly conduct of administrative proceedings, including but not limited to:
(i) Repeated absences from or persistent tardiness at scheduled proceedings without good cause (see § 404.911(b));
(ii) Willful behavior which has the effect of improperly disrupting proceedings or obstructing the adjudicative process; and
(iii) Threatening or intimidating language, gestures or actions directed at a presiding official, witness or Agency employee which results in a disruption of the orderly presentation and reception of evidence.
20 CFR § 404.1745. Violations of our requirements, rules, or standards.
… we may begin proceedings to suspend or disqualify that individual from acting in a representational capacity before us. We may file charges seeking such sanctions when we have evidence that a representative…
And on that happy note…Let’s enjoy Memphis tonight!
