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CARDINALE v. MATTHEWS

August 26, 1975

CATHERINE CARDINALE, et al., Plaintiffs
v.
F. DAVID MATHEWS, Defendant



The opinion of the court was delivered by: JONES

 This case involves, as did another case recently before this Court, the requirements of procedural due process in the context of Title XVI of the Social Security Act (Supplemental Security Income Program). See Hannington v. Weinberger, 393 F. Supp. 553 (D.D.C. 1975). Plaintiffs in this action attack three exceptions to the general rule contained in defendant's regulations that Supplemental Security Income (SSI) benefits are not to be reduced, suspended, or terminated without prior notice and some opportunity to challenge the proposed change in benefits.

 On October 30, 1972, Congress established the Supplemental Security Income Program to become effective on January 1, 1974. Pub. L. No. 92-603, 86 Stat. 1329, 42 U.S.C. § 1381 et seq. (Supp. III, 1973). SSI replaced numerous state-administered programs with a new federal minimum income program administered by the Social Security Administration. See S. Rep. No. 92-1230, 92d Cong., 2d Sess. 383 (1972), H.R. Rep. No. 92-231, 1972 U.S.Code Cong. & Admin. News, p. 4992. The program was designed to provide positive assurance that the nation's aged, blind, and disabled would no longer have to subsist on below-poverty-level incomes. S. Rep. No. 92-1230, supra at 384. Congress recognized that aged, blind, and disabled individuals may be in need notwithstanding Social Security benefits, Veterans' Administration benefits, or even private pension benefits. SSI was intended to supplement these other sources of income to free the poor from want and the indignities of poverty.

 Currently under the SSI program, persons over 65, blind persons, and disabled persons are assured of an income of $146 per month for individuals and $219 for couples. 42 U.S.C. § 1382(b) (Supp. III, 1973). *fn1" Aged, blind, or disabled individuals or couples are eligible for assistance when their nonexcluded monthly income is less than $146 or $219 respectively, and their nonexcluded resources are $1500 or less in the case of an individual or $2250 or less in the case of an individual who has a spouse with whom he is living. 42 U.S.C. § 1382(a) (Supp. III, 1973); see 42 U.S.C. §§ 1382a(b), 1382b(a) (Supp. III, 1973). For example, an individual over 65 who is living alone, who receives $120 per month in nonexcludable income from other sources such as Social Security benefits or part-time employment, and who has resources of $1500 or less, would receive an SSI payment of $26 per month.

 On July 29, 1974, defendant submitted a motion to dismiss or in the alternative for summary judgment. After the Court granted on October 17, 1974, plaintiffs' unopposed motion to amend their complaint, defendant submitted supplemental memoranda in support of his alternative motion to dismiss or for summary judgment on February 27, 1975, and June 9, 1975. Plaintiffs have moved that this case be certified as a class action and on June 12, 1975, during oral argument on all pending motions, moved for summary judgment in their favor. It is these motions that are currently before the Court.

 I. THE PARTIES

 Plaintiff Committee for the Rights of the Disabled is a nonprofit California corporation which has as its goal the protection of the legal rights of the disabled and the elderly. The plaintiffs allege that nearly all of its members receive SSI benefits.

 Plaintiffs Cardinale, Gilmore, Gooch, and Wells were converted ("grandfathered") from state welfare programs to federal SSI on January 1, 1974. Plaintiff Hinds applied for SSI benefits on or about January 1974, was found eligible, and began receiving benefits in March 1974. All the individual plaintiffs had their SSI benefits terminated or reduced without prior notice or an opportunity for a hearing.

 The following summary of each individual plaintiff's claim is based on affidavits submitted by them and by Sumner Whittier, Acting Director of the Bureau of Supplemental Security Income, Social Security Administration. *fn2"

 Catherine Cardinale, who was 79 years old when this case was filed and lived alone in Santa Cruz, California, received her first SSI check for $195 in January 1974. Because she thought this amount too high, she called the local Social Security office, but was told that if she received that much she must be entitled to it. She received the same amount for the months of February and March. However, without any notice or hearing, her benefits were reduced to $98.80 in April. She alleges that someone at the local Social Security office told her that the reason her benefits were reduced was to recoup overpayments made in January, February and March.

 Defendant asserts that plaintiff Cardinale should have been receiving $105.40 for the months January through March and, because of a Social Security increase, $98.80 for the month of April and thereafter. Defendant arrives at the $105.40 figure after subtracting $69.60 countable Social Security income and $60 unearned income from a base figure of $235. The erroneous payments for January through March were allegedly arrived at by failing to subtract anything for Social Security benefits and by charging plaintiff with only $40 of unearned income. In her second affidavit, however, plaintiff Cardinale denies ever having received $60 or any amount of unearned income.

 Payne Gilmore, who was 80 years old and lived in Oakland, California, received $22 for the months of January through March 1974. In April 1974, he received an SSI payment of $70.20 and then allegedly received a letter from the Social Security Administration that the April increase was sent by mistake and that his payments would be reduced to the $22 level in May. Plaintiff Gilmore received an SSI check for only $9.90 in May. He received the same amount in June. He was told verbally that the reason his benefits were reduced was because his wife's income had to be taken into consideration. However, plaintiff Gilmore and his wife had been separated since November 1973.

 The defendant admits that plaintiff Gilmore's payment reductions were erroneous and that his wife's income should not have been considered. He should have received $82.30 for the months of January through March and because his Social Security benefits were increased, $70.20 thereafter.

 Hattie Gooch is a 69 year old widow living in Modesto, California. Because the State incorrectly understated the amount plaintiff Gooch was receiving from the Veterans' Administration, she received $175 in SSI benefits, or $7 more than she was entitled to, for the months of January through April 1974. In April 1974, her VA benefits increased by $9. In May, plaintiff Gooch's benefits were reduced to $120 per month. The defendant admits that this figure is incorrect and has no explanation for the error. Both parties agree that plaintiff Gooch should have received $159 in May 1974.

 Pearl Wells began receiving a $73 per month SSI benefit in January 1974. During January, plaintiff Wells' VA benefits were increased by $9 per month. She alleges that she reported this immediately to her local Social Security office. Plaintiff received no SSI check for May 1974. She was told that her payments were suspended because the caseworker added the entire amount of her increased VA benefits ($96) to the entire old amount ($87) and thereby obtained the erroneous sum of $183. The $9 increase should have been added to her previous monthly benefits ($87) for a correct total of $96. She also was informed that the defendant intended to recoup amounts erroneously paid because of an improper classification of her Veterans' Benefits. Plaintiff received $59 for June 1974 from SSI and in July she began to receive what defendant claims is the correct amount of $50 per month. Defendant argues that plaintiff Wells should have received a May SSI payment and admits that her explanation of how the error occurred may be valid.

 Defendant alleges that plaintiff Wells was married on November 19, 1974, and because of her husband's cash resources and unearned income, she became ineligible for SSI in December 1974. She has allegedly signed a statement indicating that she wished her ineligibility to become effective immediately and, therefore, her payments have been suspended. She returned voluntarily her December checks and received no payment for January.

 Plaintiff Agnes Hinds applied for SSI benefits in December 1973 and was found eligible in March 1974. According to the defendants, plaintiff Hinds was paid $558.30 in March which represented retroactive payments to January 1974. Mrs. Hinds received her April check but did not receive her May check on time. She reported this nonreceipt to the Social Security Office and received her check later in May.

 At the same time that plaintiff Hinds reported nonreceipt of her May check, she also reported that her husband had been in jail since January 4, 1974. Defendant alleges that Mr. Hinds was released on bail during February 1974, but was returned to jail, actually a hospital for the criminally insane, during March 1974. He properly had been converted to SSI in January 1974. Every month Mrs. Hinds would take her husband his SSI check, he would endorse it, and she would cash it.

 Based on the information reported by plaintiff Hinds, the defendant determined that Mr. Hinds had been overpaid on two bases: (1) He was being paid as an individual rather than as part of a couple for the period of January through March; and (2) because of his institutionalization, he was entitled to no benefits after March 1974. Therefore, Mrs. Hinds' payments were suspended as of June 1974 to recover Mr. Hinds' overpayment.

 In addition to affidavits summarizing the factual backgrounds of the individual plaintiffs' claims, the plaintiffs also have filed affidavits summarizing eight nonparty case histories. *fn3" The common thread running through these case histories, like those of the plaintiffs, is that the individuals' SSI benefits were reduced without a prior notice and without opportunity for a hearing.

 Defendant, F. David Mathews, Secretary of Health, Education and Welfare is sued in his official capacity as administrator of the Supplemental Security Income Program. See 42 U.S.C. § 1383b (Supp. III, 1973).

 II. REGULATION AT ISSUE

 Regulations provide a four stage procedure to review both initial and continuing eligibility determinations for SSI benefits. 20 C.F.R. §§ 416.1401 et seq. After an initial determination, there are the reconsideration, hearing, and appeals stages within the agency, and the final stage is judicial review. Regulations provide in general that a person who was once found eligible for SSI benefits cannot have them reduced, suspended, or terminated until the reconsideration stage, which includes notice and hearing rights, is completed. 20 C.F.R. §§ 416.1336(c),.1417,.1419(a).

 The regulation that plaintiffs maintain is invalid allows a departure from the general procedure outlined above. It reads in relevant part as follows:

 
(a) Advance written notice of intent to discontinue payment because of an event requiring suspension or to reduce (see subpart D of this part), or terminate payments prior to effectuation of the action will be given in all cases except where:
 
(2) Amendments to Federal Law or an increase in benefits payable under Federal law (other than benefits payable under this part) require automatic suspension, reduction, or termination of benefits under this part [Amendment to Federal Law Exception] or
 
(3) Clerical or mechanical error has been made in effectuation of a determination or decision ...

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