A federal district court concluded that a decision of the Social Security Administration (SSA) to permanently discontinue a recipient’s Supplemental Security Income (SSI) benefits because of temporary mismanagement of a special needs trust required 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, SSA found Carolyn Colvin to be disabled as the result of lupis. Mrs. Colvin was found eligible for SSI, public benefits payable to disabled individuals with financial need.

In 2008, Mrs. Colvin got divorced. As part of the Colvin’s divorce settlement, a special needs trust was established for Mrs. Colvin to receive her ex-husband’s pension benefits in trust, allowing her to continue meeting the income limitations under the SSI program. Mrs. Colvin’s father was appointed as the initial trustee of the special needs trust, and her sister was appointed the successor trustee.

In 2009, Mrs. Colvin’s father became ill. As a result, Mrs. Colvin gained increased access to the special needs trust, and she used the trust funds to pay occasional doctor’s bills and three regular bills: telephone, electric and insurance. In addition, she also used a debit card drawn against trust funds to pay other bills and expenditures.

In 2011, SSA determined that Mrs. Colvin’s access to the funds in the special needs trust rendered it a countable resource. Because of this, SSA found that Mrs. Colvin was ineligible for SSI benefits beginning January 2009. The agency also determined that Ms. Colvin had been overpaid $18,137 in benefits.   The agency upheld its decision over Ms. Colvin’s request for reconsideration and also denied her request for a waiver of the requirement that she repay the overpayment.  Ms. Colvin then requested a hearing.

At the hearing, Mrs. Colvin asserted that, after being alerted by the agency that her increased access to the trust was improper, the debit card was destroyed and the trust was properly managed by a successor trustee starting in September 2012.  Mrs. 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 by the successor trustee. Ultimately, the administrative law judge (ALJ) affirmed Ms. Colvin’s ineligibility for SSI benefits and the agency’s determination that she owed the overpayment.

Regarding the claim that Mrs. Colvin became eligible for SSI again when the mis-management of the trust ended, the ALJ stated that he found no authority to support that position, and the authority he did find “indicated that having access to and direction of use of the funds results in the trust principle being considered a resource for SSI purposes.” Mrs. Colvin then appealed to the federal district court.

The United States District Court, Middle District of Pennsylvania, remanded the case to SSA 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:  Elias v. Colvin

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