Practical Handling of SSA Special Needs Trust Denials and ... · Lillesand, SSA Special Needs Trust Denials and Overpayments - Page 3 Practical Handling of SSA Special Needs Trust

Lillesand, SSI Appeals for Elder Law Attorneys, Page 1

Practical Handling of SSA Special Needs Trust Denials and Overpayments

David Lillesand, Lillesand, Wolasky & Waks, P.L., Clearwater and Miami, Florida

TABLE OF CONTENTS – SNT APPEALS

Introduction ................................................................................................................................................ 3

I. Initial considerations and reporting responsibilities ............................................................................... 3

Background ................................................................................................................................... 3

SSI Reporting responsibilities ......................................................................................................... 4

What types of things must be reported ......................................................................................... 4

Failure to report ............................................................................................................................. 5

Typical scenario that doesn’t require immediate reporting by the drafting attorney .................. 6

Typical scenarios that do require immediate reporting ................................................................ 6

Who should do the reporting ......................................................................................................... 8

II. Dealing with SSA adverse determinations ............................................................................................. 9

SSA appeal procedures .................................................................................................................. 9

SSA initial determinations, reported changes and periodic SSI financial reviews ........................ 10

Statutory and procedural requirements for representing your client before the agency .......... 12

Fee petition process ........................................................................................................ 12

Fee agreement process ................................................................................................... 12

Collecting a fee from the Trustee ................................................................................... 12

Notifying SSA of your representation ............................................................................. 13

First steps in the appeal – responding to requests for information ............................................ 13

Request for Reconsideration ....................................................................................................... 14

Procedural rules for a Reconsideration Conference ....................................................... 14

Who will be there ............................................................................................................ 15

What will happen ............................................................................................................ 15

When will the conference be scheduled ........................................................................ 16

Request for Hearing ..................................................................................................................... 16

When will the hearing occur ........................................................................................... 17

Where will the hearing be held ....................................................................................... 17

Outside help? .................................................................................................................. 18

Scheduling the hearing ................................................................................................... 19

Review the ODAR file ...................................................................................................... 19

What you should submit ................................................................................................. 19

Procedure at the hearing ................................................................................................ 21

Lillesand, SSA Special Needs Trust Denials and Overpayments - Page 2

Who should be there ......................................................................................... 21

What to bring ..................................................................................................... 21

Conduct of the hearing ...................................................................................... 22

Appeals Council Review ............................................................................................................... 22

Federal court review .................................................................................................................... 24

Conclusion ................................................................................................................................................. 24

ATTACHMENTS to SSA APPEALS– 16 Exhibits, 53 Pages ............................... begins after page 25

Exhibit A Matrix

Exhibit B SSI spotlight on Trusts

Exhibit C Eight step-action charts for d4 Special Needs Trusts

Exhibit D SSA Appeals Procedure Flowchart

Exhibit E Request for Reconsideration (blank)

Exhibit F Request that benefits continue pending appeal

Exhibit G Request for Reconsideration (filled in)

Exhibit H Reconsideration Conference POMS

Exhibit I SNT Evaluation forms

Exhibit J Request for Hearing (blank)

Exhibit K Request for Hearing (filled in)

Exhibit L Request for Review of Hearing Decision/Order (by Appeals Council)

Exhibit M POMS SI 02301.310 GK payments continue pending appeals

Exhibit N Fee Petition Form

Exhibit O Form 1696 Appointment of Representative

Exhibit P Form 1695 for Direct Payment of fee

TABLE OF CONTENTS – OVERPAYMENTS

[SEE SEPARATE PAPER ON “OVERPAYMENTS: AVOIDING, DEFENDING, REDUCING AND DESTROYING]


Practical Handling of SSA Special Needs Trust Denials and Overpayments

David Lillesand Lillesand, Wolasky & Waks, P.L., Clearwater, Florida

Introduction. It’s important to know if your state is a 1696 state, an SSI state or a 209b state.

The difference has to do with whether your state agrees that if SSI awards benefits Medicaid eligibility follows automatically (“1696 state”), agrees to use SSI rules to determine Medicaid eligibility (“SSI state”) or applies its own Medicaid rules (“209b state”).

In addition, there are a few states that say they are a “1634 state” but then carve out for themselves the right to analyze the SNT trust and apply their own state rules. For example, Texas is one of those states. Pursuant to Regional POMS SI DAL 01730.009 (TX), SSA/State Agreements under Section 1634,

“the Texas Health and Human Services Commission (THHSC) entered into an agreement under Section 1634 of the Social Security Act with the Social Security Administration (SSA) for SSA to make Medicaid eligibility determinations. Supplemental Security Income (SSI) recipients who receive an SSI cash payment or are Section 1619(b) recipients automatically have Medicaid eligibility unless…[t]he State has determined that the Medicaid Trust provision applies.”

The Program Operations Manual System, abbreviated as the POMS, is the controlling SSA staff manual for federal SSA employees.

The following presentation, therefore, limits its discussion to acquiring and maintaining eligibility for Supplemental Security Income (SSI) after preparation, execution and submission of a first or third party Special Needs Trust to the Social Security Administration (SSA) for approval, with emphasis on the practical and legal steps to take if SSA disapproves the trust.

I. Initial considerations and reporting responsibilities

Background. What do you do when SSA disapproves your perfectly-drafted trust? Litigate.

This is the moment to be completely aware of your client’s rights and most importantly, the timetables and jurisdictional deadlines for appealing SSA’s adverse decision, which operate like a statute of limitations.

If you decide that you are not the kind of attorney who wants to butt heads with SSA, it is critical to now, before the crisis, establish a relationship with an experienced attorney who does Social Security appeals.


Some salient points to remember:

SSI and Social Security Disability Insurance (SSDI) are identical medically, but completely different otherwise. One is welfare (SSI) and one is paid-up prepaid insurance for which there are no income or asset tests. Millionaires get SSDI. SSDI checks stay the same each month; SSI can fluctuate monthly based on receipt of other earned or unearned income. See Matrix, Exhibit A attached.

To be eligible for SSI benefits, a claimant has to meet the medical and the non-medical federal regulations for eligibility.

We’re dealing with a small part of the population. Of the 311 million people in the United States, only 4.5 million receive SSI-only benefits, and another 1.6 million receive a small SSI disability benefit to supplement their SSDI benefits. For Texas, for example of 25.7 million residents, the number of SSI recipients is 533,336 of which 219,700 get both SSDI and SSI with the related Medicare and Medicaid health insurance programs.

Not all SSA attorneys are the same: the vast majority only handle initial disability claims on the medical issue – Does the claimant meet the medical eligibility rules to be awarded disability. A very few SSA attorneys will also handle financial appeals.

Elder law attorneys need to understand that for every thousand cases on appeal, maybe only one or two involve non-medical eligibility (issues involving boyfriend-girlfriend status, immigration, deeming of spousal or parental income). Perhaps one in 5,000 cases will involve a trust.

Furthermore, the SSA institutional expertise in non-medical issues resides almost exclusively with local SSA district office staff, not with the federal Administrative Law Judges.

What starts the review process that causes SSA to look at your trust?

SSI reporting responsibilities. It’s important also to understand when “reporting” is due,

and who should do it. When a person applies for SSI disability benefits at the local SSA district office, SSA Claims Representatives (CR) do an initial financial eligibility screening, and if the claimant passes that test, the claim is forwarded for the medical eligibility determination. If medically approved, the SSA CR does a pre-effectuation review in more detail for financial eligibility. It is possible to win the battle, prove medical eligibility at an ALJ hearing, and ultimately lose the war – no benefits are paid – because the more exhaustive financial review proved that the claimant was never financially eligible in the first place, or because financial or personal living arrangement or circumstances changed.

The important point is that once SSA establishes the SSI claimant’s financial eligibility, the law shifts the burden of reporting changes to the claimant to report any circumstances that would affect financial eligibility, with the reporting due within ten days of the first of the month after the change occurred.

What types of things must be reported. The claimant must report any of the changes listed below to SSA, because they may affect eligibility for SSI and the benefit amount:


1. change of address;

2. change in living arrangements, including acquiring a federal common-law spouse (boyfriend/girlfriend publicly “holding out” as a married couple);

3. change in earned and unearned income, including a change in wages or net earnings from self–employment, including the spouse's income if the claimant is married and living together, and parents’ income if applying for a child;

4. change in resources including a spouse's resources, if married and living together, and parents’ resources if applying for a child;

5. death of spouse or anyone in the household;

6. change in marital status;

7. change in citizenship or immigration status;

8. change in help with living expenses from friends or relatives;

9. eligibility for other benefits or payments;

10. admission to or discharge from an institution (such as a hospital, nursing home, or a correctional institution such as prison, jail, detention center, boot camp, etc,);

11. change in school attendance, if you are under age 22;

12. change in legal alien status;

13. leaving the U.S. for a full calendar month or for 30 consecutive days or more;

14. a warrant for a felony crime or for violating a condition of parole or probation is issued for your arrest. However, effective March 18, 2001, we no longer suspend or deny payments based solely on an outstanding warrant for a violation of probation or parole.

For a full list of what to report, see 20 CFR §416.708. What you must report.

Failure to report. If the claimant, or the claimant’s attorney on the claimant’s behalf, does not report changes on time and accurately, several bad things can happen:

the claimant may be underpaid and not receive all benefits due, as quickly as they should be.

SSA may overpay the claimant, and the claimant may have to pay SSA back.

SSA may apply a penalty that will reduce the SSI benefit by $25 to $100 for each time the claimant fails to report a change to SSA, or the claimant or the attorney reports the change later than 10 days after the end of the month in which the change occurred.

If the claimant knowingly makes a statement which is false or misleading or knowingly fails to report important changes, SSA may impose a sanction against the SSI payments. The first sanction is a loss of payments for 6 months. Subsequent sanctions are for 12 months and then 24 months.

The stakes are high. Draft the trust, send it to SSA promptly – unless you don’t have to. See the following.

http://www.socialsecurity.gov/ssi/text-living-ussi.htm

http://www.socialsecurity.gov/ssi/text-income-ussi.htm

http://www.socialsecurity.gov/ssi/text-resources-ussi.htm

http://www.socialsecurity.gov/ssi/text-overpay-ussi.htm


Typical scenario that doesn’t require immediate reporting by the drafting attorney. These include your typical third party SNTs and others:

For persons not yet receiving benefits - unfunded trust. A person with disabilities who is named in another’s Last Will and Testament with a third party SNT inside the document, but with a testator who hasn’t died yet, has nothing to report. The expectancy of receiving an inheritance is not an “available resource.” The concept of available resource is critical to understanding when and what to report.

A “resource” under the federal regulations at 20 CFR §416.1201 is:

(a) Resources; defined. For purposes of this subpart L, resources means cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his or her support and maintenance.

(1) If the individual has the right, authority or power to liquidate the property or his or her share of the property, it is considered a resource. If a property right cannot be liquidated, the property will not be considered a resource of the individual (or spouse).

Therefore, draft the Will with the testamentary trust for the testator, but no reporting is required because the disabled beneficiary may never see the money. The beneficiary could pre-deceased the testator, or the testator’s could die penniless or debts may outstrip probate assets and the beneficiary inherits nothing. The beneficiary does not have “the right, authority or power to liquidate the property” to provide the resource necessary for his food and shelter.

Also included in the non-reporting category would be a stand-alone (a document separate from the Last Will and Testament) but unfunded third party Special Needs Trust.

The same non-reporting would include preparation of a life estate deed where the owner of the homestead property has reserved for herself the right to life in the home and to revoke the deed at any time in the future before it is inherited by the disabled individual.

Typical scenarios that do require immediate reporting by the drafting attorney. These include:

For persons not yet receiving benefits - funded trust. The first party trust drafted pursuant to Section 1917(d)(4)(A) or (C) of the Social Security Act, hereafter “d4” trusts, the trust must be presented to the SSA CR at the time of the initial application for SSI benefits. The attorney should prepare a packet to explain that the trust to be reviewed and should pass muster under SSA rules (POMS SI 01120.203). There are no SSA federal regulations on SNTs.

Our office includes the following with the packet: a copy of the trust document, a copy of the SSI Spotlight on Trusts (see Exhibit B attached), the relevant 8 step “Step-Action” chart from the POMS (Exhibit C attached); and the paperwork that describes and tracks the type of funds or property going into the trust, the bank accounts, and the accountings of the trust to date.


EXAMPLE: Child with developmental disabilities was not eligible for SSI during minority due to deeming of parent’s resources (assets) and income. At age 18, deeming stops. Child had savings or other disqualifying resources in child’s name. Before the application can be filed for SSI, the funds are moved to a d4 trust. The trust, and supporting documents are filed with the application.

For persons receiving SSI benefits - funded trust. The d4 trust is created and funded with only $100. That is clearly under the $2,000 resource limit.

Should the trust be reported to SSA? Absolutely!

Notice that number 4 in the list of changes that must be reported to SSA above is “change in resources.” It does not limit the reporting to “change of resources that would put the claimant over the $2,000 resource limit.” First of all, the attorney does not know what other resources the claimant has already reported, or more importantly, may exist in public records. Secondly, our firm is often dealing with multi-party personal injury (PI) lawsuits. A defendant may offer a nominal sum under the $2,000 resource limit that we use to fund the trust. The trust must be reported to SSA regardless of the amount of its funding.

The trust may accept additional funding until the claimant’s 65th birthday. Is that reportable? Yes. Not because a second d4 SNT is required, but because of the SSI sacred principle of the relationship between income and resources: income is anything that “comes in” during a month, and must be reported to SSA as income; if retained to the first of the following month, it becomes a resource. More succinctly stated: “Income in the month received becomes a resource in the following month.”

EXAMPLE: On February 1, 2015, the SSI claimant received his February SSI check of $733. The SSI claimant’s PI case is settled, liens paid, and the $100,000 net distributed to the claimant or placed in claimant’s d4 SNT on February 5, 2015. The funds went directly from the PI attorney’s trust account to the d4 SNT. The claimant has $100,000 of countable unearned income in the month of February which must be reported to SSA by March 10, 2015. The claimant will have an overpayment of $733 due to SSA because she had too much income in the month of February ($733 Federal Benefit Rate less unearned income of $100,000 received in February, equals not eligibility for SSI for the month of February). However, if the claimant’s funds are transferred to a proper d4 SNT trust before March 1st, the funds will not be a disqualifying resource. By March 10th, the claimant reports the receipt of the PI award by providing a copy of the Closing Statement showing the gross settlement, liens paid, net to claimant; the documents necessary to show that the funds went from the PI attorney’s trust account to the claimant’s checking account, and from there to the SNT, and the bank statements or accountings of the SNT to the date of reporting, plus the SSI Spotlight on Trust, the POMS step-action chart, etc.

The claimant will have a $733 overpayment to SSA for the month of February for being over income. The February SSI check has been received, the notice to SSA was due and complied with on March 10th (so the March check was also already received).


Therefore the April check will be reduced NOT BECAUSE OF THE TRUST (an exempt resource) but because of the overpaid February income. April is the first month that SSA would have the opportunity to correct the February overpayment. The SSI principle is called “two month retrospective monthly accounting.”

On the third party estate planning side, our law firm prefers to avoid testamentary SNTs which require probate to establish the testamentary trust, and instead we prepare stand-alone third party SNTs, especially with multiple family members (parents, grandparents, aunts and uncles, siblings, etc.) who may be providing additional funds at different times. We fund the third party stand alone SNT (TP-SNT) with a nominal amount to secure the tax ID number. We submit the TP-SNT to SSA, again even if the amount is substantially less than the $2,000 SSI resource limit.

THE CARDINAL RULE: When in doubt, report.

ATTORNEY COROLLARY #1: Never, ever, ever, ever counsel your client not to report. Failure to report can be a federal felony, and an attorney’s involvement in it, a conspiracy to commit a federal felony.

ATTORNEY COROLLARY #2: Document your file.

Who should do the reporting. You! To protect the client and to protect you. Legally it is the claimant’s responsibility, or if they have a SSA-appointed Representative Payee, it is the Rep Payee’s responsibility, to report changes to SSA. It is not the bank trustee’s legal responsibility to report nor the drafting attorney’s.

But when dealing with a trust, to avoid unnecessary appeals as well as legal malpractice claims, the attorney should do the reporting, using “the packet” of information suggested above, or if it is a third party SNT, a packet containing a clear statement that “this is a third party SNT to be evaluated under POMS SI 01120.200 only, which does not contain a requirement to have Medicaid payback as it is not a Medicaid qualifying trust.”

SSA Claims Reps are nice people, but with a high school education. My worst grade in law school was trusts and estates. It’s not a simple concept for some lawyers with seven years of college and law school education much less high school educated SSA CR’s to understand the difference between first party and a third party SNT, a pooled trust versus an individual trust, when Medicaid payback is required and when it isn’t. To know, in the case of third party trusts, which legalese in your document PROVES that the third party SNT beneficiary meets the three essential rules of third party trusts in the POMS section on third party trusts (in POMS SI 01120.200) that are quite different from the rules for first party SNTs (in POMS SI 01120.203.)

The best way to win an Social Security appeal is not to have one. The attorney should do the reporting.


II. Dealing with SSA adverse determinations

There are several scenarios when your perfectly-drafted trust will be reviewed by SSA. And the rights of the client are substantially different.

SSA Appeal Procedures. Those clients who are applying for SSI for the first time, and

submitting your trust and supporting documents, have no entitlement to SSI benefits until the case is favorably resolved. If SSA denies the trust, the appeals process follows its ordinary course with ordinary timelines with notices of appeal to the next level due in 65 days. See Exhibit D attached.

For other SSI recipients who are in current pay status at the time they receive the inheritance or PI litigation award and you create the d4 SNT, under the U.S. Supreme Court decision of Goldberg v. Kelly, 397 U.S. 254 (1970), if special timelines are followed and claims for continued benefits made within ten days of the adverse decision on the SNT, the claimant has the “GK” right to continued SSI benefits while you administratively appeal the denial of your perfect SNT through the Reconsideration stage and possibly even through the Administrative Law Judge hearing and decision. The claimant will have to sign a statement that if the appeals process is not successful, the claimant will repay the SSI interim benefits paid. No problem. Advise the client to sign it.

There is some confusion at times at the local SSA district office on whether a claimant can elect to continue benefits during a non-medical appeal. SSA staff may be aware of the statutory right to continue benefits if the issue is medical cessation (SSA claims the client is no longer disabled). That kind of cessation of benefits triggers statutory eligibility to continue benefits. However, cessation due to alleged financial ineligibility when challenged creates a federal constitutional right to continue to receive benefits, at least through the Recon stage hearing, and possibly at the ALJ hearing stage if the client elects to do so at each stage of the process – Reconsideration and Request for Hearing. Because this issue is often confusing to SSA staff, Exhibit M has been attached to assist the attorney in convincing SSA staff that benefits may continue even in financial non-medical cessation cases.

If the SSI claimant fails to file the appeal within ten days, she still has the right to file for the next level of appeal within the 65 day time limit. If she fails to meet the 65 day time limit, there are possible bases for SSA to waive the time limit described in the POMS. Also, in some circumstances, where SSA has already terminated the benefits and a waiver of time to appeal is not allowed, a subsequent “new claim” for SSI can be filed. Certain principles of administrative res judicata may apply, however, so it is always, always best to meet the guidelines.

PRACTICE NOTE. As a practical matter, however, as you will see, each level of appeal requires a filing of a timely notice, but additional documents, including the attorney’s brief, do not have to be filed at the time the notice is filed. It’s obviously better legal practice to do so, but never let an appeal deadline go by. Even if the client does not understand all the issues, tell her to file the Request for Reconsideration if at that stage,


or the Request for Hearing, by herself, immediately at the local SSA district office. The rule is meet the deadline, then do what’s necessary to prepare to win.

The same procedural levels are followed in the same order for individuals who are receiving benefits as for those who are filing a first claim for SSI benefits – the initial determination that your trust makes the claimant ineligible, then the Reconsideration, then the Administrative Law Judge hearing, then to the Appeals Council in Falls Church, Virginia (a suburb of Washington, D.C.) and finally into the U.S. District Court in the appropriate federal district court based on the claimant’s residence, the United States Circuit Court of Appeals and finally to the United States Supreme Court.

Thus, receiving word from the client that the SNT was rejected by SSA is an E ME R G E N C Y. At that point, you must be ready to advise the client, and to file the appropriate appeal documents. See Forms at Exhibits E and F attached. If you are not going to be representing the client in the appeal, get the client in touch immediately with the SSA attorney you have pre-arranged to handle your appeals. If that is not possible, make absolutely sure the client herself goes to the SSA district office and files the next appropriate level of appeal, and if within the ten days of the denial of benefits notice, also file the request to continue benefits. Remember, you have done the perfect SNT. SSA is wrong, you are right, don’t have the client lose because you missed a deadline.

The SSA Initial Determination, response to reported changes, and periodic SSI financial reviews. As noted above, there are different times when SSA will be reviewing your perfect SNT. SSA is required to do periodic reviews. Those times are listed in 20 CFR §416.204. Redeterminations of SSI eligibility.

We’ve mentioned the initial determination when a client not formerly on SSI applies for the first time with a trust or when the client’s inheritance or PI award is reported and placed in a d4 SNT. Another time, and the worst, is when SSA receives notice from the IRS that the claimant has reported income from investments.

The IRS reporting is done via computer runs which match SSA’s records of claimants receiving SSI welfare payments. Red flags automatically trigger SSA notices to claimants to come in to explain this source of reported income.

Hopefully that will never occur in one of your cases because you will have reported, and have proof of so doing through certified return receipt mail, which is another reason you and not the client should report your SNT to SSA.

If you report the change of income and resources to the client BEFORE SSA finds out, the tenor of the case changes dramatically. If it is not reported, and SSA has to find out about it from the IRS first, it is going to be assumed that the non-reporting was intentional, and every discretion will be used against your client and your SNT. If you report first, and timely, SSA will applaud you. The review of whether your trust meets SSI rules will take on a whole different tone.


Second, as a practical matter, you want to report your “perfect SNT” as early as possible because – guess what – everybody makes a mistake, and if you left out something that should have been put in, or put in a clause that should have been left out, what’s the damage. If you reported right away, the damage is X months of loss of benefits – maybe limited to two or three. If instead you didn’t report, and now it is seven years later, the legal malpractice claim is for 84 months times the SSI benefits lost – perhaps $40,000 or more. Better to have a small claim than a large one.

Third, what if you didn’t report the creation and funding that trust you did two or three years ago? Report it now! Report to SSA before IRS does. The SSA staff have the discretion to impose penalties as outlined above, and they will not do so, in my 43 years of experience, if you came to them first. It will come out eventually. And if there’s a mistake, the damages are still less at the two or three year mark, than at seven, eight or more.

Fourth, SSA is (illegally) taking the position that the new POMS they have issued in 2010, 2011 and 2012 can be applied retroactively – even to trusts they have already approved, or as they call it, exempted from counting as a resource. There are rules against ex post facto POMS that apparently the national SSI office staff have forgotten. The difference in treatment of previously reported versus never-reported SNTs is that with a previously reported and “exempted trust,” any new POMS trust rule that SSA publishes must allow for a 90-day “amendment period” for the claimant to revise her trust to make it comply with the newly published rule.

POMS SI 01120.199 Early Termination Provisions and Trusts

A. How to determine when to apply the policies in this section

1. New trusts and trusts that have not been previously excepted under section 1917(d)(4)(A) or (C) of the Act

A trust that is either newly formed or not previously excepted from resource counting must meet all of the criteria set forth in SI 01120.199 through SI 01120.203 and SI 01120.225 through SI 01120.227 to be excepted under section 1917(d)(4)(A) or (C). Do not except such a trust from resource counting unless the trust meets all of these requirements.

2. Trusts that previously met the requirements to be excepted under section 1917(d)(4)(A) or (C) of the Act

A trust that was previously determined to be exempt from resource counting under section 1917(d)(4)(A) or (C) shall continue to be excepted from resource counting, provided the trust is amended to conform with the requirements of this section within 90 days. That 90-day period begins on the day the recipient or representative payee is informed that the trust contains provisions that must be amended in order to continue qualifying for the exception under section 1917(d)(4)(A) or (C).

Do not count a previously exempted trust as a resource during the 90-day amendment period. If the trust still fails to meet the requirements of this section after the expiration of the 90-day amendment period, begin counting the trust as a resource under normal resource counting rules.

NOTE: Each previously excepted trust is permitted only one 90-day amendment period.

… [the POMS goes on to explain what early termination clauses must contain]…

https://secure.ssa.gov/apps10/poms.nsf/lnx/

https://secure.ssa.gov/apps10/poms.nsf/lnx/0501120203





Whether SSA can impose new rules retroactively is a legal issue. One of the tools against them is their own rule on “change of policy” published at GN 04001.100 titled Re-openings – Change in Ruling or Legal Interpretation – Change of Position.

For example, there is a specific Regional Chief Counsel Precedent (legal opinion published in the POMS) that a Null and Void Clause would save a defective trust in some circumstances. Subsequent to publishing that rule, Eric Skidmore at SSA’s national office issued the new POMS on Null and Void Clauses found at SI 01120.227 which is directly the opposite.

Therefore, in an SSA appeal where perhaps the 90-day amendment period has already passed, it would be wise to use the SSA rule on “Change of Position” in the GN section quoted above, against the Social Security Administration, an argument that will probably work better at the ALJ Hearing level than at the Reconsideration level for the reasons that will be explained below.

The statutory and procedural requirements for representing your client before the agency. The Social Security Administration takes great steps, backed up by scary law, to

ensure that attorneys do not take advantage of the clients they are representing before the agency. No attorney may charge or collect a fee unless SSA approves it through one of two alternative processes: the fee petition process or the fee agreement process. Collecting a fee from the client without SSA approval is a criminal offense and can lead to disbarment from practicing before the Social Security Administration, and if state bar rules require notification of other agency’s or state’s actions, potential disbarment from your state bar.

Fee petition process. With a fee petition process, the attorney submits a petition for approval of the fee at the conclusion of the matter on a form provided by the government. The fee petition is submitted to the official at the level at which the claim was approved. If at Reconsideration, to the local SSA staff; if at the conclusion of a successful ALJ appeal, to the Administrative Law Judge; and if at the Appeals Council level, then to the Appeals Council. A copy of the Form is attached as Exhibit N. The attorney can ask the client to deposit an amount for the anticipated fee in the attorney’s trust account, and held until SSA determines the amount of the fee. Any amount not approved must be returned to the client.

Fee agreement process. As an alternative, the attorney could agree to execute a contract to represent the client on a contingent fee basis of 25% of the past due benefits, potentially capped at a fee of $6,000 if successful (there are exceptions). This eliminates the requirement to keep hours and submit a detailed fee petition, but only works if the client has funds due her at the conclusion of the case. If the client has elected to have benefits continue during the pendency of the matter, there will be no “retroactive award” from which to calculate a 25% fee, and as the math consistently reveals, 25% of zero results in zero fee to the attorney.

Collecting a fee from the Trustee. If it is a first party d4 SNT, collecting a fee from the trustee is forbidden unless approved by the Social Security Administration. Collecting a fee from the trustee of a third party SNT may not be. Similarly, collecting a fee from a guardianship which


has been approved by the guardianship court judge may avoid having the fee approved by the Social Security Administration.

Notifying SSA of your representation. SSA rules require notification on Form 1696, Appointment of Representative. A copy of Form 1696 is attached as Exhibit O. Additional forms for direct payment of the fee, and IRS tax notification are also required. See Form 1695 attached as Exhibit P.

First steps in the appeal – responding to requests for information. The initial

inquiry by SSA of an unreported source of income begins with a request to the claimant that they need to appear in the local office to explain it. Failure to respond and fully cooperate with SSA will result in immediate termination of benefits for failure to cooperate:

20 CFR §416.714. When reports are due….

(b) We request a report. We may request a report from you if we need information to determine continuing eligibility or the correct amount of your SSI benefit payments. If you do not report within 30 days of our written request, we may determine that you are ineligible to receive SSI benefits. We will suspend your benefits effective with the month following the month in which we determine that you are ineligible to receive SSI benefits because of your failure to give us necessary information. [emphasis added]

More specific powers with regard to finances are granted to SSA by the claimant when the person applies for SSI disability benefits. Although they may not realize it, the claimant has authorized SSA to get information directly from financial institutions. This anti-fraud measure is what our firm uses to advise banks when the trust department receives a request from SSA to release banking information and the claimant, perhaps because of the mental impairment itself, refuses to give the bank authority to respond. It is the trustee’s obligation to protect the claimant, and one interpretation is to assist the claimant in maintaining benefits by promptly reporting.

20 CFR §416.207. You do not give us permission to contact financial institutions.

(a) To be eligible for SSI payments you must give us permission to contact any financial institution and request any financial records that financial institution may have about you. You must give us this permission when you apply for SSI payments or when we ask for it at a later time. You must also provide us with permission from anyone whose income and resources we consider as being available to you, i.e., deemors (see §§ 416.1160, 416.1202, 416.1203, and 416.1204)….

(d) We may ask any financial institution for information on any financial account concerning you. We may also ask for information on any financial accounts for anyone whose income and resources we consider as being available to you (see §§ 416.1160, 416.1202, 416.1203, and 416.1204)….

(g) If you don't give us permission to contact any financial institution and request any financial records about you when we think it is necessary to determine your SSI eligibility or payment amount, or if you cancel the permission, you cannot be eligible for SSI payments….

http://www.ssa.gov/OP_Home/cfr20/416/416-1160.htm









Once SSA has the information and mistakenly determines that your perfect SNT isn’t, a Notice of Determination will be issued advising the client that she has 65 days to appeal, and in small print for those already receiving benefits, that appealing within ten days will continue the benefits.

Request for Reconsideration. Assuming you are representing the claimant in the appeal,

the next step is to file the Request for Reconsideration. A copy of the blank form is found in Exhibit E. Don’t forget to file the request that benefits continue pending the appeal if within the ten day period. A copy of a filled out Request for Reconsideration is attached in Exhibit G. The striking thing about the filled out form is that we have circled, numerous times, the request that the Reconsideration not be done by “Case Review” but by Informal Conference. [The Formal Conference procedure is not available in non-medical cases], Case review will result in the immediate issuance of a denial of the Reconsideration without a chance to discuss the matter with local staff. An Informal Conference requires that SSA cannot issue a denial without a face-to-face conference in the local office. Always request an Informal Conference.

PRACTICE TIP. Why do we so blatantly circle the box that the Reconsideration be by “Informal Conference”? Because SSA processes thousands of requests for reconsideration daily. In a medical eligibility case, our firm like virtually all firms in the country never requests an in-person conference. The local district office staff are not the people making the medical eligibility determinations and are powerless to reverse it. The local staff, however, do issue Recon decisions on the non-medical issues all the time, and 99% of people requesting reconsideration do so asking for “case review” which gets them a one-day turn-around, “Hey, we told you we were right the first time.” Since we really want to see the staff analysis of why the SNT is allegedly defective, and have the opportunity to have the decision reversed in just a few weeks or months rather than a year or more waiting for an ALJ hearing, we need the staff to have to set up a conference and give us the information. It is to avoid simple automaton error – “See Request for Recon, process it as a Case Review” which they do in 99% of the cases. So SCREAM (in circled writing) that this case is different, we want an in-person conference.

The rules for a reconsideration conference. SSA has published a set of rules for

Reconsideration conferences found in the POMS. Because they are important, a set is attached as Exhibit H. The federal regulations on Recon conferences are:

20 CFR§ 416.1413. Reconsideration procedures.

If you request reconsideration, we will give you a chance to present your case. How you can present your case depends upon the issue involved and whether you are asking us to reconsider an initial determination on an application or an initial determination on a suspension, reduction or termination of benefits. The methods of reconsideration include the following:

(a) Case review. We will give you and the other parties to the reconsideration an opportunity to review the evidence in our files and then to present oral and written


evidence to us. We will then make a decision based on all of this evidence. The official who reviews the case will make the reconsidered determination.

(b) Informal conference. In addition to following the procedures of a case review, an informal conference allows you and the other parties to the reconsideration an opportunity to present witnesses. A summary record of this proceeding will become part of the case record. The official who conducts the informal conference will make the reconsidered determination.

Who will be there. The claimant, her attorney, and a SSA Claims Rep acting as the hearing officer will be there. The District Manager may sit in, or may actually run the conference (better yet – they usually have more experience).

What will happen. The claimant and her attorney have the right to examine the evidence offered against the perfect trust. In reality, that may not happen. Our firm has had wonderful experience with Recon conferences, and a terrible experience or two.

Why? Because before issuing the initial determination of your perfect SNT, some SSA district office staff have referred the trust to the SSA Regional Office for review. Perhaps it has been reviewed by the Regional Chief Counsel or his or her staff attorneys. If it’s the latter, SSA may take the position that the communications to the local SSA staff stating why it is believed that your perfect SNT is defective will be regarded as privileged attorney-client communications.

Try to get the local SSA staff to get the Regional Chief Counsel staff on the telephone during the conference to iron this out. The purpose of the Recon conference is for you to understand why they believe the trust is defective (which will NOT appear in the initial notice) and for you to have an opportunity to explain why SSA’s position is incorrect.

If that is not possible, ask for a continuance of the Recon conference until you get an interpretation/ruling from the Regional Chief Counsel that you have a right to see the evidence (usually an email from the Regional Office to the local SSA staff) that explains why the trust is allegedly defective.

You should prepare and bring to the Recon conference an analysis of your trust and why it meets the Eight Step-Action Chart requirements of POMS SI 01120.203, or if it is a Third Party SNT, where it contains the three minimum rules for a passable TP-SNT found in POMS SI 01120.200. A form which we use to respond to SSA for d4A individual trusts is attached as Exhibit I. Any form of written argument that you think is persuasive is acceptable. There is no requirement that you produce anything in writing but it would be bad practice to miss the opportunity.

PRACTICE TIP. If you know that your local office hates trusts and is generally difficult to deal with, consider bringing a court reporter to the Reconsideration Conference.


When will the conference be scheduled. There is what the rules suggest and what really happens. Here’s the rules:

20 CFR §416.1413c. Arrangement for conferences.

(a) As soon as we receive a request for a formal or informal conference, we shall set the time, date and place for the conference.

(b) We shall send you and any other parties to the reconsideration a written notice about the conference (either by mailing it to your last known address or by personally serving you with it) at least 10 days before the conference. However, we may hold the conference sooner if we all agree. We will not send written notice of the time, date, and place of the conference if you waive your right to receive it.

(c) We shall schedule the conference within 15 days after you request it, but, at our discretion or at your request, we will delay the conference if we think the delay will ensure that the conference is conducted efficiently and properly.

(d) We shall hold the conference at one of our offices, by telephone or in person, whichever you prefer. We will hold the conference elsewhere in person if you show circumstances that make this arrangement reasonably necessary.

In our experience, Reconsiderations conferences are routinely not set up for many weeks or several months. Calendar two months. If the conference is not set by that time, start contacting the local SSA office to inquire. Be nice. The person you yell at could be the one deciding your Recon appeal.

The procedures for running the conference are laid out in detail in Exhibit H. Usually you will know at the conclusion of the Recon conference whether you have convinced the hearing officer of the perfection of your perfect SNT. A formal written Notice of Reconsideration will be issued in writing revealing the good or bad news.

If the worst occurs and your SNT has defects, or SSA believes it has defects and you can amend with adversely affecting the viability of the client’s SNT, amend the trust, re-submit to SSA, and hopefully receive a favorable determination. If you discover the error at the Recon conference itself, ask for a continuance to correct the error so that your client does not have to file a new SSI application.

PRACTICE TIP. Build your reputation with your local office SSA staff. Be smart. Be prepared. Be helpful but be firm. And always be polite.

Request for Hearing. The Notice of Reconsideration will state that if you disagree, you have

the right to request a hearing before an Administrative Law Judge. The Form for doing that is attached as Exhibit J. Since 99%+ of cases appealed are medical, SSA staff will be looking for a host of medical disability documents that must accompany a Request for Hearing. Again, to prevent human error, we boldly advise that “this is a financial appeal and we are not submitting


Medical Release forms, the Disability Report, or other forms not required in an SSI financial eligibility issue only” or words to that effect.

When will the hearing occur. The attorney will have plenty of time to prepare for the hearing. Filing a Request for Hearing gets a claimant in line for a hearing at the Office of Disability Adjudication and Review (ODAR). Under George Bush, the wait for a hearing increased to almost three years and a backlog of one million cases occurred. Obama has re-staffed the ALJ positions, and despite a larger number of applications than usual due to the layoff of disabled workers seeking to get back on benefits, the wait is shortened substantially. As of July 2015, some sample state-wide average hearing wait times in number of months between filing Request for Hearing and having the hearing are:

California – 13.2 months Wisconsin – 16 New York – 13.3 North Carolina – 17.5 Texas – 12.7 Florida – 18.2 Illinois – 14.7 Massachusetts – 13.0 Washington D.C. – 17.0

This is the time from filing the Request for Hearing to having a hearing, not from the initial determination, and also not to the time the Administrative Law Judge actually issues the operative favorable or unfavorable decision, which may be long after the hearing was held. Therefore, one can see why it is important to try to win at the local SSA district office at Recon.

In most ODARs, the appeal will not be assigned to a particular ALJ until a month or two before it is set for a hearing. Clients will ask whether you can set the hearing, as is routinely done in many state civil and criminal courts. Unfortunately that is not one of the powers of the client, nor the client’s attorney. The SSA scheduling computer and an ODAR scheduling clerk, together with the particular ALJ assigned the case, will determine when the case is to be heard.

Where will the hearing occur. States usually have multiple ODAR offices responsible for a particular geographic area in that state. For example, in Florida, there are hearing offices in eight cities. As can be seen by the chart below, each of the ODAR office’s waiting times can vary substantially. For example, in Florida the Orlando office will hold a hearing in 16 months, but the Fort Myers office will be 21 months – almost two years! The win/loss average also varies from Jacksonville ODAR approving benefits 32% of the time, to Tallahassee’s approval of 49%.

The number of judges available, processing times, and other data may vary. What is uniformly consistent, however, is the process for conduct of a hearing. Hearing or “court” rules of procedure, and some of substance, are found in the published HALLEX, the name given to them by SSA. They are found at http://www.ssa.gov/OP_Home/hallex/hallex.html.

http://www.ssa.gov/OP_Home/hallex/hallex.html


Office Judges

Avg. Hearing

Wait Time

Average Processing

Time

Avg. Dispositions Per Day Per

ALJ

Cases Dismissed

Cases Approved

Cases Denied

Fort Myers Fl 5 21.0

months 702 days 1.6 16% 45% 39%

Ft Lauderdale 16 18.0

months 589 days 1.7 22% 41% 37%

Jacksonville 16 18.0

months 580 days 2.1 21% 32% 47%

Miami 14 20.5

months 658 days 1.6 29% 41% 31%

Orlando 15 16.0

months 488 days 2.2 17% 47% 35%

St Petersburg Fl

11 16.0

months 502 days 2.1 19% 48% 33%

Tallahassee Fl 7 19.0

months 572 days 2.5 18% 49% 33%

Tampa 15 17.0

months 528 days 2.1 17% 48% 35%

All Florida 18.2

months 577 days 2.0 20% 44% 37%

National Average: 14.3

months 452 days 2.1 18% 43% 38%

Go to the website, www.disabilityjudges.com and click on your state, and then the local “office” listed there, and you will also see the names of the judges and their record for paying or denying benefits, and comments about the particular judge’s procedures, demeanor, or other useful information. Our office secures for our file a print-out of the information on every judge in that particular ODAR unless it is an ODAR where we are totally familiar with each judge.

Outside help? Clients may also want to contact their Congressperson or U.S. Senator, thinking that pressure from them will result in a quicker or more favorable decision. SSA is used to getting these “Congressional Inquiries” and has a whole set of routine responses to issue by computer. Under the separation of powers, the legislative branch cannot interfere in the executive branches determination of eligibility for benefits. The inquiring member of Congress will be told that they will be informed of the decision when it is made, and they are. The impact of getting a congressperson involved? Zero. However, if you win, and the administrative process of getting the check to the client is delay, involving the congressional person’s “constituent office” staff is key to getting SSA to act quickly. The congressperson just can’t influence the decision, but can help effectuate it once SSA has ruled.

http://www.disabilityjudges.com/state/florida/fort-myers-fl

http://www.disabilityjudges.com/state/florida/ft-lauderdale

http://www.disabilityjudges.com/state/florida/jacksonville

http://www.disabilityjudges.com/state/florida/miami

http://www.disabilityjudges.com/state/florida/orlando

http://www.disabilityjudges.com/state/florida/st-petersburg-fl

http://www.disabilityjudges.com/state/florida/st-petersburg-fl

http://www.disabilityjudges.com/state/florida/tallahassee-fl

http://www.disabilityjudges.com/state/florida/tampa

http://www.disabilityjudges.com/


Scheduling the hearing. At a minimum, the client and attorney will be advised more than twenty days before the hearing of the time and place for the hearing. Try not to ask for a continuance, as that will put you back in line, albeit at the top. But hearing schedules are usually set 90 days in advance by the judge and the scheduling clerk, so continuing your hearing will cause you to have to wait an additional three months.

Review the ODAR file. Never, ever go to a hearing with reviewing the ODAR file. In medical cases those files are now digitized, and you get a CD with all the medical and procedural records in the file to date. In a non-medical SSI case, however, the files are still processed in paper format. Go to the local ODAR with your personal identification in hand, and a copy of your Form 1696 showing your appointment as the attorney representative for the claimant, and ask to see the “Exhibit File” in the case. Read it cover-to-cover. At that point, if you have not previously seen the SSA staff notes explaining why your perfect SNT isn’t, you will then discover the case for the other side – what SSA felt was wrong with your trust.

What should you submit. Having reviewed the ODAR Exhibit File, it is important to have a written brief arguing why you believe your trust complies with SSA rules. At the ODAR level, it is important to explain up front to the judge in writing, and orally, that there are no federal regulations on Special Needs Trusts, and therefore the POMS control.

Submit the brief before the hearing. You want to set the stage, but more importantly, sometimes judges will read a brief and decide you’re right and a hearing is not necessary.

The POMS are the only source of detailed guidelines for determining the validity of a Special Needs Trust and its proper administration, In Chevron, USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L.Ed.2d 694 (1984), the U. S. Supreme Court held that in the absence of statutory or regulatory prohibitions, an agency’s interpretations of the applicable statutes shall be given deference. The Court ruled in Washington State Dept. of Social & Health Services v. Guardianship Estate of Keffeler, 537 U.S. 371, 123 S.Ct. 1017, 154 L.Ed.2d 972 (2003) that Chevron principles apply to the SSA POMS.

Most recently and more specifically for Special Needs Trusts, the 8th U. S. Circuit Court of Appeals in the Draper v. Colvin case in 2015 discussed the POMS on SNTs and decided as follows:

The district court determined that the POMS provisions at issue warrant deference

under Skidmore v. Swift & Co., 323 U.S. 134 (1944). Skidmore deference recognizes that

an agency’s interpretation of the statute it is charged with implementing “may merit some

deference whatever its form, given the ‘specialized experience and broader investigations

and information’ available to the agency, and given the value of uniformity in its

administrative and judicial understandings of what a national law requires.” Mead, 533

U.S. at 234 (quoting Skidmore, 323 U.S. at 139). Such deference operates along a spectrum.

Id. at 228. The amount of deference afforded to an agency interpretation under Skidmore

turns on several factors, including: (1) the thoroughness of the agency’s consideration, (2)

the validity of its reasoning, (3) consistency with earlier and later pronouncements, (4)

formality, (5) expertise of the agency, and (6) all those other factors “which give it power


to persuade, if lacking power to control.” Id. at 228-29 (quoting Skidmore, 323 U.S. at

140).

We conclude that the district court properly held that the provisions in the POMS

interpreting § 1396p(d)(4)(A) warrant Skidmore deference. According respect under

Skidmore here is consistent with the Supreme Court’s conclusions that “[t]he Social

Security Act is among the most intricate ever drafted by Congress,” Schweiker, 453 U.S.

at 43, and that Congress routinely relies on agencies to fill gaps in the statutes they

administer. See 42 U.S.C. § 405(a) (giving the Commissioner “full power and authority to

make rules and regulations and to establish procedures” to administer the Social Security

Act); Chevron, 467 U.S. at 843 (noting that Congress explicitly and implicitly delegates

authority to agencies to fill statutory gaps); see also Wash. State Dep’t of Soc. & Health

Servs. v. Guardianship Estate of Keffeler, 537 U.S. 371, 385-86 (2003) (granting the POMS

provisions examined in that case respect under Skidmore); Gragert v. Lake, 541 F. App’x

853, 856 n.1 (10th Cir. 2013) (stating that the POMS warrants respect under Skidmore);

Carillo-Yeras v. Astrue, 671 F.3d 731, 735 (9th Cir. 2011) (stating that the POMS may be

entitled to respect under Skidmore “to the extent it provides a persuasive interpretation of

an ambiguous regulation”); accord Davis v. Sec’y of Health & Human Servs., 867 F.2d

336, 340 (6th Cir. 1989) (“Although the POMS is a policy and procedure manual that

employees of the [administering agency] use in evaluating Social Security claims and does

not have the force and effect of law, it is nevertheless persuasive.”).

We further agree with the district court’s conclusion that the POMS provisions at

issue here—namely, those in POMS SI 01120.203B—warrant relatively strong Skidmore

deference. The relevant POMS provisions fall squarely within the SSA’s area of expertise.

See Hagans v. Comm’r of Soc. Sec., 694 F.3d 287, 303 (3d Cir. 2012) (explaining that the

SSA “has a great deal of expertise in administering” the Social Security program). In

addition, the POMS provisions demonstrate valid reasoning; that is, the detailed process

required for establishing qualifying special needs trusts contained in the POMS is

consistent with “Congress’s command that all but a narrow class of an individual’s assets

count as a resource when determining the financial need of a potential SSI beneficiary.”

Draper v. Colvin, No. CIV. 12-4091-KES, 2013 WL 3477272, at *9 (D.S.D. July 10, 2013)

(citing 42 U.S.C. § 1382b). Finally, the provisions interpreting § 1396p(d)(4)(A) are part

of a relatively long-standing and consistent interpretation that ensures universal

applicability of the statute. Id.; see Sai Kwan Wong v. Doar, 571 F.3d 247, 261 (2d Cir.

2009) (noting that “the deference due to an agency interpretation is at the high end of the

spectrum of deference when the interpretation in question is not merely ad hoc but is

applicable to all cases” (quoting Estate of Landers v. Leavitt, 545 F.3d 98, 110 (2d Cir.

2008)); cf. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212 (1988) (declining to grant

deference to an interpretation that emerged during litigation rather than through earlier

agency action). Draper has not pointed to any contrary interpretation of § 1396p(d)(4)(A)

advanced by the SSA since the special-needs trust exception was incorporated into §

1382b. For these reasons, we conclude the district court correctly held that Draper had to

comply with the requirements listed in the POMS to establish a qualifying trust.

Most ALJs scoff at the POMS and consider them unworthy of a judge’s attention. That works in your favor, however, if your case rests on challenging the POMS as being in violation of the federal Special Needs Trust statute. If your trust does comply with the POMS, then suggest that the Keffeler and Draper cases clearly indicate that SSA has to follow its own published rules and help “educate” the ALJ on the confining rules of the POMS.


The form of your “brief” is unspecified by SSA or ODAR rules. Anything persuasive and useful is appropriate and can even be in letter format on your letterhead. Our law firm prefers a little more formal presentation that would be appropriate in a civil court appeal.

Procedure at the hearing. Arrive early and again ask for the Exhibit File from the clerk at

the front desk. Explain it is a “paper file” since almost all hearings are not these days. Review the file for anything new. Often you will find paperclips or judge’s notes of the random things the judge thinks is relevant. If you client has not reported the trust timely, most certainly the judge will make note of it and hold it against the client. Many times, however, the client has in fact told SSA local office staff, and may even know personally the name of the SSA staff member. Make a note to have the client testify to that fact, and include it in your opening statement.

Who should be there. You will meet your client in the ODAR waiting room a half hour before the hearing time. Go over the points with the client that you will want the client to testify to at the hearing. If the beneficiary is a cute child in an extra-large handicapped buggy for a ten-year-old, make sure the child is there for the hearing. In child cases, most judges insist on the child’s presence anyway. But if waived, and the child is adorable, don’t miss your opportunity. Judges get tired of seeing old, broken down disabled adults all day long, all week and all month.

What to bring. Make sure you have an extra copy of your brief for the judge, just in case, and a clean copy of the SNT and any amendments to it after its initial execution. Some judges will request to see the personal injury Closing Statement that led to the creation of the d4 SNT, and a complete accounting from beginning to present. Our firm is prepared to provide those at hearing, but only if requested. We don’t want the judge getting confused, which happened in a Florida Panhandle case, between evaluating the SNT as a qualifying document, and reviewing the distributions from the trust in case any of them were disqualifying income. Keep the focus on the language of the trust and the determination of whether it is an exempt resource, unless, of course, the denial also includes allegations of improper distributions from the trust by the trustee.

Conduct of the Hearing. Obviously, there will be some variation between judges.

My favorites will ask you to come into the hearing room alone, without your client, and will discuss the case off the record in an informal give and take, then tell you to bring in the client and we’ll put certain testimony on the record and close the hearing in fifteen minutes. That kind of conference is going to lead to a favorable decision.

Most judges will have you and clients come in to the small courtroom together. The hearings are closed to the public. If testimony is going to be taken from more than one person, the judge may invoke the rule to have other witnesses wait outside while the claimant testifies first, then bring in the additional witnesses one at a time.

The judge will be sitting at a small judicial bench, and there will be a perpendicular table for you and the clients to sit at. There will be computers in front of you (which are used in medical


cases only), and microphones which are making a recording of the proceeding. The judge will have a hearing monitor, an assistant who runs the recording equipment and handles any paperwork for the judge.

You will sit down and remain seated during the hearing, even when you are presenting your opening statement. There will be no attorney for the Social Security Administration, which is a blessing and a curse, because the judge becomes your opposing counsel (ever see two lawyers in a room agree 100% on anything?).

The judge will begin the case by introducing himself or herself, and explain to the claimant that the judge is there to hear their appeal and is not bound by the prior determinations made by SSA to date. If the client does not speak English, SSA will provide an interpreter if you advise them in advance of the hearing. The interpreter will be sworn to accurately interpret and your client will be sworn to tell the truth. If the judge asks the client to stand, raise their right hand and be sworn, you stand with your client until the oath is concluded.

Some judges will then ask you to identify yourself as the attorney representative and may ask the client if you are their chosen representative.

The judge will then indicate that various documents were assembled and assigned exhibit numbers, and ask you as the representative if you have any objections to including the exhibits in the official record of the proceedings. It is not appropriate or effective to object to an exhibit, such as the SSA analysis of the record, because it says something you don’t like. Other objections may be valid. Most of the time, no objections are appropriate.

Hopefully, the next thing the judge will do is ask you to give an opening statement. In a non-medical SNT case, our firm regards this as the appropriate time to lay out our oral argument as to the validity of the SNT. Explain the story. The client got a PI award. The client followed the advice of his personal injury attorney and hired you as an expert in Special Needs Trust to prepare a trust that complies with SSA law. Etc. Keep it brief and relevant.

SSA Administrative Law Judges are usually not local to community where they serve. They are recruited and trained nationally, and may serve in various ODARs during their careers. Some work their way through attrition and vacancies and applying for lateral moves to communities that they want to work in over the decades they serve as federal ALJs.

Because they are “not from these parts” necessarily, if any part of your presentation refers to localities, or institutions, personalities, etc., keep in mind the ALJ may have no point of reference or common understanding to that to which you are referring.

Almost every judge will have completely read the file and have an understanding of the issues. They may, however, not have a thorough understanding of the relevant POMS. The trick is to explain the POMS in a way that does not reveal the judge’s lack of knowledge in an obvious way.


If after your opening statement the judge feels the need to have testimony from the client, it is customary for the judge to ask questions first, then turn the client over to you for additional questions. Obviously it is important to carefully observe the judge’s face during the questions and answers, make notes of any areas you gleaned may have been confusing the judge, and when it’s your turn, ask your client follow up questions.

When the judge, and you, feel that no more testimony is needed, if any were taken, the judge may indicate that he or she is satisfied, or that the judge has a problem with a particular issue, and an informal colloquy ensues between you and the judge.

Eventually the judge will announce that the decision will be issued in writing and sent to the client, with a copy to you as the attorney representative. Normally decisions are issued in four to six weeks for medical cases. Our experience is that it takes much longer for non-medical decisions, such as those involving Special Needs Trusts, since there is no template or formula for issuing a non-medical decision.

The judge has to issue a written decision either way – in your client’s favor or not – because each side, your client and SSA, has the opportunity to review the decision and appeal. If you win at the ALJ level, the statistical odds of SSA taking “own motion review” of your victory are less than one percent.

Appeals Council Review. If you lose, the next step is to file a Request for Review of Hearing

Decision/Order. See the blank form attached as Exhibit L.

The Appeals Council is headquartered in Falls Church, Virginia (suburb of Washington, D.C.) with additional offices in Baltimore, Maryland and Crystal City, Virginia.

The Appeals Council looks at all requests for review, but it may deny a request if it believes the hearing decision was correct. If the Appeals Council decides to review your case, it will either decide the case itself (an outright reversal of the unfavorable ALJ decision)or return it to an Administrative Law Judge for further review (remanding the case to the same ALJ you had at the ALJ hearing). When the Appeals Council reviews your case it may consider any of the issues considered by the Administrative Law Judge, including those issues that were favorably decided in your case. Therefore, be careful in appealing ALJ decisions that are partially favorable and partially unfavorable. You may lose everything if the Appeals Council decides that even the parts you won were mistakes by the ALJ.

Additional informal or formal briefs may be submitted to the Appeals Council at any time before it issues its final decision. The Appeals Council does not grant oral argument in these cases except in super-exceptional circumstances, and it is difficult to conceive how an ordinary SNT case could fall into that category.

You will receive a copy of the Appeals Council's final action on your case, but it will be a long, long time in coming, much longer than the normally long time in deciding medical disability


appeals. Again, the issues are unfamiliar to judges at the Appeals Council and decisions must be crafted after unusual (for them) research.

This is the last step in the administrative process, and constitutes exhaustion of administrative remedies when the appeal is unfavorably decided, triggering your right appeal to the federal court.

If you bring a civil action in federal court seeking judicial review of the Social Security Administration's (SSA's) final decision, SSA staff will prepare the record of the claim for filing with the Court. This includes all the documents and evidence SSA relied upon in making the decision or determination.

Federal Court Review. There is a fee for filing a civil action in Federal court. There have

been no fees to date for appealing adverse decisions through the SSA administrative process. It is unlikely that a Motion to File In Forma Pauperis will be successful because the client has the wherewithal to pay the court filing fee from the Special Needs Trust.

The federal court appeal is filed by Complaint in the U.S. District Court including as attached Exhibits the ALJ’s decision and the Appeals Council decision, with service on the Commissioner of Social Security as the defendant. An Answer to the Complaint filed by the U. S. Attorney’s office as attorneys for the Commissioner. The Answer will include a transcript of the oral proceedings before the ALJ and copies of the ALJ and Appeals Council Exhibit file.

Often the case is re-assigned by the designated federal judge to a Magistrate Judge who will request a declaration in writing of your consent to have the Magistrate Judge decide the case, rather than issue a Report and Recommendation to the federal judge. Our office determines the likelihood of a favorable determination from the Magistrate Judge and whether the assigned favorable judge is good or not good for the type of claim we are presenting. If good, we do not agree to having the Magistrate Judge make the final binding determination, and reserve our right to file Exceptions to the Magistrate Judge’s Report, so that a second round of briefs are often required, but give our client two bites of the victory apple.

Occasionally, but rarely, we will appeal an adverse federal court decision to the United States Circuit Court of Appeals. When we do, we are usually successful, because the adverse decision was particularly egregious, not because we are the best appellate attorneys in the world.

Another consideration is whether the bad facts of your case will make bad law in your Circuit. An example would be the Eight Circuit’s recent decision on the Center for Special Needs Trust appeal on the over-age 65 pooled trust case.

Conclusion. It is a total of seven procedural steps from the Notice of Planned Action finding

your perfect SNT not so perfect, to the United States Supreme Court.

FINAL PRACTICE TIP: Because time limits to perfect an appeal are short, deciding now if this kind of attorney work is your cup of tea, and if not, determining in advance, which


attorney who practices Social Security law would be best for you to work with, is important. Because SSA rules and procedures are the same around the country, the attorney you select does not have to be one from your city.

But even if you are not going to handle the appeal itself, knowing and acting on the procedural steps to take on an emergency basis is critical. Protect your client thereby protecting yourself. Make sure the appeal deadline does not pass.

However, the best way to win the appeal, as we have emphasized from the beginning, is to not need to appeal at all by following the SSA published rules for what constitutes a perfect d4 self-settled SNT or a third party SNT, and making sure that SSA is informed of the creation and funding of the trust at the appropriate time.

ATTACHMENTS – 16 Exhibits, 53 Pages

Exhibit A Matrix

Exhibit B SSI spotlight on Trusts

Exhibit C Eight step-action charts for d4 Special Needs Trusts

Exhibit D SSA Appeals Procedure Flowchart

Exhibit E Request for Reconsideration (blank)

Exhibit F Request that benefits continue pending appeal

Exhibit G Request for Reconsideration (filled in)

Exhibit H Reconsideration Conference POMS

Exhibit I SNT Evaluation forms

Exhibit J Request for Hearing (blank)

Exhibit K Request for Hearing (filled in)

Exhibit L Request for Review of Hearing Decision/Order (by Appeals Council)

Exhibit M POMS SI 02301.310 GK payments continue pending appeals

Exhibit N Fee Petition Form

Exhibit O Form 1696 Appointment of Representative

Exhibit P Form 1695 for Direct Payment of fee

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Lillesand, Page 19

Conclusion. It is a total of seven procedural steps from the Notice of Planned Action finding your perfect SNT not so perfect, to the United States Supreme Court. Most of your cases, however, are going to be resolved at the local SSA District Office, or at worst, at the Administrative Law Judge hearing. Because very few facts will be in dispute, Elder Law attorneys should consider representing their client and defending their SNT. The cases are mostly legal argument not presentation of witnesses and evidence, and the Federal Rules of Evidence are relaxed in Social Security ALJ hearings.

Because time limits to perfect an appeal are short, deciding now if this kind of attorney work is your cup of tea, and if not, determining in advance, which attorney who practices Social Security law would be best for you to work with. Because SSA rules and procedures are the same around the country, the attorney you select does not have to be one from your city.

But even if you are not going to handle the appeal itself, knowing and acting on the procedural steps to take on an emergency basis is critical.

The best way to win the appeal, as we have emphasized, is to not need to appeal at all by following the SSA published rules for what constitutes a perfect d4 self-settled SNT or a third party SNT, and making sure that SSA is informed of the creation and funding of the trust at the appropriate time by following the reporting rules.

EXHIBITS ATTACHED

A. Matrix

B. SSI Spotlight on Trusts

C. Eight step‐action charts for d4 Special Needs Trusts

D. SSA Appeals Procedure Flowchart

E. Request for Reconsideration (blank)

F. Request that benefits continue pending appeal

G. Request for Reconsideration (filled in)

H. Reconsideration Conference POMS

I. SNT Evaluation forms

J. Request for Hearing (blank)

K. Request for Hearing (filled in)

L. Request for Review of Hearing Decision/Order (by Appeals Council)

M. POMS SI 02301.310 GK payments continue pending appeals

N. Fee Petition Form

O. Form 1696 Appointment of Representative

P. Form 1695 for Direct Payment of fee

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