AR 92-1(3): Mazza v. Secretary of Health and Human Services, 903 F.2d 953 (3d Cir. 1990) -- Order of Effectuation in Concurrent Application Cases -- (Title II/Title XVI).

ISSUE:

Whether the Secretary's processing of concurrently filed claims for Title II benefits and Supplemental Security Income (SSI) payments under Title XVI which resulted in the Title II benefits being calculated first and the potential Title XVI payments being offset was permissible under section 1127 of the Social Security Act. Section 1127 (the windfall statute) provides that when a person is entitled to both SSI and retroactive Social Security benefits for one or more months, either the SSI or the retroactive Social Security benefits will be reduced by the amount of SSI payments that would not have been paid if the retroactive Social Security benefits had been paid in the months in which they were regularly due.

STATUTE/REGULATION/RULING CITATION:

Section 1127 of the Social Security Act (42 U.S.C. 1320a-6), 20 CFR 404.408b, 416.1100, 416.1123(d).

CIRCUIT:

Third (Delaware, New Jersey, Pennsylvania, and the Virgin Islands)

Mazza v. Secretary of Health and Human Services, 903 F.2d 953 (3d Cir. 1990)

APPLICABILITY OF RULING:

This Ruling applies to determinations or decisions at all administrative levels (i.e., initial, reconsideration, Administrative Law Judge hearing and Appeals Council Review).

DESCRIPTION OF CASE:

In June 1984, Mr. Mazza filed concurrent applications for disability insurance benefits (Title II benefits) and SSI payments. In February 1985, Mr. Mazza began receiving a veterans pension which caused his income to exceed the limits for SSI eligibility. Accordingly, Mr. Mazza's claim for SSI payments covered the period between June 1984 and February 1985. In a letter dated June 5, 1985, he was notified that he met the medical requirements for Title II benefits. Shortly thereafter, Mr. Mazza's eligibility for Title II benefits and SSI payments was determined. The Social Security Administration (SSA) calculated Title II benefits first and applied an offset against potential SSI payments pursuant to the windfall statute since SSI would not have been paid if the Title II benefits had been paid when due. Thus, Mr. Mazza was precluded from establishing SSI eligibility.

On July 15, 1985, SSA informed Mr. Mazza that his application for SSI was denied because of his income, including Title II benefits for the period beginning June 1984. SSA notified him on August 6, 1985, that he would receive a check for Title II benefits covering the months from June 1984 to July 1985.

Mr. Mazza requested reconsideration of his SSI denial. On September 20, 1985, SSA affirmed the initial determination because of his receipt of retroactive Title II benefits covering the period beginning June 1984. Mr. Mazza appealed this determination. At his hearing, he pointed out that SSA's denial of SSI payments also resulted in a denial of Medicaid coverage for medical expenses incurred during his initial illness. The Administrative Law Judge found that the retroactive Title II benefits raised by Mr. Mazza's income above the SSI eligibility ceiling for the months in question.

Because of a transcription difficulty, Mr. Mazza received a second hearing before a different Administrative Law Judge. His SSI claim was denied at both the Administrative Law Judge and Appeals Council levels. Mr. Mazza appealed to the district court. The district court granted summary judgment in favor of the Secretary.

Mr. Mazza then appealed to the United States Court of Appeals for the Third Circuit. He conceded that he was not entitled to duplicative payments for the June 1984 to February 1985 period at issue. He also disclaimed any attempt to evade the windfall statute or to collect any additional sums. He contended that the Secretary should have first calculated the SSI payments and then deducted them from the Title II payments. Had this procedure been followed, he would have received the Medicaid assistance that had been denied him.

HOLDING:

The United States Court of Appeals for the Third Circuit analyzed the history of the windfall statute, its amendment in 1984, and the Secretary's position in litigation concerning the 1980 statute. The court then stated:

: The [windfall] amendment was not designed to change the consistent policy of offsetting Title II by SSI benefits in concurrent claims by substituting a random result dependent on which clerk was more efficient in processing claims for the respective benefits. Congress designed the amendment to close a loophole, not to alter a procedure that was working well. The legislation was to complement, not compromise, the existing practice in concurrent claims.

Because the court found that SSA's process was "not in accordance with statutory intent," the court reversed the district court and directed the district court to remand the case to SSA with directions that Mr. Mazza be found eligible for SSI, thereby protecting his eligibility for Medicaid.

STATEMENT AS TO HOW MAZZA DIFFERS FROM SSA POLICY

SSA has interpreted the 1984 amendments to the windfall statute to allow the offset of either SSI or Title II retroactive benefits to prevent a windfall payment. Specifically, the offset is applied to whichever benefit is paid second. The Third Circuit found this procedure to be arbitrary and held that in cases involving concurrent claims, SSI should be effectuated first.

EXPLANATION OF HOW SSA WILL APPLY THIS DECISION
WITHIN THE CIRCUIT

This Ruling applies only to concurrent cases involving claimants who reside in Delaware, New Jersey, Pennsylvania, or the Virgin Islands at the time of the determination or decision at any administrative level, i.e., initial, reconsideration, Administrative Law Judge hearing or Appeals Council review. When an adjudicator has determined that an individual is eligible for a retroactive period based on concurrent applications, the SSI determination or decision shall be effectuated first. The individual's Title II benefits shall be offset by the amount of SSI payments due or paid for the retroactive period.

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