SSR 82-9c: SECTION 1612(a)(2)(A) (42 U.S.C. 1382(a)(2)(A)) SUPPLEMENTAL SECURITY INCOME -- IN-KIND UNEARNED INCOME -- REDUCTION OF BENEFITS DUE TO RECEIPT OF A RENTAL SUBSIDY -- CONSTITUTIONALITY
20 CFR 416.1145(a) and 416.1146(k)
SSR 82-9c
Smith, Griffin, & Johnson v. Califano, U.S.D.C., Oregon, Civ. Nos. 76-875, 76-936, and 76-937 (7/19/77)
- The Social Security Administration (SSA) reduced the plaintiff's supplemental security income (SSI) payments because they had received free or subsidized housing from their children. The plaintiffs alleged that the statute and regulations which provide for this reduction resulted in irrational classifications because SSI recipients who pay little or no rent and (1) receive public housing assistance, or (2) own their own homes, or (3) reside with a homeowner and share household expenses do not have their benefits reduced. The plaintiffs argued that the statute and regulations involved are therefore unconstitutional. In reaching its decision, the court applied the standard that statutes and regulations are not unconstitutional unless they manifest a patently arbitrary classification lacking in rational justification. Here the court found that Congress could rationally have concluded that the exclusions accorded to SSI recipients who receive public assistance, are homeowners, or reside with a homeowner and share household expenses further legitimate statutory goals. Consequently, in affirming the determinations reducing the plaintiffs' benefits, the court held (1) that the challenged classifications are not unconstitutional because they are neither patently arbitrary nor irrational and (2) that the lack of similar exclusions for the plaintiffs' class does not deny them equal protection under the law.
BELLONI, District Judge:
Plaintiffs bring their actions pursuant to Sections 205(g) and 1631(c)(3) of the Social Security Act, 42 U.S.C. §§ 405(g) and 1383(c)(3), to obtain judicial review of final decisions of the Secretary of Health, Education, and Welfare which reduced their supplemental security income (SSI) benefits under Title XVI of the Social Security Act, 42 U.S.C. § 1381, et seq. All parties now move for summary judgment.
Under the SSI program, the amount of benefits allocated to a recipient is reduced by the amount of countable income he or she receives, 42 U.S.C. § 1382(b)(1). Countable income is defined as both earned and unearned income and includes "support and maintenance furnished in cash or kind," 42 U.S.C. § 1382a(a)(2)(A). In the instant cases, plaintiff's benefits were reduced by the amount of support they received from their children and grandchildren in the form of housing provided for little or no rent. Plaintiffs seek to have those parts of the statute and regulations which mandate this result declared unconstitutional, and the decision of the Secretary based on them reversed. As the three cases involve the identical issue, they have been consolidated for hearing.
Plaintiffs predicate their constitutional attack on the existence of certain allegedly irrational classifications created by the statute and regulations. Plaintiffs contrast the fact that their benefits were reduced for receiving free or subsidized housing from their offspring with the fact that other SSI recipients who pay little or o rent do not have their benefits reduced. Plaintiff points to three such "favored" groups of SSI recipients;
- 1. Those who receive public housing assistance;
- 2. Those who own their own homes free and clear;
- 3. Those who reside with a homeowner and share household expenses.
The standard for testing the constitutional validity of a classification under the Social Security Act was clearly stated in Fleming v. Nestor, 363 U.S. 603, 611 (1960):
- "Particularly when we deal with a withholding of a non-contractual benefit under a social welfare program such as [Social Security], we might recognize that the Due Process Clause can be thought to interpose a bar only if the statute manifests a patently arbitrary classification, utterly lacking in rational justification."
See also Weinberg v. Salfi, 422 U.S. 749 (1975).
For the reasons given below, I find that the challenged classifications are neither "patently arbitrary" nor "utterly lacking in rational justification."
The exclusion accorded public housing rent subsidy recipients under the SSI program is found in 20 C.F.R. §§ 416.1145 and 416.1146(k). These sections require that payments or benefits provided under a federal statute be excluded from countable unearned income where exclusion is required by the granting statute. The statute pertinent to this case, providing for the exclusion of certain housing subsidies under Section 23 of the United States Housing Act of 1937, 42 U.S.C. § 4121B, is § 9 of Public Law 92-213 (1971). I find that Congress could rationally have concluded that this exclusion furthered the legitimate goal of effectuating the purposes of the federal public housing program.
As to that class of SSI recipients who own their own homes, 42 U.S.C. § 1382b provides that the value of the home is excluded under the resource exclusions section. I find that Congress could rationally have concluded that the exclusion was appropriate in order to avoid disincentives to home ownership, thereby furthering the statute's goals of encouraging self-support.
Finally, § 12236.3 of the Claims Manual provides that the reduction of SSI benefits will not apply to those recipients who reside with a homeowner and share household operating expenses. I find that Congress could rationally have concluded that the granting of an exclusion to those who enter into a "sharing" arrangement furthered one of the purposes of the statute of encouraging recipients to look to private sources of support. In this regard, it is worth nothing that the House Committee on Ways and Means recently noted its approval of the Social Security Administration's policy on sharing arrangements, House Report No. 94-1201, May 27, 1976, page 11.
The fact that no similar exclusions were granted plaintiffs' class does not result in a denial of equal protection. As the Supreme Court noted in Jefferson v. Hackney:
- "A legislature may address a problem `one step at a time,' or even `select one phase of a field and apply a remedy there, neglecting the other,' Williamson v. Lee Optical Co., 348 U.S. 483, 489 (1955)" 406 U.S. 535, 546 (1972).
The Court continued:
- "So long as its judgments are rational, and not invidious, the legislature's efforts to tackle the problems of the poor and the needy are not subject to a constitutional straitjacket. The very complexity of the problems suggests that there will be more than one constitutionally permissible method of solving them," 406 U.S. at 546.
As I find that the challenged classifications are rational, defendant's motions for summary judgment should be granted and the decisions of the Secretary should be affirmed. Plaintiffs' motions for summary judgment should be denied.