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).

AR 92-1(3)

EFFECTIVE/PUBLICATION DATE: 01/10/92

ACQUIESCENCE RULING 92-1(3)

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

terans 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.

come 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:

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

l 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.