SSR 77-10: SECTION 1611(e)(1)(A) (42 U.S.C. 1382(c)(1)(A)) -- SUPPLEMENTAL SECURITY INCOME -- ELIGIBILITY -- STATUS OF INSTITUTION

20 CFR 416.231(b)

SSR 77-10

The basic issue is whether the XYZ rest home is a public institution

under the control of a government such that under section 1611(e)(1)(A) of

the Social Security Act, as amended, and section 416.231(b) of Regulations

No. 16, the resident claimants are no longer eligible for continuing

supplemental security income benefit payments.

Section 1611(e)(1)(A) of the Social Security Act, as pertinent herein

provides that:

Section 416.231(b)(2) of Regulations no. 16, Subpart B as pertains

herein, defines a "public institution" as follows:

An ordinance of the county in which the rest home is located provides for

the creation of an eleemosynary corporation in order to provide a method

of administering the operation of facilities for the use and benefit of

the aged and unfortunate citizens of the county. It further provides for

the corporation to be governed by a board of six trustees, with the first

board appointed by the County Council and being self-perpetuating

thereafter with the board selecting its own new members.

The ordinance further provides that the constitution of the proposed

corporation shall not contain any provisions which would disqualify the

corporation form being approved as a charitable corporation within the

meaning of the Internal Revenue Code.

It also states, that upon the formation of the corporation, the county

shall lease to the corporation upon terms and conditions to be agreed upon

in the lease, the properties of the rest home. Finally, the ordinance

provides that the County Council may provide funds to be used by the

corporation solely for the support, care, and maintenance of the

facilities of the corporation and for the indigent senior citizens of the

county.

the corporation, the county

shall lease to the corporation upon terms and conditions to be agreed upon

in the lease, the properties of the rest home. Finally, the ordinance

provides that the County Council may provide funds to be used by the

corporation solely for the support, care, and maintenance of the

facilities of the corporation and for the indigent senior citizens of the

county.

The Articles of Association of the Board of Trustees of the rest home and

the By-Laws of the Board of Trustees of the rest home state that the

purpose of the corporation was to administer the XYZ rest home as an

eleemosynary boarding home type institution for elderly residents of the

county. They further state that the corporation will be financed by fees

which the residents of the institution pay from the resources or funds

they receive from government sources for which they may qualify, donations

form individuals, organizations, or corporations desiring to contribute to

the charitable purpose of the corporation and any government programs or

ordinances now in being, or which may exist in the future.

There is a lease between XYZ Rest Homes, Inc. and the county. The lease

provides among other things that the corporation will maintain a long term

care facility for aged, inform, and unfortunate citizens of the county.

The operation of the facility was mutually agreed and understood to be

under the sole control and direction of the lessee and the lessor did not

reserve any rights in regard to the operation of the facility excepting

that in the event the premises were put to another purpose the lessor

would terminate the lease upon 30 days notice.

or aged, inform, and unfortunate citizens of the county.

The operation of the facility was mutually agreed and understood to be

under the sole control and direction of the lessee and the lessor did not

reserve any rights in regard to the operation of the facility excepting

that in the event the premises were put to another purpose the lessor

would terminate the lease upon 30 days notice.

In evaluating the evidence, the Hearing Examiner pointed out that direct

administrative control by the county cannot be even vaguely found in the

oral and documentary testimony. The appointment of the corporations Board

of Trustees is limited to the first Board, and the Board then may choose

its own successors. This is done through the method and manner in which

the charitable corporation, XYZ Rest Home, Inc., and its By-Laws and

Articles of Association, was initially chartered.

The appointment of the facilities administrator is done without

interference from any governmental unit and directly by the Board of

Trustees of the corporation. The staff who carry out the day-to-day

functions of the institution are employees of the corporation and not the

county. The hiring and firing of all the employees of the rest home is

under the sole control of the secretary-treasurer and the Board of

Trustees of the corporation. All of the obligations of the rest home,

whether it is occupying the facilities leased from the county or

otherwise, are the sole responsibility of the Board of Trustees of the

corporation. Deficits are made up either through private donations or

donations received from Federal government programs which do not require

the release of direct or indirect control of the institution and facility

to receive such funds.

The only leverage that could be exercised by the county would be the

refusal to renew the lease of any basis whatsoever and upon the specific

basis of the corporation changing the use of leased facilities from those

which were intended by the lease.

l government programs which do not require

the release of direct or indirect control of the institution and facility

to receive such funds.

The only leverage that could be exercised by the county would be the

refusal to renew the lease of any basis whatsoever and upon the specific

basis of the corporation changing the use of leased facilities from those

which were intended by the lease.

The members of the Board of Trustees are not responsible to any

governmental unit for the day-to-day operation of the facility and they

are particularly not obligated in any way to the county and its Council

other than to pay $1.00 per year and maintain a rest home facility in the

leased premises.

The total control of the fiscal decisions by the Board of Directors of

the rest home is quite evident in that no budget is submitted to the

County Council and no funds are looked for from the county. The County

Council does not approve the budget, authorize obligations or

expenditures, approve disbursements, estimate income, review actual

income, or authorize county funds to make up any deficits. The county

ordinance which established the rest home could itself be repealed in part

or whole and not affect the independence or status of the rest home.

In view of the fact there are no direct or indirect controls over the

continuing administration of the rest home, through controls over the

finances, employment practices, or otherwise, it can not be said that the

rest home is anything other than a private institution and as such the

individual claimants are entitled and eligible for supplemental security

income benefits and to have their previously determined benefits continued

in accordance with the law.

Accordingly, it is held that the XYZ Rest Home, Inc. and its facility are

a private institution and that the claimants are entitled to supplemental

security income benefit payments in accordance with section 1611(e)(1)(A)

of the Social Security Act.