2009 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit
5-15-2009 

# M argue rit e K

el ley v . C omm S o c i al S ec urity P r e c e de n t i al or N on-P r e c e de n t i al : P r e c e de n t i al D ocke t N o . 08-1652

F o l low thi s a nd a dd it ion al work s at : http://d i git alc ommon s .l a w . vi l l a no va . e du/thir dc ir c uit_2009

Thi s de c i sion i s br ou gh t t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sity S choo l of L a

w Di git al Re posit or y

. It h as be e n a c c e pt e d for inclusion in 2009 D e c i sion s b y a n author i z e d a dmini s tr at or of V i l l a no va U nive r sity S choo l of L a

w Di git al Re posit or y

. F or mor e inform at ion, p le as e c on t a ct Be n j amin
. C a rl s on@l a

w . vi l l a no va . e du
. Re c omme nde d C it at ion

" M a rgue r it e Ke l ley v

. C omm S oc i al S e c ur ity " (2009). 2009 D e cisio n s . P ape r 1272. http://d i git alc ommon s .l a

w . vi l l a no va . e du/thir dc ir c uit_2009/1272T he H onor abl e T. S. E l l is III , Seni orD i s t r i ctJ udge, * U ni t ed St at es D i s t r i ct C our t for t he E as t ern D i s t r i ct of V ir g ini a, s i t t i ng bydes i gnat i on. P RE CE DE NT I AL

UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

_____________ N o. 08- 1652

_____________
M AR GUE RI T E P

. KE L L E Y, A p p e llan t,

v. CO M M I SS I ON ER O F S OC I AL SECU RI TY

_______________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( C i vi l N o. 2: 07- cv- 1628) D i s t r i ctJ udge: H onor abl e Law r ence F. St engel

______________ A r gued J anuary8, 2009

________________ Bef or e : CH A G A RE S, H A RD I M A N , Ci r c ui tJ ud ge s , a nd ELL I S,

Seni orD i s t r i ctJ udge. * ( O pi ni on Fi l ed: M ay15, 2009)

______________2 SC O T T A

. D Y E ( A r gued) C ohen, Fl uhr& G onzal ez 1429 W al nutSt r eet Sui t e 1500 Phi l adel phi a, PA 19102 C ouns el f orAppel l ant E RI C P

. KR E S S M AN A ct i ng R egi onal C hi ef Counsel PATRI CI A M

. SM I TH A ct i ng Super vi s or yR egi onal C ouns el Soci al Secur i t yA dm i ni s t r at i on O ffi ce of t he G ener al C ouns el P. O

. B ox 41777 Phi l adel phi a, PA 19101 L A U R A M A G ID A ct i ng U ni t ed St at es A t t or ney B E V E R L Y H

. Z U C K E R M A N ( A r gued) Speci al A s s i s t antU ni t ed St at es A t t or ney E a ste rn D istric t o f

P e n n sy lv a n ia 615 C hes t nutSt r eet Sui t e 1250 Phi l adel phi a, PA 19106 C ouns el f orAppel l ee

______________ OPI NI ON O F THE COURT

______________ E L L I S, Seni orD i s t r i ctJ udge. T hi s s oci al s ecur it y appeal pr es ent s t he novel ques t i on w h e th e r th e p ro c e e d s o f th e sa le o f

a m a rital h o m e

— p lac e d in es cr ow bydi vor ci n g p a rt i es

— ar e a c ount abl e r es our ce f orpurpos es o f a s s e s s i n g e l i g i b i l i t yt o r e c e i v e S u p p l e me n t a l S e c ur i t yI n c o me ( “SSI ”) benef

i t s . T he C om m i s s i oner of Soci al Secur it y deni ed M ar guer i t e K el l ey ’ s appl i cat i on forSSI be nefi t s on t he gr ound t hat th e se p ro c e e d s w e re a c o u n tab le r e so u rc e re n d e rin g h e r in e lig ib leD uri ng t he h eari ng , K el l ey stat ed fir stt hat there w as a 1 cour tor derw i t h r egar d t o t he es cr ow , butt hen ind icat ed thats he a n d h e r h u sb a n d c re a ted th e e sc ro w b e c a u se th e yc o u ld n o t in iti a lly ag ree o n an eq u it ab le d istri b u ti o n o f the p roc ee d s fro m the h o m e’s s al e. ( A

. R

. at545–46. ) K el l eyhas s ubm i t t ed no evi dence s how i ng that the esc row ac co u n t w as c rea ted b yco u rto rde r or tha t a co u rt order precl ud ed h er fr om accessi ng t he fu nd s. I n t he af

fi davi t , w hi ch does notr efl ec t the y eari tw as 2 exec ut ed, K el l ey ’ s di vor ce a t t or neys t at ed that( i ) the funds fr om t he s al e of t he K el l ey ’ s m ar i t al hom e had been pl ace d i n an es cr ow acc ount ; ( i i ) t he curr en t b alance of the es cr ow acc ountw as $42, 088. 44; ( i i i ) K el l ey had no acc es s t o t hos e funds ; ( i v) t he funds w oul d be s ubj ectt o equi t abl e di s t r i but i on i n t he di vor ce a ct i on; ( v) K el l eyw oul d, “i n al l l i kel i hood, nothave a cl ai m i n exce s s of 60% 3 f o rS S I b e n e f

i t s . T h e D i s t r i c tC o u r tu p h e l d t h i s d e c i s i o n . We a g r e e a n d a f

f i r m. I

. M ar guer it e K el l eys uffe r s fr om chr oni c pai n and fa t i gue s econda r y t o C r ohn’ s di s eas e. O n M ar ch 5, 2003, K el l eyappl i ed forD i s abi l i t yI ns ur ance B enefi ts ( “D I B ”) underT i t l e I I of t he Soci al Secur i t yA ct , 42 U

. S. C

. §§ 401–434. T hi s cl ai m w as deni ed on M ay23, 2003, and K el l eyt hen r eques t ed an a dm i ni s t rat i ve he a r i ng . O n Augus t6, 20 03 , K e l l e yfi l e d a n a pp l i c a t i on fo rSSI und er T it le X V I of t he Soci al Secur i t yA ct , 42 U

. S. C

. §§ 1381–1383f. O n February24, 20 0 5 , an adm i ni s t r at i ve l aw j udge (“ A L J ” ) h e ld a h e a ri n g to re v ie w b o th h e r D IB a n d S S I c la im s . A tt he t i m e of t he hear i ng, K el l ey w as i nvol ved i n di vor ce p r o c e e d i n g s . S h e a n d h e rh u s b a n d h a d s o l d t h e i r mar i t a l h o me appr oxi m at el yt w o y ear s ear l i er , and by agr eement t hey pl ace d t he pr ocee ds of t he s al e i n an esc r ow acc ountunt i l t heycoul d r eac h a f u r t h e ra g r e e me n to n d i s t r i b u t i o n . Dur i n g t h e h e ar i ng, t h e ALJ 1 i ndi cat ed thathe w oul d l eave t he r ecor d open fort w o w eeks dur i ng w h ich tim e K ell eyco u ld sub m it an y ad d it ion al m aterial s. K ell ey ’s couns el s ubm i t t ed a br i ef, at t ache d t o w hi ch w as an aff i davi tfr om th e a tto rn e yw h o re p re se n ted K e lleyin h e r d iv o rc e . Y e t, it is 2of t he funds ; ” and ( vi ) K ell eyhad out s t andi ng debt s i n exce s s of $100, 000. ( A

. R

. 510. ) T he aff i davi tdoes noti ncl ude the es cr ow a g re e m e n t n o r d o e s it d e s c ri b e its te rm s o r p ro v e n a n c e . T he ac company i ng br i ef is s t amped as havi ng been 3 r ece i ved on M ar ch 15, 2005, a fa ctt he C om m i s s i onerpoi nt s t o as s how i ng t hat the aff

i davi tw as nott i m el ys ubm i t t ed and thus not par tof t he re cor d befor e t he A L J

. Y et , t he bri ef i s dat ed M ar ch 10, 2 0 0 5 , an d in d ica tes th a t itw a s b e in g tra n sm itt e d b yf a x a n d firstclass m ail , fa cts K ell eyreli es o n to arg u e tha t th e m aterial s w ere s ubm i t t ed w i t hi n t w o w eeks of t he hea r i ng. K ell ey d id n o t app ea l th e D IB p o rt ion o f th e A L J’s 4 deci s i on. 4 u n c lea r f ro m th e re c o rd w h e th e r th e a f f id a v it w a s s u b m itt e d w ith in t he al l ot t ed tw o w eeks and, acc or di ng t o t he C om m issi oner , t he A L J e x c l u d e d i ta s u n t i m e l y. 3 O n M ar ch 24, 2005, t he A L J i s s ued a de ci s i on deny i ng K el l ey ’ s cl ai m forD I B and SSI

. T he A L J det er m i ned, i n per t i nent 4 par t , t hatK el l ey ’ s “s har e of the pr ocee ds fr om t he s al e of the m ar i t al hom e ar e a count abl e r es our ce not w i t hs t andi ng t he fa ctt hat t he pr ocee ds ar e pr es ent l ybei ng hel d i n an es cr ow acc ount ” and a c c o r d i n g l yc o n c l u d e d t h a t Ke l l e y wa s n o te l i g i b l e f o rS S I

. ( A. R. at18–19. ) K el l eyr eque sted r evi ew byt he A ppeal s C ounci l and s ubm i t t ed t o t he A ppeal s C ounci l t he s ame affi davi t sh e h ad sent to th e A L J f

o llo w in g th e h e a rin g . O n M a rc h 2 , 2 0 0 7 , the A p p e a ls C ounci l deni ed K el l ey ’ s r eques t , m ak ing t he A L J ’ s deci s i on t he C o m m is s io n e r’ s f

in a l d e c is io n . See 20 C

. F. R

. § 416. 1481 ( s t at i ng t hat the A L J’ s decis i on i s bindi ng i f t he A pp eal s C ou ncil den i es a c laim a n t’s re q u e st f

o r re v iew ); s ee al

s o W el ch v. Heckl er , 808 F. 2d 264, 267 ( 3d C i r . 1986) ( not i ng t hatt he A L J ’ s deci s i on becomes f in a l an d e lig ib le f

o r ju d icia l re v iew w h e n a p p ro v e d b yth e A p p e a ls C ounci l )

. I n t he cour s e of de ny i ng K el l ey ’ s r eques tforr evi ew , t he A ppeal s C ounci l n o te d t hatt he addi t i onal evi dence K el l ey s ubm i t t ed pr ovi ded no bas i s forr ever s i ng t he A L J ’ s deci s i on. K e lle yt h e n f

i l e d th is c iv il a c tio n p u rs u a n t to 4 2 U .S .C . § 4 0 5( g)

. I n s uppor tof herr eques tforr evi ew , K el l eys ubm i t t edT he l et t eri ndi cat es t hatK el l ey h ad r eappl i ed forSSI on 5 J une 1, 2007, m aki ng J ul y 2007 t he fi r s t m ont h s he coul d r ece i ve b e n e f its b a s e d o n th a t a p p lic a tio n . See 20 C

. F. R

. § 416. 335. 5 t hr ee addi t i onal document s : ( i ) a copyof herdi vor ce de cr ee, w hi ch s how s t hats he and he rh u sb and s i gned a pr oper t ys et t l ement agr eement on N ovember 1, 2006, and t hat t hei r d ivo rce w as fi nal i zed on D ecem b er 2 7 , 2006; ( i i ) a l et t erdat ed J une 7, 2007, fro m h er divo rce att o rne y to her m o ther i n d icati n g th a t K ell ey ’s p o rt ion o f th e e scro w ed fu n d s h ad b ee n u sed to rep ayh er m o ther, w ho had pai d form os tof K el l ey ’ s l egal fee s , and t o pay“forot her fee bal ance s , m edi cal i ns ur ance and ot her bi l l s as s oci at ed w i t h t he chi l dr en” ( A ppel l ee’ s Supp. A p p . at2) ; and ( i i i ) a J ul y23, 2007, not i ce of aw ar d l et ter fr om t he Soci al Secur i t yA dm i ni s t r at i on i ndi cat i ng t hatK el l eyw as el i gi bl e t o r ece i ve SSI as o f J ul y1, 2007. T h e m at t erw as t hen r efe r r ed t o a magi s t r at e j udge,

5 pur s uantt o 28 U

. S. C

. § 6 3 6 (b)(1) ( B ) , w ho i s s ued a r epor tand r ecomm endat i on concl udi ng ( i ) t hatt he A L J corr ect l ydet er m i ned t h a tt h e e s c r o we d p r o c e e d s f r o m t h e s a l e o f Ke l l e y ’ s ma r i t a l h o me c o n stitu ted a c o u n tab le re so u rc e a n d (ii) th a t n o n e o f th e m a ter ials s ubm i t t ed byK el l eyaft ert he admi ni s t r at i ve hea r i n g w arr ant ed a di f f e r e n tc o n c l u s i o n . On J a n u a r y3 , 2 0 0 8 , a f t e rc o n s i d e r i ng K el l ey ’ s r eques tfor r evi ew and t he C om m i s s i oner ’ s r es pons e and rev iew ing the re p o rtan d re c o m m en d ati o n , the D istri ct C o u rt deni ed K el l ey ’ s r eques tforr evi ew and ent er ed j udgm enti n favor of t he C om m i s s i oner . K el l ey t i m el yappea l ed, and w e have j ur i s di ct i on pur s uantt o 28 U

. S. C

. § 1291. II. T he s ol e i s s ue on appe al i s w hethert he pro ceeds fr om t he s al e of K el l ey ’ s m ar i t al hom e, pl ace d i n an es cr ow account by K ell eyan d h er th en -hu sb an d p en d ing eq u it ab le distr ibu ti o n , w ere pr oper l ydee m ed to be a r es our ce f ort he purpos e of de t er m i ni ng K el l ey ’ s el i gi bi l i t yforSSI. T hi s i s s ue, forw hi ch t her e i s no di r ect l yappos i t e author i t yi n t hi s ci r cui torel s ew her e, i s a l egal q u e s tio n , a n d o u r r e v ie w is a c c o rd in g ly p le n a ry. Schaudec k v. C om m ’ rof

Soci alSec. A dm i n. , 1 8 1 F

. 3 d 4 2 9 , 4 3 1 (3d C ir

. 1 9 9 9 ).T h e s ta tu e p ro v i d e s th a t r e s o u rc e s lis te d in 4 2 U .S .C . § 6 1 3 8 2 b (a) m ay p rop erly b e ex clud ed w h en ca lculati n g a c lai m an t’ s r es our ces . 42 U

. S. C

. § 1382( a) ( 1) ( B )

. T he part i es corr ect l ydo not ar gue that§ 1382b( a) i s appl i cabl e her e. 6 U ndert he Soci al Secur i t yA ct , an i ndi vi dual i s el i gi bl e for SSI be nefi t s i f ( i ) s he i s aged, bl i nd, ordi s abl ed an d ( i i ) her cou ntabl e i nco m e and res ou rces fal l below cert ai n st atutor yl i m i t s. 42 U

. S. C

. § 1382( a)

. Si nce 1989, i ndi vi dual s notr es i di ng w i t h a 6 s pous e have been obl i ged t o s how t hat t hei r count abl e r es our ces do no t exc e e d $ 2, 00 0 a s pa r tof e s t a bl i s hi ng t he i re l i gi bi l i t yfo rSSI b e n e f it s . I d. T he Soci al Secur i t yA dm i ni s t r at i on has defi ned r es our ces a s “c ash or otherl i qui d as s et s oranyr eal orper s onal p ro p e rtyth a t a n in d iv id u a l (o r sp o u se , if a n y ) o w n s a n d c o u ld c o n v e rt to c a s h to b e u s e d f o r h is o r h e r s u p p o rt a n d m a in te n a n c e .” 20 C

. F. R

. § 416. 1201( a)

. Si gni fi cant l y , anotherr egul at i on p ro v id e s th a t [i ] f an i ndi vi dual ( and s pous e, i f any ) m oves outof hi s orherhom e w ithoutt he i nt entt o r etur n, t he hom e bec om es a count abl e re s our ce beca us e i ti s no l onger t he i ndi vi dual ’ s pr i nci pal pl ace of r es i dence

.

. . . T h e i n d i v i d u a l ’ s e q u i t yi n t h e f o r m e rh o me beco m es a cou ntabl e res ou rce effecti ve w i t h the fi rs t dayof t he mont h fol l ow i ng t he m ont h i t i s no l onger hi s orherpr i nci pal pl ace of r es i dence

. I d. § 416. 1212( c)

. T he r egul at i on fur t hers t at es t hatpr ocee ds fr om the s ale o f a h o m e m ayo n lyb e e x clud ed fro m an ind ividu al’s count abl e r es our ces t o t he ext ent t he pr ocee ds “ar e i nt ended t o be us ed and a r e, i n fact , us ed t o pur chas e anotherhom e . . . w i t hi n 3 m ont hs of t he dat e of r ece i ptof t he pr oce ed s . ” I d. § 4 1 6

. 1 2 1 2 ( d ) ( 1 )

. Th u s , u n d e rt h i s r egul a t i o n , i ti s c l e a rt h e ALJ pr oper l ycons i der ed the proc eeds fr om t he sal e of K el l ey ’ s m ar i t al hom e t o be a c ount abl e r es our ce f or t he purpos e of cal cul at i ng her S S I e l i g i b i l i t y. N ori s t hi s concl us i on a l t e r e d b eca us e K el l eyagr eed t o pl ace t he pr ocee ds fr om t he s al e of he rformerhom e i n an es cr owT h is c o n c lu si o n is c o n f irm e d b yth e S o c ial S e c u rity 7 A d m inistrati o n ’s P rog ram O p era ti n g M an u al S y stem (“P O M S ”). T he PO M S r epr es ent “the publ i cl yavai l abl e oper at i ng i ns t ruct i ons forpr oces s i ng Soci al Secur i t ycl ai m s . ” W as h. Stat e D ep’ tof

Soc. & H ealth S ervs. v. G uar di ans hi p Es t at e of

Kef f el er , 537 U

. S. 371, 38 5 (200 3). T he S up rem e C ou rthas sta t ed that“[w ]hi l e t hese admi ni s t r at i ve i nt erpr et at i ons ar e notpr oduct s of for m al rulem aki ng, t heynevert hel es s w arr antr es pect
. ” I d. ( ci t i ng Ski dm or e v. Sw i

f t& Co. , 3 2 3 U .S . 1 3 4 , 1 3 9

– 4 0 (1 9 4 4 ); U ni t ed S tat es v. Mead C or

p. , 5 3 3 U. S. 2 1 8 , 2 2 8 , 2 3 4

– 3 5 ( 2 0 0 1 ) )

. T he app l i cable PO M S sect i on reas on ablyi nterpret s the st atutor yph ras e “anyl egal i ns t rum entordevi ce thati s s i m i l arto a tr u st ” as c o v e rin g a n yin stru m e n t, de v ice , o r a rra n g e m e n t th a t in v o lv e s (i) a g ra n to r; (ii) “w h o tr a n sf e rs p ro p e rty(o r w h o se p ro p e rtyis tra n sf e rre d b y a n o th e r);” (iii) “to a n in d iv id u a l o r e n tityw ith fi duci aryobl i gat i ons ; ” ( i v) “w i t h t he i nt ent i on t hatitbe hel d, m a n a g e d o r a d m in iste re d b y th e in d iv id u a l o r e n tityf o r th e b e n e f

it o f th e g ra n to r o r o th e rs.” P O M S S I 0 1 1 2 0 .2 0 1 B .5 ; see al so P O MS S I 0 1 1 2 0 .2 0 1 G .1

. T h e P O M S a lso e x p licitly list es c ro w a c c o u n ts a s a n e x a m p le o f

a le g a l in s tr u m e n t o r d e v ic e s im ila r to a tr u s t. I d. ; s ee al s o P O M S S I 0 1 1 2 0 .2 0 1 G .2

. A not herpr ovi s i on i n the s ubs ect i on expl ai ns t hat“an 8 i ndi vi dual s hal l be cons i der ed t o have e s t abl i s hed a trus ti f any asse ts of

the in d ividu al (or o f th e ind ividu al’s s p o u se) a re t r ans ferr ed t o t he t rus tot her tha n byw i l l

. ” I d. § 1 3 8 2 b (e)(2)(A ). 7 acc ount pendi ng equi t abl e di s t r i but i on i n her di vor ce. T he Soci al S e c u ri ty A c t a d d re s s e s th e tr e a tm e n t o f tr u s ts in 4 2 U .S .C . § 1382b( e) , w hi ch def

i nes t he t er m “trus t ” as i ncl uding “anyl egal in s tr u m e n t o r d e v ic e th a t is s im ila r t o a tr u s t.” 4 2 U .S

. C . § 1 3 8 2 b (e )(6 )(A ). B e c a u se a n e sc ro w a c c o u n t is sim ilar to a tru st, th e e sc ro w a c c o u n t K e lley c re a ted w ith h e r hu s b a n d is appr opr i at el y t r eat ed as a t rus t under § 1382b( e)

. T hats ubs ect i on, 7 enac t ed i n 1999 as par tof t he F os t er C ar e Inde pendenc e A ct , Pub. L

. N o. 106- 169, 113 St at
. 1822, s epar at el yaddr es s es r evoca bl e and i r r evo cabl e trus t s . Fi r s t , i tpr ovi des t hati f an i ndi vi dual has es t abl i s hed a r evoca bl e trus t , “the corpus of the t rust s hal l be cons i der ed a r es our ce a vai l abl e t o t he i ndi vi dual

. ” I d. § 1 3 8 2 b (e )(3 )(A )

. In th e c a se o f a n irre v o c a b le tru st, th e sta tu te 8T he t er m “as s et ” i s fur t herdefi ned as i ncl udi ng ( i i i ) any o ther pa y m entorpr oper t yt o w hi ch the in d iv id u a l (o r o f

[ sic ] th e in d iv id u a l’s s p o u se ) is e n tit led b u t d o e s n o t re c e iv e o r h a v e a c c e ss to b e c a u s e o f

a c t i o n b y— (I) th e in d iv id u a l o r sp o u se ; (II) a p e rso n o r e n tity( in c lu d in g a c o u rt) w ith l egal author i t yt o act i n pl ace of, oron behal f of, the in d ividu al or sp o u se; o r ( I I I ) a per s on orent i t y( i ncl udi ng a court ) act i ng att he di r ect i on of, oron t he r eq u est of, t he i ndi vi dual ors pous e. I d. § 1 3 8 2 b ( e ) ( 6 ) ( C )

. T h u s , e v e n i f t h e e s c r o w w a s c r e a t e d b y a cour t , i tw oul d s t i l l fal l w i t hi n t he t er m s of t he s t atut e. I n expl ai ni ng t hi s pr ovi s i on, t he r el evant PO M S st at es t hat 9 “i f a pa y m entca n b e m ade t o orfort he bene fi tof t he i ndi vi dual underanyci r cumst ance , no m at t erhow unl i kel yor di s t anti n t he futur e, t he general rul e . . . app l i es (i

. e. , t he port i on of th e trust [fr om w hi ch p ay m en tcoul d be made] t hati s at t r i but abl e t o t he i ndi vi dual i s a r es our ce . . . )

. ” PO M S SI 01120. 201D

. 2. b. 8 f u rth e r p ro v id e s th a t i f t her e ar e any ci r cumst ance s underw hi ch paym ent fr om t he trus tcoul d be made t o orfort he bene fi tof t he i ndi vi dual ( orof t he i ndi vi dual ’ s s pous e) , t he por t i on of t he corpus fr om w hi ch p aym entt o orfor the benef

i tof t he i ndi vi dual ( orof t he i ndi vi du al’s s pous e) coul d be made s hal l b e cons i der ed a re so u rc e a v a ilab le to th e in d iv id u a l. I d. § 1 3 8 2 b (e)(3)(B ). 9 T he Soci al Secur i t y A ct ’ s t r eatm ent of t rus t s and trus t
- l i ke instrum en ts co m p els t h e co n clus ion that the e scro w ed fu n d s w ereN o t ad d re ss e d h e re is w h e th e r th e A L J a p p ro p ria tely 10 count ed onl yK el l ey ’ s s har e of t he pr ocee ds i n es cr ow orw hether t h e e n t i r e p r o c e e d s f

r o m t h e s a l e o f

Ke l l e y ’ s ma r i t a l h o me co n sti tuted a c o u n table re so u rce b ec au se, in ei ther ev en t, K ell ey ’s cou n t a b l e r e s o u r c e s wou l d h a v e e x c e e d e d t h e $ 2 0 0 0 t h r e s h ol d, t herebyrenderi ng her i neli gibl e for S S I benefit s. I ndeed, t he J une 7, 2007, l et t erfr om K el l ey ’ s di vor ce 11 at t or ney , s ubm i t t ed on lyt o t he D i s t r i ctC our t , demonst r at es t hat this i s ex ac tl yw h a t h ap p en ed ; K ell ey ’s sh are o f th e f u n d s w ere us ed t o r e p a y a l o a n f

r o m h e r moth e r a n d t o p a y “ f o r o t h er fee bal ance s , m edi cal i ns ur ance , and otherbi l l s as s o ciat ed w i t h t he chi l dr en. ” ( A ppel l ee’ s Supp. A pp. at 2. ) I t i s i m por t ant t o not e that w e d o n o t r elyo n this lett er, o r an yo f th e o ther m aterial s n o t part of t he r e c o r d b e f

o r e t h e ALJ , i n r e a c h i n g o u rc o n c l u s i o n ; t he m a ter ials th a t w e re b e f o re th e A L J p ro v id e a m p le s u p p o rt. 9 app ropri at el ydeem ed to be o ne o f K el l ey ’s res ou rces . B ecause 10 th e ter m s o f

th e e sc ro w a g re e m e n t ar e n o t in th e r e c o r d , it is i m pos s i bl e t o det er m ine def i ni t i vel yw hethert he es cr ow acc ount sh o u ld b e d e e m e d m o re a k in to a re v o c a b le o r irre v o c a b le tru st. Y e t, th e c o n c lu sio n th a t th e p ro c e e d s h e ld in e sc ro w w e re p ro p e rly count ed hol ds r egar dl es s of w hethert he esc r ow acc ounti s t r eat ed as a r evoca bl e or i r r evoca bl e trus t
. I f K el l ey ’ s es cr ow acc ountw as m or e s i m i l art o a r evoca bl e trus t , t he s t atut e’ s unqual i fi ed comm and that“[i ] n t he ca s e of a r evoca bl e t rus tes t abl i s hed byan i ndi vi dual , t he corpus of t he trus ts hal l be cons i der ed a r es our ce a v a ila b le to th e in d i v i d u a l ” a p p lie s . I d. § 1382b( e) ( 3) ( A )

. E ven a ss u m in g th e e sc ro w a c c o u n t is pr o p e rly c o n sid e re d a n irre v o c a b le t rus t , i t i s cl ear t hat t he esc r ow ed funds w er e corr ect l ycat egor i zed a s a co u n tab le re so u rc e g iv e n th a t th e re w e r e c e rta in ly
“ c irc u m sta n c e s u n d e r w h ich p a y m e n t f ro m th e [ e sc ro w a c c o u n t] c o u ld b e m a d e to o r f o r t h e b e n e f

it o f ” K e lle y . I

d. § 1382b( e) ( 3) ( B )

. A l t hough t he exac t t er m s of t he es cr ow agr eement w er e never m ade a par tof t he r ecor d, K el l eyand hert hen- hus band cl ear l ycr eat ed the es cr ow acc ountw i t h t he under s t andi ng t hat w hen t heyhad agr eed on an equi t abl e di s t r i but i on of t he pr ocee ds fro m the sal e of thei rm ar i t al hom e and thei rdi vor ce ha d been fi nal i zed, t heyw oul d eac h r ece i ve ei t herpaym en ts fr om t he accou nt ort he b enef

i tof p ay m ents from t he acc ou nt. G i ven t his , 11A ddi t i onall y , t her e i s no need t o r emand t o t he C om m i s s i oner pur s uantt o the si xt h s ent ence of 42 U

. S. C

. § 405( g) beca us e the m at er i al s K el l eys ubm i t t ed af t erthe A L J ’ s deci s i on s uppor t , r ather th a n u n d e rm in e , th a t d e c is io n . See M at thew s v. Apf

el , 239 F. 3d 589, 593 ( 3d C i r . 2001) ( “[W ] hen the cl ai m ants eeks to rel yon evi dence t hatw as notbefor e the A L J , t he di s t r i ctcour tm ayr emand t o t he C om m i s s i oner but onl y i f t he evi dence i s new and mat er i al a n d if th e re w a s g o o d c a u se w h y it w a s n o t p re v io u sly p re se n ted to th e A L J . . . .”); s ee al s o Sz ubak v. S ec ’y o

f Heal th & H

um an Servs. , 745 F. 2d 831, 833 ( 3d C i r . 1984) ( not i ng t hata s i xt hs ent ence r emand under§ 405( g) r equi r es t he cl ai m ant t o s how “that t her e [i s ] a r eas onabl e pos s i bi l i t yt hatthe new evi dence w oul d have ch an g ed the o u tcom e o f th e S ec retary ’s de term ination ”). Mi r anda v. B a rn ha rt , N o. SA

- 00

- CA

- 11 95 , 20 02 U

. S. 12 D ist. L E X IS 2 5 8 9 2 (W .D . T e x . M a r. 2 9 , 2 0 0 2 ), th e so le a u th o rity o n w h ich K ell ey reli es fo r this interpre tat ion o f 20 C

. F

. R . § 4 1 6 .1 2 0 1 (a ), is n e ith e r c o n tro lli n g n o r o n p o in t. 10 it i s c lea r th a t o n th is re c o rd , ev e n a ss u m in g th e e sc ro w a c c o u n t is p rop erlytr ea ted a s a n ir rev o ca b le t rust, the e scro w ed fu n d s w ere properl ycou nted as a r esource for S S I purposes. K el l eyadvanc es t hr ee a r gum ent s agai ns tt hi s concl us i on, none of w hi ch per s uades

. Fi r s t , K el l eyas s er t s t hatt he es cr ow ed funds s houl d notbe cons i der ed a reso u rce beca us e s he had no acc es s t o t he funds

. I n s uppor tof t hi s ar gum ent , K el l eyrel i es on 20 C

. F

. R

. § 4 16

. 12 01 (a) , w hich defines the t erm res ou rces as “cash orot herl i qui d as s et s oranyr eal o r p erso nal pr oper t yt hatan i ndi vi dual ( ors pous e, i f any ) ow ns and coul d convert t o cas h t o be us ed for hi s or her s uppor tand mai nt enanc e” a nd fur t herpr ovi des th a t “[ i]f

th e in d iv id u a l h a s t h e rig h t, au th o rityo r p o w e r to liq u id a te th e p ro p e rty o r his o r he r sh a re o f th e p ro p e rty , it is c o n sid e re d a re so u rc e .” Y e t, K e lley ’s a ttem p t to d r a w f r o m th is l anguage t he pri nci pl e thatfunds ar e nota count abl e r es our ce unde r t he Soci al Secur i t y A ct unl es s a cl ai m ant i s abl e t o acc es s t he funds a t w ill is m isg u id e d

. A lth o u g h it is ce rta in lytru e th a t an a ss e t is 12 gener al l ynotan i ndi vi dual ’ s r es our ce i f t he i ndi vidual does not h av e the l egal r i ghtt o us e the as s etforhers uppor tand m a in ten a n c e , the re g u latio n d e f in in g “ re so u rc e ” m u st b e r e a d in11 t andem w i t h t he l at er - enac t ed s t atut or ypr ovi s i on addr es s i ng how t o countt he r es our ces of an i ndi vi dual w hos e as sets h av e been t r ans ferr ed t o a t rus tora l eg al i ns t rum ents i m i l art o a trus t
. A nd t hatpr ovi s i on m akes cl ear t hat an i ndi vi dual ’ s count abl e r es our ces i ncl ude as s et s t hat have been t r ans ferr ed t o a trus t
- l i ke i ns t rum ent t o t he ext entpaym entfr om t he i ns t rum ent “coul d be m ade t o orfor t he benef i t of t he i ndi vi dual , ” r egar dl es s of w hethert he i ndi vi dual h a s a c c e s s to th e f

u n d s . See 4 2 U .S .C . § 1 3 8 2 b (e ). B e c a u se o n th is r ecor d i ti s cl eart hatt her e w er e ci r cumst ances u n d er w hi ch paym ent s coul d be made fr om t he es cr ow acc ountt o K el l eyorfor herbenef

i t , t he ques t i on w hethers h e coul d acc es s t he es cr ow ed f u n d s a t w ill is im m a ter ial. K e lle y ’s s e c o n d a rg u m e n t, w h ic h a ls o re lie s o n 2 0 C .F .R . § 416. 1201( a) , i s t hatt he funds i n t he es cr ow ac co u nts houl d not have been count ed as a r es our ce beca us e t hey coul d nothave be en us ed forher “s uppor t and m ai nt enanc e” gi ven t hat herout s t andi ng deb t s e xc e e de d t he e s c r owed fu nd s . Thi s a r gu ment a l s o fail s. A gai n, even a s s um i ng t he esc r ow acc ount i s pr oper l yt r eat ed as an irre v o c a b le tru st, th e p e rtin e n t q u e stio n u n d e r § 1 3 8 2 b (e )(3 )(B ) is w hether“t her e ar e anyci r cumst ance s underw hi ch paym entfr om th e tr u s t c o u ld b e m a d e to o r f o r t h e b e n e f

it o f t h e in d iv id u a l.” H e re , p a y m e n ts w e re e v e n tu a llym a d e f ro m th e e sc ro w a c c o u n t to p a yh e r o u ts ta n d in g d e b ts , a c le a r b e n e f it to K e lle y . See PO M S SI 01120. 201F. 1 ( “[C]ons i der paym ent s t o be m ade

. . . t o orfort he benef i tof an i ndi vi dual [] i f pay m ent s of any s or t fr om t he corpus ori ncome of the t rus tar e pai d t o anotherper s on orent i t ys o t hat t he ind iv idual deri ves som e ben efi tfrom t he p ay m ent. ”). T hu s, gi ven the appl i cabl e s t atut or yl anguage, t he fa ctt hather o u tsta n d in g d e b ts e x c e e d e d th e a m o u n t o f f u n d s in e sc ro w is irre lev a n t. Fi nal l y , K el l eyar gues t hatt he conc l us i on r eac hed byt he AL J i s c o n t r a r y t o t h e u n d e r l y i n g b e n e f i c e n tp u rp o s e o f

T i t l e XVI o f t he So ci al S ecuri t y A ct
. T he pri m ary pu rpose of SS I “ is to as s ur e a mi ni m um l evel of i ncome forpeop l e w ho ar e age 65 or over , orw ho ar e bl i nd ordi s abl ed and w ho do not have s uffi ci ent i ncome and r es our ces t o m ai nt ai n a s t andar d of l i vi ng att he es t abl i s hed F eder al m i ni m um i ncome l evel

. ” 20 C

. F. R

. § 416. 110. D esp it e K ell ey ’s arg u m en t to the co n tr ary , the re su ltrea ch ed h ere12 does notunder m i ne thatbas i c purpos e. R ather , accordi ng t o t he Hou s e Commi t t e e o n W a y s a n d M e a n s ’ s r e p o r t o n t h e s ect i on of t h e b i l l t h a tb e c a me § 1 3 8 2 b ( e ) , Con g r e s s a me n d e d t h e So c i al Secur i t yA ctt o addr es s s peci fi cal l yhow as s et s i n t rus t s s houl d be c o u n ted b e c a u se o f c o n c e rn th a t in d iv id u a ls w ith re so u rc e s c o u ld qu al i fyfor SS I by shel t eri ng t heir asset s i n trust -l i ke instrum ents
. See H

. R

. R ep. N o. 106- 182( I ) ( 1 9 99) , 1999 W L 387373, at*34. T he comm i t t ee r epor t fi r s t s t at es t hat under t he l aw as i texi s t ed at t he t i m e “[a] s s et s pl ace d i n a trus ti n w hi ch i ndi vi dual s have no ow ner sh ip an d t o w hi ch theyhave no a cce s s no l ongerm eett he defi ni t i on of a r es our ce f orSSI purpos es ” bec aus e “SSI r egul at i ons defi ne r es our ces as cas h orot herl i qu id as s et s , oranyr eal or p e rso n a l p ro p e rty
. . . tha t an in d iv id u a l (o r sp o u se ) o w n s a n d c o u ld conver t t o c a s h t o b e u s e d f o r s u p p o r t a n d ma i n t e n a n c e ( i

. e . , for food, cl ot hi ng, or s hel t er )

. ” Id

. T h e re p o rt th e n n o tes th a t th e b ill w oul d change t hi s t r eatm entof as s et s hel d i n t rus t b ec aus e “[ a] pr i nci pl e under l y i ng vi r tual l yal l Feder al w el far e pr ogr ams i s t hat r eci pi ent s m eeta t es tof l ow i ncome and l ow as s et s ” and “t o al l ow i ndi vi dual s t o pr ot ectr es our ces i n a t rus tt hatcoul d be us ed t o m eet t hei rneeds vi ol at es t he pr i nci pl e of w el far e. ” I d. T hi s ci t at i on t o the l egi s l at i ve hi s t or yof § 1382b( e) i s not in ten d e d to su g g e st th a t K e lleyw a s a ttem p tin g to h id e h e r a ss e ts w hen s he agr eed t o pl ace t he proc eeds fr om t he sal e of herm ar i t al hom e i n an es cr ow acc ount
. I ndeed, t here i s no i ndi cat i on i n t he re c o rd o f a n yf ra u d u len t in te n t. N o n e th e les s, § 1 3 8 2 b (e ) re f lec ts C o n g ress’s jud g m en t th at w h en an ind ividu al’s asse ts are tra n sf e rre d to a tru st-lik e in stru m e n t, th o se a ss e ts s h o u ld g e n e ra lly be count ed as a r es our ce i n det er m i ni ng SSI e l i gi bi l i t ybeca us e of t he pot ent i al for fr aud. A ddi t i onal l y , C ongr es s t emper ed the ef fec t o f § 1 3 8 2 b (e ) b ye x e m p tin g sp e c ial n e e d s tru sts a n d p o o led tru sts and bypr ovi di ng t hat“[t ] he C om m i s s i oner of Soci al Secur i t ym ay w ai ve the appl i cat i on of t hi s s ubs ect i o n w ith r es pectt o an i ndi vi dual i f t he C o m m i s s i onerdet er m i nes t hats uch appl i cat i on w oul d w or k an undue ha r ds hi p ( as det er m i ned on the bas i s of cr i t er i a es t abl i s h ed byt he C om m i s s i oner ) on t he i ndi vi dual

. ” 42T he cr i t er i a es t abl i s hed byt he C om m i s s i onerpr ovi de that 13

“ un du e ha r ds hi p e xi st s in a mont h i f [ ( i ) ] fa i l ur e t o r e c e i ve SSI p ay m en ts w o u ld d ep ri v e the ind ividu al of fo o d o r sh elt er; an d [(ii )] t he i ndi vi dual ’ s avai l abl e funds do not equal or exce ed t he Feder al b e n e f it ra te (F B R ) plu s fe d e ra lly a d m in iste re d S tate su p p lem e n t, i f any . ” PO M S 1120. 203. C

. 1. K el l ey h as n everar gued thats he s at i s fi ed t he undue har ds hi p cr i t er i a and w as t her efor e el i gi bl e for a w aive r. 13 U .S .C . § 1 3 8 2 b (e )(4 )– (5 ). S u b se c tio n § 1 3 8 2 b (e ) th u s re p re se n ts 13 t he bal ance C ongr es s s t ruck i n i t s as s es s m entof how bes tt o count t he as s et s of an i ndi vi dual t hathave be en tr ans ferr ed t o a tr us tor tru st- li k e d ev ice in d eterm ining that ind ividu al’s eli g ibil ityfo r S S I, and w e ar e bound byt hatj udgm enther e. III

. F o r th e f o re g o in g re a so n s, w e a g re e th a t th e A L J p ro p e rly count ed t he pr ocee ds fr om t he s al e of K el l ey ’ s m ar i t al h o m e, pl ace d i n es cr ow pendi ng equi t abl e di s t r i but i on, as a re s our ce that r ender ed her ineli gi bl e forSSI. A ccor di ngl y , w e af fi r m t he ju d g m e n t o f

th e D istric t C o u rt.