The opinion of the court was delivered by: Robert D. Morgan, Chief Judge.
This action is one for judicial review of an adverse
decision of the defendant Secretary reducing plaintiff's
benefits under Supplemental Security Income (SSI) by
one-third. Plaintiff had owned her own home until 1978, at
which time she moved in with her daughter and son-in-law. At
that time plaintiff had been receiving SSI since 1974, and had
received similar benefits from the Illinois Department of
Public Aid since 1966. She received a Notice of Planned Action
from the Department of Health and Human Services on February
5, 1979, stating that her SSI would be reduced by one-third
due to the change in her living situation. Plaintiff requested
reconsideration, which was denied, and her benefits were
reduced in April 1979.
Plaintiff requested and received a hearing before
Administrative Law Judge (ALJ) Harrison L. Dod on July 9,
1979. That hearing was reopened for further evidence on
December 19, 1979. The ALJ denied plaintiff's request for
restoration of her full benefits. The Health and Human
Services Appeals Council denied review on August 27, 1980.
Thus the decision of the ALJ constitutes the final decision of
This case was filed October 22, 1980. It appears that
plaintiff has exhausted her administrative remedies and is
properly before this court pursuant to 42 U.S.C. § 405(g).
Plaintiff has, in timely fashion, submitted a memorandum to the
court. Defendant has not. Section 405(g) authorizes the court
to enter judgment on the pleadings. After a thorough review of
the record in this case, the decision of the Secretary must be
affirmed in part and remanded in part.
This court reviews decisions of the Secretary within very
narrow limits. Findings of fact are deemed conclusive if
supported by substantial evidence, Lechelt v. Cohen,
428 F.2d 214 (7th Cir. 1970); 42 U.S.C. § 405(g). The court may also
review whether the proceedings below were in conformity with
the Regulations and the validity of the Regulations, 42 U.S.C. § 405(g).
Several sections of Title 42 and several Regulations under
those sections are relevant here. 42 U.S.C. § 1382 establishes
criteria to determine eligibility for SSI, based primarily on
income. Section 1382(a) defines income as including both earned
and unearned income. Section 1382(a)(2)(A) includes as unearned
income any support and maintenance furnished in cash or in kind
to an applicant. Further, that section directs that if both
support and maintenance are furnished to a person living in
another person's household, the benefits to the person are
reduced by one-third in lieu of calculation of unearned income.
Section 1382a(b)(2)(A) excludes $20 per month of any income
from counting against benefits.
Relevant regulations under the Act are found at
20 C.F.R. § 416.1125. Section 416.1125(b) provides that the one-third
reduction applies when the claimant is living in the household
of another, unless claimant can show that he or she is paying a
pro-rata share of the total household expenses,
416.1125(b)(3)(iv). The one-third reduction applies when the
claimant lives in his or her own household and receives in-kind
support and maintenance, 416.125(d)(2). The one-third reduction
does not apply when only support or maintenance is furnished in
kind. The value of the in-kind support or maintenance is
considered unearned income, 416.1125(f). A person is living in
his or her own household if the person is renting space at fair
market value, 416.1125(b)(3).
Plaintiff moved in with her daughter in 1978. At that time
they entered into an oral agreement whereby plaintiff would
pay $150 per month for room and board. There was no
designation of how much went for room and how much for board.
After plaintiff received notice of reduction of her benefits,
she entered into a written lease, dated May 9, 1981. She
agreed to pay $110 per month for room and $40 per month for
food. Petitioner's daughter purchased and prepared all the
food consumed in the household consisting of three adults. On
July 9, 1979, the agreement was changed. Plaintiff paid $110
per month for room and purchased her food separately.
In a decision dated March 28, 1980, the ALJ made findings
based on the prior testimony and all of the records that were
submitted. The ALJ found, in pertinent part, that from
November 1978 until May 1979 plaintiff was living in the
household of another, and that her unapportioned contribution
of $150 was not her pro-rata share of total household
expenses. As a result, she received both support and
maintenance in kind, and the one-third reduction applies to
those months. Further, the ALJ found that after May 1979,
claimant paid fair market rent of $110, and thus was living in
her own household. He further found that she continued to
receive support and maintenance in the form of food only, so
that the presumptive one-third reduction in § ...