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Mason v. Sybinski

February 11, 2002

IVY MASON, ON HER OWN BEHALF AND ON BEHALF OF THOSE SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
PETER SYBINSKI, ET AL., DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 00-0988-C-M/S--Larry J. McKinney, Chief Judge.

Before Flaum, Chief Judge, and Harlington Wood, Jr., and Easterbrook, Circuit Judges.

The opinion of the court was delivered by: Flaum, Chief Judge.

Argued January 9, 2002

Ivy Mason, on behalf of herself and a class of past, present, and future mentally impaired Social Security recipients who are institutionalized in Indiana state mental health institutions, brought action against the state of Indiana. The class sought declaratory and injunctive relief to prevent the state hospitals, appointed by the Social Security Administration ("SSA" or "the Administration") as representative payees, from deducting a portion of the recipients' Social Security benefits to pay for institutional maintenance without their voluntary consent. The class contends that the state hospitals' actions violate the anti-attachment provision of the Social Security Act ("the Act") as well as procedural due process. The district court granted summary judgment in favor of the state on all claims. Mason, on behalf of the class, now appeals. For the reasons stated herein, we affirm the decision of the district court.

I. Background

The SSA, when it determines that a recipient is unable to manage or direct management of her own Social Security benefits, appoints a representative payee to do the job for her. 42 U.S.C. sec.405(j) (2001); 20 C.F.R. sec.404.2001 (2000). Representative payees are subject to a number of Social Security regulations created to prevent misuse or abuse of the funds. The appointed payee must use the payments received only for the "use and benefit" of the beneficiary, "in a manner . . . he or she determines, under the guidelines in this subpart, to be in the best interests of the beneficiary." 20 C.F.R. sec.404.2035. The regulations define "for the use and benefit" of the recipient to include costs of current maintenance, 20 C.F.R. sec.404.2040(a)(1), and define "current maintenance" to include customary charges by a state,federal, or private institution where the beneficiary is receiving care. 20 C.F.R. sec.404.2040(b). The Act states, moreover, that a creditor who provides the beneficiary with goods or services for consideration cannot be that person's representative payee except, inter alia, when that creditor is a state-licensed or certified care facility. 42 U.S.C. sec.405(j)(2) (C)(i)(III); 42 U.S.C. sec.405(j)(2)(C)(iii).

The regulations set forth an order of preference in selecting a representative payee for institutionalized beneficiaries. If a legal guardian, spouse, other relative, or friend who demonstrates a strong concern for the recipient exists, the SSA will generally appoint that person to be the payee. If not, however, the Administration's preference is to appoint the state institution where the recipient resides. 20 C.F.R. sec.404.2021(a).

When the SSA appoints a state hospital as representative payee, it provides notice to the hospital that it must use the payments for the benefit and care of the recipient. The Administration also provides notice to the beneficiary herself that a payee has been appointed and that she has the right to appeal that appointment. The recipient is told that the representative payee will be responsible for managing her benefits. In Indiana, when a state hospital is appointed payee, it verbally informs the beneficiary that her benefits may be used to pay for the cost of their care. Also, the SSA generally informs the beneficiary (and did so, by letter, in Mason's case) that the hospital, as payee, will apply part of the money toward its bill.

After receiving a recipient's benefit payment, the hospital deposits the money into a trust account. According to guide lines and specific instruction from the SSA, the hospital provides the recipient with spending money for bills, clothing and other reasonable expenses. It also deducts a portion of the benefits to pay for institutional costs. The hospital does not obtain written consent from the beneficiary to allow the state to apply the benefits to the cost of institutionalization.

Under Indiana law, residents of hospitals and institutions are liable for the cost of their treatment and care. Ind. Code sec. 12-24-13 (2001). If a person is legally admitted to a state institution, however, she is entitled to care and maintenance there, regardless of her ability to pay. Ind. Code sec. 12-24-5-4. When a patient is admitted, Indiana mental health institutions generally show her a notification of liability. After the hospital is appointed as representative payee for a patient, however, it does not inform her that she will be treated at the hospital even if she does not use her Social Security benefits to pay for the cost.

Ivy Mason, the class representative, is mentally disabled and has been a resident patient at Richmond State Hospital ("RSH") from July 7, 1992 to January 14, 1993; from October 4, 1994 to June 18, 1999; and from December 4, 1999 to the present. Upon her second and third admissions, pursuant to Indiana law, she signed a "Notification of Liability for Cost and Care of Treatment." From at least January 1998 until her second release, and for the entirety of her current stay at the hospital, RSH has been the representative payee for her Social Security benefits. On January 29, 1998, the SSA awarded Mason Social Security survivor's benefits retroactive to 1989 and informed her that she would be getting both ongoing monthly benefits in the sum of $618 as well as a lump-sum check for $34,408.73 for her back benefits. The SSA told both Mason and RSH that $25,942.73 of the lump-sum check was to be applied to her outstanding hospital bill. RSH did so and, under SSA guidance, also uses a portion of her monthly benefits check (as of the time of discovery, about $518) to pay her bill (which, again at the time of discovery, was approximately $7,170 per month). As of May 31, 2000, the bill for Mason's care at RSH totaled $412,070.98.

II. Discussion

We review the district court's grant of summary judgment de novo, construing all of the facts and reasonable inferences that can be drawn from those facts in favor of the nonmoving party. See Central States, Southeast & Southwest Areas Pension Fund v. Fulkerson, 238 F.3d 891, 894 (7th Cir. 2001). A grant of summary judgment is appropriate if the pleadings, affidavits, and other supporting materials leave no genuine ...


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