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Gwin v. Colvin

United States District Court, N.D. Illinois, Eastern Division

December 5, 2017

CAROLYN W. COLVIN, Commissioner of Social Security Defendant.



         Plaintiff Carole Gwin brings this action against the Acting Commissioner of Social Security, Nancy Berryhill, [1] pursuant to the Social Security Act, 42 U.S.C. § 405(g), seeking review of the Commissioner's determination that Plaintiff received an overpayment of disability insurance benefits. Plaintiff received disability benefits from August 2009 until March 2012. In June 2012, however, the Social Security Administration ("SSA") determined that she had not been eligible for benefits during that period because she had been engaged in substantial gainful activity. See 20 C.F.R. § 404.1571 ("If you are able to engage in substantial gainful activity, we will find that you are not disabled."). The SSA also sought repayment of the $54, 053.60 it had provided her during that period. Plaintiff's request for reconsideration of the SSA's overpayment determination was denied, and following a hearing, an administrative law judge (ALJ) issued a written decision affirming that Plaintiff had been performing substantial gainful activity while receiving disability benefits and was therefore liable for repayment of the $54, 035.60 she had received. In addition to her request for reconsideration, Plaintiff requested a waiver of overpayment recovery, but the ALJ did not address that request in her decision. After the SSA Appeals Council denied Plaintiff's request for review of the ALJ's decision, Plaintiff brought this suit.

         Plaintiff asks this court to remand her case for further administrative proceedings, and she has moved for summary judgment [19] on that request. She contends that remand is required because the ALJ (1) lacked substantial evidence to support the conclusion that Plaintiff engaged in substantial gainful activity, (2) failed to make an express assessment of Plaintiff's credibility, and (3) ignored Plaintiff's request for waiver of overpayment. The Commissioner responds that substantial evidence in the record supports the ALJ's conclusion and that the ALJ appropriately considered Plaintiff's credibility. With respect to waiver of overpayment, the Commissioner contends that the court lacks jurisdiction to consider that question because Plaintiff has failed to exhaust her administrative remedies with respect to that issue. For the reasons stated below, the court denies Plaintiff's motion.


         The ALJ's written decision does not identify the nature of the disability for which Plaintiff had been receiving benefits. The court understands, however, based on a pre-hearing letter Plaintiff's attorney sent to the ALJ, that Plaintiff stopped working at her job as a human resources manager on March 11, 2009 because of extreme and debilitating migraine headaches. (Certified Copy of the Admin. Record [8] (hereinafter "R.") at 325, 360.) At the time Plaintiff stopped working, her 27-year old son Jonathon was living in a group home that provided support services for adults with developmental disabilities. (Id. at 360, 384.) According to Plaintiff, in August of that year, her son had an epileptic seizure when he was left unattended in that group home, and he suffered a concussion and multiple injuries to his face after falling to the ground. (Id. at 384.) Plaintiff says that she decided at that point to remove him from the group home and care for him in her own home. (Id.) She also learned at that time that she was eligible for funding from the Illinois Adult Home Based Support ("AHBS") Program, which provides financial assistance to allow disabled individuals to receive care in their homes instead of in a group home. (Id. at 360, 384.) Plaintiff was Jonathon's primary caregiver at home until March 2012, when she returned to full-time work in human resources. (Id. at 251.) By that time, therapy, relaxation, and other techniques had improved her condition, and she stopped receiving disability benefits. (Id. at 251, 326, 385.) Plaintiff continues to receive AHBS payments for Jonathon's care, but she now uses the funds to pay for a non-family caregiver. (Id. at 326.)

         The SSA determined that Plaintiff was engaged in substantial gainful activity from September 2009 through March 2012 by caring for her son while receiving financial compensation through the AHBS program. (Id. at 20.) The Illinois AHBS Program is funded by Medicaid and is designed to assist with the cost of home or community-based services for individuals who would otherwise require care in a hospital, nursing facility, or intermediate care facility. (Id. at 331, 366.) The State of Illinois contracts with a private third-party service provider ("ACES$")[2] to administer the hiring and payment of personal support workers who care for disabled individuals in the AHBS Program. (Id. at 330.) To receive funding under the program, Plaintiff reported the amount of time she spent caring for Jonathon each month by submitting time sheets to ACES$, and ACES$ sent her a monthly check. (Id. at 386-87.) Regardless of the number of hours a caretaker works, there is a monthly limit on the amount of funding available for each individual enrolled in the program. (Id. at 21, 333.) At the hearing before the ALJ, Plaintiff testified that she worked more than 100 hours per month caring for her son and was paid an hourly rate of roughly $15 per hour up to the maximum amount, which she testified was around $1, 900.[3] (Id. at 386-89.) The tasks Plaintiff performed on a weekly basis while caring for her son included helping him use the toilet, preparing his meals and snacks, helping him eat, administering his medications, setting up books and magazines for him to read and movies for him to watch, setting up the television, helping him bathe and dress, and driving him for doctor visits and for water therapy. (Id. at 21, 253.)

         Plaintiff submitted time sheets documenting the hours she worked in order to receive payments from ACES$, but she nevertheless believes the payments do not constitute wages or income. Plaintiff contends that her position on the nature of the funds she received is consistent with a change in the tax status of the funds since the period when she was receiving disability benefits. According to an SSA investigator who looked into Plaintiff's case, until 2007, payments received under the AHBS program were considered reimbursements for the costs incurred in providing care, and were not taxed by the State. (Id. at 252, 362.) But when Illinois contracted with ACES$ to manage the payment of funds under the program as wages, the State began treating the payments as taxable income. (Id.) The treatment of these payment for federal tax purposes differs; the Internal Revenue Service determined that, as of January 3, 2014, "certain payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver (Medicaid waiver) program . . . are difficulty of care payments excludable under § 131 of the Internal Revenue Code." (Id. at 347.) Thus, the payments Plaintiff received under the AHBS Program were exempt from federal income tax. (Id. at 345.)

         The SSA investigator who examined Plaintiff's case concluded that, although the Illinois tax status of the payments changed, the purpose of the AHBS Program remained the same: to reimburse the families for expenses incurred in taking care of disabled individuals at home. (Id. at 252, 362.) Plaintiff testified at her hearing that she understood the AHBS payments to be "a funding" or "a grant, " as opposed to wages. (Id. at 397.) She emphasizes, also, that she used the funds to pay for expenses related to her son's disability, including modifications to her garage and bathroom, the purchase of a new “push chair” and a car that could transport the push chair, and payments for the portion of his medical care not covered by insurance. (Id.)

         Plaintiff also maintains that even if the AHBS payments are considered compensation for the work of caring for Jonathon, she was not performing substantial gainful activity because she was significantly limited in her ability to care for him during the time period at issue. According to Plaintiff, she provided care for Jonathon on an "inconsistent basis." (Id. at 264.) She says there "might be some days when [she] could assist Jonathon [only] for part of the day, " and there may have been days when she “laid [sic] in bed with a migraine." (Id.) Plaintiff emphasizes that other family members-including her other sons, and Jonathon's father, stepmother, grandmother, and aunt-helped to take care of Jonathon (id. at 251-253, 265, 327), and she disputes Watson's estimation (provided to the SSA investigator) that Plaintiff provided roughly 75 to 80% of Jonathon's care while other family members provided the rest. (Id. at 252-53.) According to Plaintiff, even if her other sons assisted Jonathon only 20 to 25% of the time, Jonathon was with his father more than 20% of the time (on weekends and holidays), and thus it was impossible for Plaintiff to have taken care of him 75 to 80% of the time, as Watson estimated. (Id. at 264.) At Plaintiff's attorney's request, Watson wrote a letter withdrawing her prior estimate of the percentage of time Plaintiff spent caring for Jonathon: Watson noted that the earlier estimate was not based on "the hours reimbursed from timesheets [submitted to ACES$] during the timeframe in question." (Id. at 330.)

         SSA denied Plaintiff's request for reconsideration of its overpayment determination in September 2012 but granted Plaintiff's request for a hearing before an ALJ. The ALJ conducted the hearing on February 26, 2013 and heard testimony from Plaintiff and two of her sons, Erich Missel and Thomas Gulo. During her testimony, Plaintiff emphasized that she believed the payments from ACES$ were "funding" rather than wages, that Jonathon's family members assisted Plaintiff in caring for him, and that she used the payments from ACES$ to cover expenses related to Jonathon's disability. (Id. at 394-98.) Plaintiff's sons testified about the amount of time they spent caring for Jonathon. Missel testified that Jonathon required care throughout the day and that someone was always home to care for him. (Id. at 404, 409.) He explained that Plaintiff had to be taken to the emergency room on a frequent basis because of her migraines and that either Missel or Gulo would watch Jonathon while she was away. (Id. at 405.) Missel said that he consistently helped with Jonathon's care before he moved out of the state in June 2010; he estimated that he provided about 40% of Jonathon's required care, while Plaintiff provided the other 60%. (Id. at 404, 406, 409.) Gulo testified that he helped care for Jonathon "all the time" when Jonathon first began living at home because Gulo was not employed at the time. (Id. at 412.) According to Gulo, once he started a new job in March 2010, he continued to help with Jonathon's care because he still lived at home and did not leave for work until the afternoon. (Id. at 412-13.) Gulo testified that he has since lost his job and is now helping to care for Jonathon "full-time." (Id. at 413.) Neither son was paid for the care they provided. (Id. at 408, 414.)

         In a written decision issued on August 30, 2013, the ALJ concluded that Plaintiff had been overpaid disability benefits and was required to pay back the amount she had received. (Id. at 19.) The ALJ considered Plaintiff's argument that the payments she received were not income because she used them to pay for Jonathon's medical and other disability-related expenses. But the ALJ disagreed, finding that the evidence showed that she was paid for her work activity. (Id. at 21.) The ALJ emphasized that since Plaintiff's return to work in human resources, she has used the same funds from the AHBS program to pay a third-party caregiver to perform the same tasks Plaintiff performed when she cared for Jonathon. (Id.) These payments to the third-party caregiver were, in the ALJ's view, evidence that Plaintiff's caretaking work had economic value, for which she was being compensated through the program. (Id.)

         The ALJ also pointed to Watson's letter as evidence that Plaintiff had received income for work activities while she was caring for her son. As the ALJ noted, in that letter, Watson confirmed that Plaintiff was "employed" by ACES$, that the "reimbursement" ACES$ provided was for the care Plaintiff provided, and that Plaintiff "earned" the funds she received as a "personal support worker." (Id. at 21.) Watson's letter, the ALJ found, "clearly indicate[d] that the funds received by [Plaintiff] under the Home-Based Support Program[] represented payments in exchange for the home care services provided by the [Plaintiff] for her disabled son." (Id.) The ALJ rejected Plaintiff's argument that she worked under "special conditions" and therefore did not engage in substantial gainful activity because Jonathon's other family members assisted in caring for him. The ALJ noted that it was not necessary for Plaintiff to have provided all of Jonathan's care in order to have engaged in substantial gainful activity. (Id.) Plaintiff's reports of working over 100 hours per month and her receipt of over $9, 000 per month satisfied the ALJ that she performed substantial gainful activity during the time period at issue. (Id.)

         Following the ALJ's decision, Plaintiff filed a Request for Review of Hearing Decision/Order Decision on August 30, 2013. (Id. at 15.) The Appeals Council denied the request on May 6, ...

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