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FUSON v. BARNHARDT

April 22, 2003

KEVIN S. FUSON, PLAINTIFF,
v.
JO ANNE B. BARNHARDT, COMMISSIONER OF SOCIAL SECURITY, DEFENDANT.



The opinion of the court was delivered by: Maxine M. Chesney, United States District Judge

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT; GRANTING IN PART AND DENYING IN PART DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT; REMANDING ACTION FOR FURTHER PROCEEDINGS

Plaintiff Kevin S. Fuson brings this action pursuant to 42 U.S.C. § 405 (g) to obtain judicial review of a final decision of the Commissioner of the Social Security Administration. The matter is before the Court on plaintiffs motion for summary judgment and defendant's cross-motion for summary judgment. Pursuant to Civil Local Rule 16-5, the motions have been submitted on the papers without oral argument. Having considered the papers in support of and in opposition to the motions, the Court rules as follows.

BACKGROUND

Plaintiff became eligible for supplemental security income ("SSI") benefits in January 1984. (Certified Transcript of Record ("Tr.") at 128.) On September 14, 1995, the Social Security Administration ("SSA") approved plaintiff's Plan for Achieving Self-Support ("PASS").*fn1 (Tr. at 91.) Plaintiffs plan was "to start a store-front collectible business." (See Tr. at 67.) Under the PASS, which was effective as of March 1995, plaintiff was able to set aside $422 of his monthly social security benefits, up to a maximum of $8,524 over the term of the PASS. (Tr. at 91.) In approving the plan, the SSA stated: "Our approval is good until 8/31/96 when we will review your activities under the plan and consider extending it." (Id.)

In April 1997, plaintiff filed a request for an extension of his PASS. (Tr. at 58-65, 94-96.) On August 6, 1997, the SSA advised plaintiff that before it would review plaintiffs request for an extension of his PASS, plaintiff would need to submit certain additional information. (Tr. at 97-98.) The SSA also advised plaintiff that his SSI benefits "may stop" if he did not respond to the request for further information before September 6, 1997. (Tr. at 97.) On August 12, 1997, plaintiff filed a Request for Reconsideration, contending that his benefits should not be stopped before a determination on his plan had been made. (Tr. at 99.) On January 24, 1998, the SSA denied plaintiffs Request for Reconsideration, stating: "[W]e cannot continue to pay the extra money each month that we have been paying until a decision on the PASS is made." (Tr. at 103.) On March 20, 1998, plaintiff provided additional information concerning his PASS to the SSA. (Tr. at 106-08.) That same day, plaintiff also filed a Request for Hearing by an Administrative Law Judge ("ALJ"), challenging the SSA's determination to reduce plaintiffs SSI benefits while plaintiffs request to extend his PASS remained pending. (Tr. at 110.)

On April 29, 1998, the SSA sent plaintiff a letter denying his request for an extension of his PASS, stating:

When the goal of a PASS involves self employment, the plan must include a detailed business plan that explains how, when and why the business will be successful. Neither the original PASS nor the business plan you submitted with it provides this information. In order to make a decision on your request for an extension of your PASS you were asked to provide this information, but you said this already has been done and did not submit what was requested. Although you have received additional income as a result of the PASS for thirty-three months you did not yet have a place to operate your business and have not made any profit from your business. You have not supplied any information to establish that the proposed business has a reasonable chance of being successful and that it will lead to you becoming self supporting. Therefore your request for an extension of your PASS is denied and it is suspended effective February 1997. Please note, however, that if you can provide an in-depth business plan that gives a specific date and place that you will actually begin selling merchandise we will consider approving an extension to cover storage fees and possibly other expenses.
(Tr. at 113.) On May 13, 1998, plaintiff sent the SSA what he described as a "business plan written for the period April, 1997 thru September, 1998."*fn2 (See Tr. at 119). Thereafter, on June 23, 1998, plaintiff filed a Request for Reconsideration of the SSA's April 29, 1998 decision to suspend his PASS. (See Tr. at 121.) On November 27, 1998, the SSA denied reconsideration, stating:
We have thoroughly reviewed your PASS, the business plan you submitted in 1995, and the evidence you submitted for your progress review and find that the decision to suspend your PASS was correct.
The business plan you submitted was incomplete and provided no evidence of how your business will be successful or how it will lead to you becoming self-supporting. In addition, there is no evidence that you have taken the steps necessary to start your business. Therefore, the original redetermination is upheld.
(Id.)

On March 5, 1999, ALJ Gilbert Pavlovsky issued a decision on the issue of whether plaintiff remained eligible for an income exclusion under his PASS for the period during which the SSA was considering whether to grant plaintiffs request for an extension.*fn3 (Tr. at 127-31.) ALJ Pavlovsky ruled that plaintiff remained eligible for an income exclusion "through at least the date a substantive determination is made on his formal request for extension." (Tr. at 130-31.) At the time that decision was announced, however, the substantive determination, as noted above, had already been made by the SSA, a fact of which neither plaintiff nor the SSA advised ALJ Pavlovsky. (Tr. at 151.)

In response to ALJ Pavlovsky's decision of March 5, 1999, the SSA issued retroactive payments to plaintiff in May 1999 and August 1999, for the periods February 1998 through May 1999 and March 1995 through August 1999, respectively. (Tr. at 29, 145-46, 151-52.) On October 3, 1999, the SSA advised plaintiff that it was implementing its April 29, 1998 decision to deny an extension. (Tr. at 151-52.) Thereafter, on October 14, 1999, the SSA notified plaintiff that it would reduce plaintiffs benefits beginning September 1, 1999. (Tr. at 158-163.) On October 25, 1999, plaintiff filed a Request for Reconsideration of the October 14, 1999 notice. On November 23, 1999, the SSA denied plaintiffs Request for Reconsideration, stating:

The decision to reduce your SSI payments is correct. We must now count your Social Security disability as income. In the past we had excluded your Social Security as income because of a Plan to Achieve Self Support. However it was decided that you were not in compliance with your PASS and accordingly, we must count the Social Security benefits as income against the SSI.
(Tr. at 169.)

On December 30, 1999, plaintiff filed a Request for Hearing by an ALJ, stating:

Since 98 Jan. my PASS plan was stopped without a reason (I have a decision on March 99 on this issue from Judge Pavlovsky at Hearings & Appeals S.F.) I also got a redetermination Ms. McSweeney on Nov. 99 which I also disagree with. And they are still refusing to pay me my [sic] from the March 99 decision!!!
(Tr. at 174.) On May 23, 2000, in response to plaintiffs December 30, 1999 Request for Hearing, ALJ F. Neil Aschemeyer conducted a hearing. (Tr. at 39.) During the hearing, plaintiff argued that the SSA erred by not renewing his PASS because he was in compliance with the terms of his PASS, and that he had not received all of the money due to him under ALJ Pavlovsky's decision of March 5, 1999. (See Tr. at 40, 48.)

In a decision dated May 26, 2000, ALJ Aschemeyer stated that "the only issue to be considered at this hearing is whether the claimant's request for extension of the income exclusion should be continued beyond September 1999." (Tr. at 30) (emphasis in original). The ALJ found that plaintiff was not eligible for an extension of his original PASS, because plaintiffs "plan for achieving his occupational objective is not ...


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