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Draper v. Colvin

United States Court of Appeals, Eighth Circuit

March 3, 2015

Stephany Draper, Plaintiff - Appellant
v.
Carolyn W. Colvin, Acting Commissioner of the Social Security Administration, Defendant - Appellee; National Academy of Elder Law Attorneys; Special Needs Alliance, Amici on Behalf of Appellant

Submitted October 9, 2014

Page 557

Appeal from United States District Court for the District of South Dakota - Sioux Falls.

For Stephany Draper, Plaintiff - Appellant: Richard D. Casey, Lynn & Jackson, Sioux Falls, SD; R. Eric Solem, Solem & Mack, Englewood, CO.

For Carolyn W. Colvin, Acting Commissioner of the Social Security Administration, Defendant - Appellee: Stephanie Carlson Bengford, Assistant U.S. Attorney, Kevin Koliner, Assistant U.S. Attorney, U.S. Attorney's Office, Sioux Falls, SD; John Jay Lee, Supervisory Attorney, Social Security Administration, Office of the General Counsel, Region VIII, Denver, CO.

For National Academy of Elder Law Attorneys, Special Needs Alliance, Amici on Behalf of Appellant(s): Ron M. Landsman, Rockville, MD; Craig C. Reaves, Reaves Law Firm, P.C.

Before MURPHY, SMITH, and GRUENDER, Circuit Judges.

OPINION

Page 558

GRUENDER, Circuit Judge.

Stephany Draper appeals from the district court's[1] decision affirming the termination of her Supplemental Security Income (" SSI" ) payments. The district court held that Draper was not eligible for SSI benefits because the funds in her trust raised her assets above the eligibility limit. We affirm.

I.

Eighteen-year-old Stephany Draper suffered a traumatic brain injury in a car accident in June 2006. Draper executed a durable power of attorney, authorizing her parents, John and Krystal Draper, to, among other things: (1) " demand, sue for, recover, collect, and receive" every sum of money belonging to or claimed by Draper; (2) " compromise or compound any claim or demand; " and (3) " fund, transfer assets to, and to instruct and advise the trustee of any trust wherein [Draper is] or may be the trustor, or beneficiary."

Draper began receiving SSI payments in July 2007. Approximately seven months later, on February 12, 2008, John Draper signed a personal-injury settlement statement on Draper's behalf, under which Draper received $429,259.41. Later that day, Draper's parents, without referencing the power of attorney, signed documents creating the Stephany Ann Draper Special Needs Trust. As explained in the trust document, Draper's parents intended for the trust to qualify under 42 U.S.C. § 1396p(d)(4)(A), meaning that it would provide for Draper's needs without " displac[ing] or supplant[ing] public assistance or other sources of support that may otherwise be available to the beneficiary." The trust listed as its funding source only " the proceeds of the settlement of a liability claim," referring to the money Draper received in the personal-injury settlement. The trust was funded with the $429,259.41 sum in a single deposit on the same day that her parents executed the trust agreement.

In September 2008, Draper received notice from the Social Security Administration (" SSA" ) that she had been overpaid a total of about $3,000 in SSI benefits from February through September 2008 because her assets, including the funds in the trust, exceeded the SSI-eligibility limit of $2,000. The SSA also informed Draper that her SSI payments would cease. Draper appealed the agency decision to an Administrative Law Judge (" ALJ" ).

The ALJ found that Draper had been overpaid SSI benefits because her special-needs trust was not exempt from being counted as a personal asset under § 1396p(d)(4)(A). To reach this conclusion, the ALJ relied on the SSA's interpretation of § 1396p(d)(4)(A) set forth in its Program Operations Manual System (" POMS" ), a policy and procedure manual that agency employees use in evaluating eligibility for SSI benefits. According to the POMS, Draper's parents had to act as third-party creators when establishing the trust in order for it to be exempt under § 1396p(d)(4)(A). POMS SI 01120.203B(1)(g). The ALJ found that the

Page 559

trust did not qualify because Draper's parents acted as Draper's agents under the power of attorney when they established the trust. Accordingly, the ALJ held ...


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