Stephany Draper v. Carolyn W. Colvin
779 F.3d 556
8th Cir.2015Background
- Stephany Draper, disabled by traumatic brain injury, received SSI beginning July 2007.
- On February 12, 2008 Draper’s father signed a personal-injury settlement for $429,259.41 under Draper’s durable power of attorney; that same day her parents executed and funded the Stephany Ann Draper Special Needs Trust with the settlement proceeds.
- SSA determined Draper was overpaid and terminated SSI because the trust funds pushed her resources above the $2,000 SSI eligibility limit and the trust was not exempt under 42 U.S.C. § 1396p(d)(4)(A).
- The ALJ applied the SSA’s POMS, which requires either (a) a parent create an "empty" or seed trust with their own funds before a disabled adult’s assets are transferred, or (b) a court-created trust ordered by the court; a trust funded by the disabled person (or funded by an agent under a power of attorney at creation) counts as the individual’s resource.
- Draper’s parents later obtained a state-court nunc pro tunc order naming the court as settlor effective Feb 12, 2008; Appeals Council and district court rejected this as insufficient to qualify the trust.
- The Eighth Circuit affirmed: the trust is a countable resource because it was funded at creation with Draper’s assets via her parents acting under the power of attorney, and the retroactive court order did not “establish” the trust under the statute/POMS.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a parent acting under a power of attorney may create and fund a § 1396p(d)(4)(A) qualifying trust | Draper: parents acted in their individual capacities and either created an empty trust or otherwise validly established the trust before funding it | SSA: parents acted as agents under the power of attorney and funded the trust at creation, so it was established by the disabled individual (countable) | Held: Parents funded trust while acting as agents under power of attorney; under POMS and trust law the trust counts as Draper’s resource and is not exempt. |
| Whether a nunc pro tunc state-court order naming the court as settlor retroactively “establishes” a qualifying court-created trust | Draper: the court’s retroactive order cured any initial defect and thus qualifies the trust as court-created | SSA: the court did not order creation but merely retroactively assigned settlor status; POMS requires the court to have required creation | Held: Retroactive nunc pro tunc order is only an approval/assignment, not creation; it does not satisfy § 1396p(d)(4)(A). |
| Whether SSA’s POMS interpretation of § 1396p(d)(4)(A) is entitled to deference | Draper: POMS should not control if inconsistent with statute or state law | SSA: POMS fills statutory gaps and guides administration; it applies here | Held: POMS interpretation warranted Skidmore deference and is persuasive; the agency permissibly filled ambiguities. |
| Whether substantial evidence supports agency finding of non-qualifying trust | Draper: record evidence shows intent to create an empty trust and parents acted individually | SSA: record shows funding at creation with Draper’s funds and parents’ use of power of attorney | Held: Substantial evidence supports SSA; court affirms agency and district court. |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (administrative deference framework)
- United States v. Mead Corp., 533 U.S. 218 (agency interpretive materials may merit respect under Skidmore)
- Skidmore v. Swift & Co., 323 U.S. 134 (factors for weight of agency interpretations)
- Washington State Dept. of Social & Health Servs. v. Guardianship Estate of Keffeler, 537 U.S. 371 (POMS may merit deference in the Social Security context)
- Travis v. Astrue, 477 F.3d 1037 (substantial-evidence standard explained)
- Byes v. Astrue, 687 F.3d 913 (standard of review for SSI denials)