John F. LOPES, Attorney-in-Fact, Amelia F. Lopes, Plaintiffs-Appellees, v. DEPARTMENT OF SOCIAL SERVICES, Michael P. Starkowski, Commissioner of Connecticut Department of Social Services, Defendants-Appellants.
Docket No. 10-3741-cv.
United States Court of Appeals, Second Circuit.
Decided: Oct. 2, 2012.
Argued: Sept. 22, 2011. Final Submission: Dec. 30, 2011.
Although Congress enacted
III. Conclusion
To summarize, we conclude that short-swing trading in an issuer‘s stock by a 10% beneficial owner in violation of Section 16(b) of the Securities Exchange Act causes injury to the issuer sufficient for constitutional standing.
The judgment of the district court is AFFIRMED.
Hugh Barber, Assistant Attorney General (Tanya Feliciano DeMattia, Assistant Attorney General, on the brief), for George Jepsen, Attorney General of the State of Connecticut, Hartford, CT, for Defendants-Appellants.
Before: LEVAL, HALL and LOHIER, Circuit Judges.
LOHIER, Circuit Judge:
This appeal raises the issue of whether a non-assignable annuity contract that provides the spouse of an institutionalized person with monthly payments counts as an excess resource that must be spent down before the institutionalized person can receive Medicaid benefits under the Medicare Catastrophic Coverage Act of 1988 (“MCCA“). Before the United States District Court for the District of Connecticut (Hall, J.), Amelia Lopes (“Lopes“), attorney-in-fact for her husband, John Lopes, challenged the defendants’ determination that he is ineligible for Medicaid benefits because Lopes is the payee of a six-year annuity contract that provides her with fixed monthly payments of $2,340.83. Lopes contended that, because the annuity contract contains an anti-assignment provision that prohibits her from assigning her rights thereunder, the annuity payments are “income” that need not be spent down in order for her husband to receive benefits. The Commissioner of the Connecticut Department of Social Services treated the annuity as a “resource” on the ground that Lopes could potentially sell the payment stream from the annuity to a third party notwithstanding the anti-assignment provision. The District Court concluded that the Commissioner‘s determination rested on more restrictive eligibility criteria than those used by the federal Supplemental Security Income Program, in violation of
BACKGROUND
A. Statutory Framework
The MCCA requires States to consider the resources of both the institutionalized spouse and the “community spouse” in determining the former‘s eligibility for Medicaid benefits.
When Lopes filed her husband‘s application for Medicaid benefits, the applicable “community spouse resource allowance” was approximately $180,000.
B. Factual Background
Shortly before Lopes filed her husband‘s application for benefits, her liquid assets exceeded the community spouse resource allowance by about $160,000. Seeking to reduce her resources to below the protected amount, Lopes purchased an immediate single premium annuity with a premium of $166,878.99 from The Hartford Life Insurance Company (“The Hartford“). The annuity contract, which was governed by Connecticut law, provided for monthly payments of $2,340.83 over a period of approximately six years. At Lopes‘s election, the annuity contract contained an “Assignment Limitation Rider,” which provided:
This contract is not transferable. The rights, title and interest in the contract may not be transferred; nor may such rights, title and interest be assigned, sold, anticipated, alienated, commuted, surrendered, cashed in or pledged as security for a loan. Any attempt to transfer, assign, sell, anticipate, alienate, commute, surrender, cash in or pledge this contract shall be void of any legal effect and shall be unenforceable against [The Hartford].
Lopes requested a letter from The Hartford clarifying the import of the Assignment Limitation Rider. The Hartford confirmed that “neither the Annuity Contract, nor any periodic payments due thereunder can be cashed-in, sold, assigned, or otherwise transferred, pledged, or hypothecated [due to the Assignment Limitation Rider].”
Lopes submitted the application for Medicaid benefits thirteen days after purchasing the annuity. Because the Department of Social Services‘s Uniform Policy Manual (“UPM“) § 4030.47 provides that, for purposes of determining benefit eligibility, “the right to receive income from an annuity is regarded as an available asset, whether or not the annuity is assignable,” the Commissioner sought to determine whether Lopes could sell her annuity income stream to a third party notwithstanding the Rider. Although a third party, Peachtree Financial, appears to have been willing to purchase the payment stream for approximately $99,000, Lopes maintained that the annuity was a “fixed income stream[,] ... not an asset that she [was] required to” liquidate. In May 2010 the Commissioner told Lopes that her husband was ineligible for Medicaid benefits because she had “failed to apply for or try to get assets which may be available to [her] family.”
C. Procedural History
Lopes filed suit, claiming that the Commissioner‘s application of UPM § 4030.47 was more restrictive than an SSI regulation providing that “[i]f the individual has the right, authority or power to liquidate the property ... it is considered a resource,”
The parties cross-moved for summary judgment. The District Court granted Lopes‘s motion, concluding that, because Lopes would breach her contractual obligations under the anti-assignment clause if she attempted to assign her right to the payment stream, she did not have the “right, authority or power” to liquidate her interest in the annuity, as required by
The Commissioner appealed, arguing, among other things, that (1) the POMS requirement of a “legal right, authority or power” to liquidate the asset is unreasonable in light of the language of
Following oral argument, to aid our analysis, we solicited the views of the United States Department of Health and Human Services (“HHS“) regarding “(1) whether the applicable statutes and regulations ... require an income stream from an irrevocable annuity to be considered as ‘income’ or as a ‘resource,’ and (2) the policy implications of resolving this case in favor of the plaintiff or the State.” In response, HHS, as amicus curiae, urges us to adopt Lopes‘s, and the District Court‘s, interpretation of the relevant SSI regulations for two main reasons: (1) the “natural reading of ... [§] 416.1201, as clarified in POMS § SI 01110.115, is that [the Social Security Administration] will not require an applicant to renegotiate or, possibly, breach a contract in order to recover the value of a resource, such as a non-assignable annuity, in order to qualify for Medicaid“; and (2) Lopes‘s retention of the annuity payment stream is not inconsistent with the Medicaid statute‘s primary purposes, which are to provide health care for the indigent and protect community spouses from impoverishment while preventing financially secure couples from obtaining Medicaid assistance.
DISCUSSION
We review the grant of summary judgment de novo and “will uphold the judgment if the evidence, viewed in the light most favorable to the party against whom it is entered, demonstrates that there are no genuine issues of material fact and that the judgment is warranted as a matter of law.” McGullam v. Cedar Graphics, Inc., 609 F.3d 70, 75 (2d Cir. 2010) (quotation marks omitted). Because the material facts are not in dispute here, we consider only whether the annuity is non-assignable and, if so, whether it is income or a resource.1 The language of the relevant regulations, as clarified in the POMS and in HHS‘s amicus brief, convinces us that the income stream from Lopes‘s annuity is properly considered income, not a resource, because the annuity is non-assignable.
A. SSI Regulations
As noted above, the SSI regulation that differentiates between income and re-
The Commissioner nonetheless submits that the owner of a non-assignable annuity has the effective “right, authority or power” to liquidate the asset, as long as there is a prospective purchaser for the payment stream. We cannot agree. We recognize that the SSI regulations do not specifically address the status of a “non-assignable” annuity like the one Lopes purchased. But one SSI regulation,
Some types of unearned income are ... [a]nnuities, pensions, and other periodic payments. This unearned income is usually related to prior work or service. It includes, for example, private pensions, social security benefits, disability benefits, veterans benefits, worker‘s compensation, railroad retirement annuities and unemployment insurance benefits.
The Commissioner points to additional SSI regulations that appear to say that if an individual liquidates a resource before applying for benefits, the receipts from the liquidation are still a resource. For example, the Commissioner cites
We reject the argument for the following reasons. Unlike
B. POMS Sub-Regulation
The POMS is a set of guidelines through which the Social Security Admin-
istration “further construe[s]” the statutes governing its operations. Clark v. Astrue, 602 F.3d 140, 144 (2d Cir. 2010). We have held that POMS guidelines are entitled to “substantial deference, and will not be disturbed as long as they are reasonable and consistent with the statute.” Bubnis v. Apfel, 150 F.3d 177, 181 (2d Cir. 1998). But we have declined to defer to the POMS where “the plain language of the statute and its implementing regulation do not permit the construction contained within the manuals.” Oteze Fowlkes v. Adamec, 432 F.3d 90, 96 (2d Cir. 2005).
As relevant here, the POMS provides that “[a]ssets of any kind are not resources if the individual does not have ... the legal right, authority or power to liquidate them (provided they are not already in cash)....” POMS § SI 01110.115 (emphasis added). This provision strongly supports the District Court‘s conclusion that the payment stream from Lopes‘s non-assignable annuity is income. As discussed above, notwithstanding the existence of a prospective purchaser for the payment stream, the Assignment Limitation Rider divests Lopes of the legal right and the power to direct that the payor pay the annuity benefit directly to a third party. See Rumbin, 757 A.2d at 531, 535.
The Commissioner asserts that the POMS guideline is not entitled to deference because
The Commissioner also argues that even if we were to defer to the POMS interpretation, the payment stream from the annuity contract qualifies as a resource because Lopes could sell it without assigning her rights by simply signing a separate contract promising to pass each payment along to a third party. Tr. of Oral Arg. at 11-13. Assuming for the moment that Lopes could do this without breaching the annuity contract, this argument proves too much. A Medicaid applicant could make a similar agreement regarding any source of income: pension checks, railroad retirement annuities, or even the applicant‘s weekly income from a current job. Construing these payment streams as resources merely because the applicant could pass them on to a third party in the way the Commissioner describes conflicts with
We conclude that POMS § SI 01110.115, which is reasonable and consistent with
C. HHS‘s Views
In addition to the regulations and POMS guidelines, we also have the benefit of HHS‘s views in this case, which simply confirm our conclusions. The interpretive guidance of an administrative agency such as HHS “constitute[s] a body of experience and informed judgment to which courts and litigants may properly resort for guidance.” Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944). Even where an agency has expressed its view through a medium other than “the fruits of notice-and-comment rulemaking or formal adjudication,” United States v. Mead Corp., 533 U.S. 218, 230, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001), the “agency‘s interpretation may merit some deference whatever its form, given the ‘specialized experience and broader investigations and information’ available to the agency, and given the value of uniformity in its administrative and judicial understandings of what a national law requires.” Id. at 234, 121 S.Ct. 2164 (citation omitted) (quoting Skidmore, 323 U.S. at 139, 65 S.Ct. 161); see also Christensen v. Harris Cnty., 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000) (opinion letters from agencies entitled to Skidmore deference).
For that reason, “a reasonable agency determination, when advanced in an amicus brief that is not a post hoc rationalization, may be entitled to some deference on account of the specialized experience and information available to the agency.” Conn. Office of Prot. & Advoca- cy for Persons with Disabilities v. Hartford Bd. of Educ., 464 F.3d 229, 239 (2d Cir. 2006) (quotation marks, alteration and citation omitted); see also Serricchio v. Wachovia Sec. LLC, 658 F.3d 169, 178 (2d Cir. 2011) (considering agency‘s views, expressed in an amicus brief solicited by the Court, “for persuasive value.” (citing Skidmore, 323 U.S. at 140, 65 S.Ct. 161, and N.Y.S. Rest. Ass‘n v. N.Y.C. Bd. of Health, 556 F.3d 114, 130 (2d Cir. 2009))).4 Of course, regardless of the agency‘s interpretation, “[t]he plain meaning of language in a regulation governs unless that meaning would lead to absurd results.” Forest Watch v. U.S. Forest Serv., 410 F.3d 115, 117 (2d Cir. 2005).
In its amicus brief, HHS makes two persuasive arguments that support the District Court‘s and Lopes‘s interpretation of the SSI regulations. First, it interprets
HHS further notes that its interpretation of the income/resource distinction is consistent with the treatment of annuities in the DRA. The DRA provides that, so long as annuities are disclosed in Medicaid applications and name the State as the remainder beneficiary, the placement of
assets in an annuity will not be considered a suspect “transfer of assets” exposing an applicant to certain penalties.5
HHS‘s position as articulated in its amicus brief accords with our reading of the relevant regulations and POMS guideline and is consistent with both Medicaid‘s policy goals and the DRA. We attach some persuasive value to HHS‘s views, which in any event only bolster our conclusion that Lopes‘s annuity payment stream qualifies as income.
We therefore hold that the payment stream from a non-assignable annuity is not a resource for purposes of determining Medicaid eligibility. In doing so, we now join those of our sister circuits that have addressed the same issue. See id. at 218 (holding that even if the community spouse “has the de facto ability to effect a change in ownership,” a non-assignable annuity
CONCLUSION
For the foregoing reasons, the judgment of the District Court is AFFIRMED.
James Edward PAYNE, Plaintiff-Appellee, v. Officer Brandon JONES, Defendant-Cross Claimant-Appellant, City of Utica, Defendant-Cross Defendant-Appellant.
Docket No. 09-5201-cv.
United States Court of Appeals, Second Circuit.
Decided: Oct. 3, 2012.
Argued: Dec. 14, 2010.