This legal opinion analyzes whether A~ entitlement to Title II (including Medicare) is affected by evidence that his 1988 criminal conviction was overturned, he was acquitted after a new trial in 2001, and he was awarded a Certificate of Innocence in 2017.

BACKGROUND

A~ was receiving DIB when he was convicted of armed robbery in 1988. Effective August 1988, the Agency suspended his benefits.

While A~ was imprisoned and his benefits were suspended, SSA terminated his DIB in September 1989 following a Continuing Disability Review.^[1] As a result, his Medicare terminated in March 1990. The Master Beneficiary Record indicates that the reason for the DIB and Medicare terminations was DIB cessation. However, as A~ Title II paper folder was destroyed, we do not know the basis for the disability cessation. We also have no record that the required notices of the Continuing Disability Review, disability cessation determination, and termination of benefits were sent to A~.

A~ DIB insured status expired either on September 30, 1991 (per the Master Beneficiary Record) or June 30, 1992 (according to the Waukegan, Illinois Field Office).

A~ conviction was overturned in May 2001. Agnew v. Leibach, 250 F.3d 1123 (7th Cir. 2001). He was acquitted in November 2001 after a new trial. He was awarded a Certificate of Innocence in 2017.

A~ was released from prison in November 2001. Shortly thereafter, A~ informed the Agency that his conviction had been overturned and that he had been exonerated. He was instructed to re-apply for benefits. The following month, he applied for DIB and supplemental security income (SSI). The Agency approved his SSI application, finding him disabled beginning December 1, 2001. However, according to an unsigned Disability Determination and Transmittal form, the Agency denied his DIB application because he did not have a severe impairment through December 1, 1988. Therefore, he was also denied Medicare. We have no record that a denial notice was sent to A~.

In June 2018, A~ filed a motion in state court asserting that he was erroneously denied Medicare benefits and was provided no appeal process from the 2001 Medicare denial. He claims that he continues to be denied Medicare benefits despite tendering a certified copy of the court order granting the Certificate of Innocence.

DISCUSSION

Suspension of Benefits August 1988 – August 1989

At the time of A~ conviction in 1988, Section 202(x) of the Social Security Act provided for the suspension of a beneficiary’s Title II benefits for any month during which he was confined in a correctional facility pursuant to a felony conviction. 42 U.S.C. § 402(x)(1) (1988); see also POMS GN 02607.160B2. Here, the Agency suspended A~ DIB from August 1988 through August 1989 due to his confinement in connection with his felony conviction.

After his conviction was overturned and he was acquitted in November 2001 following a new trial, A~ informed the Agency of these events. At that time, the Social Security regulations provided that a determination may be reopened at any time if it is incorrect because “[y]our conviction of a crime that affected your right to receive benefits or your entitlement to a period of disability is overturned.”^[2] 20 C.F.R. § 404.988(c)(11)(ii) (2001); see also POMS GN 04020.110. In light of A~ overturned conviction and subsequent acquittal, the suspension of his benefits from August 1988 through August 1989 based on that conviction was no longer correct. Therefore, the Agency had authority in 2001 to reopen the suspension of A~ benefits.

In addition, effective February 2002, POMS GN 02607.200A3 states that, if a court overturns an individual’s conviction and the individual is acquitted after a new trial, SSA must reinstate the individual’s benefits if they are in suspension and repay any benefits that were withheld. Thus, based on 20 C.F.R. § 404.988(c)(11)(ii) and POMS GN 02607.200A3, we believe it would be appropriate for the Agency to reopen the suspension of A~ benefits from August 1988 through August 1989, and repay him the benefits that were withheld during that period.

Termination of DIB in 1989 and Medicare in 1990

As relevant here, an individual’s entitlement to Medicare is dependent on his entitlement to DIB. Specifically, effective July 1973, an individual is entitled to Medicare Part A (hospital insurance) if he is disabled and entitled to Title II disability benefits for 24 months.^[3] POMS HI 00801.001A,HI 00801.146. Anyone entitled to Medicare Part A based on disability is also eligible to enroll in Medicare Part B (supplementary medical insurance). POMS HI 00801.146A, HI 00805.005A1.

Individuals confined pursuant to a felony conviction, like other Social Security beneficiaries, are required to undergo a Continuing Disability Review periodically. POMS DI 28065.001(D)^[4] ; see also 20 C.F.R. §§ 404.1589, 404.1590(b), 404.1594(a) (1989); POMS DI 13001.005. Here, the Agency initiated a Continuing Disability Review in or around June 1989, while A~ was incarcerated and his DIB was suspended. As a result of the Continuing Disability Review, A~ DIB was terminated in September 1989 and his Medicare was terminated in March 1990.

A~ states that he was informed his wrongful conviction was the only reason his Medicare benefits were terminated. To the contrary, the evidence indicates that A~ DIB was terminated (and thus his Medicare ended) because the Agency determined, after a Continuing Disability Review, that his disability ceased. See 20 C.F.R. § 404.316(b)(3) (1989). However, because A~ Title II folder was destroyed, we do not know the underlying reason for the disability cessation (i.e. , medical improvement or one of the exceptions). See 20 C.F.R. § 404.1594 (1989); POMS DI 28005.001 , DI 28020.001. That being said, there are potential scenarios in which A~ conviction and imprisonment may have affected the Agency’s determination that his disability ceased, and would permit the Agency to reopen that determination.

It is possible that the Agency found A~ disability ceased due to medical improvement. Under the Act, in determining whether an individual continues to be under a disability, the Agency will not consider: (1) any impairment arising in connection with or aggravated by the individual’s commission of a felony; or (2) any impairment arising in connection with or aggravated by the individual’s confinement pursuant to a felony conviction. 42 U.S.C. § 423(d)(6); 20 C.F.R. § 404.1506 (1989); POMS DI 28065.001B . Therefore, in conducting A~ Continuing Disability Review in 1989, SSA presumably would not have considered any impairment that arose in connection with or was aggravated by the crime for which he was convicted or by his confinement. However, because the Title II folder was destroyed, we lack evidence of the Agency’s analysis.^[5] As noted above, a determination may be reopened at any time if it is incorrect because a criminal conviction that affected an individual’s right to receive benefits or his entitlement to a period of disability is overturned. 20 C.F.R. § 404.988(c)(11)(ii); see also POMS GN 04020.110. Given that A~ conviction and imprisonment may have affected the medical improvement finding (due to possible exclusion of a felony-related or confinement-related impairment), and his conviction has been overturned, we believe that SSA would be permitted to reopen the 1989 disability cessation determination under 20 C.F.R. § 404.988(c)(11)(ii).

It is also possible that the Agency found A~ disability ceased because he failed, without good cause, to cooperate during the Continuing Disability Review. 20 C.F.R. § 404.1594(e)(2); POMS DI 28020.900B2, DI 28075.005. Procedural due process requires the Agency to provide beneficiaries written notice of a Continuing Disability Review. 20 C.F.R. § 404.1589 (1989). A~ could potentially argue that he did not receive the notice of his Continuing Disability Review in 1989 because he was in prison at the time. If A~ were to bring a due process claim in federal court asserting that SSA improperly terminated his DIB for failure to cooperate, we believe that the Agency would likely prevail.^[6] Nevertheless, given the lack of evidence that SSA provided A~ the requisite notices regarding the Continuing Disability Review, disability cessation, and termination of DIB, as well as our inability to ascertain the Agency’s reasoning, we believe that the Agency would have discretion to provide A~ due process. Specifically, the Agency could reopen the disability cessation determination and redetermine whether A~ continued to be under a disability before his date last insured.

Thus, under the circumstances presented, we believe that the Agency has the authority to reopen the 1989 disability cessation determination.

Denial of 2001 DIB Application

A~ applied for DIB and SSI in December 2001. The Agency awarded A~ SSI, but denied his DIB application because it determined that he did not have a severe impairment through December 1, 1988. See 20 C.F.R. § 404.1520(c) (2001). Initially, we note that the evidence that A~ conviction was overturned in May 2001 and he was acquitted in November 2001 has no bearing on the Agency’s denial of his December 2001 DIB application, as the reason for the denial was unrelated to A~ conviction.

However, the Disability Determination and Transmittal form (SSA-831) for A~ 2001 DIB application appears to contain at least one error that would permit the Agency to reopen the denial of that application, as well. U nder 20 C.F.R. § 404.988(c)(8), an unfavorable determination or decision may be reopened at any time when it is based on error on the face of the evidence. See alsoPOMS GN 04010.020 , GN 04020.080, GN 04060.005. According to the POMS, an error on the face of the evidence exists “when it is absolutely clear that the determination or decision was incorrect,” and based on all the evidence “it is unmistakably certain that the determination or decision was incorrect.” POMS GN 04010.020A (emphasis in original). Here, the form indicates that the DDS evaluated the period through December 1, 1988. However, A~ had already been found disabled and entitled to DIB (in suspended status) through the September 1, 1989 termination determination. Instead, the correct period should have been September 1, 1989 through his date last insured, which was either September 30, 1991 (per the Master Beneficiary Record) or June 30, 1992 (according to the Waukegan, Illinois Field Office). See POMS DI 26510.030A2.^[7] Therefore, it would be appropriate for the Agency to reopen the denial of A~ 2001 DIB application to evaluate his impairments during the correct period.^[8]

CONCLUSION

A~ overturned conviction and subsequent acquittal in 2001 permit the Agency to reopen the suspension of his DIB from August 1988 through August 1989 and repay any withheld benefits during that period. In addition, the Agency may reopen the 1989 disability cessation determination because A~ conviction and imprisonment may have impacted the Continuing Disability Review. Finally, the Agency may reopen A~ 2001 DIB application denial because the Disability Determination and Transmittal form, on its face, did not consider the proper time period.

This opinion explains that the Government Pension Offset (GPO) applies to Social Security benefits based on receipt of a pension from a defined benefit plan provided by the State Universities Retirement System (SURS) of Illinois. Furthermore, the opinion concludes that the pension the beneficiary receives from the SURS Traditional Benefit Plan is a government pension based on noncovered employment and, therefore, triggers the application of the GPO to any spousal benefits to which he may be entitled. See Discussion paragraph in opinion for specific details about assertions the beneficiary makes for why GPO should not apply.

QUESTION PRESENTED

You requested a legal opinion regarding whether E~’s receipt of benefits from a defined benefit plan provided by the State Universities Retirement System (SURS) of Illinois triggers the application of the Government Pension Offset (GPO) to any spousal benefits to which he may be entitled.

SHORT ANSWER

The annuity benefit that E~ receives from SURS is a government pension that triggers the application of the GPO.

FACTUAL BACKGROUND

SURS is an administrator of retirement and other benefits for employees of Illinois public higher education including state universities, community colleges, and state agencies. See SURS, All About SURS 1 (2018) [hereinafter All About SURS]:

About SURS (last visited Mar. 5, 2018). The letter E~ submitted from SURS indicates that he began employment with a SURS employer in July 1984, and that he continued his employment there until June 2005. (E~ reported that he worked for the University of Illinois – Urbana-Champaign.) E~’s pension rights vested in March 1992. He began receiving pension benefits in June 2006, and as of August 2017 he was receiving a pension payment of $8,253.79 per month. SURS described E~’s pension payment as a “defined benefit based on money purchase calculation.”

According to SURS, the “money purchase calculation” is one method of calculating the benefit paid under its Traditional pension plan.^[9] See SURS, Traditional Plan Member Guide 15 (rev. 2018) [hereinafter Traditional Plan] (see PDF link below), Retirement FAQs, SURS (last visited Mar. 5, 2018).

Employees are required to make contributions from their earnings, and an employer contribution is also attributed to the employees’ plan. See Traditional Plan, supra, at 2. Upon retirement, employees begin receiving retirement annuity payments under the plan. The amount of benefit paid is determined by applying four available formulas (one of which is the money purchase calculation); whichever formula results in the highest payment will be used to set the defined benefit retirement payment received by the employee. See id. at 15.

The Traditional Plan publication describes the “money purchase calculation” as follows:

Money Purchase Calculation*

*This calculation is not available to participants who began SURS-covered employment on or after July 1, 2005.

The Money Purchase Formula is based on your accumulated normal retirement contributions and interest, an imputed employer (State of Illinois) contribution, and your age at retirement.

Traditional Plan, supra, at 18.

Moreover, the All About SURS publication explains that:

…SURS is the sole source of retirement income for its participants. The state/employer does not contribute to Social Security on the employee’s behalf, and there is no coordinated benefit for SURS-covered employment from Social Security upon retirement.

In addition, retirees who may qualify for Social Security benefits from other, non-SURS covered employment, may be affected by the Windfall Elimination Provision or the Government Pension Offset, resulting in an offset of their Social Security benefit.

All About SURS, supra, at 1. Thus, SURS participants are not eligible for Social Security coverage based on their employment, and Social Security taxes are not withheld from their SURS earnings. See Traditional Plan, supra, at 2; General FAQs, SURS (last visited Mar. 5, 2018).

LEGAL BACKGROUND

Government employers that provide their employees with retirement benefits are not required to participate in Social Security. 42 U.S.C. § 410(a)(5), (7). If a government entity provides retirement benefits to its employees and does not participate in Social Security, its employees are “noncovered”; they pay no Social Security taxes on their earnings and are not entitled to Social Security benefits based on those earnings. Id.

Congress enacted the GPO in 1977, which provides for a reduction in Social Security spousal and certain other benefits if a person in noncovered public employment receives a monthly periodic benefit that is based upon such individual’s earnings while in the service of the Federal Government or any State (or political subdivision thereof). See 42 U.S.C. § 402(k)(5)(A); 20 C.F.R. § 404.408a(a)(2). The Supreme Court summarized the motivation behind the GPO in Heckler v. Mathews:

[A]s part of a general reform of the Social Security system, Congress repealed the dependency requirement for widowers and husbands. It concluded, however, that elimination of the dependency test, by increasing the number of individuals entitled to spousal benefits, could create a serious fiscal problem for the Social Security trust fund. This problem was particularly acute with respect to the large number of retired federal and state employees who would now become eligible for spousal benefits. Unlike most applicants, who must offset any dual Social Security benefits against each other, 42 U.S.C. § 402(k)(3)(A), retired civil servants could, at the time of the 1977 Amendments, receive the full amount of both the spousal benefits and the government pensions to which they were entitled. Congress estimated that payment of unreduced spousal benefits to such individuals could cost the system an estimated $190 million in 1979.

To avoid this fiscal drain, Congress included as part of the 1977 Amendments a “pension offset” provision that generally requires the reduction of spousal benefits by the amount of certain federal or state government pensions received by the Social Security applicant.

465 U.S. 728, 732 (1984) (citations and footnote omitted).

Because an individual who was receiving a Social Security retirement benefit based entirely on covered employment would have his spousal benefit calculation reduced based on his own Social Security retirement benefit, Congress concluded that it was appropriate to ensure that the individual receiving a government pension based on noncovered employment should also have his spousal benefit adjusted. See SSA, Pub. No. 05-10007, Government Pension Offset (2017), Heckler, 465 U.S. at 750. As relevant here, the GPO decreases an individual’s spousal benefit by two-thirds of his government pension. 42 U.S.C. § 402(k)(5)(A); 20 C.F.R. § 404.408a(a)(1)(iii), (d)(1).

While there are exceptions that preclude the application of the GPO in certain circumstances, they are primarily related to military personnel and government employment that also became subject to the payment of Social Security taxes. 20 C.F.R. § 404.408a(b).

DISCUSSION

Our review of this case shows that E~ is receiving a government pension based on noncovered employment, which triggers the application of the GPO to any spousal benefits to which he may be entitled. 20 C.F.R. § 404.408a(a)(2). Specifically, the defined benefit monthly payment E~ receives from SURS is based on his employment with an Illinois public university, which is considered a state government employer. Thus, his is a government pension. 20 C.F.R. § 404.408a(a)(1)(i). In addition, as noted above, SURS employers do not participate in Social Security. As such, SURS participants are not eligible for Social Security coverage based on their employment, and Social Security taxes are not withheld from their SURS earnings. Thus, E~’s defined benefit payment is related to noncovered employment for which he did not pay Social Security taxes. 20 C.F.R. § 404.408a(a)(1)(ii). None of the exceptions to the application of the GPO apply here. 20 C.F.R. § 404.408a(b).

In his Dec. 1, 2017 letter, E~ asserts that the GPO should not apply for two reasons. First, he asserts that his pension payment is not based on earnings because the amount of the pension payment is not calculated based on his earnings. He relies on SSA Publication No. 05-10007, which states “we won’t reduce your Social Security benefits as a spouse, widow, or widower if you: Receive a government pension that’s not based on your earnings.” SSA, supra, at 2. His assertion is incorrect. As discussed above, the “money purchase calculation” used to determine the amount of E’s pension payment is based on his and his employer’s retirement contributions. And his contributions were a percentage of his earnings. See Traditional Plan, supra, at 2 (“Your contributions are equal to 8% of your gross earnings….”). As such, they are directly related to his earnings.

Second, E~, relying on POMS GN 02608.400A.2a, asserts that the GPO does not apply because his pension is not his employer’s primary retirement plan nor is it a supplemental plan. This assertion is also incorrect. First, the POMS refers to the employee’s primary retirement plan, not the employer’s. POMS GN 02608.400A.2)a. So, whether his employer offered a different “primary” plan, as E~ asserts, is not relevant. Under the POMS, if the pension E~ receives from SURS is his primary retirement plan, and it is based on earnings from noncovered government employment (which it is, as discussed above), the GPO applies. Id. Further, even if this pension were not E~’s primary retirement plan, and instead were a supplemental plan (which is somewhat unlikely given that it pays over $8,000 per month), it would nonetheless trigger the application of the GPO because both E~ and his employer made contributions on E~’s behalf. Id. (“If the plan is a supplemental plan, the payments are subject to GPO when the plan payments contain employer or both employer and employee contributions.”).

CONCLUSION

For the reasons discussed above, we conclude that the pension E~ receives from SURS is a government pension based on noncovered employment and, therefore, triggers the application of the GPO to any spousal benefits to which he may be entitled.