TN 5 (07-14)

PS 01820.011 Florida

A. PS 14-102 Supplemental Security Income Resource Determination—Validity of Personal Services Contract

DATE: May 21, 2014

1. SYLLABUS

This is a new decision that neither supersedes nor modifies the decision at PS 01820.011 FL (PS 13-065). The prior decision did involve the same applicant with the same issue of counting resources transferred at less than fair market value (FMV). The previous decision hinged on a faulty and unsigned contract for services by the niece in exchange for the applicants resources of more than $37,000. However, in the present decision the Regional Chief Counsel (RCC) looked at the application filed on January 14, 2014. The niece of the applicant presented a new, revised, and signed contract for services. The RCC determined that the new signed contract met the requirements of Florida law, and, therefore, as of the second application for benefits no transfer of resources for less than FMV occurred.

2. OPINION

QUESTION

You have asked whether a transfer of resources by an applicant for Supplemental Security Income (SSI) constitutes a transfer for less than fair market value or is a valid contract for services.

OPINION

The contract is a valid contract for services in exchange for fair market value.

BACKGROUND

On April 17, 2013, we issued an opinion in which we concluded a January 29, 2013 contract for services entered into by David (Applicant), and his niece, Ann, an attorney residing in New Jersey, was not a valid contract for services. The agency published this opinion in Program Operations Manual System (POMS) PS 01820.011 Florida (PS 13-065).

On January 14, 2014, Applicant’s niece filed a new application for SSI on behalf of Applicant. Applicant is a resident of a nursing home in St. Petersburg, Florida, and has no spouse. He was born in October and is presently seventy-three years old. 1 Applicant’s niece submitted a revised contract dated August 27, 2013, in support of the application. The document, entitled “Contract for Personal Services” (Contract), is three pages long. It states Applicant’s niece will perform multiple services for Applicant, including health monitoring, arranging for health care, arranging for hospitalization or other care and treatment, overseeing the adequacy and quality of health care, visiting periodically, purchasing personal effects, evaluating his needs and general well-being and reporting any problems, communicating on his behalf by writing letters and making phone calls, investing his bank accounts and coordinating his powers of attorney and funeral instructions, paying bills, and looking after his house. Contract ¶ A.1-11.

The Contract states Applicant’s niece will provide these services for the duration of Applicant’s life, which was estimated at 11.24 years, based on the life expectancy table in POMS SI 01150.005. Contract ¶ B, C.1.a. It further states the consideration for the services Applicant’s niece is to render is payment of $25.00 per hour. Contract ¶ C.1.b. The Contract states court-appointed guardians provide similar services at the rate of $45 per hour and geriatric care managers provide similar services at the rate of $100 per hour. Contract ¶ C.1.b. It indicates Applicant’s niece normally charges $350.00 per hour for legal services. Contract ¶ C.1.b. The Contract states Applicant’s niece is currently providing services to Applicant, on average, for six hours per week and anticipates she will continue to provide an average of six hours per week. Contract ¶ C.1.c. The Contract states Applicant’s niece has visited Applicant four times in the previous six months, each visit lasted approximately three days, and she spent ten hours per day with him. Contract ¶ C.1.c.

The Contract states the estimated cost for the services Applicant’s niece is to provide is $87,672.00, but because Applicant does not have that much money, Applicant’s niece accepts the lesser amount of $37,627.89 as payment.2 Contract ¶ C.1.d. The Contract indicates payment is due immediately. Contract ¶ G. Applicant promises to pay the difference later if he becomes able. Contract ¶ C. 1. d. Applicant’s attorney indicated in his letter that on November 20, 2013, Applicant transferred a parcel of real estate via Quitclaim Deed to his niece as additional consideration for the services, and that the real estate was valued at $33,000. Applicant’s niece has therefore received approximately $70,600 in value for the services she is to render. The Contract states Florida law governs its construction. Contract ¶ F. Applicant and his niece executed the Contract in Florida, before a notary public.

DISCUSSION

SSI is a general public assistance program for aged, blind, or disabled individuals who meet certain income and resource restrictions and other eligibility requirements. See Social Security Act (Act) §§ 1602, 1611(a); 20 C.F.R. §§ 416.110, 416.202 (2014). 3 “Resources” include cash or other liquid assets or any real or personal property that an individual owns and could convert to cash to be used for his or her support and maintenance. See Act § 1613; 20 C.F.R. § 416.1201(a). The Act and regulations establish the dollar amount that an individual’s nonexcluded resources cannot exceed. See Act § 1611(a)(1)(B); 20 C.F.R. § 416.1205(a).

An individual’s eligibility for SSI may depend or be conditioned on the disposal, at fair market value, of resources that exceed the resource limitations, and the failure to dispose of property in an appropriate manner may render the individual ineligible for SSI. See Act § 1613(b)(1); 20 C.F.R. § 416.1240. An individual who gives away or sells a nonexcluded resource for less than fair market value is ineligible for SSI for a prescribed period. See Act § 1613(c)(1)(A)(i). Resource transfers for less than fair market value made after December 14, 1999, may result in a period of ineligibility of up to thirty-six months. See Act § 1613(c)(1)(A)(ii)(I); POMS SI 01150.001(A), (C)(3); POMS SI 01150.110(A). The agency evaluates transfers of cash for services based on the current market value (CMV) of the services and the frequency and duration of the services under the agreement. See POMS SI 01150.005.

A valid transfer of resources is based on a legally binding agreement. If a transfer is not valid, the individual still owns the property and it counts as a resource for SSI purposes. See POMS SI 01150.001(B)(1). Accordingly, the validity of the contract is of primary importance.

Applicant and Applicant’s niece both executed the Contract in Florida. Florida courts follow the general principle that the place where a contract is made governs the validity, interpretation, and obligations of a contract. See Jemco, Inc. v. United Parcel Service, Inc., 400 So. 2d 499, 501 (Fla. Dist. Ct. App. 1981). In addition, the Contract recites that Florida law governs. Therefore, Florida law governs the construction of the Contract.

Florida law provides that the elements of a contract are an offer, acceptance, and consideration. See Med-Star Cent. Inc. v. Psychiatric Hosp. of Hernando Cnty, Inc., 639 So. 2d 636, 637 (Fla. Dist. Ct. App. 1994). Acceptance of a contract may be shown by signing it. See Consol. Res. Healthcare Fund I, Ltd. v. Fenelus, 853 So. 2d 500, 503 (Fla. Dist. Ct. App. 2003) (“the object of a signature is to show mutuality or assent”).

The Contract at issue provides for services to be performed over Applicant’s lifetime, stated to be 11.24 years. Contract ¶C.1.a. Under Florida law, a contract for services that cannot be performed within one year is not enforceable unless signed by the person who must perform the services.

No action shall be brought ... upon any agreement that is not to be performed within the space of 1 year from the making thereof ... unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person by her or him thereunto lawfully authorized.

Fla. Stat. Ann. § 725.01 (West 2014). Applicant’s niece signed the Contract; therefore, it is enforceable against her. See id.

Florida will recognize the validity of personal services contracts in general and under the proper circumstances. In Thomas v. Florida Dep’t of Children & Families, 707 So. 2d 954 (Fla. Dist. Ct. App. 1998), the court held that a lifetime contract between a mother and daughter, wherein the daughter agreed to supervise her mother’s health care and provide personal services in exchange for $67,725.00, was valid for determining the mother’s eligibility for Medicaid benefits. The T~ opinion provides no factual detail of the type of services to be provided, the geographic proximity of the mother and daughter, the mother’s age, or expected lifetime. It held simply that the parties’ evidence of the fair market value of the services was uncontradicted, and therefore accepted by the court. Id. at 955.

Applicant presented evidence of the fair market value for the services to be rendered in the Contract, which states the rate of $45 per hour is typically paid to court-appointed guardians and $100 per hour is common for professional geriatric care managers. Contract ¶ C.1.b. An internet search confirmed these rates to be accurate. 4 The kinds of services Applicant’s niece is to provide are outlined in sufficient detail in the Contract. Contract ¶ A.1-11.

The Contract states Applicant’s niece will provide, on average, approximately six hours per week of services to Applicant, which amounts to 312 hours per year. Contract ¶ C.1.c. The Contract states the hours may fluctuate, and provides an example of four visits within the last six months, indicating Applicant’s niece spent approximately 120 hours (four visits x three days x ten hours per day) on visits alone. Contract ¶ C.1.c. A countervailing consideration is that Applicant’s niece resides in New Jersey, while Applicant is in Florida, making delivery of services difficult. However, Applicant’s niece’s nearly monthly visits indicate she delivers services in person fairly frequently.

We conclude the Contract is a legally binding agreement that validly transferred Applicant’s resources to his niece for fair market value. See POMS SI 01150.001(B)(1).

CONCLUSION

Because Applicant and Applicant’s niece signed the Contract, it is enforceable under Florida law and is valid. The Contract includes sufficient detail of the services to be provided, provides adequate support for the number of hours of services to be provided, and establishes that the exchange of services is at fair market value.

Sincerely,

Mary Ann Sloan

Regional Chief Counsel

By: ______________

Megan E. Gideon

Assistant Regional Counsel

B. PS 13-065 Supplemental Security Income Resource Determination—Validity of Personal Services Contract

DATE: April 17, 2013

1. SYLLABUS

The office of Regional Chief Counsel (RCC) determined that this case represented a transfer of resources without due compensation. The person receiving the resources is the niece of the SSI applicant. This niece, a resident of New Jersey, failed to sign the agreement of transfer and therefore no legally binding agreement exists. The transferred funds count as a resource. In addition, the niece failed to convince the RCC that undefined services she would be prepared to perform from a location over a thousand miles away justified the transfer of $37,000 to her. The 72 year old applicant’s basic needs are presently being met as a resident of a nursing home in Florida.

2. OPINION

QUESTION

You have asked whether a transfer of resources by an applicant for Supplemental Security Income (SSI) constitutes a transfer for less than fair market value, or is excludable as a valid contract for services.

OPINION

The contract is not a valid contract for services nor does the contract establish that the services to be exchanged constitute fair market value for the resources purportedly transferred.

BACKGROUND

Based on the information provided, we understand the facts to be as follows: Ann filed an application for SSI on behalf of her uncle, David (Applicant). Applicant is a resident of a nursing home in St. Petersburg, Florida, and has no spouse. He was born in 1940 and is presently seventy-two years old. On January 29, 2013, Applicant appointed his niece, an attorney residing in New Jersey, to be his representative for purposes of obtaining SSI. On February 19, 2013, the Social Security Administration (SSA) selected Applicant’s niece as his representative payee. That same day, Applicant’s niece faxed the agency documentation of Applicant’s assets, including a mutual fund account valued at $25,265.06 and an IRA valued at $12,266.68.

Applicant’s niece advised SSA that she had transferred approximately $37,000 of Applicant’s assets, the sums in the mutual fund and IRA, to herself, pursuant to a “Contract for Services.” Applicant purportedly entered into this contract with his niece on January 29, 2013.

The one-page contract states Applicant’s niece will perform the following services for Applicant: “act as a Power of Attorney; serve as a Health Care Representative; serve as a representative for Social Security; serve as a representative for Medicare/Medicaid; communicate with any and all doctors and/or other hospital/facility representatives on behalf of [Applicant]; and communicate with social services regarding living arrangements for [Applicant].” The contract states Applicant’s life expectancy is 12.1 years. It further states that the consideration for the services Applicant’s niece is to render is payment of $20.00 per hour. The contract states Applicant’s niece is anticipated to provide services, on average, six hours per week. It states Applicant is paying his niece for services rendered and the payment should not be construed as a gift. The contract was executed by Applicant in Pinellas County, Florida, before a notary public. Applicant’s niece did not sign the contract.

DISCUSSION

SSI is a general public assistance program for aged, blind, or disabled individuals who meet certain income and resource restrictions and other eligibility requirements. See Social Security Act (Act) §§ 1602, 1611(a); 20 C.F.R. §§ 416.110, 416.202 (2012). 5 “Resources” include cash or other liquid assets or any real or personal property that an individual owns and could convert to cash to be used for his or her support and maintenance. See Act § 1613; 20 C.F.R. § 416.1201(a). The Act and regulations establish the dollar amount that an individual’s nonexcluded resources cannot exceed. See Act § 1611(a)(1)(B); 20 C.F.R. § 416.1205(a).

An individual’s eligibility for SSI may depend or be conditioned on the disposal, at fair market value, of resources that exceed the resource limitations, and the failure to dispose of property in an appropriate manner may render the individual ineligible for SSI. See Act § 1613(b)(1); 20 C.F.R. § 416.1240. An individual who gives away or sells a nonexcluded resource for less than fair market value is ineligible for SSI for a prescribed period. See Act § 1613(c)(1)(A)(i). Resource transfers for less than fair market value made after December 14, 1999, may result in a period of ineligibility of up to thirty-six months. See Act § 1613(c)(1)(A)(ii)(I); Program Operations Manual System (POMS) SI 01150.001(A), (C)(3); POMS SI 01150.110(A). The agency evaluates transfers of cash for services based on the current market value (CMV) of the services and the frequency and duration of the services under the agreement. See POMS SI 01150.005.

A valid transfer of resources is based on a legally binding agreement. If a transfer is not valid, the individual still owns the property, and the property counts as a resource for SSI purposes. See POMS SI 01150.001 (B)(1). Accordingly, the validity of the contract is of primary importance.

Applicant executed the contract in Florida. Florida courts follow the general principle that the place where the contract is made governs the validity, interpretation and obligations of a contract . See Jemco, Inc. v. United Parcel Service, Inc., 400 So. 2d 499, 501 (Fla. Dist. Ct. App. 1981). Therefore, Florida law governs the construction of the contract.

Florida law provides that a valid contract is based on an offer, acceptance and exchange of consideration. See Med-Star Central, Inc. v. Psychiatric Hospitals of Hernando County, Inc., 639 So. 2d 636, 637 (Fla. Dist. Ct. App. 1994). Acceptance of the contract may be shown by signing it. See Consolidated Resources Healthcare Fund I, Ltd. v. Fenelus, 853 So. 2d 500, 503 (Fla. Dist. Ct. App. 2003) (“the object of a signature is to show mutuality or assent”). Assent may also be shown by the acts or performance of the party. Id. (citing Gateway Cable T.V., Inc., v. Vikoa Construction Corp., 253 So.2d 461, 463 (Fla. Dist. Ct. App. 1971)).

The contract at issue provides for services to be performed over Applicant’s lifetime, stated to be 12.1 years. Under Florida law, a contract for services that cannot be performed within one year is not enforceable unless signed by the person who must perform the services.

No action shall be brought ... upon any agreement that is not to be performed within the space of 1 year from the making thereof ... unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person by her or him thereunto lawfully authorized.

Fla. Stat. Ann. § 725.01 (West 2012). Applicant’s niece did not sign the contract, therefore, it is unenforceable against her as it cannot be performed within one year. Fla. Stat. Ann. § 725.01 (West 2012). The doctrine of partial performance under a contract may cure the lack of a valid writing in some circumstances, but under Florida law, partial performance of a contract for personal services does not cure its invalidity. See Johnson v. Edwards, 569 So. 2d 928, 929 (Fla. Dist. Ct. App. 1990). Therefore, the fact that Applicant’s niece performed some services for Applicant, such as filing his SSI application, does not cure the lack of a valid contract. As the contract is unenforceable it does not constitute a valid transfer of resources, and Applicant remains the owner of the property purportedly transferred. See POMS SI 01150.001 (B)(1). 6

Even if the contract were a legally binding agreement and constituted a valid transfer of resources, Applicant’s niece has presented no evidence of the fair market value of the services she is to render. The contract submitted by Applicant’s niece presents little detail of the services she is to provide and no explanation of how she will provide them to Applicant in Florida while she maintains her residence in New Jersey. It does not appear probable that Applicant’s niece will be aware of Applicant’s needs and able to communicate on his behalf with doctors and facilities in Florida while she remains in New Jersey. By comparison, in R~, the contract set out in great detail the services the daughter would provide in person. R~, 193 S.W. 3d at 840-41. (“The Contract set out duties of the [daughter] such as preparation of nutritious, appropriate meals, house cleaning and laundry; assistance with grooming, bathing, dressing, and personal shopping, including purchase of clothing, toiletries and other personal items; assistance with purchasing hobby, entertainment or other goods for R~'s use and enjoyment, taking into account R~'s ability to pay for such items; monitoring of R~'s physical and mental condition and nutritional needs in cooperation with health care providers; arranging for transportation to health care providers and to the physician of R~'s choice, as well as arranging for assessment, services and treatment by appropriate health care providers for R~; assisting R~ in carrying out the instructions and directives of R~'s health care providers; arranging for social services by social service personnel as needed; visiting at least weekly and encouraging social interaction; arranging for outings and walks, if reasonable and feasible for R~; and interacting with and/or assisting any agent of R~ in interacting with health professionals, long-term care facility administrators, social service personnel, insurance companies, and government workers in order to safeguard R~'s rights, benefits, or other resources as needed.”)

The contract states Applicant’s niece will provide, on average, approximately six hours per week of services to Applicant, but does not set forth the basis for this average. If she provided six hours of services per week, that would amount to three hundred twelve hours per year. Making an occasional phone call or sending an occasional e-mail from New Jersey would not likely require three hundred twelve hours per year. Without a reasoned basis for the estimated number of hours of services, it appears the number was selected at random. By comparison, in R~, the daughter made three to four sixty-mile round trips weekly to attend to her mother. Id. at 843. Thus, while the contract recites the frequency and duration of the services to be provided, Applicant’s niece has not established that this estimate is accurate.

Further, the contract recites that Applicant has an average life expectancy of 12.1 years. However, the life expectancy table in POMS SI 01150.005 governs the calculation of the value of compensation of services for life. The life expectancy for a 72-year-old male set forth in POMS SI 01150.005 is 11.24 years. The contract’s use of a longer life expectancy than that set forth in POMS renders the estimated duration of the contract inaccurate, and would also impact the hourly rate. Thus, the contract is inaccurate. Applicant has not established it requires payment of fair market value for the services to be rendered.

CONCLUSION

Because Applicant’s niece did not sign the personal services contract, which anticipates she will provide services for more than one year, the contract is unenforceable under Florida law and is not valid. Moreover, the contract does not include sufficient detail of the services to be provided, does not provide any support for the number of hours of services to be provided, explain how Applicant’s niece could provide the services to Applicant from a remote location and uses an incorrect life expectancy for Applicant. Applicant has not established the services to be exchanged constitute fair market value for the resources allegedly transferred.

Sincerely,

Mary Ann Sloan

Regional Chief Counsel

By: ______________

Megan E. Gideon

Assistant Regional Counsel


Footnotes:

[1]

This opinion is premised on the assumption that Applicant is competent and has the capacity to enter into contracts. You have not presented any evidence he is not competent to enter into contracts. If your records reflect there is any question regarding Applicant’s competence, please advise.

[2]

This sum is nearly identical to the sum Applicant’s niece transferred to herself in January 2013, $37,531.74, which consisted of Applicant’s mutual fund account valued at $25,265.06 and an Individual Retirement Account valued at $12,266.68.

[3]

All subsequent references to the Code of Federal Regulations are to the 2014 edition unless otherwise noted.

[4]

Florida Guardians.com (visited May 20, 2014) http://www.floridaguardians.com/assets/documents/2011-02%20-%20Order%20Governing%20Court%20Appointed%20Guardian%20Fees.Orange.pdf> (listing maximum rate of $64.00 per hour for court-appointed guardians); Florida ElderCare.com (visited May 20, 2014) http://www.florida-eldercare.com/fees.html> (listing rate of $95.00 per hour for geriatric care management services).

[5]

All subsequent references to the Code of Federal Regulations are to the 2012 edition unless otherwise noted.

[6]

Florida will recognize the validity of personal services contracts in general and under the proper circumstances. See Thomas v. Florida Dep’t of Children and Families, 707 So. 2d 954 (Fla. Dist. Ct. App. 1998) (lifetime contract between a mother and daughter whereby daughter agreed to supervise mother’s health care and provide personal services in exchange for $67,725 was valid). In a case similar to T~, Missouri recognized the validity of personal services contracts. See Reed v. Missouri Dep’t of Soc. Serv., Family Support Div., 193 S.W. 3d 839, 842-43 (Mo. Ct. App. 2006) (evidence showed valid contract where daughter assisted mother with feeding, purchased correct size equipment and clothing, kept track of mother’s belongings, took her on drives, helped her attend events at nursing home, noted medication errors and corrected them and performed services over an eleven-year period in exchange for $11,000).


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PS 01820.011 - Florida - 07/09/2014
Batch run: 07/09/2014
Rev:07/09/2014