You have requested legal advice regarding the field office's determination that Woodward
Youth Corporation (Woodward) is a public institution which renders its residents ineligible
for supplemental security income (SSI). 20 C.F.R. § 416.211 (2005). Woodward is a privately owned organization that rents
state property located on the grounds of the Woodward State Hospital School and contracts
with the Iowa Department of Human Services (DHS) to provide rehabilitative treatment
and supportive services to juvenile offenders. Because DHS is disputing the field
office's determination, the field office has requested regional office review and
Specifically, you have posed two questions:
Have we correctly interpreted the language in the contract, thus supporting regional
office approval of the field office determination that Woodward Academy is a public
2. Does DHS have any legal recourse if they disagree with this determination?
After careful review of the information you provided, which includes the Rehabilitative
Treatment and Supportive Services Contract between DHS and Woodward as well as the
lease agreement between these parties, we believe the field office reasonably concluded
that Woodward is a public institution because DHS has indirect administrative control
over its operations.
Indirect Administrative Control
The regulation at 20 C.F.R. § 416.201 defines “public institution” to mean, in part,
“an institution that is operated by or controlled by the Federal government, a State,
or a political subdivision of a State such as a city or county.” As referenced in
your memorandum, the Program Operations Manual System (POMS), SI 00520.001B.4 defines a public institution as “an institution that is operated by or under the
direct or indirect administrative control of the Federal government, a State, or political
subdivision of a State, such as a city or county.” The POMS at SI 00520.001C.2.a provides more specific guidance and states in relevant part that indirect administrative
When a governmental unit has control of all fiscal decisions (even though it lacks
the authority to hire and fire) [or]
When a governmental unit establishes a contractual arrangement whereby an institution
becomes an agent of the governmental unit . . . An institution is an agent when it
is acting on behalf of and with the authorization of a governmental unit, and is accountable
to the governmental unit. . .
The specific contract provisions supporting the determination that DHS retains indirect
administrative control over Woodward are numerous and are set forth in the attachment.
In summary, however, they show that DHS leases the property to Woodward for a nominal
amount and retains the authority to approve all services provided, monitors Woodward's
performance, directs in specific terms how it is billed for services, and prohibits
any changes to the services or the property without the prior written approval of
DHS. DHS can unilaterally terminate the contract if insufficient funds are available
or if Woodward's services do not comply with State rules. In addition, DHS determines
when the contract between the parties will expire. Using the factors set forth in
the POMS, the information provided shows that DHS has retained fiscal control of Woodward
as well as control over the services provided and the use of the leased property.
DHS also retained the authority to supervise Woodward's performance under the contract.
Under the POMS guidelines, we believe that these facts are sufficient to establish
indirect administrative control.
The issue of “public institution” status was litigated under a similar set of facts
in the Ninth Circuit Court of Appeals. In Department of Health & Human Services
v. Chater, 163 F.3d 1129 (9th Cir. 1998), the Washington State Department of Social and Health
Services (WDSHS) sought review on behalf of juvenile offenders who were denied SSI
because the Social Security Administration (SSA) determined that the privately-owned
group homes in which they resided were public institutions. Like the Iowa situation,
WDSHS contracted with the private group homes to provide services to juvenile offenders.
The Ninth Circuit upheld SSA's determination that the homes were public institutions
because they were under the control of WDSHS. The decision in this case, although
not binding in the Eighth Circuit Court of Appeals (which includes Iowa), shows that
at least one court has agreed with SSA's interpretation and implementation of the
Under POMS SI 00520.800, the field office is responsible for advising the institution of its initial determination
and any subsequent revised determination in writing. Neither the POMS nor any other
legal provision, however, grants the institution a right to appeal that determination.
On the other hand, appeal rights under 42 U.S.C. § 405(g) attach to any individual
who is found ineligible to receive SSI on the basis that he or she resides in a public
institution. The POMS at SI00520.800.G sets forth instructions for implementation
of an administrative or judicial decision on an individual's (or a class action) claim
that involves this issue. Furthermore, as the WDSHS litigation discussed above shows,
the state agency may be able to appeal a denial of benefits on behalf of the juvenile
offenders under its control.
Frank V. S~ III
Jamie G. C~
Assistant Regional Counsel