16-204-cv
Simonsen v. Bremby


                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                       SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

       At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 15th day of February, two thousand seventeen.

PRESENT: REENA RAGGI,
                 RAYMOND J. LOHIER, JR.,
                 CHRISTOPHER F. DRONEY,
                                 Circuit Judges.
----------------------------------------------------------------------
DAWN SIMONSEN, by her attorney-in-fact, BRUCE
SIMONSEN,
                                 Plaintiff-Appellee,

                        v.                                               No. 16-204-cv

RODERICK L. BREMBY, in his official capacity as
Commissioner of the Connecticut Department of Social
Services,
                                 Defendant-Appellant.
----------------------------------------------------------------------
APPEARING FOR APPELLANT:                          HUGH BARBER, Assistant Attorney General,
                                                  for George Jepsen, Attorney General for the
                                                  State of Connecticut, Hartford, Connecticut.

APPEARING FOR APPELLEE:                          RENÉ H. REIXACH (Carmine Perri, Brendan
                                                 F. Daly, Czepiga Daly Pope LLC, Berlin,
                                                 Connecticut, on the brief), Woods Oviatt
                                                 Gilman LLP, Rochester, New York.



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       Appeal from an order of the United States District Court for the District of

Connecticut (Victor A. Bolden, Judge) granting a preliminary injunction.

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the order entered on December 23, 2015, is AFFIRMED.

       Defendant Roderick Bremby, as Commissioner of the Connecticut Department of

Social Services (“DSS”), appeals from an order preliminarily enjoining DSS from

imposing a penalty on plaintiff Dawn Simonsen that would render her ineligible for

Medicaid benefits. The penalty is based principally on DSS’s determination that two

decanted trusts (“Predecessor Trusts”) constituted resources available to Simonsen to

cover the cost of long-term care.1 The district court concluded that, in reaching this

determination, DSS impermissibly employed a “more restrictive” methodology than that

used to determine federal Supplemental Security Income (“SSI”) eligibility. See 42

U.S.C. §§ 1396a(a)(10)(C)(i), 1396a(r)(2)(A)(i).     We review the grant of a preliminary

injunction for abuse of discretion, which we will identify only where the decision rests on

an error of law or a clearly erroneous finding of fact.            See New York ex rel.

Schneiderman v. Actavis PLC, 787 F.3d 638, 650 (2d Cir. 2015). We consider only the

likelihood-of-success-on-the-merits prong of preliminary injunction analysis because it is

the only one DSS disputes on appeal. See Winter v. Nat. Res. Def. Council, Inc., 555

U.S. 7, 20 (2008) (discussing preliminary injunction standard).          In conducting our


1
  Because the statutory mechanism by which the penalty period was imposed is not in
dispute, we do not discuss it herein. See 42 U.S.C. § 1396p(c)(1)(A) (providing that
individual is ineligible for assistance where he disposes of assets for less than fair market
value).

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review, we assume the parties’ familiarity with the facts and record of prior proceedings,

which we reference only as necessary to explain our decision to affirm.

       Federal law requires that state Medicaid plans adopt eligibility methodologies that

are no more restrictive than that used for the federal SSI program. See 42 U.S.C.

§ 1396a(r)(2)(A)(i); id. § 1396a(r)(2)(B) (explaining that no-more-restrictive requirement

is met if, “using the methodology, additional individuals may be eligible for medical

assistance and no individuals who are otherwise eligible are made ineligible for such

assistance”). The parties agree that resource eligibility for the federal SSI program is

governed by 20 C.F.R. § 416.1201, which defines “resource” as “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.” Section 416.1201(a)(1) further

states that property is to be considered a resource only “[i]f the individual has the right,

authority or power to liquidate the property or his or her share of the property.”

       The term “resource,” as used in the federal SSI regulation, is further interpreted in

the SSI Program Operations Manual System (“POMS”). See Lopes v. Dep’t of Soc.

Servs., 696 F.3d 180, 186 (2d Cir. 2012) (describing POMS as “set of guidelines through

which the Social Security Administration further construes the statutes governing its

operations” (alteration and internal quotation marks omitted)). This court has ruled that

the POMS provisions are entitled to “substantial deference, and will not be disturbed as

long as they are reasonable and consistent with the statute.” Id. (internal quotation

marks omitted). We will decline to defer to the POMS only where “the plain language



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of the statute and its implementing regulation do not permit the construction contained

within [them].” Id. (internal quotation marks omitted).

        With these principles in mind, we consider DSS’s argument that, as a matter of

state law, the Predecessor Trusts constitute “support trusts,” which Connecticut

recognizes as resources available to the beneficiary. See Corcoran v. Dep’t of Soc.

Servs., 271 Conn. 679, 699–700, 859 A.2d 533, 545 (2004) (holding that beneficiary of

“general” support trust “has a legal right” to “compel distribution” of funds (internal

quotation marks omitted)). 2      In support, DSS points to language in the document

creating the Predecessor Trusts, which states as follows:

        The trustee shall pay to my daughter or utilize for her benefit so much of
        the income and principal of her trust as the trustee deems necessary or
        advisable from time to time for her health, maintenance in reasonable
        comfort, education and best interests considering all of her resources
        known to the trustee and her ability to manage and use such funds for her
        benefits.

J.A. 40, 41. 3     DSS further relies on language in the trust document stating that

Simonsen’s “health, happiness and best interests are to be considered foremost in priority

over those who will receive the remaining trust funds on her death,” as a result of which

“the trustee is encouraged to be liberal in its use of the funds for her even to the extent of

the full expenditure thereof.” Id. at 40, 41–42.

        In response, Simonsen argues that, pursuant to the POMS, see POMS SI

§ 01120.200(B)(16), (D)(1)(a), (D)(2), the existence of a spendthrift clause in the

2
  Although Simonsen seeks Medicaid benefits from Connecticut, the Predecessor Trusts,
by their terms, must be construed according to Florida law.
3
    The relevant terms are identical as to both Predecessor Trusts.

                                              4
Predecessor Trusts precludes them from being considered available resources for the

federal SSI program and, in any event, the trust language establishes that the Predecessor

Trusts cannot be considered support trusts nor, consequently, available resources.

       We need not resolve the issues raised by Simonsen. We conclude, in any event,

that the district court did not abuse its discretion in finding that Simonsen’s interest in the

Predecessor Trusts was not an available resource for purposes of Connecticut’s Medicaid

plan because that interest would not be so deemed for purposes of the SSI program. See

Freedom Holdings, Inc. v. Spitzer, 408 F.3d 112, 114 (2d Cir. 2005) (“[W]e may affirm

on any ground supported by the record.” (internal quotation marks omitted)).

       The POMS defines an available resource as property (1) owned by an individual

(2) who has the right, authority, or power to convert it to cash, and (3) who is not legally

restricted from using it for her support and maintenance.                    See POMS SI

§ 01110.100(B)(1). The POMS further states that property is not a resource if the

individual “is not legally able to transfer that interest to anyone else.”                  Id.

§ 01110.100(B)(3). Here, the trust language affords Simonsen no authority to convert

the trust corpus to cash or to transfer her trust interest to anyone. Thus, even if the

Predecessor Trusts do constitute “support trusts,” as DSS argues, Simonsen remains

“legally restricted from using” the trust funds except as disbursed to her in the discretion

of the trustee. Id. § 01110.100(B)(1).

       This conclusion finds further support in POMS SI § 01120.200, which, in

specifically referencing trusts, states inter alia that trust principal is a resource of a

beneficiary who, “under the terms of the trust,” can “direct the use of [that principal] for

                                              5
. . . her support and maintenance.” Id. § 01120.200(D)(1)(a).       The POMS recognizes

that a beneficiary’s authority thus to control trust principal may be evident from “either

specific trust provisions allowing the beneficiary to act on his or her own or by permitting

the beneficiary to order actions by the trustee.” Id. § 01120.200(D)(1)(b). The trust

documents here provide no such authority or permission.            The trustee alone has

authority to direct the use of trust principal for Simonsen’s support and welfare.

Furthermore, the trust documents do not authorize Simonsen to “revoke or terminate” the

trusts, and DSS does not contend that Simonsen can “sell . . . her beneficial interest” in

the trusts, since they contain a valid spendthrift clause. Id. § 01120.200(D)(1)(a).

       To the extent the trustee is authorized to direct use of principal only for

Simonsen’s support and welfare, Simonsen might well be able to sue were the trustee to

do otherwise. See generally Restatement (Second) of Trusts § 187 (stating that trustee’s

exercise of discretion “is not subject to control by the court, except to prevent an abuse

by the trustee of his discretion”).    But the POMS states that an individual is “not

require[d] . . . to undertake litigation in order to accomplish . . . access” to a resource.

POMS SI § 01120.010(C)(2). “The property is not a resource under such circumstances

. . . .” Id.

       These POMS interpretations are not inconsistent with 20 C.F.R. § 416.1201’s

definition of resources and, thus, we defer to them here, see Lopes v. Dep’t of Soc. Servs.,

696 F.3d at 186, and conclude that the district court did not abuse its discretion in

determining that Simonsen had established likely success on the merits of her claim that

the Predecessor Trusts are not available resources under the federal SSI program.

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      Accordingly, having considered DSS’s remaining arguments and concluding that

they are without merit, we AFFIRM the order granting preliminary injunctive relief.

                                        FOR THE COURT:
                                        Catherine O’Hagan Wolfe, Clerk of Court




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