20 CFR 404.362(b)
The issue before the Appeals Council (AC) was whether SSA is barred by the doctrine of equitable estoppel from denying child's insurance benefits to C as the worker's legally adopted child.
The worker became entitled to OAIB effective August 1978. C, born on September 14, 1971, first began living with the worker and his wife as a foster child on June 7, 1979. The worker and his wife considered adopting C, and they, along with C's social worker, were all apparently told by an SSA employee that if the worker adopted C the child could become entitled to child's insurance benefits as the worker's adopted child. The worker and his wife legally adopted C on October 29, 1980, and an application on C's behalf was filed on November 3, 1980. The claim was denied initially and on reconsideration because C did not meet, under the provisions of section 202(d)(8) of the Act, the dependency requirement of section 202(d)(1)(C). The worker then filed a request for a hearing.
The worker's representative asserted that SSA should be estopped from denying benefits to C because the worker and his wife had adopted the child in reliance upon erroneous information from SSA employee that C could become entitled to child's insurance benefits on the worker's earnings record. The adoption caused the claimant and his wife to assume a great financial burden since C is mentally and physically handicapped and needs continuing medical care. The representative further contended that the worker had not applied for a State adoption subsidy because of his belief that C could become entitled to child's insurance benefits. When the worker learned that C could not become entitled to those benefits, the time limit for filing for the State adoption subsidy had expired.
In his decision, the administrative law judge (ALJ) found that the worker and his wife adopted C in reliance upon the erroneous information that C could be entitled to benefits, that equitable estoppel applied against SSA in this case, and that C should not be barred from receiving child's insurance benefits as the worker's legally adopted child. In reaching this decision, the ALJ noted that the U.S. Supreme Court, in Schweiker v. Hansen, 450 U.S. 785 (1981) (see SSR 81-29c, C.E. 1981), held that an SSA representative's erroneous statement to a claimant that she was ineligible for benefits and the representative's failure to advise the claimant to file an application did not estop SSA from denying retroactive benefits. However, the ALJ concluded that the erroneous information given by SSA in the instant case placed it within an exception to Hansen because the worker "specifically relied on information supplied by the Social Security Administration and not only may have suffered financial loss in the form of Social Security benefits, but also undertook the adoption of a mentally handicapped minor -- a change in circumstances far in excess of a mere loss of money or benefits."
Section 202(d)(1) of the Act provides, in pertinent part, that --
Section 202(d)(8) of the Act provides, in pertinent part, that --
Section 216(e) of the Act provides, in pertinent part, that --
Section 216(h)(2)(A) of the Act provides that --
The AC, pursuant to 20 CFR 404.988, reopened and reversed the ALJ's decision. The AC found that C clearly did not meet the dependency requirement of section 202(d)(1)(C) of the Act and that estoppel should not lie against SSA. The AC stated that C was not the worker's natural child or stepchild and did not live with and receive one-half support from the worker throughout the year before the month in which the worker became entitled to OAIB. In addition, it was noted that, in the Hansen case, the U.S. Supreme Court held that erroneous statements by an SSA employee could not estop SSA from denying benefits where statutory requirements are not met. The Court stated that it had never decided what type of conduct by a Government employee would estop the Government from insisting upon compliance with valid regulations governing the distribution of welfare benefits, and that in cases involving the denial of citizenship, the Court has declined to decide whether even "affirmative misconduct" would estop the Government from denying citizenship. The Court recognized that it is "the duty of all courts to observe the conditions defined by Congress for charging the public treasury" and that "a court is no more authorized to overlook the valid regulation requiring that applications be in writing than it is to overlook any other valid requirement for the receipt of benefits." The AC also noted that in Terrel v. Finch, 302 F. Supp. 1063 (S.D. Tex., 1969) (see SSR 70-19c, C.B. 1970), the district court held that the doctrine of equitable estoppel does not apply where an SSA employee who purportedly misinformed a claimant had no authority to make the representation in question and, therefore, could not bind the Government thereby. The court found that "the unauthorized act of a Government employee cannot vary the requirements established by Congress."
The AC further stated that the ALJ's attempt to distinguish the present case from the U.S. Supreme Court's decision in Hansen, on the basis that the worker was disadvantaged not only by the loss of Social Security benefits, but because he "also undertook the adoption of a mentally handicapped minor -- a change in circumstances far in excess of a mere loss of money or benefits," is not well taken. The evidence of record reveals that the worker advised an SSA representative that he was not alleging that he had been disadvantaged by the misinformation from SSA, and that he and his wife would have adopted C anyway.
SSA's erroneous statements that C could become entitled to child's insurance benefits upon adoption did not cause C to lose Social Security benefits to which the child would have otherwise been entitled. C could have become entitled to child's insurance benefits as the worker's child only if the evidence had established that, besides being legally adopted by the worker, C had been dependent on him under the provisions of section 202(d)(8) of the Act. Therefore, the worker's only actual monetary loss or disadvantage as a result of SSA's misinformation was the loss of a State adoption subsidy which he had failed to timely file for because of his reliance on SSA's statement that C could become entitled to child's insurance benefits. Although this loss is unfortunate, it cannot serve as the basis for finding that C is entitled to child's insurance benefits when C clearly does not meet the statutory requirements.