SSR 83-39a: SECTIONS 202(d), 216(e), AND 216(h)(2)(A) (42 U.S.C. 402(d), 416(e), AND 416(h)(2)(A)) CHILD'S INSURANCE BENEFITS -- DEPENDENCY OF CHILD ADOPTED AFTER WORKER'S ENTITLEMENT TO OLD-AGE INSURANCE BENEFITS -- ESTOPPEL -- RELIANCE BY WORKER ON INFORMATION FROM AN OFFICIAL SOURCE

20 CFR 404.362(b)

SSR 83-39a

The worker became entitled to old-age insurance benefits (OAIB) in August 1978. C, born September 14, 1971, began living with the worker as a foster child in June 1979. The worker was apparently informed by an employee of the Social Security Administration (SSA) that if he adopted C, the child could become entitled to child's insurance benefits on his earnings record. Consequently, the worker adopted C in October 1980 and applied for child's insurance benefits on C's behalf in November 1980. SSA denied the application because C did not meet the statutory dependency requirement. The evidence showed that C was not the worker's natural child or stepchild and that C was not living with and receiving one-half support from the worker throughout the year before the month in which the worker became entitled to OAIB. Held, C is not entitled to child's insurance benefits on the worker's earnings record because C did not meet, pursuant to the provisions of section 202(d)(8) of the Social Security Act (the Act), the dependency requirement of section 202(d)(1)(C) of the Act. Further held, SSA is not estopped from denying the application filed by the worker on C's behalf, even though the worker relied on erroneous information provided by an SSA employee when deciding to adopt the child, because the statutory requirements for entitlement to the benefits were not met.

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 --

"Every child (as defined in section 216(e)) of an individual entitled to old-age or disability insurance benefits, or of an individual who dies a fully or currently insured individual, if such child --

(A) has filed application for child's insurance benefits,

(B) at the time such application was filed was unmarried and . . .

(C) was dependent upon such individual --

(i) if such individual is living, at the time such application is filed . . . shall be entitled to a child's insurance benefits . . . ."

Section 202(d)(8) of the Act provides, in pertinent part, that --

"In the case of --

(A) an individual entitled to old-age insurance benefits . . . a child of such individual adopted after such individual became entitled to such old- age . . . insurance benefits shall be deemed not to meet the requirements of clause (i) . . . of paragraph (1)(C) unless such child --

(C) is the natural child or stepchild of such individual . . . or

(D)(i) was legally adopted by such individual in an adoption decreed by a court of competent jurisdiction within the United States,

(ii) was living with such individual in the United States and receiving at least one-half of his support from such individual (I) if he is an individual referred to in subparagraph (A), for the year immediately before the month in which such individual became entitled to old- age insurance benefits . . . or (III) if he is an individual referred to in . . . subparagraph (A) . . . and the child is the grandchild of such individual or his or her spouse, for the year immediately before the month in which such child files his or her application for child's insurance benefits, and

(iii) had not attained the age of 18 before he began living with such individual."

Section 216(e) of the Act provides, in pertinent part, that --

"The term 'child' means (1) the child or legally adopted child of an individual . . . ."

Section 216(h)(2)(A) of the Act provides that --

"In determining whether an applicant is the child or parent of a fully or currently insured individual for purposes of this title, the Secretary shall apply such law as would be applied in determining the devolution of intestate personal property by the courts of the State in which such insured individual is domiciled at the time such applicant files application, or, if such insured individual is dead, by the courts of the State in which he was domiciled at the time of his death, or if such insured individual is or was not so domiciled in any State, by the courts of the District of Columbia. Applicants who according to such law would have the same status relative to taking intestate personal property as a child or parent shall be deemed such."

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.