20 CFR 416.231(b)

SSR 77-10

The Social Security Administration (SSA) suspended benefits to the Supplemental Security Income (SSI) recipients in the XYZ Rest Home, because SSA decided the rest home was a public institution under the control of the county. The representatives of the rest home argue that it is not under the direct or indirect administrative or financial control of the county. Held, the rest home is a private institution, not the responsibility of a governmental unit; therefore, the SSI claimants in the rest home are entitled to continuing benefits under section 1611(e)(1)(A) of the Social Security Act, as amended.

The basic issue is whether the XYZ rest home is a public institution under the control of a government such that under section 1611(e)(1)(A) of the Social Security Act, as amended, and section 416.231(b) of Regulations No. 16, the resident claimants are no longer eligible for continuing supplemental security income benefit payments.

Section 1611(e)(1)(A) of the Social Security Act, as pertinent herein provides that:

"no person shall be an eligible individual or eligible spouse for the purpose of this title with respect to any month if throughout such month he is an inmate of a public institution."

Section 416.231(b)(2) of Regulations no. 16, Subpart B as pertains herein, defines a "public institution" as follows:

(2) A "public institution" is an institution that is the responsibility of a governmental unit, or over which a governmental unit exercises administrative control.

An ordinance of the county in which the rest home is located provides for the creation of an eleemosynary corporation in order to provide a method of administering the operation of facilities for the use and benefit of the aged and unfortunate citizens of the county. It further provides for the corporation to be governed by a board of six trustees, with the first board appointed by the County Council and being self-perpetuating thereafter with the board selecting its own new members.

The ordinance further provides that the constitution of the proposed corporation shall not contain any provisions which would disqualify the corporation form being approved as a charitable corporation within the meaning of the Internal Revenue Code.

It also states, that upon the formation of the corporation, the county shall lease to the corporation upon terms and conditions to be agreed upon in the lease, the properties of the rest home. Finally, the ordinance provides that the County Council may provide funds to be used by the corporation solely for the support, care, and maintenance of the facilities of the corporation and for the indigent senior citizens of the county.

The Articles of Association of the Board of Trustees of the rest home and the By-Laws of the Board of Trustees of the rest home state that the purpose of the corporation was to administer the XYZ rest home as an eleemosynary boarding home type institution for elderly residents of the county. They further state that the corporation will be financed by fees which the residents of the institution pay from the resources or funds they receive from government sources for which they may qualify, donations form individuals, organizations, or corporations desiring to contribute to the charitable purpose of the corporation and any government programs or ordinances now in being, or which may exist in the future.

There is a lease between XYZ Rest Homes, Inc. and the county. The lease provides among other things that the corporation will maintain a long term care facility for aged, inform, and unfortunate citizens of the county. The operation of the facility was mutually agreed and understood to be under the sole control and direction of the lessee and the lessor did not reserve any rights in regard to the operation of the facility excepting that in the event the premises were put to another purpose the lessor would terminate the lease upon 30 days notice.

In evaluating the evidence, the Hearing Examiner pointed out that direct administrative control by the county cannot be even vaguely found in the oral and documentary testimony. The appointment of the corporations Board of Trustees is limited to the first Board, and the Board then may choose its own successors. This is done through the method and manner in which the charitable corporation, XYZ Rest Home, Inc., and its By-Laws and Articles of Association, was initially chartered.

The appointment of the facilities administrator is done without interference from any governmental unit and directly by the Board of Trustees of the corporation. The staff who carry out the day-to-day functions of the institution are employees of the corporation and not the county. The hiring and firing of all the employees of the rest home is under the sole control of the secretary-treasurer and the Board of Trustees of the corporation. All of the obligations of the rest home, whether it is occupying the facilities leased from the county or otherwise, are the sole responsibility of the Board of Trustees of the corporation. Deficits are made up either through private donations or donations received from Federal government programs which do not require the release of direct or indirect control of the institution and facility to receive such funds.

The only leverage that could be exercised by the county would be the refusal to renew the lease of any basis whatsoever and upon the specific basis of the corporation changing the use of leased facilities from those which were intended by the lease.

The members of the Board of Trustees are not responsible to any governmental unit for the day-to-day operation of the facility and they are particularly not obligated in any way to the county and its Council other than to pay $1.00 per year and maintain a rest home facility in the leased premises.

The total control of the fiscal decisions by the Board of Directors of the rest home is quite evident in that no budget is submitted to the County Council and no funds are looked for from the county. The County Council does not approve the budget, authorize obligations or expenditures, approve disbursements, estimate income, review actual income, or authorize county funds to make up any deficits. The county ordinance which established the rest home could itself be repealed in part or whole and not affect the independence or status of the rest home.

In view of the fact there are no direct or indirect controls over the continuing administration of the rest home, through controls over the finances, employment practices, or otherwise, it can not be said that the rest home is anything other than a private institution and as such the individual claimants are entitled and eligible for supplemental security income benefits and to have their previously determined benefits continued in accordance with the law.

Accordingly, it is held that the XYZ Rest Home, Inc. and its facility are a private institution and that the claimants are entitled to supplemental security income benefit payments in accordance with section 1611(e)(1)(A) of the Social Security Act.

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