NSSTA counsel Craig Ulman at Hogan Lovells recently passed along welcome news about an Illinios case involving structured settlements, special needs trusts and the Supplemental Security Income (SSI) program.  In a November 15 opinion, U.S. Magistrate Judge Sidney Schenkier reversed a decision by the Social Security Commissioner that had denied SSI benefits to Ms. Jovanie Rios, who is the beneficiary of a special needs trust funded by a structured settlement.

In 1982, Ms. Rios, then a toddler, fell from a porch in her family’s apartment building and suffered organic brain injury.  Under a 1987  settlement approved by the Cook County, Illinois Circuit Court she became entitled to receive lifetime monthly benefits once she turned 18.  

Shortly after Ms. Rios reached maturity, her mother was appointed as her guardian and entered into a Joinder Agreement with the Illinois Disability Pooled Trust, a supplemental needs trust established by the Illinois Disability Association. Under the Joinder Agreement and by order of the Cook County Court, the annuity payments under Ms. Rios’ structured settlement were directed to a trust sub-account established for Ms. Rios.  

Ms. Rios submitted an application for SSI benefits, which was denied on grounds that payments to the trust constitute income to Ms. Rios exceeding the $2,000 per month limit for SSI eligibility.  After unsuccessfully appealing to the Social Security Appeal Council, Ms. Rios appealed to the U.S. District Court for the Northern District of Illinois.

In his November 15 opinion, Judge Schenkier concluded that both the Administrative Law Judge who ruled against Ms. Rios and the Appeal Council had reached conclusions that were wrong as a  matter of law.  As his decision “eliminates the sole bases on which the Commissioner found Ms. Rios ineligible for benefits,” Judge Schenkier directed “that benefits be awarded to Ms. Rios.”

As Ulman notes, the  decision turns on the facts of Ms. Rios’ case, and the Social Security Administration’s misinterpretation of those fact; but it does provide guidance for parties seeking to redirect structured settlement payments to special needs trusts.  

The case is Rios v. Astrue, U.S. Dist. Ct.,  N.D. Ill No. 09 C 7348, 2010 WL 4736485 (Nov. 10, 2010).

To download a free brochure published by NSSTA on structured settlements and special needs trusts, please click here.