BROTMAN, District Judge:
The present case is before the court on appeal from the decision of the Secretary of Health and Human Services ("Secretary") to discontinue Plaintiff's Supplemental Security Benefits and to collect an overpayment which resulted from Plaintiff's ownership of excess resources. For the reasons set forth below, this court affirms the Secretary's decision.
The Plaintiff, Shirley Woods ("Plaintiff"), applied for Supplemental Security Income ("SSI") benefits on October 14, 1987. She qualified for benefits as a result of combined disabilities including visual problems caused by glaucoma, borderline intelligence and a generalized anxiety disorder.
In December of 1989, upon field contact from the Social Security Administration ("SSA"), the Plaintiff informed the agency that she owned three life insurance policies
with a total cash value of $ 5,415.01, and two annuities with cash values totalling $ 13,179.25. Once Plaintiff disclosed the existence of the life insurance policies and the annuities, SSA determined that the resources available to Plaintiff from these policies and annuities exceeded the resource levels permitted by the SSI program. SSA subsequently discontinued benefits in March of 1990, and processed a non-fraudulent overpayment, which relieved the Plaintiff of liability for causing the overpayment, but still required repayment of the money received during the period of ineligibility.
Upon reconsideration, SSA upheld the overpayment and the decision to terminate benefits due to excess resources. Plaintiff appealed and a hearing was held before an Administrative Law Judge ("ALJ"), on August 28, 1990. The ALJ held that the cash surrender values of the life insurance policies and the annuities exceeded the regulatory limits for the SSI program, as set by 20 C.F.R. §§ 416.1201(a), 416.1230(a).
The ALJ's decision was upheld by the Secretary on appeal. Accordingly, the ALJ's opinion stands as the final decision of the Secretary.
A. Standard of Proof
Pursuant to 42 U.S.C.A. §§ 405(g) and 1383(c)(3), this court's role in reviewing the decision of the Secretary is to determine whether the record, as a whole, contains substantial evidence to support the Secretary's findings. "Substantial evidence" has been defined as that evidence which "a reasonable mind might accept as adequate to support a conclusion". Pierce v. Underwood, 487 U.S. 552, 565, 101 L. Ed. 2d 490, 108 S. Ct. 2541 (1988) (quoting Consolidated Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 83 L. Ed. 126, 59 S. Ct. 206 (1938)). Where evidence is susceptible to more than one interpretation, the court must give deference to the agency interpretation unless it is arbitrary and capricious or an abuse of the agency's discretion. Fishburn v. Gardner, 452 F.2d 1004, 1005 (3d Cir. 1971).
B. Plaintiff's Resources
1. Life Insurance Policies
There is no question that the resources Plaintiff was entitled to from her insurance policies exceeded the resource limitations established by the SSI program. 42 U.S.C.A. § 1382b(a), provides that the cash surrender value of insurance policies must be considered as a resource unless the total face value of all policies is $ 1,500.00 or less. According to her testimony, Plaintiff possessed insurance policies having a total face value of $ 20,000 when she initially applied and qualified for benefits. Plaintiff's testimony indicated that she had taken out these policies in 1968 with the money she received from her husband's death benefits. May 1, 1991 Hearing Tr. p. 4.
The effective resource limitation for cash and liquid assets was $ 1,800 during 1987; $ 1,900 during 1988; and $ 2,000 after 1989. See 20 C.F.R. § 416.1205(c). Life insurance policies are defined as liquid resources by 20 C.F.R. § 416.1201(b)
because they can easily be converted into cash within the prescribed period of twenty (20) working days.
In December of 1989, when Plaintiff first reported these policies to the agency, the cash surrender value of her policies was $ 5,415.01. See SSA Exhibit B-11. This value exceeded the resource limitations in effect for 1989. Based on the cash surrender value of the policies in 1989, it is reasonable to conclude that the cash surrender value of the policies exceeded the 1987 and 1988 limitations on resources as well.
Plaintiff argues that she was not given time to dispose of the resources. However, under the provisions of 20 C.F.R. § 416.1240(a)(2), Plaintiff could either agree in writing to dispose of her excess resources and repay any overpayment, or otherwise her resources would be considered as available for her support and maintenance, and would result in making Plaintiff ineligible for benefits. Payments made for the period during which resources are being disposed are conditioned upon the resources actually being disposed of in the manner prescribed by 20 C.F.R. § 416.1240(c). Furthermore 20 C.F.R. § 416.1240(c) concludes that failure to dispose of the resources as prescribed in § 416.1240(a)(2), regardless of the claimant's efforts, results in the resources being counted at their then current market value, and the claimant's ineligibility due to possession of the excess resources. Extended time periods for conversion of resources apply to non-liquid resources. However, as stated above, 20 C.F.R. § 416.1201(b)
defines the cash value of insurance policies as a liquid resource. See 20 C.F.R. § 416.1242. Consequently, the Secretary was correct in terminating Plaintiff's benefits when it was discovered that Plaintiff's resources exceeded the limitations established by SSI eligibility provisions.
Plaintiff argues that it is unclear whether her two annuities should be considered as a resource or as unearned income. She contends that because the regulations specifically address annuities only under 42 U.S.C.A. § 1382a(a)(2)(B) in the computation of unearned income, the annuities should not be counted as resources. Plaintiff reasons that for an individual to be able to receive monthly payments from an annuity, the face value of the policy is likely to exceed the resource limitations of 20 C.F.R. § 416.1205(c). The court, however, does not find Plaintiff's reasoning compelling. Although 20 C.F.R. § 416.1201 does not specifically list annuities among the examples of liquid and non-liquid resources, it does define a 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 . . . support and maintenance." See 20 C.F.R. § 416.1201(a). Plaintiff's annuities can be easily converted into cash within seven (7) days according to the policies. See SSA Exhibit B-20, at 4.
The inclusion of annuities within the definition of unearned income found in 20 C.F.R. § 416.1121(a) was adequately explained by the ALJ in his decision. He explained that once payments commence, the policy holder can no longer withdraw the cash surrender value of the annuity, hence, the payments would then be counted as unearned income.
However the cash surrender value of the annuity should be considered as a resource if the annuity payments have not yet commenced. The principle behind this reasoning is that if the individual has the ability to cash in the annuity, then that annuity is a resource. However, if periodic payments have begun and the individual can no longer obtain the cash surrender value of the annuity, then the annuity is properly deemed unearned income.
The ALJ's reasoning is supported by the Social Security Administration's Programs Operation Manual System ("POMS"). The POMS is published to help clarify the regulations for the Social Security field offices. After defining retirement funds as annuities, POMS goes on to state
"the value of a retirement fund is the amount of money that an individual can currently withdraw from the fund . . . . [a] retirement fund owned by an eligible individual is a resource if he/she has the option of withdrawing a lump sum even though he/she is not eligible for periodic payments. However, if the individual is eligible for periodic payments, the fund may not be a countable resource . . . "