In some good news from the courts, on April 10, 2020, the First Circuit Court of Appeals issued a decision in U.S. v. Vaello-Madero, — F.3d—, 2020 WL 181597 (1st Cir. Apr. 10, 2020) finding it unconstitutional for the Social Security Administration to deny Supplemental Security Income (SSI) benefits to otherwise qualified individuals based on their residence in Puerto Rico. The decision impacts an estimated 700,000 residents who could be eligible for SSI. SSA may now petition the Supreme Court for certiorani or seek an en banc rehearing.
Interestingly, the case arose not from a claim for benefits but from a civil suit filed by SSA to collect an overpayment charged against the plaintiff after he moved from New York to Puerto Rico while collecting SSI. SSA also sought criminal penalties based on fraud. Plaintiff, through pro bono counsel, raised the affirmative defense that SSA’s exclusion from SSI eligibility violated the equal protection guarantee under the Constitution. SSI is restricted to U.S. citizens living in the 50 states, the District of Columbia and the Northern Mariana Islands.
The district court decision, reported in our April 2019 newsletter, had found that disparate treatment of U.S. citizens residing in Puerto Rico “ran ‘counter to the very essence and fundamental guarantees of the Constitution itself’” and “[c]lassifying a group of the Nation’s poor and medically neediest United States citizens as ‘second tier’ simply because they reside in Puerto Rico is by no means rational.” Vaello-Madero, 2020 WL 1815967, at *9, citing U.S. v. Vaello-Madero, 356 F. Supp. 3d 208, 213, 216 (D.P.R. 2019.) SSA attempted to rely on Califano v. Gautier Torres, 435 U.S. (1978)(per curiam) and Harris v. Rosario, 446 U.S. 651 (1980), which both justified differential treatment of Puerto Rican residents based on plenary powers granted Congress under the Territory Clause. The district court in Vaello-Madero found the cases did not apply because they “predated ‘important subsequent developments in the constitutional landscape.’”
The First Circuit declined to follow the lower court’s reasoning but did come to the same conclusion: that the exclusion of Puerto Rico residents from SSI eligibility violated the equal protection clause of the Fifth Amendment. Id. at *3. The Circuit distinguished the case from Califano, which reviewed the exclusion of Puerto Rico as violating the constitutional right to travel; the Califano court did not have before it an equal protection question. Vaello-Madero, 2020 WL 1815967, at *7, citing Harris, 446 U.S. at 645-55 (Marshall, J., dissenting.) Harris, meanwhile, involved block grants received by Puerto Rico under the AFDC program and did not rule on the validity of discriminatory treatment of residents under SSI. Id. at *5.
One explanation offered by SSA for excluding Puerto Rico residents is its tax status of not contributing federal income tax. The court found instead that “[t]he residents of Puerto Rico not only make substantial contributions to the federal treasury, but in fact have consistently made them in higher amounts than taxpayers in at least six states, as well as the territory of the Northern Mariana Islands.” Id. at *8-9. To base eligibility on payment of federal income tax is also antithetical to the program, which is targeted specifically at individuals who generally do not pay federal income tax.
The court also found unconvincing the government’s argument that cost would be a detriment to the program when “an entire segment of the would-be benefitted class is excluded.” Id. at *12. The court noted that the government’s inclusion of the Northern Mariana Islands in the SSI program undercut all its arguments for excluding Puerto Rico.
A similar case is pending in a district court in Guam, another U.S. territory excluded from the SSI program. The lawsuit, Schaller v. U.S. Social Security Admin., et. al., (18-cv-00044)(J. Tydingco-Gatewood), was filed by a claimant whose twin sister in Pennsylvania qualifies for benefits based on the same permanent disability diagnosed at birth, myotonic dystrophy. Vaello will not binding on this case – Guam is in the Ninth Circuit – but it will be interesting to see if it could result in similar decisions from two circuits. Other U.S. territories excluded from SSI are the U.S. Virgin Islands and American Samoa.