SIDNEY SCHENKIER, Magistrate Judge
In this social security disability insurance benefit appeal, the guardian of the estate of plaintiff Robert Hoskins, Jr. ("plaintiff" or "Robert"), moves for reversal and/or remand of a final decision by the Commissioner of the Social Security Administration ("SSA"), denying Robert's application for Social Security Income ("SSI") (doc. # 25). In the alternative, plaintiff argues that the Appeals Council erred in denying his motion to reopen and reconsider its denial of SSI ( Id.). The Commissioner has filed a cross-motion for summary judgment to affirm the decision rejecting Robert's claim for SSI (doc. # 37). For the reasons set forth below, we grant in part and deny in part the Commissioner's and the plaintiff's motions, and we remand this case for further proceedings.
We refer to Robert Hoskins by his first name to avoid confusion with his guardian, Sharon Hoskins, and because that is how he is referred to in the trust documents at issue in this case.
I.
We begin with a summary of the procedural history of this case. The claimant in this case, Robert Hoskins, Jr., suffers from cerebral palsy and possible mental retardation (R. 23, 172). The guardian of Robert's person — his mother, Sharon Hoskins ("Ms. Hoskins") — applied for SSI on his behalf on June 15, 2005 (R. 86). The previous month, a "supplemental needs trust" in the amount of approximately $500,000.00 was created for Robert (R. 23, 73, 114). The Northern Trust Company ("Northern Trust") is the trustee and has been the guardian of Robert's estate since July 1997 (R. 106).
On September 27, 2005, SSA determined that the trust was a countable resource to Robert for SSI purposes, and on October 4, 2005, SSA ruled that he was ineligible to receive SSI despite his undisputed disability because — counting the assets in the trust — he had excess resources (R. 83, 86). On October 31, 2005, Ms. Hoskins filed a request for reconsideration (R. 94). On December 20, 2005, SSA completed its reconsideration and again found that Robert was not eligible to receive SSI (R. 95). On January 17, 2006, Ms. Hoskins requested a hearing before an ALJ, which was granted and scheduled for October 3, 2007 (R. 98, 100, 124).
On October 2, 2007, the Illinois probate court authorized a first amendment to the trust ("First Amended Trust") (R. 107, 136). At the October 3, 2007 hearing, only Robert's representatives appeared. In a written opinion dated November 30, 2007, the ALJ adopted the trustee's argument that the First Amended Trust was not a countable resource, and thus, that Robert was entitled to SSI (R. 19, 25-26).
On January 11, 2008, the regional commissioner of SSA submitted written argument in support of a request that the Appeals Council review and reverse the ALJ's decision (R. 143-46). On January 28, 2008, the Appeals Council sent out a notice indicating its intent to review the ALJ's November 30, 2007, decision on the grounds that the ALJ committed an error of law and his decision was not supported by substantial evidence (R. 147). The notice indicated that the Appeals Council planned to find Robert ineligible for SSI due to excess resources (R. 148).
On February 26, 2008, the probate court approved a second amendment to the supplemental needs trust ("Second Amended Trust") (R. 157). That same day, Robert's attorney wrote a letter contesting the Appeals Council's intended decision to find the First Amended Trust a countable resource, and arguing that in any event the newly filed Second Amended Trust was not a countable resource (R. 153). On July 2, 2009, the Appeals Council issued a ruling reversing the ALJ's decision finding Robert eligible for SSI. The Appeals Council held that the trust — in its original and amended forms — is a countable resource, and thus precludes Robert's eligibility for SSI due to excess resources (R. 16-18).
On August 4, 2009, the trust was amended for a third time (R. 7, 9). On that same day, Robert's attorney sent the Appeals Council a letter entitled a "Motion to Reconsider," asking the Appeals Council to reconsider its unfavorable decision and find Robert eligible for SSI, and attaching the Third Amended Trust (R. 5-6). On September 22, 2009, the Appeals Council denied the motion to reconsider (R. 3). On September 30, 2009, Robert's attorney sought review in this Court of the Appeals Council's denial of SSI and refusal to reopen the decision denying SSI (doc. #1: Complaint).
II.
The administrative record in this case consists of the supplemental care trusts, legal arguments as to whether Robert is entitled to SSI, and Social Security rulings and opinions on this issue. The parties agree that Robert was born with and continues to suffer from cerebral palsy. Willie Hoskins, Robert's cousin and one of his caregivers, testified that Robert also suffers from severe mental retardation (R. 172).
On May 4, 2005, a supplemental care trust was entered into on Robert's behalf with approximately $500,000.00 in assets. The trust was funded with proceeds Robert received in 1989 or 1990 from a settlement in a personal injury lawsuit that was filed on his behalf due to injuries he received at birth and his resulting disabilities (R. 111, 173-74). Article Three of the trust stated that it "shall terminate upon Robert's election following his restoration of rights or upon [his] death," and that upon Robert's death,
in accordance with
42 U.S.C. 1396p(d)(4)(A) and
89 Ill. Admin. Code, Ch. 1, Sect. 120.347(d)(1), the Trust assets remaining upon termination as provided or at the death of Robert shall be paid to the appropriate State agencies, as reimbursement to the State of Illinois for benefits provided to Robert during Robert's lifetime, except that the Trustee may with court approval and consistent with existing law first pay any outstanding, reasonable expenses for maintaining the existence of the Trust, and final bills, debts, expenses, taxes, fees, and funeral-related items. In the event that any assets of the Trust are remaining after payment of the reasonable expenses and reimbursement to the State of Illinois as set forth above, then the balance shall be distributed to whomever Robert designates by will, or if none, to Robert's estate.
(R. 77). The supplemental care trust further stated that: "[t]he Trust is created for the purpose of providing for the extra and supplemental needs, comforts and luxuries of Robert during his lifetime," that are not covered by state or federal medical assistance programs, and that the trust "will not cause disqualification from[] the benefits that Robert otherwise receives as a result of his disability . . ." (R. 73-74).
A.
On June 15, 2005, Ms. Hoskins filed an application for SSI on Robert's behalf (R. 86). In support of the application, on September 7, 2005, Kelly Hancock, an attorney and a Vice President at Northern Trust who represented Northern Trust in its capacity as guardian of Robert's estate, submitted the supplemental care trust and attached a brief letter stating that the trust "was created for the purpose of providing for the extra and supplemental needs, comforts and luxuries of Mr. Hoskins during his lifetime" (R. 72).
In a memorandum dated September 27, 2005, SSA indicated its intent to find Robert ineligible for SSI because he had excess resources in his trust (R. 83-84). SSA stated that the trust did not meet one of the requirements of the "special needs trust exception," all of whose requirements must be met to stop the trust assets from being counted as a resource for SSI purposes ( Id.). Specifically, SSA explained that the trust failed to provide that upon Robert's death, the state will be reimbursed as the first payee for the total medical assistance it provided for Robert except for certain taxes due and fees for the administration of Robert's estate (R. 84). In addition, SSA argued that Robert's trust was a countable resource under SSA's "regular resource rules," because Robert could revoke the trust as the grantor and sole beneficiary of the trust, and the trust allows Robert to terminate the trust following his restoration of rights (R. 84-85).
One week later, on October 4, 2005, SSA issued a notice denying Robert's application for SSI because he had resources worth more than $2,000.00 for the calendar years for which he sought benefits (R. 86). SSA determined that Robert's resources amounted to over $470,000.00 in June, July, August, and September 2005 due to the supplemental care trust (R. 89-92). Ms. Hoskins timely filed a request for reconsideration on October 31, 2005 (R. 94), which was denied on December 20, 2005 (R. 95). Ms. Hoskins then timely filed a request for a hearing before an ALJ (R. 98), which was granted, with a hearing date set for October 3, 2007 (R. 100, 124).
The Social Security Act provides that an individual will not be eligible for SSI if he or she has resources that exceed $2,000.00 for the calendar year for which he or she is seeking benefits. 42 U.S.C. § 1382(a)(1)(B)(ii), (a)(3)(B).
SSA erroneously left off a zero in its September 2005 calculation, listing Robert's resources as $47,600.00 rather than $470,600.00 (R. 92).
B.
Ms. Hancock, Ms. Hoskins, and Willie Hoskins appeared at a pre-hearing meeting before the ALJ on August 22, 2007 (R. 166, 190). During that meeting, Ms. Hancock argued that Robert should be entitled to SSI because the supplemental care trust was an "over trust" created to provide for Robert's supplemental needs that were not covered by Medicaid and Social Security, and the public benefits would be paid back from the trust assets when Robert dies (R. 167-68, 179-80). Further, Ms. Hancock noted that the beneficiaries of the nine other supplemental trust arrangements that she oversees all receive SSI (R. 169-70). The ALJ questioned Willie Hoskins as to the nature of Robert's illness, which Willie Hoskins described as severe mental retardation, some paralysis on his left side, and cerebral palsy (R. 171-72). The ALJ then asked whether Robert had previously received SSI, and Ms. Hancock replied that he received benefits in the 1980s, but they were discontinued after he received $500,000.00 from the personal injury lawsuit filed on his behalf in 1989 or 1990 (R. 172-73). The ALJ then took the matter under advisement (R. 180).
On October 2, 2007, the probate court authorized Northern Trust to execute a first amendment to the supplemental care trust, specifically "to make any and all amendments necessary" so that the trust will "be in compliance with Social Security Administration regulations" (R. 136). The First Amended Trust, filed the same day, amended Article Three so that it stated that upon termination of the trust or Robert's death, the remaining trust assets will be used to reimburse the State of Illinois, except that "the Trustee may with court approval first pay taxes as allowed by current law. Any other final expenses must be in compliance with current law and with the expressed written consent of the State with notice to all interested parties and prior court approval" (R. 139).
Ms. Hancock and Robert's attorney, Paul Franciszkowicz, appeared at the ALJ hearing on October 3, 2007 (R. 186). Ms. Hancock testified that Robert was adjudicated disabled by the probate court approximately ten years prior based on cerebral palsy and mental retardation, and that he is unable to manage his personal and financial affairs (R. 193). She again testified that the supplemental care trust is a special needs trust that Northern Trust created "to allow [Mr. Hoskins] to . . . qualify for government benefits to meet his medical needs so that his trust assets could be preserved for his supplemental needs," because "there's no likelihood that he'll ever be able to work and support himself," and Northern Trust sought to ensure that "his estate assets would be able to last throughout his lifetime" (R. 194).
Ms. Hancock further testified that Article Three of the First Amended Trust was amended to address SSA's concern that the State be reimbursed first, except for certain exceptions permitted by law (R. 198). Further, she testified that Robert does not have the mental capacity to revoke a legal document and is not expected to, nor does he have the right to receive income from the trust because disbursements on his behalf can only be made with court approval (R. 199-200). Ms. Hancock also clarified that there is no other intended beneficiary of the trust besides Robert (R. 201). The ALJ considered Ms. Hancock an expert based on her years of experience with special needs trusts (R. 204).
On November 30, 2007, the ALJ issued a fully favorable decision finding Robert eligible for SSI (R. 19). Although representatives of SSA did not appear at the hearing, in making his decision, the ALJ considered the arguments in SSA's September 27, 2005 memorandum (R. 23-24). In his opinion, the ALJ made the following rulings. First, the ALJ determined that the trust need not be established for the sole benefit of the individual beneficiary (R. 25). Second, the ALJ held that Northern Trust, not Robert, was the grantor of the trust, and thus the trust is not revocable ( Id.). Third, the ALJ found that the early termination provision did not create a contingent interest in any foreseeable third party ( Id.). Fourth, the ALJ found that the First Amended Trust satisfied SSA's concern about Article Three of the trust, by providing that upon Robert's death, the State had priority as first payee over payment of other debts and expenses ( Id.). Therefore, the ALJ found that the First Amended Trust was not a countable resource for purposes of determining Robert's eligibility for SSI (R. 25-26).
C.
On January 11, 2008, the regional commissioner of SSA requested that the Appeals Council reopen the ALJ's decision, and provided written argument that the ALJ erred in finding that the supplemental needs trust was not a countable asset (R. 145-46). The regional commissioner argued: that the trust must be for the sole benefit of the individual; that Robert is both the grantor and sole beneficiary of the trust and thus the trust is revocable; that the early termination provision creates a contingent interest in third parties; that the probate court did not approve the First Amended Trust; and that the trust fails to provide that all states that provided medical assistance to Robert must be reimbursed before other expenses are paid (R. 145-46).
On January 28, 2008, the Appeals Council sent out a notice indicating its intent to review the ALJ's decision, and to find Robert ineligible for SSI due to excess resources on the grounds that the ALJ committed an error of law and his decision was not supported by substantial evidence (R. 147-48). First, the Appeals Council stated that the ALJ "provided no rationale" for his conclusions and "appears to have simply accepted the arguments submitted by the attorney for the claimant's representative" (R. 148). Second, the Appeals Council stated that the ALJ evaluated only whether the trust met the criteria for the special needs trust exception, and not whether the trust meet the regular resource requirements ( Id.). Third, the Appeals Council agreed with SSA's contention that the First Amended Trust was not approved by the Circuit Court (R. 149). Fourth, the Appeals Council stated that Robert was the grantor of the trust because it was established with his assets, despite the fact that Northern Trust acted in a fiduciary capacity to establish the trust ( Id.). Fifth, the Appeals Council stated that Robert was the sole beneficiary of the trust, and because the trust does not have contingent beneficiaries, the trust is revocable ( Id.).
On February 26, 2008, the probate court approved a second amendment to the supplemental needs trust ("Second Amended Trust") (R. 159, 162-63). The Second Amended Trust amended Articles One and Three to first provide reimbursement to Illinois or any other state that provided benefits to Robert (R. 162-63). In addition, Article Three was amended to add a contingent beneficiary upon Robert's death:
In the event that any assets of the Trust are remaining after payment of the reasonable expenses and the reimbursement to the State of Illinois and any other State in which Robert resided and received benefits . . ., then . . . (a) One Percent (1%) [of the balance] shall be distributed to Sharon Hoskins, Guardian of the Person of Robert Hoskins; [and] (b) Ninety-nine (99%) shall be distributed pursuant to the Will drafted by Robert, or if none, according to the laws of intestacy . . .
(R. 163). The probate court also issued a declaratory order stating that Robert's supplemental care trusts "were and continue to be irrevocable" (R. 159).
Also on February 26, 2008, Robert's attorney wrote a letter contesting the Appeals Council's intended decision to find the original and First Amended Trust to be a countable resource, and arguing that the newly filed Second Amended Trust should be considered and found to not be a countable resource (R. 153). Robert's attorney argued that: (1) because SSA chose not to appear at the ALJ hearing, its arguments for review of the ALJ opinion unfairly raised issues that were not raised at the hearing in violation of Robert's due process rights; (2) he had provided proof of a court order approving the First Amended Trust; (3) the Second Amended Trust is not revocable because Robert is the sole beneficiary during his lifetime, but there is a residuary beneficiary upon his death; (4) because Robert is and will continue to be under an incapacity, the trust is irrevocable because "the only possible way to revoke the trust is through court order, and there is no evidence to suggest that the Probate Court ever would have allowed such a revocation;"(5) SSA must accept the probate court's declaratory judgment finding the trust irrevocable; and (6) the Second Amended Trust addresses SSA's concern that the First Amended Trust did not call for repayment to other states besides Illinois (R. 154-57). Robert's attorney requested that the Appeals Council uphold the ALJ's decision and allow him to appear before them to address the legal and policy issues in the case (R. 157-58).
The Appeals Council did not hold a hearing, but on July 2, 2009, it issued an unfavorable decision reversing the ALJ's decision finding Robert eligible for SSI (R. 10). In its written decision, the Appeals Council adopted the ALJ's statements regarding the relevant provisions of the Act, SSA's regulations and rulings, the issues in the case, and the evidentiary facts (R. 14). The Appeals Council then adopted the statements in its January 28, 2008 notice of its intent to review the ALJ's decision as its basis for concluding that the assets under the First Amended Trust were a countable resource (R. 15).
Next, the Appeals Council addressed the newly filed Second Amended Trust (R. 16). The Appeals Council first looked to SSA's operating instructions on trusts as set forth in the Programs Operations Manual, or POMS. The Appeals Council concluded that the Second Amended Trust is not a countable resource under the regular resource rules set forth in POMS SI 01120.200 ( Id.). Under those rules, a trust will be counted as a resource if the claimant can: (1) revoke or terminate the trust and use the assets to meet his needs for food or shelter; (2) direct the use of the trust principal for his support and maintenance; or (3) sell his beneficial interest in the trust ( Id.). The Appeals Council found that the Second Amended Trust met each of these requirements: (1) the trust as irrevocable because it had residual beneficiaries; (2) the claimant could not direct the use of the trust principal because the trustee had sole discretion to make distributions; and (3) the claimant would not be able to sell his beneficial interest in the trust ( Id.).
Nevertheless, the Appeals Council concluded that the trust — in all its versions — failed to meet two of the three requirements of the special needs trust exception, all three of which must be met to avoid the general rule that a trust created with the assets of an individual is a resource for SSI purposes (R. 16-17). To constitute an exception, the trust (1) must contain the assets of an individual under age 65 who is disabled; (2) must be established for the benefit of such individual through the actions of a parent, legal guardian, or court; and (3) must provide that the state will receive all amounts remaining in the trust upon the death of the individual up to an amount equal to the total medical assistance paid on behalf of the individual under a state Medicaid plan ( Id.). The Appeals Council found that the trust did not meet the second and third requirements ( Id.).
As to the second requirement, the Appeals Council first explained that POMS SI 01120.203(B)(1)(e) interprets the language to mean that the trust must be established for the sole benefit of the individual (R. 17). Under POMS SI 011120.201(F)(2), "sole benefit" means that the trust must benefit no one but that individual, whether at the time the trust is established or at any time for the remainder of the individual's life ( Id.). Because Article Three allows residual beneficiaries to receive trust assets upon early termination due to restoration of Robert's rights — rather than only upon Robert's death — the Appeals Council found the "sole benefit" requirement not met ( Id.).
As to the third requirement, the Appeals Council found that the trust did not comply with the types of expenses that SSA allowed prior to reimbursement of the states (R. 17). POMS SI 01120.203(B)(3)(a) specifies that the only administrative expenses that may be paid from the trust prior to reimbursement to the states are: (1) taxes due from the trust to the states or federal government because of the death of the beneficiary; and (2) reasonable fees for administration of the trust estate associated with termination of the trust ( Id.). In the Second Amended Trust, however, Article Three allows the trustee, with court approval, to pay taxes and other final expenses as allowed by "current law" prior to reimbursement to the states ( Id.). The Appeals Council found that this was broader than permitted under POMS, and that the term "current law" was overly vague ( Id.). Thus, the Appeals Council reversed the decision of the ALJ and found that the trust — in all its forms — is a countable resource that precluded Robert's eligibility for SSI due to excess resources at all times since the date of his June 15, 2005, application (R. 18).
D.
On August 4, 2009, the trust was amended a third time, with probate court approval (R. 7-9). Pursuant to this amendment, the trust was revised to state that it "shall terminate upon the death of Robert (R. 7)," thus eliminating the possibility of termination upon Robert's election following any restoration of rights. The Third Amended Trust also changed the language indicating that reimbursement would comply with "current law" to specifically track the language from POMS as cited by the Appeals Council that:
the Trust assets remaining at the death of Robert shall be paid as follows prior to reimbursement of the state(s): Taxes due from the trust to the state or federal government because of the death of the Beneficiary and reasonable fees for administration of the trust estate such as an accounting of the trust to the court, completion and filing of documents, or other required actions associated with termination and wrapping up of the trust. Then, the Trust shall make repayment to the appropriate state agencies, as reimbursement to the State of Illinois, or any other state that has provided benefits to Robert during his lifetime, an amount equal to the total medical assistance payments, or other state payments, paid on behalf of Robert, under any public benefit programs to the extent such assistance has not already been reimbursed from any other source.
(R. 7).
On August 4, 2009, Robert's attorney asked the Appeals Council to reconsider its unfavorable decision, and to find him eligible for SSI based on the revisions made in the Third Amended Trust (R. 5-6). The attorney attached the Third Amended Trust and asked the Appeals Council to consider it in support of the motion ( Id.). In addition, the Third Amended Trust used the exact POMS language to describe distribution of trust proceeds upon Robert's death ( Id.). Based on these amendments to the trust and as a matter of public policy, Robert's attorney requested that the Appeals Council reconsider its unfavorable decision and find Robert eligible for SSI (R. 6).
In the motion, Robert's attorney explained that he had to receive special permission from the probate court to remove the possibility of termination upon restoration of Robert's rights, because the probate court "has always required the provision regarding restoration of rights to be included in supplemental care trusts, in order to protect the rights of an individual if his disability is ever lifted" (R. 5).
On September 22, 2009, the Appeals Council denied the motion to reconsider (R. 3). First, the Appeals Council stated that none of the following reasons to reopen or change its decision were present: new and material evidence; a clerical error; or evidence already considered that clearly showed that there was an error ( Id.). Second, the Appeals Council stated that the time limit for reopening a decision on a claim for SSI had expired since the motion to reconsider was filed more than two years after SSA's initial notice that the trust was a countable resource on September 27, 2005 ( Id.). The Appeals Council further stated that "[u]nder our rules, you do not have the right to court review of our denial of your request for reopening" (R. 3). In addition, it noted that "[i]f, based on the changes made to the trust you believe that the claimant now qualifies for [SSI], you should contact the local Social Security office to re-apply for those benefits. The August 4, 2009 request for reopening may serve as a protective filing for those benefits, if you file a new application within 60 days of the date of this notice" ( Id.).
There is nothing in the record to indicate that plaintiff re-applied for benefits based on the changes made to the trust. Rather, on September 30, 2009, Robert's attorney sought review in this Court of the Appeals Council's denial of SSI and refusal to reopen the decision denying SSI. In the memorandum in support of his motion for summary judgment, plaintiff argues that we should reverse and remand the Appeals Council's July 2, 2009, decision reversing the ALJ's decision and denying him SSI based on the Second Amended Trust (doc. # 30: Pl.'s Mem. at 6). In the alternative, he argues for reversal and remand because the Appeals Council erroneously denied his motion to reconsider based on the Third Amended Trust.
III.
We reverse the Commissioner's final decision only if it is not supported by substantial evidence, is based on a legal error, or is too poorly articulated to permit meaningful review. Hopgood ex rel. L.G. v. Astrue, 578 F.3d 696, 698 (7th Cir. 2009). While judicial review of the Commissioner's decisions "is deferential, it is not abject." Parker v. Astrue, 597 F.3d 920, 921 (7th Cir. 2010). We uphold the decision if it is supported by substantial evidence; that is, "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Terry v. Astrue, 580 F.3d 471, 475 (7th Cir. 2009) (internal citations and quotations omitted).
IV.
It is premature, however, to apply these standards of review to the Appeals Council's July 2, 2009 determination that Robert is ineligible for SSI based on the Second Amended Trust, because this may not be the "final decision" of the Commissioner if this case is remanded to the Appeals Council to consider the Third Amended Trust. Accordingly, we address plaintiff's second argument first: whether the Appeals Council erred in its September 22, 2009 decision denying plaintiff's motion to reopen and refusing to reconsider its denial of SSI based on the Third Amended Trust. The Appeals Council set forth two reasons for its denial: (1) the time limit for reopening their decision had expired; and (2) good cause for reopening was not shown. Plaintiff argues that the Appeals Council erred because: (1) the Third Amended Trust constituted new and material evidence entitling Robert to a reopening of the prior decision, and ultimately entitling him to SSI, and (2) the limitations period cited in the denial of the motion to reconsider was erroneous (Pl.'s Mem. at 12-13). We address these two arguments in turn.
A.
First, we address the Appeals Council's determination that there was no good cause shown for reopening the case. Agency regulations make clear that good cause may be shown where: (1) new and material evidence was furnished; (2) a clerical error was made; or (3) the evidence that was considered in making the determination or decision clearly showed on its face that an error was made. See 20 C.F.R. § 416.1489 (listing these three examples as evidence of good cause to reopen a decision). Plaintiff argues that the Third Amendment to the Trust constitutes new and material evidence which the Appeals Council should have considered (Pl.'s Mem. at 12).
At the threshold, defendant contends that the Appeals Council's decision not to reopen its earlier decision is not reviewable. In general, federal courts lack jurisdiction to review an administrative decision not to reopen a decision on a previous claim for benefits, unless the denial of the petition to reopen implicates the party's constitutional rights. Califano v. Sanders, 430 U.S. 99, 107-09 (1977). Review of a decision not to reopen the Commissioner's final decision is limited because the decision is discretionary. Eads v. Sec'y of the Dep't of Health Human Servs., 983 F.2d 815, 817 (7th Cir. 1993).
We can, however, review an erroneous refusal by the Appeals Council to take account of new evidence submitted to it, because that is a legal error. Keys v. Barnhart, 347 F.3d 990, 993 (7th Cir. 2003). The Seventh Circuit has held that the Appeals Council's determination that additional evidence submitted by a claimant is not material is a legal determination that is subject to de novo review. Nelson v. Bowen, 855 F.2d 503, 506 (7th Cir. 1988). The Social Security Act, 42 U.S.C. § 405(g), authorizes the court to remand the case to SSA for consideration of newly discovered evidence. Eads, 983 F.2d at 817.
This is in contrast to a case where the Appeals Council considers the newly submitted evidence as a part of the claimant's petition to reopen his case. Diaz v. Chater, 55 F.3d 300, n. 1 (7th Cir. 1995). In that situation, the decision not to reopen a case and the additional evidence accompanying it may not be reviewable. Id. Nevertheless, even then, "there is authority for the proposition that, when a decision has been reopened and reconsidered on the merits to any extent, the new decision on the merits is subject to judicial review." Johnson v. Sullivan, 936 F.2d 974, 976 (7th Cir. 1991). Here, however, there is no evidence that the Appeals Council considered the Third Amended Trust, and neither the Appeals Council's letter denying the motion to reconsider nor defendant's brief suggests that the Appeals Council considered the Third Amended Trust.
In this case, plaintiff has persuaded us that the Third Amended Trust is new and material evidence. See Eads, 983 F.2d at 818. "New evidence is evidence not in existence or available to the claimant at the time of the administrative proceeding." Jens v. Barnhart, 347 F.2d 209, 214 (7th Cir. 2003) (internal quotations omitted). That clearly applies to the Third Amended Trust, which was amended to conform with the Appeals Council's July 2, 2009 decision. "Evidence is material if there is a reasonable probability that the Commissioner would have reached a different conclusion had the evidence been considered." Id. As explained above, on its face the Third Amended Trust amends the specific provisions of the Second Amended Trust that the Appeals Council found to render the assets of the trust to be a countable resource; and, counting those assets as a resource is what made Robert ineligible for SSI. Thus, there is a reasonable probability that the Commissioner would have reached a different conclusion as to whether the Third Amended Trust was a resource to Robert than was found as to the Second Amended Trust. We conclude that the Appeals Council committed a legal error in failing to recognize the Third Amended Trust to be new and material evidence.
B.
The Appeals Council, however, also stated that plaintiff was time-barred from seeking reconsideration and reopening of the Appeals Council's earlier decision. Agency regulations provide that "[a] determination, revised determination, decision, or revised decision may be reopened . . . (b) Within two years of the date of the notice of the initial determination if good cause is shown to reopen the case." 20 C.F.R. § 416.1488(b). In this case, the Appeals Council ruled that the relevant date for triggering this two-year time period was September 27, 2005, the date of the initial determination denying SSI based on the original supplemental care trust (R. 3). Consequently, the Appeals Council found that the motion to reconsider was filed too late because it was filed more than two years after that date ( Id.). Plaintiff argues that the Appeals Council's selection of the September 2005 date was arbitrary and capricious because the decision for which he sought reconsideration was not issued until July 2, 2009, more than two years after the Commissioner's initial determination.
We agree with plaintiff. We note that while the initial decision by SSA in September 2005 was unfavorable to Robert, on November 30, 2007, the ALJ issued a decision finding Robert eligible for SSI. As of that date, there was nothing for Robert to appeal. Instead, it was the Commissioner who requested that the Appeals Council review the ALJ's decision. It was not until July 2, 2009, that the Appeals Council issued its decision reversing the ALJ's decision. Robert then sought reconsideration on August 4, 2009, just over one month later.
The regulations allow for reopening within two years of "[a] determination, revised determination, decision, or revised decision." 20 C.F.R. § 416.1488(b). The Appeals Council's decision on July 2, 2009, constitutes a revised decision or determination, as it reversed the ALJ's opinion, and issued the new, final decision in this case. We find nothing in the Appeals Council's decision to explain why it started the clock running with the September 27, 2005 decision, and ignored the intervening ALJ decision of November 30, 2007, and the Appeals Council decision of July 2, 2009. Thus, plaintiff's motion to reopen was timely under the clear language of the Agency's own regulations.
CONCLUSION
For the foregoing reasons, the Court directs the Clerk of the Court to enter judgment granting in part and denying in part plaintiff's motion for summary judgment (doc. # 25) and Defendant's motion for summary judgment (doc. # 37). Because we grant plaintiff's motion to remand for consideration of whether, under the Third Amended Trust, Robert is entitled to SSI, we deem it premature to address the Appeals Council's decision that Robert was ineligible for SSI based on the Second Amended Trust. Only once the Appeals Council on remand considers the impact of the Third Amended Trust will we know whether anything remains to address with respect to the Second Amended Trust. We thus remand pursuant to sentence six of 42 U.S.C. § 405(g), which allows a remand to the agency "upon a showing that there is new evidence which is material and that there is good cause for the failure to incorporate such evidence into the record in a prior proceeding," for proceedings consistent with this Memorandum Opinion and Order. Terminating case.
Plaintiff also asks for an award of one-fourth of any back benefits payable on plaintiff's Social Security accounts (Pl.'s Mem. at 14). Plaintiff, however, provides no support for this request, and we deny this request without prejudice.
Dated: November 1, 2010