QUESTIONS PRESENTED
You asked for guidance in responding to a State court order that appears to appoint
the Senior Advocacy Network as the organizational representative payee for beneficiary
V~ for Social Security purposes. You also asked whether the transfer of funds from
the current agency-appointed representative payee, L~, to Senior Advocacy Network
should trigger an investigation for misuse of funds under the applicable program rules.
SHORT ANSWERS
A State court order does not supersede Federal law. Under the Social Security Act,
its implementing regulations, and related program rules, a State court lacks authority
to appoint a representative payee for Social Security benefits. Therefore, the agency
is not bound by the language of the State court order and should continue to follow
its own regulations and policies. Additionally, these same program rules continue
to apply to the agency-appointed representative payee, and considerations of whether
she may have misused beneficiary funds.
BACKGROUND
On March XX, 2016, the agency selected L~ to be the representative payee for her mother,
V~. Subsequently, on March XX, 2016, Senior Advocacy Network submitted an application
to be the representative payee for V~. With its application, Senior Advocacy Network
submitted a copy of a California Superior Court order, dated February XX, 2016, appointing
Senior Advocacy Network as the representative payee of V~ and directing L~ to transfer
$500.00 of V~’s funds to Senior Advocacy Network. The agency denied Senior Advocacy
Network’s application. In considering the application for representative payee, the
Modesto field office contacted several of V~’s children and learned that L~ is also
seeking to be appointed a conservator for her mother under California state law. Through
its investigation, the Modesto office also received allegations of impropriety by
Senior Advocacy Network and its staff.
ANALYSIS
The Supremacy Clause of the U.S. Constitution establishes that the Social Security
Act (Act), a Federal law, and the Commissioner’s regulations promulgated to carry
out the Act supersede contradictory state law. U.S. Const. Art. VI, § 2. Through the
Act, Congress granted the Commissioner of Social Security the “full power and authority
to make rules and regulations and establish procedures” consistent with the Act to
carry out the provisions thereof. Social Security Act § 205(a), 42 U.S.C. § 405(a).
As relevant here, Congress granted the agency the power to determine who should manage
a beneficiary’s benefits under section 205(j) of the Act. Section 205(j) states that,
if the interests of the beneficiary would be served thereby, the Commissioner may
appoint a person or organization to be the beneficiary’s “representative payee.” Social
Security Act § 205(j)(1)(A), 42 U.S.C. § 405(j)(1)(A). However, section 205(j) further
provides that the agency will only appoint a person or organization to be a representative
payee should they meet the certification requirements. Certification requires (i) the
agency’s investigation of the person or organization to serve as representative payee,
and (ii) adequate evidence that appointment of such person or organization as representative
payee is in the interest of the beneficiary. Social Security Act § 205(j)(2)(A), 42
U.S.C. § 405(j)(2)(A); see also 20 C.F.R. §§ 404.2001-404.2065 (regulations implementing section 205(j) of the Act).
A representative payee is obligated to follow agency policy and regulations, not a
State court order, when managing and distributing Social Security benefits. See Social Security Act § 205(j), 42 U.S.C. § 405(j). Under the regulations, a representative
payee must ensure that Social Security benefits are used only for the “use and benefit”
of the beneficiary and in the manner and for the purposes that the representative
payee determines to be in the “best interests” of the beneficiary. 20 C.F.R. § 404.2035(a). The
agency will consider payments given to the representative payee to have been used
for the “use and benefit of the beneficiary” if they are used for the beneficiary’s
“current maintenance.” 20 C.F.R. § 404.2040(a)(1). Current maintenance is defined
as “costs incurred in obtaining food, shelter, clothing, medical care or personal
comfort items.” Id. If any amount remains after the representative payee has used the benefits for the
beneficiary’s current maintenance, the representative payee must conserve or invest
the remaining funds on behalf of the beneficiary. 20 C.F.R. § 404.2045(a). Conserved
funds are to be “invested in accordance with the rules followed by trustees” and invested
funds must “show clearly that the payee holds the property in trust for the beneficiary.” Id. The regulations and agency policy provide that only the representative payee has discretion
on how to use the benefits in the beneficiary’s best interests. 20 C.F.R. § 404.2035(a);
Program Operations Manual Support (POMS) GN 00602.001.A.1.
Although the language of the State court’s order appears to appoint the Senior Advocacy
Network as V~’ representative payee, the State court lacks the authority and the jurisdiction
to designate a representative payee for purposes of the Social Security Act, or to
direct the disposition of Social Security benefits to a representative payee. Under
the Act and related Federal regulations, the agency determines whether a representative
payee is required and, if so, the individual or organization in the best position
to serve as the beneficiary’s representative payee. 20 C.F.R. §§ 404.2001, 404.2020[1] . The State court’s order assigning a representative payee and directing conserved
benefits to Senior Advocacy Network contravenes this clearly established Federal law
and thereby violates the Supremacy Clause. See U.S. Const. Art. VI, § 2.
Furthermore, the court’s order directing conserved benefits to Senior Advocacy Network
violates the anti-assignment provision in section 207 of the Act. See Social Security Act § 207(a), 42 U.S.C. § 407(a). Social Security benefits are exempted
from any legal process, such as State court orders, by section 207(a) of the Social
Security Act, 42 U.S.C. § 407(a), which provides that:
The right of any person to any future payment under this title shall not be transferable
or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject
to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
Social Security Act § 207(a), 42 U.S.C. § 407(a) (emphasis added). The exemption provision
of section 207(a) of the Act was upheld by the United States Supreme Court in Philpott v. Essex County Welfare Board, 409 U.S. 413 (1973). In Philpott, the Court held section 207(a) barred the State of New Jersey from interfering with
benefits paid under Title II of the Social Security Act. Id. at 415-16. Additionally, in Bennett v. Arkansas, 485 U.S. 395, 397-98 (1988), the Supreme Court relied on section 207(a) to prohibit
an Arkansas State court from seizing a prison inmate’s Social Security benefits to
help defray the costs of maintaining the Arkansas prison system. Further, in Washington State Dept. of Social and Health Services v. Guardianship Estate of Keffeler, 537 U.S. 371, 385 (2003), the Supreme Court cited POMS GN 02410.001 and noted the exemption provisions of section 207(a) applied to State court orders.
See also POMS PR 07211.017 (concluding Indiana State court orders did not override Federal
statutes and SSA regulations regarding the rights and duties of representative payees,
and finding the State court orders violated the anti-assignment provision in section
207 of the Act).
Finally, it is well established that the Federal government, as sovereign, is immune
from State court suits and orders unless it consents to the jurisdiction of such court.
See United States v. Sherwood, 312 U.S. 584 (1941). The agency has not relinquished its sovereignty nor has the
agency submitted itself to jurisdiction of the California State court in this matter.
Therefore, even if the State court designates a representative payee or attempts to
direct the distribution of past conserved benefits, such an order or determination
is not binding on the agency.[2] Moreover, if L~ follows the State court’s order, she could be violating her duty
as a representative payee. The regulations provide that, after a representative payee
uses benefit payments for the current maintenance of the beneficiary, any remaining
amounts must be conserved or invested on the beneficiary’s behalf. See 20 C.F.R. § 404.2045. Any such “[c]onserved funds should be invested in accordance
with the rules followed by trustees” and invested funds must “show clearly that the
payee holds the property in trust for the beneficiary.” Id. If L~ complied with the State court order and paid part of V~’ conserved funds to
Senior Advocacy Network, this could be construed as a violation of the federal regulations.
In such situations, the agency has the authority to investigate such misuse of funds
when it deems appropriate.
CONCLUSION
We conclude that the State court did not have the authority to appoint Senior Advocacy
Network as V~’ representative payee. If L~ follow the State court’s order, and transfers
V~’s benefits to Senior Advocacy Network, the agency may consider investigating the
misuse of funds.