PR 02605.020 Kentucky

A. PR 87-007 Reimbursement to SSA for Cost of Processing Non-SSA Workloads - Kentucky

DATE: April 23, 1987


We held that where the Social Security Administration discovered that a State was utilizing Social Security funds for the processing of non-Social Security workloads, in violation of Section 221 of the Social Security Act, the Administration could institute recovery action to recoup improperly expended funds even though there were closed audits for some previous years when the expenditures were made.

(Cost of Processing Non-SSA Workloads - RAIV - [Adams] - to ARC, Progs., Atl., 04/23/87)


Your office has requested our advice on whether a request can be made for payments from the State of Kentucky for any Social Security Administration (SSA) funds utilized in the processing of non-SSA matters prior to 1983. The facts presented indicate that the Kentucky Department of Disability Determinations has been using SSA resources to process Medicaid cases for the Kentucky Cabinet for Human Resources. This procedure was being carried out pursuant to a March 27, 1975, administrative order from the Kentucky Secretary for Human Resources.

For the past two years there have been negotiations with the State of Kentucky with respect to the processing of non-SSA workloads. Although the Disability Determination Service (DDS) began processing Medicaid cases in 1975, the State contends that they are not required to reimburse SSA for the period prior to 1983 since there have been audit closures through 1982.

We have reviewed the Section 221 agreement dated December 23, 1975, Section 221 of the Social Security Act, as amended (effective June 1981) and pertinent regulations. Paragraph G of the Section 221 agreement pertaining to fiscal matters provides, in pertinent part, that:

1. The Secretary will provide funds in advance, as may be mutually agreed upon, for the necessary cost to the State agency of making determinations of disability authorized by this agreement ....

2. Such funds will be used solely for such expenses.

3. ... The Secretary will determine whether such expenditures were necessary in making determinations of disability authorized by this agreement under standards in effect at the time such expenditures were made o~ incurred. If, pursuant to such standards, the Secretary determines that any such expenditure was not necessary for such purpose, the Secretary shall so inform the State agency of tentative exceptions taken, with full explanation of such tentative exceptions. The State agency will be given a reasonable length of time to justify such expenditures. If such expenditures cannot be justified by the State agency, the total amount of expenditures actually made and incurred in such period shall be reduced by any expenditures determined by the Secretary to be not necessary in making determinations of disability authorized by this agreement.

4. Any monies paid to the State which are used for purposes not within the scope of this agreement shall be returned to the Treasury of the United States for deposit in the Trust Fund from which payment was certified.

Likewise, Section 221 of the Social Security Act, 42 U.S.C. §421, provides, in part, that:

(e) Each State which is making disability determinations under subsection (a)(1) under this section shall be entitled to receive from the Trust Funds, in advance or by way of reimbursement, as determined by the Secretary, the cost to the State of making disability determinations under subsection (a)(1). The Secretary shall from time to time certify such amount as is necessary for this purpose to the Managing Trustee, reduced or increased, as the case may be, by any sum (for which adjustment hereunder has not previously been made) by which the amount certified for any prior period was greater or less than the amount which should have been paid to the State under this subsection for such period. (Emphasis added.)

(f) All money paid to a State under this section shall be used solely for the purposes for which it is paid; and any money so paid which is not used for such purposes shall be returned to the Treasury of the United States for deposit in the Trust Funds.

Both the 1975 Section 221 agreement and Section 221 of the Social Security Act provides for adjustment for incorrect payments in a prior year. There are no time limitations contained in either the agreement or the statute. Therefore, it is our opinion that the Social Security Administration may request payments from the State for periods covered by closed Federal or State audits. If there is any disagreement, the State can appeal these determinations pursuant to 20 C.F.R. §416.1027(b)

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PR 02605.020 - Kentucky - 04/26/2002
Batch run: 01/13/2016