You have asked for legal advice on whether a state court has authority to discharge
liability for repayment of an overpayment, which is a federal debt.
Background
According to the documentation submitted to our office, Tracy A. M~, now Tracy A.
O~, began receiving social security child's benefits in June 1993. Benefits were being
paid to her representative payee, First National Bank of Winfield, Kansas ("First
National Bank"), who had previously been appointed to be Ms. M~'s conservator by the
District Court of Cowley County, Kansas. In March 1998, Ms. M~ was married. During
the months of March and April 1998, First National Bank received benefits on behalf
of Ms. M~ in the amount of $1,549.60. Because of Ms. M~'s marriage, her benefits should
have ceased effective March 1998. Thus, the $1,549.60, which First National Bank received
on Ms. M~'s behalf in March and April of 1998, amounted to an overpayment. By letter
dated July 7, 1998, the Social Security Administration ("SSA") advised First National
Bank of the overpayment and requested repayment. On May 22, 1998, the Honorable J.
M. S., judge for the District Court of Cowley County, Kansas, entered an Order of
Discharge which discharged First National Bank from its duties as conservator for
Ms. M~ and released the bank from any and all further liability. Based on Judge S.
Order of Discharge, First National Bank contends that it is not liable for the overpayment
it received on behalf of Ms. M~.
Discussion
The Supremacy Clause of the United States Constitution provides:
This Constitution, and the Laws of the United States which shall be made in Pursuance
thereof; and all Treaties made, or which shall be made, under the Authority of the
United States, shall be the supreme Law of the Land; and the Judges in every State
shall be bound thereby, any Thing in the Constitution or Laws of any State to the
Contrary notwithstanding.
U.S. Const. Art. VI, cl. 2 . Thus, the United States Constitution, together with federal
statutes and regulations made in pursuance of the Constitution, are the supreme law
of the land. Carter
v. Carter, 298 U.S. 238, 296 (1936). See also Geier,
et al. v. American Honda Motor Co., et al., 166 F.3d 1236, 1242 (D.C. Cir. 1999); In re Cook, et al., No. 98-10039,
§F.3d, 1999 WL 123931 at *5 (5th Cir. 1999). Accordingly, state courts are bound to
recognize the supreme authority of federal law. Harlan
Sprague Dawley, Inc. v. Ind. Dept. of Revenue, 583 N.E.2d 214, 226 (Ind. T.C. 1991). In other words, "'the Supremacy Clause imposes
on state courts a constitutional duty to proceed in such a manner that all the substantial
rights of the parties under controlling federal law [are] protected.'" Id. (quoted citations omitted). "But as to persons that Congress [has] subjected to liability,
individual States may not exempt such persons from federal liability by relying on
their own [laws]. . . . States would then be free to nullify for their own people
the legislative decisions that Congress has made on behalf of all the People." Howlett v. Rose, 496 U.S. 356, 383 (1990).
The statutory provision which governs with respect to recovery of Title II benefits,
which includes child's benefits, provides in pertinent part: "Whenever the Commissioner
of Social Security finds that more . . . than the correct amount of payment has been
made to any person, . . . proper adjustment or recovery shall be made . . ." 42 U.S.C.A.
§ 404(a)(1) (West Supp. 1998). The statute further provides that the Commissioner
of Social Security shall require such overpaid person to refund the amount in excess
of the correct amount. Id. at § 404(a)(1)(A). See 20 C.F.R. § 404.501 et. seq. (1998). In the event that a
representative payee is involved, as in this case, the Program Operations Manual System
("POMS") and case law permit SSA to seek recovery of an overpayment from the representative
payee. POMS GN 02205.007 (March 1989); Corr ex rel. Corr v. Sullivan, 725 F. Supp. 413, 414 (N.D. Ind. 1989); Abrams v. Schweiker, 543 F. Supp. 589, 592 (N.D. Ga. 1982). Because the foregoing federal statute and
regulations impose liability on those who receive an overpayment in Social Security
benefits, the supremacy clause of the United States Constitution denies a state court
judge the power to exempt a representative payee from liability for an overpayment.
Accordingly, the Order of Discharge entered by the District Court of Cowley County,
Kansas does not discharge First National Bank from liability for the overpayment.
Based on the foregoing, we are of the opinion that the state court Order of Discharge
from the District Court of Cowley County, Kansas does not discharge First National
Bank from liability for the overpayment.