You have asked for a legal opinion regarding whether the Social Security Administration
(SSA) may withhold Title II retirement benefits and Title XVI Supplemental Security
Income (SSI) benefits to satisfy a restitution order entered as part of the individual's
criminal sentence.
FACTUAL BACKGROUND
A criminal investigation established that Jimmy V~ helped at least thirty individuals
fraudulently obtain benefits under Title II and Title XVI of the Social Security Act.
Mr. V~ pled guilty to Conspiracy to Defraud the United States, Mail Fraud, and Aiding
and Abetting. He was not receiving benefits himself. He was ordered to pay restitution
in the amount of $767,215.68 to SSA.
After serving a five-year prison sentence, he began a three-year term of supervised
release. He recently applied for Title II retirement benefits and SSI benefits as
an aged individual with an ineligible spouse. The Tacoma, Washington Field Office
determined that he is potentially eligible for a Title II benefits in the amount of
$418.00 a month, and SSI benefits in the amount of $269.20 a month.
DISCUSSION
SSA cannot use the overpayment provisions of the Social Security Act to collect monies
owed under the restitution order. However, with the assistance of the U.S. Attorney
General, Mr. V~'s Title II benefits may be levied to satisfy the restitution order.
Because Mr. V~ was convicted before 1996, however, SSI benefits may not be levied.
The Overpayment Provisions
Title II and Title XVI of the Social Security Act allow for the recovery of overpayments
made to an individual through adjustments and reductions in any future benefits that
an individual may receive. 42 U.S.C.A. §§ 404, 1383(b)(1)(A)-(B). The regulations
define an overpayment as a payment(s) made to an individual in excess of the amount
due to that individual under the Act. See 20 C.F.R. §§ 404.501, 416.537 (1998). Although the Program Operations Manual System
(POMS) addresses the recovery of overpayments after a fraud conviction, the POMS address
the issue solely in the context of an individual convicted of fraud regarding his
own benefits. See POMS GN 02201.55. Therefore, the POMS are based on the regulatory definition of overpayment
that only allows the Commissioner to withhold an individual's current benefits, for
the overpayment of past benefits to that individual. Id. This interpretation is also supported by the legislative history of the Social Security
Act and its amendments. Congress has consistently discussed the recovery of overpayments
from an individual, only in relation to overpayments made to the same individual.
See, e.g., S. REP. NO. 81-836 (1949); CONF. REP. NO. 89-97 (1965); CONF. REP. NO. 90-1030 (1967);
H.R. REP. NO. 92-231 (1971).
Mr. V~ never received an overpayment as contemplated by the Social Security Act's
overpayment provisions. 42 U.S.C.A. §§ 404, 1383(b)(1)(A)-(B). Rather, he fraudulently
assisted others in receiving overpayments. While the restitution order requires Mr.
V~ to repay SSA for the overpayments made to those other people, SSA must follow normal
procedures for the enforcement of restitution orders set forth in Title 18 of the
United States Code. SSA may not use the overpayment provisions of the Social Security
Act.
The Levy Process
At the time of Mr. V~'s conviction, a court could properly order restitution upon
a conviction of a crime specified in Title 18 of the United States Code. See 18 U.S.C.A.
§ 3663 (1994), the Victim and Witness Protection Act (VWPA). Mr. V~ was convicted
of violations of 18 U.S.C.A. §§ 371 and 1341 and, therefore, the restitution order
was within the authority of the court. 18 U.S.C.A. § 3663.
Restitution must be made to a victim of an offense, and courts have determined that
SSA, as well as other government agencies may be considered a victim under the VWPA.
See United States v.
Martin, 128 F.3d 1188, 1190-1192 (7th Cir. 1997); United
States v. Streebing, 987 F.2d 368, 374 (6th Cir. 1993). Therefore, Mr. V~ was properly directed to make
restitution to SSA.
An order of restitution may be enforced by the United States in the same manner provided
for the collection and payment of fines set forth in subchapter B of chapter 229 of
title 18, in the same manner as a judgment in a civil action. A victim may also enforce
a restitution order in the same manner as a judgment in a civil action. See 18 U.S.C.A. § 3664(h)(1)-(2). Subchapter B of chapter 229, codified at 18 U.S.C.A.
§§ 3611-3615, imposes "a lien in favor of the United States” that arises at the time
of judgment and may be enforced “upon all the property belonging to the person fined.”
18 U.S.C.A. § 3613; see
also United States v. Mills, 991 F.2d 609, 612 (9th Cir. 1993). The lien expires twenty (20) years after entry
of judgment, or upon the death of the defendant. 18 U.S.C.A. § 3613(b).
The U.S. Attorney General is responsible for enforcing the lien through the levy provisions
of the Internal Revenue Code. 18 U.S.C.A. §§ 3612(c) and 3613(c). The Internal Revenue
Code permits the Attorney General to levy Mr. V~'s property, but expressly exempts
SSI benefits from the categories of property subject to levy. 26 U.S.C.A. § 6334(a)(11)(A).
The anti-assignment provision in section 207 of the Social Security Act, 42 U.S.C.
§ 407, does not prevent enforcement of the restitution order against Mr. V~'s Title
II benefits. Section 207 of the Act provides that “the right of any person to any
future payment shall not be transferable or assignable, at law or in equity. . .,“nor
“subject to execution, levy, attachment, garnishment, or other legal process . . .
.” 42 U.S.C.A. § 407. The anti-assignment provision is very strict and provides further
that “no other provision of law, enacted before, on, or after the date of the enactment
of this section [the section was enacted August 10, 1939, P.L. 76-379, §207], may
be construed to limit, supersede, or otherwise modify the provisions of this section
except to the extent that it does so by
express reference to this section.” 42 U.S.C.A. § 407 (emphasis added). Fortunately, the relevant Internal Revenue Code
provisions contain an express reference to section 207 of the Act. 26 U.S.C.A. § 6334(c).
That section provides that:
[n]otwithstanding any other law of the United States (including section 207 of the
Social Security Act), no property or rights to property shall be exempt from levy
other than the property specifically made exempt by subsection (a). 26 U.S.C.A. §
6334(c). Therefore, the Attorney General may levy Mr. V~'s Title II benefits to satisfy
the restitution order.
Case precedent supports the proposition that Title II benefits are subject to levy
pursuant to the Internal Revenue Code. In
Bonetti v. Department of the Treasury, No. 90 C 2394, 1990 WL 155619 (S.D.N.Y. Oct. 12, 1990), the plaintiffs, a retired
couple, challenged a levy of Title II benefits to collect a tax deficiency owed by
the husband's former corporation. They argued that the Title II benefits were exempt
from levy. The Federal district court held that “[s]ection 6334(c) expressly provides
that Social Security funds are not exempt from levy.” Id. at *1. Likewise, in Cleveland v. Secretary of Health and Human
Services, No. 93 C 0994, 1993 WL 321755 (N.D. Ill. Aug. 19, 1993), the plaintiff claimed that
his Title II benefits were not subject to levy. In dismissing the suit for lack of
subject matter jurisdiction, the Federal district court commented that Title II benefits
are subject to levy for unpaid taxes pursuant to 26 U.S.C. § 6334(c). Id. at *3-4.
Ms. Anastasia B~, an Assistant U.S. Attorney in the Financial Litigation Unit in the
United States Attorney's Office for the Western District of Washington, has indicated
that she will assist SSA in the levy process. On SSA's behalf, we are submitting a
letter to her to begin the levy process.
Lucille G. M~
Acting Regional Chief Counsel
By:__________________________
Norman M. B~
Assistant Regional Counsel