In the case of Damon v. Secretary of Health, Education and Welfare , 557 F.2d 31 (2nd Cir. 1977), the Court of Appeals held that in the State of Vermont,
foster-care payments to foster parents are not to be treated as support to the child
from the State of Vermont but as property of the foster parents.
The court concluded that the payments made to a foster parent are the foster parent's
property and are not public assistance payments to the adopted child. The use of the
payments by the foster parent for the foster child's needs constitutes support by
the foster parent from the parent's income and is not support by a public assistance
agency. (In the Damon case, the worker adopted the child after he became entitled to Social Security benefits.)
This decision is incorporated into Social Security Administration AR No. 86-16(2).