BASIC (01-02)

VB 01503.700 Representative Payee Stop-Payment Actions (S08)

A. Policy

SVB must be paid directly even when a representative payee is being sought and/or while payee issues are being developed unless the beneficiary is legally incompetent under the laws of the jurisdiction in which the individual resides, or if direct payment would cause “substantial harm” to the beneficiary.

1. Direct Payment Precluded

SVB direct payment is prohibited to individuals who are legally incompetent under the laws of the jurisdiction in which the individual resides. In these situations, SVB will not be paid pending payee selection. The 1-month time limitation discussed in VB 01503.700A.2. does not apply although the payee issue should be resolved as quickly as possible.

2. Substantial Harm

Substantial harm means that direct receipt of funds by the beneficiary would cause physical or mental injury to the beneficiary. SVB payments can be suspended a maximum of 1 month while a payee is being developed if direct payment to the beneficiary would cause “substantial harm.” The 1-month period begins the date the stop-payment action is transmitted or the date the CPS learns of the stop-payment action if it resulted from a systems interface (e.g., a check is returned because the payee died). If the representative payee issue is not resolved by the end of 1 month, direct payment to the beneficiary must be initiated unless direct payment is precluded per VB 01503.700A.1.

B. List of Situations

The following postentitlement events will warrant an SVB stop-payment action using the policy guidelines in VB 01503.700A.:

  • a beneficiary in direct pay is subsequently adjudged legally incompetent under the laws of the jurisdiction in which the individual resides; or

  • a payee dies, is unwilling to continue serving, or is no longer qualified and the beneficiary is legally incompetent under the laws of the jurisdiction in which the beneficiary resides, or substantial harm would result from direct payment. (REMINDER: Benefits can be suspended for only 1 month based on a finding of substantial harm.)

C. Procedure

1. General

The Representative Payee System (RPS) will not be used for SVB claims and will not contain representative payee information for SVB individuals. SVB representative payee information will be recorded on the SVB Intranet Site and the SVB SSR. The Intranet site does not interface or propagate information to the SVB SSR just as the SSR data does not interface or propagate information to the Intranet site.

2. SVB Individual Legally Incompetent

The CPS will take the following actions when suspending SVB for representative payee purposes and the beneficiary is legally incompetent under the laws of the jurisdiction in which he or she resides:

  • Input S08 on the SVB record to stop or prevent SVB payments;

  • Identify why direct payment is not possible in the Remarks on the SVB SSR (e.g., as “payee died—direct payment prohibited”); and

  • Update the stop payment to the SVB Intranet site in the “Suspensions & Terminations” and “Remarks” fields.

3. SVB Beneficiary Competent—Direct Payment Would Result In Substantial Harm

The CPS will take the following actions when SVB payments are to be withheld for 1 month while payee development continues:

  • Prepare a written substantial harm determination;

  • Input S08 on the SVB record to stop or prevent SVB payment;

  • Identify why direct payment is not possible in the SVB SSR remarks (e.g, “payee recants—substantial harm involved”);

  • Update stop payment to the SVB Intranet site in the “Suspensions & Terminations” and “Remarks” fields;

  • Send a manual notice to the beneficiary explaining the stop-payment action (see VB 01503.705 for notice procedures); and

  • Tickle to reinstate SVB payments 1 month following the date of S08 input.


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