BASIC (10-05)

PR 04010.053 Washington

A. PR 00-123 (Washington) Satisfaction of a Restitution Order

DATE: August 2, 1999

1. SYLLABUS

A criminal investigation established that an individual helped at least thirty other individuals to fraudulently obtain benefits under Title II and Title XVI of the Social Security Act. The beneficiary pled guilty to Conspiracy to Defraud the United States, Mail Fraud, and Aiding and Abetting. He was ordered to pay restitution in the amount of $767,215.68 to SSA.

After serving a prison sentence, he began a term of supervised release. He recently applied for Title II retirement benefits and SSI benefits as an aged individual with an ineligible spouse.

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, the individual's Title II benefits may be levied to satisfy the restitution order. Because he was convicted before 1996, however, SSI benefits may not be levied.

At the time of 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). The individual 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).

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 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 the individual's Title II benefits.

2. OPINION

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


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PR 04010.053 - Washington - 04/03/2008
Batch run: 01/27/2009
Rev:04/03/2008