TN 9 (04-11)
PR 04015.017 Indiana
A. PR 11-092 Garnishment of an Underpayment Issued After the Insured Individual’s Death (Indiana)
DATE: April 25, 2011
A legal opinion has been offered to an inquiry on whether an underpayment due on the claim of a deceased wage earner is subject to garnishment under an existing income withholding order or whether the death underpayment should be disbursed to the survivors who would otherwise be eligible to receive the payment. It was the response of Regional Consul that in Indiana, an income withholding order remains in effect until a child support obligation is paid in full. Therefore, absent an order to stop the garnishment of benefits, the existing income withholding order will apply to a resulting underpayment on the claim of the deceased obligor. The amount of garnishment on the underpayment would be governed by the garnishment limits of the State of Indiana. Any resulting balance that remains after garnishment has been applied would be disbursed under policies governing underpayments in death cases.
You requested a legal opinion as to whether you should withhold a portion of an underpayment due on the account of Willie E. N~, a deceased number holder (NH), in order to satisfy an Indiana child support garnishment order against the NH. For the reasons discussed below, we conclude that an underpayment due when the underpaid individual is deceased is subject to garnishment for child support under § 459(a) of the Social Security Act (Act). Moreover, at least one of the child support garnishment orders in this case met all of the requirements for SSA to comply with the order. The garnishment amount, however, is restricted under applicable Indiana law. Therefore, SSA should withhold a portion of the NH’s underpayment in accordance with § 459(a) of the Act and Indiana law and pay it to the appropriate party for child support purposes. The remaining amount should be disbursed according to the hierarchy set forth in § 204(d) of the Act.
In September 2006, the NH filed a claim for Title II benefits.
In November 2007, the Vanderburgh County (Indiana) Child Support Division issued an Order/Notice to Withhold Income for Child Support to SSA. The order showed the NH as the obligor and Elizabeth Y~, the mother of the NH’s child, as the obligee. The order also showed that the NH owed child support arrearages totaling $7,065.20.
The NH died in February 2009 in Indiana.
In April 2009, SSA received a One-Time Order/Notice-Lump Sum Payment for a total child support arrearage of $7,065.20.
In June 2009, an ALJ issued a favorable decision on the NH’s claim, finding that the NH became disabled in August 2006. SSA then assessed an underpayment on the NH’s account; the underpayment has not yet been disbursed.
I. Underpayments Due When an Individual is Deceased are Subject to Garnishment to Pay Child Support Obligations Owed by the Deceased Individual
When a beneficiary has died before receiving a Title II underpayment and SSA has been served with a garnishment order, there are two statutory provisions on point that call for different methods of disbursing the underpayment. First, § 204(d) of the Act directs SSA to pay any underpayment due a deceased individual to certain survivors of the individual according to a specific hierarchy. See also 20 C.F.R. § 404.503(b); POMS GN 02301.030. Second, § 459(a) of the Act provides that, not withstanding any other provision of law, Title II benefits due from, or payable by, the United States to an individual are subject to withholding and any other legal process to enforce a legal obligation to provide child support or alimony in accordance with state law. See also 5 C.F.R. § 581.101(a); 20 C.F.R. § 404.1820(b); POMS GN 02410.200(A). This latter provision does not specifically address the situation where the individual is deceased and has an underpayment on his account. Thus, the question is whether SSA should: (1) pay the underpaid amount to the appropriate survivor(s) pursuant to § 204(d) without garnishing any portion of the underpayment, or (2) withhold the underpayment and pay it to the appropriate party for child support purposes, pursuant to § 459(a), and disburse any remainder in accordance with § 204(d).
The Office of Program Law (OPL) has previously considered this question and advised that there is legal support for withholding an underpayment to honor a garnishment order when the underpaid individual is deceased. See OPL, Withholding an Underpayment After the Beneficiary’s Death, State of Michigan Garnishment Order (March 1, 2004) (discussing regulations, POMS, case law, and legislative history of § 459). Specifically, OPL reasoned that § 459(a) takes priority, notwithstanding § 204(d), whenever money is due from, or payable by, the United States to an individual. OPL went on to conclude that an underpayment due when an individual is deceased should be considered money due to the deceased individual, not to his survivors, and thus subject to garnishment under § 459(a).Thus, we consider the underpayment in this case as being due to the deceased NH, and not his survivors. Accordingly, SSA may withhold the underpayment for purposes of satisfying the garnishment orders pursuant to § 459(a), provided that the orders meet certain requirements, as discussed below.
II. The 2007 Indiana Garnishment Order Constitutes “Legal Process” that, on its Face, Conforms to the Laws of the Issuing Jurisdiction
Under the Act, SSA is required to comply with legal process to enforce an individual’s support obligations, the same as if SSA were a private person. See Section 459(b) of the Act; see also 5 C.F.R. §§ 581.101(b), 581.305(a). “Legal process” is defined as “any writ, order, summons, notice to withhold income pursuant to [Section 466 of the Act], or other similar process in the nature of garnishment” which is issued by (1) a court of competent jurisdiction (domestic or foreign), (2) an authorized official pursuant to a court order or pursuant to state or local law, or (3) a State agency authorized to issue income withholding notices pursuant to State or local law or pursuant to Section 466(b) of the Act; and is directed to a governmental entity to compel it to make a payment, from moneys otherwise payable to an individual, to another party in order to satisfy the individual’s legal obligation to provide child support or alimony. See Section 459(i)(5) of the Act; 5 C.F.R. § 581.102(f); POMS GN 02410.200(B). In addition, the legal process must, on its face, conform to the laws of the issuing jurisdiction. See 5 C.F.R. § 581.305(a)(1); POMS GN 02410.210(A)(3)(b).
Here, SSA received two garnishment orders. The Vanderburgh County (Indiana) Child Support Division issued an Order/Notice to Withhold Income for Child Support dated November 14, 2007, which we reviewed. You indicated that SSA also received a One-Time Order/Notice-Lump Sum Payment dated April 2, 2009, but we were not provided a copy of such order. As long as the November 2007 order was valid, it is not necessary to also review the April 2009 order, which appears to be duplicative. In Indiana, an income withholding order remains in effect until a child support obligation is paid in full. See Ind. Code § 31-16-15-2.6. Thus, the November 2007 order was in effect when the NH’s underpayment became “payable” (i.e., when the ALJ awarded benefits in the NH’s claim) in June 2009.
Based on our review, the November 2007 order appears to satisfy all of the requirements for “legal process.” Under Indiana law, a Title IV-D (child support enforcement) agency is authorized to issue income withholding orders. See Ind. Code §§ 31-16-15-0.5(b), 31-16-15-2.5. The Indiana Child Support Bureau is charged with administering the Title IV-D program, and under a cooperative agreement, local county prosecutor’s offices perform child support enforcement responsibilities. See Indiana Dept. of Child Services, Child Support: About Ushttp://www.in.gov/dcs/2429.htm, (last visited April 14, 2011). Accordingly, in this case the November 2007 order was issued by the Vanderburgh County Prosecutor’s Office, Child Support Division. See Vanderburgh Prosecuting Attorney, Child Support Division, http://www.vanderburghprosecutor.org/wps-html/ChildSupport/ (last visited April 14, 2011).
In addition, the order was directed to SSA to make payment to the state’s collection unit in order to satisfy the NH’s child support arrearages.
We believe that the November 2007 order also satisfies the requirement that it, “on its face, conform to the laws of the jurisdiction from which it was issued.” 5 C.F.R. § 581.305(a)(1). Although this phrase is not defined in the regulations, there is a similar phrase in the Act and implementing regulations that the government is relieved from liability for complying with legal process which is “regular on its face.” See Section 459(f)(1) of the Act; 5 C.F.R. § 581.305(e)(1). In United States v. Morton, 467 U.S. 822 (1984), the U.S. Supreme Court treated the two phrases as interchangeable. See id. at 834-46. As such, the inquiry whether legal process “conforms on its face” is essentially similar to the inquiry whether legal process is “regular on its face.” As for the level of scrutiny required by these terms, the Court noted:
Whether a process conforms or is regular “on its face” means just that. Facial validity of a writ need not be determined “upon the basis of scrutiny by a trained legal mind,” nor is facial validity to be judged in light of facts outside the writ’s provisions which the person executing the writ may know.
Id. at 829 n.10 (internal quotations and citation omitted). Other cases considering the level of scrutiny required for “regular on its face” also suggest that it is superficial, and that no inquiry is required beyond the face of the document. See Millard v. U.S., 16 Cl. Ct. 485, 488-89 (Cl. Ct. 1989), judgment affirmed, 916 F.2d 1 (Fed.Cir. 1990) (“the question is whether the order shows anything on its face that provides reasonable notice that it was issued without authority of law”); Trimble v. U.S. Social Security, 369 Fed.Appx. 27, 2010 WL 764050, at *4-*5 (11th Cir. 2010).
Here, the November 2007 order was on a regular form established by the Indiana Child Support Bureau. In addition, the order stated the names of the obligor, obligee, and income payor; the basis for the action being taken (i.e., an order for child support from the state of Indiana); and the amount being sought in arrearages. It was dated and signed by an attorney from the Vanderburgh County Prosecutor’s Office, Child Support Division, who had authority under Indiana law to issue income withholding orders. In short, there was nothing on the face of the order indicating that it had been issued without authority of law. See Morton, 467 U.S. at 825, 836 (implicitly agreeing with trial court’s conclusion that garnishment order was “regular on its face” because it was on the regular form used by the state courts); Millard, 16 Cl. Ct. at 489 (order was “regular on its face” where it recited names of the parties, basis for the action being taken, and amounts to be withheld; and bore seal of the issuing court, stamped signature of judge, and attestation by clerk of the court). Thus, we conclude that the November 2007 order was legal process that, on its face, conformed to the laws of the issuing jurisdiction. Accordingly, SSA should comply with the order to the extent indicated in the next section.
III. The Underpayment is Subject to the Garnishment Limits Prescribed by Indiana Law
The Consumer Credit Protection Act (CCPA) limits the percentage of an individual’s aggregate disposable earnings that is subject to garnishment to enforce a support order. See 15 U.S.C. § 1673(b)(2); see also 5 C.F.R. § 581.402(a); POMS 02410.215(A)(3). In Kokoszka v. Bedford, 417 U.S. 642 (1974), the U.S. Supreme Court held that the term “disposable earnings” was limited to “periodic payments of compensation needed to support the wage earner and his family on a week-to-week, month-to-month basis,” and did not include a tax refund. Id. at 651. Although our case deals with a lump-sum Title II underpayment instead of a lump-sum tax refund, we believe the same rationale applies. See Mem. from Reg. Chief Counsel, Chicago, to Asst. Reg. Comm’r-MOS, Michigan--Garnishment of Underpayment to Deceased Title II Beneficiary’s Account--Child Support (March 10, 2010). Therefore, we conclude that the CCPA’s restrictions on the amount subject to garnishment do not apply to lump-sum Title II underpayments.
Since the NH’s underpayment is not subject to the CCPA, it is garnishable in its entirety under federal law. However, in the absence of controlling federal law concerning a subject matter, states may enact their own laws concerning that subject matter without running afoul of the Supremacy Clause, U.S. Const. Art. VI, cl. 2. In other words, since the CCPA does not cover lump-sum payments, states are free to enact their own laws restricting the garnishment of lump-sum payments. And in any event, the CCPA does not preempt state garnishment laws that are more restrictive, i.e., result in a smaller amount garnished. See 15 U.S.C. § 1677; see also Evans v. Evans, 429 F.Supp. 580, 582 (W.D. Okl. 1976); Hodgson v. Hamilton Mun. Ct., 349 F.Supp. 1125, 1133 (S.D. Ohio 1972). Thus, we must turn to applicable state law to determine whether there are any state limits on the garnishment of lump-sum payments.
According to the POMS, when considering any state limits on garnishment, SSA applies the law of the state where the beneficiary resides. See POMS GN 02410.215(A)(3). Here, the NH was living in Indiana at the time of his death, so Indiana law applies. Indiana law provides that if an obligor is entitled to a lump-sum payment and owes child support arrearages, the income payor must withhold either (1) the amount in arrears, or (2) the amount of support the obligor is required to pay each week multiplied by the number of weeks represented by the lump-sum payment, whichever is less, up to the maximum permitted under 15 U.S.C. § 1673(b). See Ind. Code § 31-16-15-19. Where, as here, the original support ordered is 12 or more weeks in arrears, the maximum permitted under 15 U.S.C. § 1673(b) is 55% of the underpayment (if the NH was supporting a spouse or dependent child at the time of his death) or 65% of the underpayment (if the NH was not supporting a spouse or dependent child at the time of his death). See 15 U.S.C. § 1673(b)(2). Accordingly, SSA should withhold a portion of the NH’s underpayment in accordance with Indiana law, and distribute the remainder according to the hierarchy set forth in § 204(d) of the Act.
For the reasons discussed above, we conclude that SSA should comply with the November 2007 garnishment order and withhold a portion of the NH’s underpayment, as limited by applicable Indiana law.
Donna L. C~
Regional Chief Counsel, Region V
We note that the Office of the Regional Chief Counsel (ORCC), Atlanta Region, issued an opinion in 2007 that appears to be inconsistent with OPL’s opinion. See Mem. from Reg. Chief Counsel, Atlanta, to Asst. Reg. Comm’r-Processing Center Operations, Garnishment of an Underpayment Issued After the Insured Individual’s Death (March 5, 2007) (applying § 204(d), concluded that underpayment assessed after NH’s death was due to surviving spouse).
The legal process must also be properly served on SSA in accordance with the law of the issuing state. See Section 459(c)(2) of the Act; 5 C.F.R. § 581.202; POMS GN 02410.205, 02410.210(A). Under Indiana law, an income withholding order may be served by first class mail, facsimile transmission, or other electronic means approved by the state’s Title IV-D (child support enforcement) agency. See Ind. Code § 31-16-15-16.5. You have not raised any questions regarding the service of the garnishment orders in this case.