This memorandum responds to your June 7, 2012 memorandum requesting our legal opinion
whether individuals confined under Massachusetts General Laws chapter 123, section
16 (Section 16), are subject to suspension of title II benefits under section 202(x)(1)(A)
of the Social Security Act (Act). You noted that the General Counsel for The Commonwealth
of Massachusetts Department of Mental Health (DMH) disagrees with the agency’s position
that individuals confined under Section 16 are subject to suspension of benefits.
DMH objects to this policy, in part, because it believes the agency incorrectly presumes
that individuals are confined under Section 16 “at public expense.”  As discussed below, we conclude that the agency’s policy of suspending title II benefits
to individuals confined under Section 16 is legally supportable because otherwise
such individuals would be double-compensated in the form of title II benefits and
taxpayer-funded living arrangements in state institutions.
I. Title II Rules Governing Payment of Benefits to Certain Individuals Confined in
an Institution at Public Expense
The Ticket to Work and Work Incentives Improvement Act of 1999 amended section 202(x)
of the Social Security Act to prohibit the payment of title II benefits where an individual
is confined by court order in an institution at public expense in connection with
certain verdicts or findings. See Ticket to Work and Work Incentives Improvement Act of 1999, Pub. L. No. 106-170,
§ 402(b), 113 Stat. 1860, 1907 (1999) (effective April 1, 2000). Section 202(x) of
the Act, as amended, provides in pertinent part:
(1)(A) Notwithstanding any other provision of this subchapter, no monthly benefits
shall be paid under this section or under section 423 of this title to any individual
for any month ending with or during or beginning with or during a period of more than
30 days throughout all of which such individual—
(i) is confined in a jail, prison, or other penal institution or correctional facility
pursuant to his conviction of a criminal offense, [or]
(ii) is confined by court order in an institution at public expense in connection
(I) a verdict or finding that the individual is guilty but insane, with respect to
a criminal offense,
(II) a verdict or finding that the individual is not guilty of such an offense by
reason of insanity,
(III) a finding that such individual is incompetent to stand trial under an allegation
of such an offense, or
(IV) a similar verdict or finding with respect to such an offense based on similar
factors (such as a mental disease, a mental defect, or mental incompetence) . . .
On its face, section 202(x)(1)(A)(ii) states that no benefits shall be paid while
the individual “is confined at public expense” (emphasis added). The Act clearly precludes the agency
from disbursing title II benefits to individuals while they are confined in an institution
at public expense in connection with certain verdicts or findings. Specifically, the
fact that no benefits shall be paid while the individual “is confined at public expense”
suggests that the relevant inquiry is whether the public is bearing the cost of confinement
at the time of the confinement. That the state may later be reimbursed is a separate
inquiry, and one that should not preclude application of section 202(x)(1)(A)(ii)
to an individual who is currently confined at public expense.
Both the legislative history of the statute and relevant case law suggest that the
purpose of the nonpayment provision is to conserve scarce Social Security resources
and avoid “payment of benefits to people who don’t need them because they are being
maintained at the expense of the taxpayer, who is also the source of the benefits
and doesn’t want to pay twice over.” Milner v. Apfel, 148 F.3d 812, 814 (7th Cir. 1998); see H.R. Rep. No. 103-491 (1994), reprinted in 1994 U.S.C.C.A.N. 3266, 3268, 3273; Dawley v. Barnhart, No. 05-11440-GAO, 2006 WL 2085976, at *2 (D. Mass. July 26, 2006) (“Like other provisions
of the Act, 42 U.S.C. § 402(x)(1)(A)(iii) was intended to limit the drain on scarce
Social Security resources by persons whose basic needs are already being provided
for by the State.”); Artz v. Barnhart, 214 F. Supp. 2d 459, 465 (D.N.J. 2002) (42 U.S.C. § 402(x)(1)(a)(II) “should be
construed broadly to prevent the depletion of public funds at the hands of acquitees
receiving double compensation for living expenses”), aff’d, 330 F.3d 170 (3d Cir. 2003). Thus, it appears that the statute aims to prevent “double
compensation,” or the simultaneous receipt of title II benefits and certain types
of taxpayer-funded care.
II. Confinement Under Section 16
The prohibition on payment of title II benefits to individuals confined in connection
with a finding of either not guilty by reason of insanity, or incompetence to stand
trial, is statutory. The Act contains separate provisions barring payment of benefits
to prisoners, see 42 U.S.C. § 402(x)(1)(A)(i), and to persons confined by court order in an institution
at public expense in connection with certain verdicts or findings, see 42 U.S.C. § 402(x)(1)(A)(ii). The agency’s authority to deny benefits to persons
confined under Section 16 arises from the latter provision. Section 16 contains three subsections relevant to the inquiry here. Subsection (a)
provides that a court may order a person who has been found incompetent to stand trial,
or who has been found not guilty by reason of mental illness or mental defect to be
hospitalized at a facility  for a period of forty days for observation and examination. Subsection (b) provides
that a person found or believed to be incompetent to stand trial or found not guilty
of any crime by reason of mental illness or other mental defect is subject to a court
ordered commitment at a mental health facility for up to six months. Subsection (c)
provides that after the expiration of a commitment under subsection (b), a court may
order an individual to continue to be committed for one-year periods. We believe that
each of the enumerated situations meets the requirements in 42 U.S.C. § 402(x)(1)(A)(ii)(II),
(III), or (IV) that the court-ordered confinement in an institution be in connection
with a verdict or finding of not guilty by reason of mental illness or incompetence,
or a finding of incompetence to stand trial.
However, such confinement may not be “at public expense,” as required by 42 U.S.C.
§ 402(x)(1)(A)(ii). As the legislative history and case law discussed above suggests,
the “public expense” requirement of 42 U.S.C. § 402(x)(1)(A)(ii) aims to prevent the
confined individual from contemporaneously receiving two forms of support: title II
benefits and publicly funded support. Massachusetts state law permits DMH to “make
charges for the care of any person in its facilities.” Mass. Gen. Laws. ch. 123, §
32. DMH may charge the confined individual or a third party for the cost of confinement.
Id. If the individual or a third party pays the total cost of confinement while the individual
is confined, the individual may be eligible for title II benefits during confinement.
If, however, the total cost of confinement is not paid contemporaneously to the confinement,
the agency could reasonably find the individual to be “confined at public expense,”
and thus ineligible to receive title II benefits.
Furthermore, although DMH may bill a person or an eligible third party, it is not
required to do so. Id. (“The department may make charges for the care of any person in its facilities.”) (emphasis added). If
DMH does elect to send a bill, there is no guarantee that it will receive payment.
And even if payment is received, it may not cover the entire cost of confinement,
leaving the public responsible for at least a portion of the confinement. See id. (allowing the Department to “make adjustments to the charges based upon said person’s
individual circumstances”). Furthermore, individuals confined under Section 16 may
be confined at Bridgewater State Hospital, which is not a “facility” for which the
Department can bill patients. Mass. Gen. Laws ch. 123, §§ 1, 32.
We provided guidance to the State of Connecticut in 1998 regarding a similar situation.
In that case, the State of Connecticut asserted that a certain individual was not
confined at public expense because a State statute allowed the State to bill the individual
for the cost of his confinement. We explained that, despite that statute, the individual
was confined at public expense because he was not, in fact, paying for the cost of
his confinement. Thus, absent proof that the individual is paying the full cost of
his care, we believe it is reasonable for the agency to assume that the individual
is being confined at public expense.
For the reasons discussed above, we believe there is legal support for the agency’s
position that individuals confined under Section 16 are generally subject to suspension
of title II benefits under 42 U.S.C. § 402(x)(1)(A)(ii).