PR 07105.039 Ohio
A. PR 03-010 Charles C~, SSN ~ Advice About State Court Order to Appoint Representative Payee
DATE: October 4, 2002
In an order dated January 28, 2002, the Judge of the Juvenile Court Division of the common Pleas Court, Cuyahoga County, OH ordered the Cuyahoga County Juvenile Court to apply to be selected as representative payee for Charles C~. Before appointing a representative payee, SSA must first determine whether or not an individual is capable of managing or directing someone else to manage his/her own benefits. In developing Mr. C~ capability, SSA found him to be capable of managing his own benefits. Because a State court lacks the authority and jurisdiction to designate a representative payee for purposes of the Social Security Act, or to direct the disposition of benefits certified to a representative payee, SSA is not required to select the Cuyahoga County Juvenile Court as Mr. C~ representative, despite the court order.
Mr. P~ contacted our office for advice about handling a request by a juvenile court to be selected representative payee for a student beneficiary, Charles C~. He indicated that, as a result of your investigation, he considers Mr. C~ capable of managing his benefit payments and, therefore, he intends to authorize payment directly him. The information provided in this memorandum is intended to assist you in answering inquiries from the juvenile court in connection with your office's determination that Mr. C~ does not require a representative payee.
Mr. P~ stated that Charles C~ is entitled to child's insurance benefits as a full-time student. He submitted a copy of a court order from Judge F~ of the Juvenile Court Division of the Common Pleas Court, Cuyahoga County, Ohio dated January 28, 2002. In that order, which does not name the Social Security Administration as a party, the judge order the Cuyahoga County Juvenile Court to apply to be selected as representative payee to receive Mr. C~ social security benefits on his behalf. The order further stated, "The Cuyahoga Juvenile Court is to remain representative payee of child's Social Security benefit until child is terminated from placement and the Social Security Administration receives a written termination letter from the Court's fiscal Review Officer. The Social Security Administration is to begin this action forthwith." Mr. C~ has been placed at Glen Mills Schools pursuant to the court's order, but he has not been adjudged incompetent.
In a telephone conversation with the undersigned, Mr. C~ indicated that the juvenile court had, in fact, filed an application to be selected as representative payee. Mr. P~ stated that, based on his investigation, he believed Mr. C~ was capable of administering his own funds and he was inclined to authorize payment directly to Mr. C~ rather than appoint a representative payee.
Although the language of the court's order appears to direct SSA to select the Cuyahoga Juvenile Court as Mr. C~ representative payee, the state court does not have jurisdiction over SSA and, therefore, does not have the power to order SSA to make a particular representative payee selection. Your determinations as to whether Mr. C~ needs a representative payee and, if so, who should be selected as his representative payee are governed by SSA regulations. The following information is intended to assist you in answering any inquiries from the Cuyahoga Juvenile Court.
The Social Security Act requires SSA, a federal agency, to determine whether an individual requires a representative payee, and, if so, to designate the party to serve as the payee. The designation of payees to receive benefits payable under Title II of the Social Security Act is made pursuant to §205(j)(1)(a) of the Social Security Act, 42 U.S.C. § 405(j)(1)(a). That section provides:
If the Commissioner of Social Security determines that the interest of any individual under this title would be served thereby, certification of payment of such individual's benefit under this title may be made, regardless of legal competency or incompetency of the individual, either for direct payment to the individual, or for his or her use and benefit, to another individual, or an organization, with respect to whom the requirements of paragraph (2) have been met (hereinafter in this subsection referred to as the individual's "representative payee").
42 U.S.C. § 405(j)(1)(A). Thus, SSA may, but is not required to, appoint a representative payee for a beneficiary who has not been found incompetent by a court of law.
Paragraph (2) of that section provides:
Any certification made under paragraph (1) for payment of benefits to an individual's representative payee shall be made on the basis of --
(i) an investigation by the Commissioner of Social Security of the person to serve as representative payee, which shall be conducted in advance of such certification and shall, to the extent practicable, include a face-to-face interview with such person, and
(ii) adequate evidence that such certification is in the interest of such individual (as determined by the Commissioner of Social Security in regulations
42 U.S.C. § 405(j)(2)(A).
Pursuant to these provisions of the Act and the implementing regulations (20 C.F.R. §§ 404.2001-404.2065), SSA (1) determines whether a representative payee is required for a beneficiary; and (2) if a representative payee is required, selects the individual or organization it determines to be in the best position to serve as representative payee in the interest of the beneficiary and disburses the benefits on his or her behalf.
Payments certified to a representative payee must be applied only for the "use and benefit" of the beneficiary, i.e., for those purposes which will serve the beneficiary's best interest, taking into account the beneficiary's individual requirements and particular circumstances. The beneficiary must derive some advantage or satisfaction from the expenditures made by the representative payee. SSA advises each individual appointed as a representative payee of the proper use of such benefits in accordance with the SSA regulations. Once a representative payee is appointed by SSA, SSA holds that representative payee responsible for disbursing benefits in the best interest of the beneficiary.
Under the regulations, SSA will pay benefits to a representative payee on behalf of a beneficiary age 18 or older if SSA finds that representative payment will be in the beneficiary's interest. 20 C.F.R. § 404.2010(a). SSA will generally appoint a representative payee when the beneficiary is legally incompetent or mentally incapable of managing his benefits or when the beneficiary is physically incapable of managing or directing the management of his or her benefit payments. 20 C.F.R. § 404.2010(a). In determining whether to appoint a representative payee, SSA considers whether a court has found the beneficiary legally incompetent, whether medical evidence indicates the beneficiary is capable of managing or directing the management of his benefit payments, and other evidence, such as statements from relatives, friends, and others in a position to know and observe the beneficiary. 20 C.F.R. § 404.2015. Only after SSA determines that a beneficiary needs a representative payee, will it select a representative payee. In selecting a representative payee, SSA will consider the following types of information: (1) the beneficiary's relationship to the potential representative payee, if any; (2) the amount of interest that the potential representative payee shows in the beneficiary; (3) any legal authority the potential representative payee has to act on the beneficiary's behalf; (4) whether the potential representative payee has custody of the beneficiary; and (5) whether the potential representative payee is likely to know of beneficiary's needs and look after those needs. 20 C.F.R. § 404.2020. Thus, the fact that a person or government entity may have custody of a beneficiary is relevant only if SSA determines that the beneficiary needs a representative payee, i.e., he is unable to manage or direct management of his benefit payments. The regulations set forth an order of preference in selecting a representative payee. 20 C.F.R. § 404.2021. The order of preference, however, is flexible to accommodate SSA's desire to select the payee who will best serve the beneficiary's interests. 20 C.F.R. § 404.2021.
A State court lacks the authority and the jurisdiction to designate a representative payee for purposes of the Social Security Act, or to direct the disposition of benefits certified to a representative payee. The pertinent statutory and regulatory authorities are cited above, and they provide that the Commissioner of Social Security has the discretion and authority to designate a representative payee. See McGrath v. Weinberger, 541 F.2d 249 (10th Cir. 1976), cert. denied, 430 U.S. 933 (1977). A copy of the McGrath decision is enclosed.
Social Security benefits are exempted from any legal process by section 207(a) of the Social Security Act, 42 U.S.C. § 407(a). That section provides:
The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law. (emphasis added)
The exemption provisions of section 207(a) of the Act were construed by the United States Supreme Court in Philpott v. Essex County Welfare Board, 409 U.S. 413 (1973). A copy of the Philpott decision is enclosed. In Philpott, the Court held that benefits paid under Title II of the Social Security Act were exempt from the reimbursement claims of a State agency for assistance furnished. The Court stated:
On its face, the Social Security Act in § 407 bars the State of New Jersey from reaching the federal disability payments paid to Wilkes. The language is all inclusive: "[N]one of the moneys paid or payable . . . under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process . . . ." The moneys paid as retroactive benefits were "money's paid . . . under this subchapter," and the suit brought was an attempt to subject the money to "levy, attachment . . . or other legal process."
Philpott, 409 U.S. at 415-16. The United States Supreme Court reversed the New Jersey Supreme Court on the basis of the Supremacy Clause of the Constitution.
Furthermore, it is well-established that the Federal Government, as sovereign, is immune from suits in and the orders of State Courts, unless the sovereign has consented to submit itself to the jurisdiction of such court, which in the present situation it has not. See United States v. Sherwood, 312 U.S. 584 (1941). Hence, even if the State court designates a representative payee, or attempts to direct the disposition of past conserved benefits, the Agency would not be bound by such a determination or order.
We conclude that the SSA is not required to select the Cuyahoga County Juvenile Court as Mr. C~ representative payee, despite the January 28, 2002 order of the Common Pleas Court of Cuyahoga County, Ohio. The information provided in this memorandum, and the enclosures, are intended to assist you in answering any inquiries the court may have.
Thomas W. C~
Regional Chief Counsel
Nancy L. B~
Assistant Regional Counsel