TN 6 (09-16)

PR 07110.006 California

A. PR 16-176 California State Court’s Appointment of a Representative Payee

Date: August 11, 2016

1. Syllabus

A State court order does not supersede Federal law. Under the Social Security Act, its implementing regulations, and related program rules, a State court lacks authority to appoint a representative payee for Social Security benefits. Therefore, the agency is not bound by the language of the State court order and should continue to follow its own regulations and policies. Additionally, these same program rules continue to apply to the agency-appointed representative payee, and considerations of whether she may have misused beneficiary funds.

2. Opinion

QUESTIONS PRESENTED

You asked for guidance in responding to a State court order that appears to appoint the Senior Advocacy Network as the organizational representative payee for beneficiary V~ for Social Security purposes. You also asked whether the transfer of funds from the current agency-appointed representative payee, L~, to Senior Advocacy Network should trigger an investigation for misuse of funds under the applicable program rules.

SHORT ANSWERS

A State court order does not supersede Federal law. Under the Social Security Act, its implementing regulations, and related program rules, a State court lacks authority to appoint a representative payee for Social Security benefits. Therefore, the agency is not bound by the language of the State court order and should continue to follow its own regulations and policies. Additionally, these same program rules continue to apply to the agency-appointed representative payee, and considerations of whether she may have misused beneficiary funds.

BACKGROUND

On March XX, 2016, the agency selected L~ to be the representative payee for her mother, V~. Subsequently, on March XX, 2016, Senior Advocacy Network submitted an application to be the representative payee for V~. With its application, Senior Advocacy Network submitted a copy of a California Superior Court order, dated February XX, 2016, appointing Senior Advocacy Network as the representative payee of V~ and directing L~ to transfer $500.00 of V~’s funds to Senior Advocacy Network. The agency denied Senior Advocacy Network’s application. In considering the application for representative payee, the Modesto field office contacted several of V~’s children and learned that L~ is also seeking to be appointed a conservator for her mother under California state law. Through its investigation, the Modesto office also received allegations of impropriety by Senior Advocacy Network and its staff.

ANALYSIS

The Supremacy Clause of the U.S. Constitution establishes that the Social Security Act (Act), a Federal law, and the Commissioner’s regulations promulgated to carry out the Act supersede contradictory state law. U.S. Const. Art. VI, § 2. Through the Act, Congress granted the Commissioner of Social Security the “full power and authority to make rules and regulations and establish procedures” consistent with the Act to carry out the provisions thereof. Social Security Act § 205(a), 42 U.S.C. § 405(a).

As relevant here, Congress granted the agency the power to determine who should manage a beneficiary’s benefits under section 205(j) of the Act. Section 205(j) states that, if the interests of the beneficiary would be served thereby, the Commissioner may appoint a person or organization to be the beneficiary’s “representative payee.” Social Security Act § 205(j)(1)(A), 42 U.S.C. § 405(j)(1)(A). However, section 205(j) further provides that the agency will only appoint a person or organization to be a representative payee should they meet the certification requirements. Certification requires (i) the agency’s investigation of the person or organization to serve as representative payee, and (ii) adequate evidence that appointment of such person or organization as representative payee is in the interest of the beneficiary. Social Security Act § 205(j)(2)(A), 42 U.S.C. § 405(j)(2)(A); see also 20 C.F.R. §§ 404.2001-404.2065 (regulations implementing section 205(j) of the Act).

A representative payee is obligated to follow agency policy and regulations, not a State court order, when managing and distributing Social Security benefits. See Social Security Act § 205(j), 42 U.S.C. § 405(j). Under the regulations, a representative payee must ensure that Social Security benefits are used only for the “use and benefit” of the beneficiary and in the manner and for the purposes that the representative payee determines to be in the “best interests” of the beneficiary. 20 C.F.R. § 404.2035(a). The agency will consider payments given to the representative payee to have been used for the “use and benefit of the beneficiary” if they are used for the beneficiary’s “current maintenance.” 20 C.F.R. § 404.2040(a)(1). Current maintenance is defined as “costs incurred in obtaining food, shelter, clothing, medical care or personal comfort items.” Id. If any amount remains after the representative payee has used the benefits for the beneficiary’s current maintenance, the representative payee must conserve or invest the remaining funds on behalf of the beneficiary. 20 C.F.R. § 404.2045(a). Conserved funds are to be “invested in accordance with the rules followed by trustees” and invested funds must “show clearly that the payee holds the property in trust for the beneficiary.” Id. The regulations and agency policy provide that only the representative payee has discretion on how to use the benefits in the beneficiary’s best interests. 20 C.F.R. § 404.2035(a); Program Operations Manual Support (POMS) GN 00602.001.A.1.

Although the language of the State court’s order appears to appoint the Senior Advocacy Network as V~’ representative payee, the 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 Social Security benefits to a representative payee. Under the Act and related Federal regulations, the agency determines whether a representative payee is required and, if so, the individual or organization in the best position to serve as the beneficiary’s representative payee. 20 C.F.R. §§ 404.2001, 404.20201 . The State court’s order assigning a representative payee and directing conserved benefits to Senior Advocacy Network contravenes this clearly established Federal law and thereby violates the Supremacy Clause. See U.S. Const. Art. VI, § 2.

Furthermore, the court’s order directing conserved benefits to Senior Advocacy Network violates the anti-assignment provision in section 207 of the Act. See Social Security Act § 207(a), 42 U.S.C. § 407(a). Social Security benefits are exempted from any legal process, such as State court orders, by section 207(a) of the Social Security Act, 42 U.S.C. § 407(a), which provides that:

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.

Social Security Act § 207(a), 42 U.S.C. § 407(a) (emphasis added). The exemption provision of section 207(a) of the Act was upheld by the United States Supreme Court in Philpott v. Essex County Welfare Board, 409 U.S. 413 (1973). In Philpott, the Court held section 207(a) barred the State of New Jersey from interfering with benefits paid under Title II of the Social Security Act. Id. at 415-16. Additionally, in Bennett v. Arkansas, 485 U.S. 395, 397-98 (1988), the Supreme Court relied on section 207(a) to prohibit an Arkansas State court from seizing a prison inmate’s Social Security benefits to help defray the costs of maintaining the Arkansas prison system. Further, in Washington State Dept. of Social and Health Services v. Guardianship Estate of Keffeler, 537 U.S. 371, 385 (2003), the Supreme Court cited POMS GN 02410.001 and noted the exemption provisions of section 207(a) applied to State court orders. See also POMS PR 07211.017 (concluding Indiana State court orders did not override Federal statutes and SSA regulations regarding the rights and duties of representative payees, and finding the State court orders violated the anti-assignment provision in section 207 of the Act).

Finally, it is well established that the Federal government, as sovereign, is immune from State court suits and orders unless it consents to the jurisdiction of such court. See United States v. Sherwood, 312 U.S. 584 (1941). The agency has not relinquished its sovereignty nor has the agency submitted itself to jurisdiction of the California State court in this matter. Therefore, even if the State court designates a representative payee or attempts to direct the distribution of past conserved benefits, such an order or determination is not binding on the agency.2 Moreover, if L~ follows the State court’s order, she could be violating her duty as a representative payee. The regulations provide that, after a representative payee uses benefit payments for the current maintenance of the beneficiary, any remaining amounts must be conserved or invested on the beneficiary’s behalf. See 20 C.F.R. § 404.2045. Any such “[c]onserved funds should be invested in accordance with the rules followed by trustees” and invested funds must “show clearly that the payee holds the property in trust for the beneficiary.” Id. If L~ complied with the State court order and paid part of V~’ conserved funds to Senior Advocacy Network, this could be construed as a violation of the federal regulations. In such situations, the agency has the authority to investigate such misuse of funds when it deems appropriate.

CONCLUSION

We conclude that the State court did not have the authority to appoint Senior Advocacy Network as V~’ representative payee. If L~ follow the State court’s order, and transfers V~’s benefits to Senior Advocacy Network, the agency may consider investigating the misuse of funds.


Footnotes:

[1]

. Federal regulations further clarify that the agency’s first preference for representative payees for beneficiaries over age 18 is a legal guardian, spouse, or other relative who has custody of or demonstrates strong concern for the personal welfare of the beneficiary. 20 C.F.R. § 404.2021(a)(1). Thus, the agency’s selection of the beneficiary’s daughter as the representative payee is consistent with applicable regulations.

[2]

. In addition, because the agency does not submit to State court jurisdiction under the circumstances at issue here, the agency will not make an appearance in State court to contest a State court order.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/1507110006
PR 07110.006 - California - 09/20/2016
Batch run: 09/20/2016
Rev:09/20/2016