This opinion settles an issue regarding the selection of representative change from parent to parent (father to mother) during an ongoing custody dispute. The former payee (father) requests SSA to suspend his child’s SSI benefits and not to make a payee selection until the ongoing child custody dispute is resolved in court.

Under SSA rules, a child claimant’s benefit can be suspended pending the selection of a representative payee but the payee issue must be resolved as soon as possible. SSA has decided that the mother is properly serving as representative payee for her child and has physical custody of the claimant (he is living with her). Therefore, there is no need to suspend benefits. The agency will continue to disburse claimant’s mother who is the current representative payee. The ongoing custody dispute does not alter this analysis.

QUESTION PRESENTED

You asked whether SSA should continue paying Claimant’s Supplemental Security Income (SSI) benefit to his current representative payee, his mother with whom he currently lives, despite a request from Claimant’s father that benefits be suspended pending ongoing litigation regarding the child’s custody.

OPINION

Yes. Claimant’s mother is properly serving as representative payee and there is no need to suspend benefits. While the ongoing custody dispute does not warrant suspending benefits, SSA should require Claimant’s mother to update the agency with any developments because a change in Claimant’s legal or physical custody could warrant consideration of whether to appoint a successor payee.

BACKGROUND

Canutegeorge E~ (Claimant) is a minor child. Claimant’s father, George E~, served as his representative payee beginning on October 2, 2007.

In June 2010, Claimant moved with his mother, Marcelaine L~, from Florida to New York, purportedly against Mr. E~’s wishes. On August 10, 2010, Ms. L~ filed a child support action against Mr. E~ in New York Family Court. On October 8, 2010, Mr. E~ filed for an injunction to have Claimant returned to his care in Florida.

On December 23, 2010, Ms. L~ petitioned to serve as representative payee. On January 4, 2011, the agency requested that Mr. E~ provide an accounting and return any unused funds to SSA. On January 12, 2011, the agency notified Mr. E~ by letter that Claimant’s benefits were being suspended.

In April 2011, Ms. L~ reapplied to serve as representative payee. During development, Ms. L~ visited the Jamaica, NY field office and submitted the following documents: her passport; a letter indicating that Claimant had been enrolled in kindergarten in St. Albans, NY since September 2010; receipts indicating Ms. L~ had paid the school’s tuition with personal checks; a September 5, 2010 form, indicating that Claimant had enrolled in a karate class in Forest Hills, NY; and a September 14, 2010 letter indicating that Ms. L~ had agreed to pay for the karate classes with her credit card. It was concluded that Ms. L~ was attending to Claimant’s needs and had physical custody of him. She was selected to serve as representative payee and benefits were reinstated at that time.

On May 13, 2011, a Florida Court issued an order finding that Claimant is a resident of that state. As such, the order dictated that further litigation regarding his custody would take place there.

On May 17, 2011, Mr. E~ requested that the agency reconsider its decision to appoint Ms. L~ representative payee. In a contemporaneous statement, Mr. E~ asked that the agency not decide the issue of who would be appointed representative payee until a court decided Claimant’s custody. He further asked that benefits be suspended pending that determination.

 

ANALYSIS

Under SSA rules, a child claimant’s benefit can be suspended pending the selection of a representative payee, but the payee issue must be resolved as soon as possible. Social Security Act § 1631(ix)(II), 42 U.S.C. § 1383(ix)(II); 20 C.F.R. § 416.611(b), Program Operations Manual System (POMS) GN 00504.105(A)(2)(b). Here, following the termination of Mr. E~ as representative payee, claimant’s benefit was suspended in January 2011. However, the agency subsequently appointed Ms. L~ to serve in that role and we are unaware of any reason to terminate her representative payee status. See 20 C.F.R. § 416.650, POMS GN 504.100(A)(2). Ms. L~ is attending to claimant’s current needs and we remain unaware of any indication she is misusing claimant’s funds. See 20 C.F.R. § 416.650, POMS GN 504.100(A)(2). Without any need to select a representative payee, our rules do not contemplate suspending benefits.

The ongoing custody dispute does not alter this analysis. At this time, Ms. L~ is a natural parent with physical custody of claimant by virtue of the fact that he is living with her. See POMS GN 00501.010(B)(9) (an individual has physical custody when the claimant “actually lives with with the person”). Although Mr. E~ sought an injunction which would have required claimant be returned to his care in Florida, we are unaware of any court order directing such an arrangement. As the natural custodial parent, Ms. L~ remains the preferred choice to serve as representative payee under our rules. POMS GN 00502.105(B)(1) (payee preference lists for minor children).

That being said, continued monitoring is necessary because any “shift in custody” would warrant consideration of whether a successor payee should be appointed under agency rules. See POMS GN 00504.100(A)(2),(B)(6). As representative payee, Ms. L~ has a duty to provide the agency with evidence, accounting, or information as requested, including information regarding the continuing relationship and responsibility for care. 20 C.F.R. § 404.2025. Ms. L~ should be required to update the agency regarding any changes to claimant’s physical or legal custody, so that we are promptly aware of any future need to consider a successor payee.

CONCLUSION

The agency should continue to disburse Claimant’s benefit to his current representative payee, Marcelaine L~. Pursuant to her continuing duties as a representative payee, Ms. L~ should be required to continuously update the agency with any changes to claimant’s physical or legal custody.

Stephen P. C~

Chief Counsel, Region

By___________

Rebecca H. E~

Assistant Regional Counsel

Odollam Inc., an authorized nongovernmental fee for service (FFS) representative payee, appealed the Agency's decision that it no longer meets the requirements to be FFS. The Agency determined the organization no longer satisfied the requirements because it could not provide a business license or operating certificate from the State of New York. Odallam Inc. contends that New York does not require their business to possess a specific license to provide services for mentally-ill adults and that the owner's personal license to act as a mental health counselor satisfies SSA's licensing requirement to maintain FFS status. The opinion cited, that if the business is providing residence for individuals in need of mental health or residential care services, the entity must be licensed or possess an operating certificate from the New York State Office of Mental Health (see PR 07110.035 B). Moreover, under section § 31.02 of New York State Mental Hygiene Law ("N.Y. Mental Hyg.") and various sections of 14 NY Codes, Rules, and Regulations ("NYCRR"), a provider of social services must be issued an operating certificate in order to operate certain mental health programs. Also, an individual license does not satisfy the licensing requirement that is a requisite for an organization to maintain FFS status. In addition, the dishonesty bond submitted does not satisfy the bonding requirement for FFS payees. The opinion concludes that an organization which is a community residential facility providing counseling/social services to mentally-ill adults does require a license or operating certificate in order to collect a fee in the States of New York.

You asked us to review whether Odollam Inc., a nongovernmental fee-for-service ("FFS") representative payee, should continue to be afforded FFS status when it does not maintain a license or operating certificate to conduct social and residential mental health services in the State of New York. We conclude that the documentation provided by Odollam Inc. demonstrates that it is a community residential facility that provides counseling/social services to mentally ill adults and, as such, it must have a license or operating certificate per New York State law to conduct its business activities. Since, Odollam Inc. does not maintain a license or operating certificate from New York, it fails to satisfy SSA's licensing requirement and may no longer qualify as a FFS payee. In addition, the dishonesty bond submitted by Odollam Inc. does not currently satisfy the bonding requirements for nongovernmental fee-for-service organizational representative payees.

BACKGROUND

You note that Odollam Inc. is a nongovernmental fee-for-service ("FFS") representative payee. You indicate that in June 2008, the Field Office conducted a full site review of the payee in order to verify that they continued to meet their FFS status requirements. You further note that after reviewing the documents submitted by the payee, the Agency determined that Odollam Inc. no longer satisfied the requirements necessary to retain their FFS status because they could not provide a business license or operating certificate. Specifically, you indicate that Mr. L. G~, the executive director of Odollam Inc., surrendered his operating certificate to the New York State Office of Mental Health when he was confronted with accusations of business impropriety in June 2006. Mr. G~ also indicated that Odollam Inc. was a congregate care Level II community facility but lost that status in 2006 or 2007.

Odollam Inc. appealed the Agency's determination that it no longer met the requirements necessary for FFS status, and requested a review of the Agency's decision. Mr. G~ contends that he does not need an operating certificate to maintain his FFS status because he had a personal license to act as a mental health counselor. Mr. G~ stated that he considers the business that he operates to be a residential treatment facility. The majority of beneficiaries for whom he provides services for live in the community. Mr. G~ also indicated that two of the beneficiaries that he provides services to reside in the home owned by Odollam Inc.

LAW

1. SSA Act

Pertinent to this discussion are certain sections of the Social Security Act concerning the licensing and bonding requirements for nongovernmental fee-for-service organizations. Section 205(j)(4)(A)(i)of the Social Security Act (hereinafter "the Act")provides in part that "a qualified organization may collect from an individual a monthly fee for expenses (including overhead) incurred by such organization in providing services performed as such individual's representative payee. . . ."

Further, the Act states:

the term "qualified organization" means any State or local government agency whose mission is to carry out income maintenance, social service, or health care-related activities, any State or local government agency with fiduciary responsibilities, or any community-based nonprofit social service agency which is bonded or licensed in each State in which it serves as a representative payee. . . .

Section 205(j)(4)(A)(i)(B).

More specifically, the Act provides:

the term 'certified community-based nonprofit social service agency' means a community-based nonprofit social service agency which is in compliance with requirements, under regulations which shall be prescribed by the Commissioner for annual certification to the Commissioner that it is bonded in accordance with requirements specified by the Commissioner and that it is licensed in each State in which it serves as a representative payee (if licensing is available in the State) in accordance with requirements specified by the Commissioner.

Section 205(j)(10)(emphasis added).

Thus, a nongovernmental fee-for-service representative payee must be bonded and licensed (if licensing is available).

2. POMS

Like the Act, the POMS instructions do not waiver regarding the insistence that all nongovernmental fee-for-service payees must be bonded and licensed (if licensing is available). The POMS consistently states that nongovernmental fee-for-service representative payees must be bonded and licensed in each state in which they serve as representative payees, provided that licensing is available in the state. POMS GN 00506.001, POMS GN 00506.100, POMS GN 00506.110. Indeed, the POMS emphasizes the requirement for bonding and licensing by bolding the "and" in the relevant section:

To qualify as a FFS [fee for service] organization, the payee must be either:

"a state or local government agency, OR "a community based, non-profit social service agency, that is bonded and licensed by each state in which it serves as a representative payee (if licensing is available)

POMS GN 00506.001.

In addition, the POMS provides guidance on the types of bonding and licensing that nongovernmental fee-for-service payees must possess in order to receive fees for service. POMS GN 00506.105. The POMS defines bonding as "a bond or insurance contract guaranteeing payment to either the beneficiary, or SSA on behalf of the organization, in the event of the unforeseen financial loss caused by the action or inaction of the organization or an employee of the organization." Id. Bonds and insurance policies that would satisfy the bonding requirement include:

"blanket bonds,

"fiduciary bonds,

"fidelity bonds,

"dishonesty bonds,

"insurance contracts, or

"a simplified crime insurance policy.

Id.

The POMS further provides that fee-for-service organizations must possess (if licensing is available in the state), a licensing document issued in the state, which permits the agency to:

"Provide a specialized service to residents of the state, such as:

"Fiduciary services,

"Community mental health services,

"Social Services,

"Substance abuse treatment services,

"Residential care services,

"Psychiatric care services,

"Skilled nursing services

"Medicaid services, OR

" Conduct business or operate in the State (generally referred to as an "operating license")

Id.

The POMS recognizes that there may be some instances where it is difficult to determine whether a nongovernmental fee-for-service payee is properly bonded and/or licensed. POMS GN 00506.110. The POMS suggest that if it cannot be determined that the payee organization is bonded or/and licensed in the state in which it serves as payee, an individual may:

"Contact a representative of the organization or State agency which issued the agreement or license to obtain further explanation; and/or

"Obtain the necessary information, such as the protection given under a bonding agreement or the purpose of a license, and document the RPS RFST screen with the information obtained." Document the contact on an SSA-5002 and photocopy the proofs for the FO paper precedent file.

POMS GN 00506.110.

3. New York State Law

New York requires that organizations providing services such as those identified by Mr. G~, maintain a license from the state. For example, New York requires that the following facilities and activities be licensed:

""Assisted living facilities"

"Community mental health services

"Psychiatric care facilities

More specifically, under section 31.02 of New York State Mental Hygiene Law ("N.Y. Mental Hyg.") and various sections of Title 14 of the New York Compilation of Codes, Rules and Regulations of the State of New York ("NYCRR"), a provider of social services must be issued an operating certificate in order to operate the following mental health programs:

"Assertive community treatment (ACT) program

"Comprehensive psychiatric emergency program (CPEP)

"Outpatient (non-residential) program, including clinic, continuing day treatment, day treatment, partial hospitalization, intensive psychiatric rehabilitation treatment, and personalized recovery oriented services (PROS)

"Psychiatric inpatient unit in a general hospital

"Hospital for mentally ill persons (freestanding psychiatric hospital other than a state-operated psychiatric center)

"Residential treatment facility for children and youth

"Residential (housing) facility such as a community residence or apartment program.

New York also provides that certain facilities including adult care facilities must hold operating certificates to operate within the State. While similar background information is typically needed when applying for an operating certificate or license, New York does expressly require some organizations to obtain an operating certificate and others a license.

Here, Mr. G~ contends that New York does not require that his entity possess a specific license to provide services for mentally ill adults. See letter from Lawrence G~ to SSA dated January 16, 2009. In addition, Mr. G~ argues that his personal license to act as a mental health counselor satisfies SSA's licensing requirement to qualify as FFS payee. However, an individual license does not satisfy the licensing requirement that is a requisite for Odollam Inc. to maintain its FFS status. Odollam Inc. is the payee, not Mr. G~, and it is Odollam Inc. that needs to be licensed. As noted above, you relate that Mr. G~ stated that he considers the business that he operates to be a residential treatment facility. If Mr. G~ is providing a residence for individuals in need of mental health or residential care services, the entity must be licensed or possess an operating certificate from the New York State Office of Mental Health. POMS GN 00506.001; N.Y. Mental Hyg. § 31.02.

Moreover, a review of Odollam's certificate of incorporation, and an audit conducted on the entity dated December 31, 2004, reveals that Odollam Inc. provides residential services and counseling for those afflicted with mental illness in order to assist such individuals in their ability to function in their daily lives and communities. As discussed above, New York State law states that an organization providing residential services and/ or mental health treatment must possess an operating certificate from the state. Since Mr. G~ is unable to provide a license or operating certificate from New York State that affords him the right to provide mental health and/or adult care residential services to SSA's beneficiaries, he fails to satisfy the licensing requirement, per SSA law, to maintain his status as a FFS organization.

Further, the dishonesty bond submitted by Odollam, Inc. does not satisfy the bonding requirement for FFS payees. The bond does not currently include a provision that protects SSA from misuse and embezzlement, loss of or damage to money, and securities or property from theft by employees of the organization. In addition, the dishonesty bond does not show that SSA is named as an insured party and guaranteed payment as the "loss party," in the event the payee is unable or unwilling to secure a claim.

CONCLUSION

We conclude that the documentation provided by Odollam Inc. demonstrates that it is a community residential facility that provides counseling/social services to mentally ill adults and, as such, must maintain a license or operating certificate per New York State law to conduct its business activities. Since Odollam Inc. does not maintain a license or operating certificate from the state, the payee fails to satisfy SSA's licensing requirement and may no longer qualify as a FFS payee. In addition, the dishonesty bond submitted by Odollam Inc. does not currently satisfy the bonding requirements for nongovernmental fee-for-service organizational representative payees.

Mary Ann S~

Chief Counsel, Region VII

By___________

Kristina C~

Assistant Regional Counsel

This opinion settles an inquiry regarding whether the Bethesda House of Schenectady (Bethesda), a non-governmental organization, requires a license from New York State (NYS) as part of the requirement to become authorized as a fee for service representative payee. The opinion cited that NYS law requires that organizations providing certain activities be licensed or possess an operating certificate to conduct business in the State (see PR 07110.035B). Bethesda, filed an amended certificate of incorporation on January 23, 2007, under § 803 of NYS's Not-For-Profit Corporation Law. Bethesda became a not-for-profit corporation and as a charitable organization, must file a certificate of incorporation with the New York Department of State (New York Business Corporation Law § 104) and also register with the NYS Department of Law, Charities Bureau. Bethesda has fulfilled both these requirements and the services they provide do not require any other NYS licenses, including those licenses discussed in section three of the July 11, 2005 memo under the title "New York State Law " (PR 07110.035B). However, if Bethesda were to expand or provide additional services other than those listed in the amended certificate of incorporation, then reevaluation would be necessary to determine if additional NYS licenses may be required. In conclusion, Bethesda House of Schenectady has satisfied all its licensing requirements under NYS law.

You asked us for a legal opinion regarding whether Bethesda House of Schenectady ("Bethesda"), a non-governmental fee-for-service payee, requires a license from New York State ("NYS") in order to charge a fee for its payee services.

Previously, our office addressed the issues of when a non-governmental fee-for-service payee needs a license in New York and New Jersey, in order to charge a fee and what information SSA should secure from the organization to show that it is properly licensed. See July 11, 2005 Memo from the Office of General Counsel, Region II to Dennis M~, Director, Programs Operations Center, Re: Licensing for New York Non-Governmental Fee-For-Service Payees ("July 11 2005 memo").

We conclude that Bethesda does not require any further licenses from NYS for the particular services listed in its amended certification of incorporation under § 803 of NYS's Not-for-Profit Corporation Law. Please note that in addition to the licensing requirement, Section 205 (j)(4)(A)(i) of the Social Security Act requires Bethesda to be a "certified community-based nonprofit social service agency." Moreover, Bethesda must be bonded in accordance with SSA requirements. See Section 205(j)(10);. see also Program Operations Manual ("POMS") GN 00506.001 and GN 00506.105. Additionally, Section 102 of the Social Security Protection Act of 2004 requires that all non-governmental fee-for-service payees provide representative payee services to at least five beneficiaries and not be a creditor of a beneficiary. You should confirm that Bethesda meets all of the other criteria necessary to be a fee-for-service payee.

1. Bethesda's Services

On January 23, 2007, Bethesda amended its certificate of incorporation to be a corporation that operates exclusively without pecuniary purpose and assists the homeless and others who are in need in Schenectady, New York. It provides the following services:

Provides a day time safe haven;

Provides emergency services, life skills classes, case management services, professional services and hospitality services;

Serves as an entry point for some, and, as a place of last resort for others, in need of referrals and/or direct assistance with basic needs;

Advocates for the homeless;

Works cooperatively and collaboratively with other social service agencies on their behalf; Provides temporary transitional housing assistance;

Provides fiduciary services to the extent of participation in the Social Security Administration's Representative Payee Program.

2. NYS Law

Our office's July 11, 2005 memo provides a list of services for which a provider must obtain a license from NYS. While the list is not all-inclusive and is subject to changes in state law, it contains many of the types of services that fee-for-service representative payees are likely to provide and is a good reference, which should be used when considering whether a non-governmental fee-for-service organization requires a license in NYS. See July 11, 2005 memo at 6-7. Furthermore, NYS has an online permit assistance and licensing website with a sidebar link that lists all the licenses that the state grants according to which NYS agency is responsible for granting the license. See NYS Online Permit Assistance and Licensing, http://www.nys-opal.com/ (last visited August 19, 2008).

3. Applicability of NYS Law to Services Provided By Bethesda

Bethesda is a not-for-profit corporation. Consequently, as a charitable organization, Bethesda must file a certificate of incorporation with the New York Department of State. See New York Business Corporation Law § 104. Bethesda is also required to register with the NYS Department of Law, Charities Bureau prior to the solicitation of contributions or within six months after any property held or income received is required to be used for charitable purposes (whichever is sooner). See New York Executive Law Article 7A; NYS Estates and Trust Law, §§ 8-14. Bethesda has fulfilled both these requirements. See Certificate of Amendment of the Certificate of Incorporation of Bethesda House of Schenectady, Inc. dated January 23, 2007; see also Office of the NYS Attorney General's Charities Bureau Search, http://bartlett.oag.state.ny.us/Char_Forms/show_details.jsp?id={6467AAF8-26AC-41E5-A616-3D899C94C687} (online records indicate Bethesda is registered with the NYS Department of Law, Charities Bureau under NYS registration no. 06-57-52).

Bethesda's services do not seem to require any other NYS license, including those licenses discussed in section three of the July 11, 2005 memo under the title "New York State Law." However, if Bethesda's services are or become more expansive than those listed in the amended certificate of incorporation then additional NYS licenses may be required. For example, an organization proposing to operate an outpatient program (such as an assertive community treatment; clinic; comprehensive psychiatric emergency program; continuing day treatment; day treatment; intensive psychiatric rehabilitation treatment; and partial hospitalization) or proposing significant changes to a program for persons with mental illness is required to be licensed under Article 31.02 of NYS Mental Hygiene Law. Legislative history shows that non-governmental representative payees should certify annually that they are licensed. Social Security Protection Act of 2004, Pub. L. No. 108-203, § 102. Accordingly, we recommend that Bethesda provide updated information and documentation of the services it is providing at the time of its certification.

Moreover, the State Licensing Digest in the POMS indicates for New York that the type of license needed to provide fiduciary services is "not shown." POMS GN 00506.430. NYS mandates that some organizations providing fiduciary services be licensed. For instance, a Type B not-for-profit corporation, like Bethesda, is required to have a license before engaging in the business of budget planning. NYS Banking Law, Article 12-C, §§ 579 - 587. However, there is no NYS law that requires the licensing of organizations that only provide fiduciary services in the context of acting as a SSA representative payee. Since Bethesda's amended certificate of incorporation specifically limits the organization to provide fiduciary services as a representative payee, then Bethesda does not need a license to act as a fiduciary.

CONCLUSION

Bethesda appears to have fulfilled all its licensing requirements under NYS law. If Bethesda were to expand or provide additional services other than those listed in its amended certificate of incorporation, then reevaluation would be necessary.

Barbara L. S~

Chief Counsel, Region VII

By___________

Michelle L. C~

Assistant Regional Counsel

This opinion settles an inquiry regarding whether the Chautauqua County Association for Retarded Children's application to become a fee for service representative payee should be granted when the association did not provide a license from the State. The opinion cited that New York State law requires that organizations providing certain activities be licensed or possess an operating certificate to conduct business in the State. Moreover, facilities that are community residences and are certified by the Office of Mental Retardation and Development (OMRDD), such as the Chautauqua CO ARC, are prohibited from providing any service "for the care, custody, and treatment of the mentally disabled without an operating certificate" issued by the Commissioner of Health. 14 NY Codes, Rules, and Regulations ("NYCRR") §686.4(d). The document submitted by the organization was neither a license or operating certificate issued by the State of New York. Since Chautauqua CO ARC has failed to provide a copy of its operating certificate, the opinion concluded that their application to become a fee for service representative payee should be denied. In addition, the organization did not submit evidence that it was bonded

You asked us to review whether the Chautauqua County Association for Retarded Children's ("Chautauqua CO ARC") application to become a fee-for-service representative payee should be granted when the association did not provide a license from the State. We conclude that New York requires certain organizations to be licensed or possess an operating certificate to conduct business in the state. An organization such as Chatauqua CO ARC, which is a residential facility, is required under New York State Law to maintain an operating certificate. Since Chatauqua CO ARC has failed to provide a copy of its operating certificate, we conclude that their application to become a fee-for-service representative payee should not be granted until additional information is provided. We also conclude that since legal authority does not require Chatauqua CO ARC to possess a license to operate, presentation of its operating certificate would most likely satisfy the documentation requirement under POMS GN 00506.001. In addition, per POMS GN 00506.105, to qualify as a fee-for-service organization, Chatauqua CO ARC must show evidence that the association is bonded.

FACTS

You note that Chatauqua CO ARC has filed to become a fee-for-service representative payee. You also note that they are a non-profit organization that provides residential and outpatient rehabilitation services. You mention that the association also operates apartment buildings, nonresidential buildings, and intermediate care facilities.

In addition, you note that per POMS GN 00506.105, a fee-for-service organization is required to be licensed (if licensing is available in the state). You also indicated that Chatauqua CO ARC submitted a Medicaid Service Coordination Vendor Contract, which they contend satisfies the licensing requirement under POMS GN 005006.105.

LAW

1.SSA Act

Pertinent to this discussion are certain sections of the Social Security Act concerning the licensing and bonding requirements for non-governmental fee-for-service organizations. Section 205(j)(4)(A)(i)of the Social Security Act (hereinafter "the Act") provides in part that "a qualified organization may collect from an individual a monthly fee for expenses (including overhead) incurred by such organization in providing services performed as such individual's representative payee. . . ."

Further, the Act states:

the term "qualified organization" means any State or local government agency whose mission is to carry out income maintenance, social service, or health care-related activities, any State or local government agency with fiduciary responsibilities, or any community-based nonprofit social service agency which is bonded or licensed in each State in which it serves as a representative payee. . . .

Section 205(j)(4)(A)(i)(B).

More specifically, the Act provides:

the term 'certified community-based nonprofit social service agency' means a community-based nonprofit social service agency which is in compliance with requirements, under regulations which shall be prescribed by the Commissioner for annual certification to the Commissioner that it is bonded in accordance with requirements specified by the Commissioner and that it is licensed in each State in which it serves as a representative payee (if licensing is available in the State) in accordance with requirements specified by the Commissioner.

Section 205(j)(10)(emphasis added).

2. POMS

Like the Act, the POMS instructions do not waiver regarding the insistence that all non-governmental fee-for-service payees must be bonded and licensed (if licensing is available). The POMS consistently states that non-governmental fee for service representative payees must be bonded and licensed in each state in which they serve as representative payees, provided that licensing is available in the state. POMS GN 00506.001, POMS GN 00506.100, POMS GN 00506.110. Indeed, the POMS denotes the requirement for bonding and licensing by bolding the "and" in the relevant section:

To qualify as a FFS [fee for service] organization, the payee must be either:

"a state or local government agency, OR

a community based, non-profit social service agency, that is bonded and licensed by each state in which it serves as a representative payee (if licensing is available)

POMS GN 00506.001.

3. New York State Law

New York requires that organizations providing certain activities be licensed or possess an operating certificate to conduct business in New York. Indeed, facilities that are community residences and are certified by the Office of Mental Retardation and Development ("OMRDD"), such as the Chatauqua CO ARC, are prohibited from providing any service "for the care, custody, and treatment of the mentally disabled without an operating certificate" issued by the Commissioner of Health. 14 NY Codes, Rules, and Regulations ("NYCRR")§686.4(d). Here, Chatauqua CO ARC failed to submit an operating certificate detailing the services they provided, which they should have in their possession. See NY Social Service Law § 460-b; NY Mental Hygiene Law § 41.36(1); 14 NYCRR §§671.1 and 671.2. Instead of submitting an operating certificate, Chatauqua CO ARC submitted a general vendor contract that was not specific as to the kind of care and services provided by its facility. In addition the contract did not list the operators of the association or provide a physical description of the facility. In the absence of such identifying information, Chatauqua CO ARC's application to become a fee-for-service representative payee is incomplete. Only when New York does not require a facility to possess a license or operating certificate, the non-governmental fee-for-service payee may then charge a fee in New York if it is providing one of the services listed in POMS GN 00506.105. Thus, the burden rests with Chatauqua CO ARC's to explain why they do not possess an operating certificate under the aforementioned law. In addition, Chatauqua CO ARC should provide evidence that it is a bonded organization per POMS GN 00506.001.

CONCLUSION

We conclude that Chatauqua CO ARC should submit a copy of an operating certificate issued by the Department of Mental Hygiene or Department of Health under New York State law. We also conclude that since legal authority does not demonstrate that Chatauqua CO ARC must possess a license to operate, presentation of its operating certificate would most likely satisfy the documentation requirement under POMS GN 00506.001. In the absence of such documentation, their application to become a fee-for-service representative payee should not be granted at this time. In addition, per POMS GN 00506.001, to qualify as a fee-for-service organization, Chatauqua CO ARC would need to provide evidence that the association is bonded.

Barbara L. S~

Chief Counsel, Region VII

By___________

s/ Kristina C~

Assistant Regional Counsel

This opinion settles an inquiry regarding the types of licenses required by non-governmental representative payee organizations in the States of New Jersey and New York when filing for authorization to collect a fee. The opinion emphasizes that in these two states certain types of organizations must be licensed or obtain an operating certificate and that SSA must obtain documentation that the license or certificate is valid and current. In addition, it addresses that if these non-governmental organizations are not required to obtain a license or operating certificate, then they must provide one of the services listed in the procedural guidelines for fee for service authorization (i.e., community based, non profit social service agency). In conclusion, the opinion intensifies the need to precisely ascertain what type of service is provided and ensure that the facility does or does not require a license or operating certificate in order to collect a fee in the States of New Jersey and New York.

You asked us to review whether a non-governmental fee for service payee needs a license in order to charge a fee in New York and New Jersey. You further asked us what information SSA should secure from the organization to show they are licensed. We conclude that certain types of organizations must be licensed or obtain an operating certificate. If the organization is so required, SSA must obtain documentation that the license or operating certificate is valid and current. When an organization is not required to obtain a license or operating certificate, the non-governmental fee for service payee may also charge a fee in New York if it is providing one of the services listed in POMS GN 00506.105. It is important in this circumstance to precisely ascertain what type of service is being provided and ensure that the facility does not need a license or operating certificate and is a "community based non profit organization providing social services" and that it is bonded. Similarly, when New Jersey requires that a facility maintain a license or operating certificate, SSA must obtain proof of such license or operating certificate in order for the non-governmental payee to charge a fee in New Jersey. When New Jersey does not require a license or operating certificate, the non-governmental fee for service payee may also charge a fee in New Jersey if it is providing one of the services listed in POMS GN 00506.105. As with New York facilities, we must ensure that such a facility is a "community based non profit organization providing social services" and that it is bonded.

FACTS

You note that Section 102 of the Social Security Protection Act of 2004 requires that all non-governmental fee for service payees be licensed and bonded, provide representative payee services to at least five beneficiaries, and not be a creditor of the beneficiary. You also note that the non-governmental fee for service payee must be licensed and bonded by April 1, 2005 and that failure to fulfill this requirement will result in the revocation of the payee's authority to collect a fee from the beneficiaries they serve. You further note that for SSA's purpose, the licensing document must be issued in the State in which the agency serves as payee and it must permit the agency to:

Provide specialized services to residents of the State, such as:

Fiduciary services,

Community mental health services,

Social Services,

Substance abuse treatment services,

Residential care services,

Psychiatric care services,

Skilled nursing services, or

Medicaid services

You mention that many of the Region's field offices in central and western New York State have inquired about the type of license the payees need. You also mention that the payees are concerned that their authorization to charge a fee will be revoked if they do not have a license in place by April 1, 2005. You further mention that some payees in New Jersey have had similar inquiries.

LAW

1. SSA Act

Pertinent to this discussion are certain sections of the Social Security Act concerning the licensing and bonding requirements for non-governmental fee for service organizations. Section 205(j)(4)(A)(i)of the Social Security Act (hereinafter "the Act") provides in part that "a qualified organization may collect from an individual a monthly fee for expenses (including overhead) incurred by such organization in providing services performed as such individual's representative payee. . . ."

Further, the Act states:

the term "qualified organization" means any State or local government agency whose mission is to carry out income maintenance, social service, or health care-related activities, any State or local government agency with fiduciary responsibilities, or any community-based nonprofit social service agency which is bonded or licensed in each State in which it serves as a representative payee. . . .

Section 205(j)(4)(A)(i)(B).

More specifically, the Act provides:

the term 'certified community-based nonprofit social service agency' means a community-based nonprofit social service agency which is in compliance with requirements, under regulations which shall be prescribed by the Commissioner for annual certification to the Commissioner that it is bonded in accordance with requirements specified by the Commissioner and that it is licensed in each State in which it serves as a representative payee (if licensing is available in the State) in accordance with requirements specified by the Commissioner.

Section 205(j)(10)(emphasis added).

Thus, a non-governmental fee for service representative payee must be bonded and licensed (if licensing is available).

2. POMS

Like the Act, the POMS instructions do not waiver regarding the insistence that all non-governmental fee for service payees must be bonded and licensed (if licensing is available). The POMS consistently states that non-governmental fee for service representative payees must be bonded and licensed in each state in which they serve as representative payees, provided that licensing is available in the state. POMS GN 00506.001, POMS GN 00506.100, POMS GN 00506.110. Indeed, the POMS denotes the requirement for bonding and licensing by bolding the "and" in the relevant section:

To qualify as a FFS [fee for service] organization, the payee must be either:

a state or local government agency, OR

a community based, non-profit social service agency, that is bonded and licensed by each state in which it serves as a representative payee (if licensing is available)

POMS GN 00506.001.

In addition, the POMS provides guidance on the types of bonding and licensing that non-governmental fee for service payees must possess in order to receive fees for service. POMS GN 00506.105. The POMS defines bonding as "a bond or insurance contract guaranteeing payment to either the beneficiary, or SSA on behalf of the organization, in the event of the unforeseen financial loss caused by the action or inaction of the organization or an employee of the organization." Id. Bonds and insurance policies that would satisfy the bonding requirement include:

blanket bonds,

fiduciary bonds,

fidelity bonds,

dishonesty bonds,

insurance contracts, or

a simplified crime insurance policy.

Id.

The POMS further provide that fee for service organizations must possess (if licensing is available in the state), a licensing document issued in the state, which permits the agency to:

Provide a specialized service to residents of the state, such as:

Fiduciary services,

Community mental health services,

Social Services,

Substance abuse treatment services,

Residential care services,

Psychiatric care services,

Skilled nursing services

Medicaid services, OR

Conduct business or operate in the State (generally referred to as an "operating license")

Id.

The POMS recognizes that there may be some instances where it is difficult to determine whether a non-governmental fee for service payee is properly bonded and/or licensed. POMS GN 00506.110. The POMS suggest that if it cannot be determined that the payee organization is bonded or/and licensed in the state in which it serves as payee, an individual may:

Contact a representative of the organization or State agency which issued the agreement or license to obtain further explanation; and/or

Obtain the necessary information, such as the protection given under a bonding agreement or the purpose of a license, and document the RPS RFST screen with the information obtained

Document the contact on an SSA-5002 and photocopy the proofs for the FO paper precedent file.

POMS GN 00506.110.

Finally, the State Licensing Digest in the POMS indicates for New York under Fiduciary Services that the type of license needed is "not shown." POMS GN 00506.430. The State Licensing Digest indicates for New Jersey under Fiduciary Services that the State of New Jersey has compiled a listing of the occupations and business activities that require some form of registration, license or certification. Id.

3. New York State Law

New York requires that organizations providing certain activities be licensed or possess an operating certificate to conduct business in New York. Many of the services that require licensing in New York are similar to the services that the POMS notes would require licensing. See POMS GN 00506.105. For example, New York requires that the following facilities and activities be licensed:

"Assisted living facilities"

Community mental health services

Alcoholism community residence

Psychiatric care facilities

Registered and Licensed Practical Nurses

New York also provides that certain facilities including adult care facilities and nursing facilities must hold operating certificates to operate within the State. While similar background information is typically needed when applying for an operating certificate or license, New York does expressly require some organizations to obtain the former and others the latter. In addition, a charitable organization must file a certificate of incorporation with the New York Department of State. Further, prior to solicitation of contributions or within six months after any property held or income received is required to be used for charitable purposes (whichever comes first), the organization must register with the State of New York, Department of Law, Charities Bureau.

New Jersey Law

As noted in POMS GN 00506.430, the State of New Jersey has compiled a listing of the occupations and business activities that require some form of registration, license, or certification. The following information should assist the field in informing non-governmental fee for service organizations of any licensing requirements they must meet. For example, organizations providing services similar to those listed in POMS GN 00506.105, supra, that require New Jersey licensing/certification include:

Adult Daycare

Alcoholism Treatment Center (Residential)

Assisted Living Administrator

Home for the Aged

Nurse Residences for Disabled

Residential Facilities for Children

Residential Health Care Facility

Drug Treatment Center

Each organization providing a social service will often require some form of license, registration or certification by the State of New Jersey. The organization should consult the appropriate agency contact for a listing of those requirements.

CONCLUSION

Social Security Regulations provide that non-governmental fee for service representative payees must be bonded and licensed, provided that licensing is available in the State. New York requires facilities providing certain services to be licensed and/or certified in order to operate within the state. These services include, but are not limited to, assisted living facilities, community mental health services, alcoholism community residences, psychiatric care facilities, registered and licensed practical nurses, adult care facilities, nursing facilities, and charitable organizations. We, therefore, recommend that when New York requires the facility to maintain a license or operating certificate, SSA must obtain proof of such license or operating certificate in order for the non-governmental payee to charge a fee in New York. When New York does not require a license or operating certificate, the non-governmental fee for service payee may also charge a fee in New York if it is providing one of the services listed in POMS GN 00506.105. It is important in this circumstance to precisely ascertain what type of service is being provided and ensure that the facility does not need a license or operating certificate and is a "community based non profit organization providing social services" and that it is bonded. Similarly, when New Jersey requires that a facility maintain a license or operating certificate, SSA must obtain proof of such license or operating certificate in order for the non-governmental payee to charge a fee in New Jersey. When New Jersey does not require a license or operating certificate, the non-governmental fee for service payee may also charge a fee in New Jersey if it is providing one of the services listed in POMS GN 00506.105. As with New York facilities, we must ensure that such a facility is a "community based non profit organization providing social services" and that it is bonded.

Barbara L. S~

Chief Counsel, Region VII

By___________

Kristina C~

Assistant Regional Counsel