You asked whether any federal or state conflict of interest laws bar a state employee
from profiting as a fee-for-service organizational payee. We could not locate any
federal or state law which prohibits such a situation. However, for the reasons discussed
below, we advise that it is not in the best interests of a Social Security beneficiary
if his or her organizational representative payee is headed by the same person who
oversees his or her casework at the state public assistance agency. Therefore, we
conclude that it would be within the agency’s discretion to discontinue using the
state employee’s organizational representative payee in order to avoid any appearance
of conflict of interest.
Anthony is employed with the Ohio Department of Jobs and Family Services (ODJFS),
which is a state agency that administers needs-based public assistance. Anthony also
operates Lifetime Family services, Inc. (LFS), a fee-for-service organizational payee.
ODJFS contacted SSA’s state liaison in Ohio to request a list of persons for whom
Anthony serves as payee through LFS, in order to ensure that Anthony does not oversee
the casework of any client at ODJFS for whom he is a payee.
You expressed concern that an arrangement whereby Anthony serves as a representative
payee for an individual whose casework he oversees at ODJFS would give the perception
of a conflict of interest. As you requested, we researched federal and Ohio state
laws but did not find any authority which bars such an arrangement.
In particular, we looked at the Ohio statutes governing ODJFS, chapter 329 of the
Ohio Revised Code. See Oh. Rev. Code § 329.01 et seq. Nothing in that chapter or elsewhere in the Ohio statutes
addresses or prohibits this situation.
We also looked at the Social Security regulations governing representative payment,
20 C.F.R. §§ 404.2001 et seq., 416.601 et seq. Significantly, none of the regulations
pertaining to the agency’s selection of a representative payee bars the arrangement
in question here, where a state public assistance agency employee who oversees an
individual’s casework also serves as the individual’s organizational representative
payee. See 20 C.F.R. §§ 404.2020 (information considered in selecting a representative payee),
404.2021 (order of preference in selecting a representative payee), 404.2022 (who
may not serve as a representative payee), 404.2040a (compensation for qualified organizations
serving as representative payees), 404.2050 (when SSA will select a new representative
payee). The only mention of conflict of interest is in the context of a creditor,
which is not applicable here. See 20 C.F.R. § 404.2022(e) (creditor generally may not serve as a representative payee,
except if creditor meets certain requirements including that his financial relationship
with beneficiary presents no substantial conflict of interest).
We note, however, that the primary factor the agency considers when selecting a representative
payee is the best interests of the beneficiary. See 20 C.F.R. §§ 404.2020 (SSA tries to select a payee who will “best serve the interest
of the beneficiary”), 404.2021 (SSA’s primary concern is to select the payee who will
“best serve the beneficiary’s interest”), 404.2050 (SSA may terminate a payee if beneficiary’s
interest is not served). Based on this standard, SSA has broad discretion in deciding
who will serve as representative payee and when to change payees. Here, a strong argument
can be made that, due to the appearance of a conflict of interest, a Social Security
beneficiary’s interest would not be best served if Anthony were to oversee the beneficiary’s
public assistance casework in his capacity as a state employee and also serve as the
beneficiary’s representative payee. Indeed, ODJFS was so concerned about this potential
conflict of interest that it requested a list of persons for whom Anthony serves as
payee, so that it could prevent Anthony from serving both as an ODJFS caseworker and
as representative payee for the same individual. However, under the agency’s disclosure
rules, SSA might not be allowed to disclose this information to ODJFS. And it would
be either impossible or too administratively burdensome for SSA to undertake this
task. Under these circumstances, we believe it would be well within the agency’s discretion
if it chooses to discontinue using the services of LFS as an organizational payee.
For the reasons discussed above, we conclude that no federal or Ohio state law prohibits
an employee of a state public assistance agency from profiting as an organizational
representative payee. However, we believe that it would not serve the best interests
of a Social Security beneficiary if his or her organizational payee is headed by the
same person who oversees his or her casework at the state public assistance agency.
Therefore, we advise that it would be within the agency’s discretion to discontinue
using LFS as an organizational payee, in order to avoid any potential conflict of
Grace M. Kim
Acting Regional Chief Counsel, Region V
Assistant Regional Counsel