TN 4 (11-12)

PR 07115.039 Ohio

A. PR 12-134 Federal and State of Ohio Laws Barring a State Employee From Serving as a Fee for Service Organizational Payee – REPLY

DATE: September 13, 2012

1. SYLLABUS

The Ohio Department of Jobs and Family Services (ODJFS), which is a state agency that administers needs-based public assistance asked SSA 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, 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). Therefore, 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. We conclude that it would be within the agency’s discretion to discontinue using the state employee’s FFS organization as representative payee in order to avoid any appearance of conflict of interest.

2. OPINION

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.

BACKGROUND

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.

DISCUSSION

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.

CONCLUSION

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 interest.

Grace M. Kim

Acting Regional Chief Counsel, Region V

By: _____________

Cristine Bautista
Assistant Regional Counsel


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/1507115039
PR 07115.039 - Ohio - 11/08/2012
Batch run: 11/08/2012
Rev:11/08/2012