You provided us with an Amended Intergovernmental Agreement (the Agreement) between
the State of Oregon, acting through the Department of Human Services (DHS), and a
Social Security Administration (SSA or Agency) representative payee organization pursuant
to the Oregon Money Management Program (OMMP). You then asked for a legal opinion
on the following issues:
A. Whether compensation paid from the State of Oregon to an SSA representative payee
organization under the OMMP affects the payee’s ability to collect a fee from the
B. Whether there are any other fee concerns with the Agreement.
A. Yes. Compensation paid by the State of Oregon to a representative payee organization
under the OMMP Agreement likely affects the payee organization’s ability to collect
a fee from the beneficiary because the monthly base rate appears to compensate the
payee organization for the provision of representative payee services.
B. Yes. The provision in the Agreement indicating Oregon DHS authorizes a representative
payee organization to charge “the fee set by the Social Security Administration” is
void because it violates Agency regulations.
SUMMARY OF FACTS
The OMMP is a program sponsored by the State of Oregon that provides daily money management
services assistance for seniors and people with disabilities (Consumers) who have
difficulty budgeting, paying routine bills, and keeping track of financial matters
and, therefore, are at risk of losing their independence. Through a network of volunteers
and staff coordinators, who are trained and supervised by the “Regional Sponsor” to
provide assistance with money management tasks, the program helps Consumers organize
and keep track of their finances. In addition to providing money management assistance,
volunteers provide the secondary service of “companionship and socialization.”
The Regional Sponsor enters into the Agreement with Oregon DHS. Under the Agreement,
the Regional Sponsor administers and coordinates OMMP services in a region. Regional
Sponsors perform approximately 40 services and activities in their respective service
area. Chief among those services is the duty to provide “Payee services” to eligible
Consumers enrolled in OMMP. “Payee service” is defined as:
an OMMP Money Management Program service delivered through a network of [Regional
Sponsors] RS’s by Volunteers or Regional Coordinators. Representative Payee Service
is offered to seniors and people with disabilities. Volunteers or coordinators provide
one-on-one assistance to Consumers who do not have the capacity to manage their Federal
benefits and other pensions.
The Agreement includes “Payment Provisions,” which explain the five types of payments
Oregon DHS makes to the Regional Sponsor, including: (1) monthly base rate payments;
(2) Consumer service incentive payments; (3) a one-time volunteer service incentive
payment; (4) an additional rural region rate; and (5) new program add-on payments.
For example, in the current Agreement, Oregon DHS agreed to pay the Regional Sponsor:
1. a monthly base rate of $3,000 per month;
2. a monthly Consumer service incentive payment based on the number of “new” Consumers
receiving services each month (ranging from $500 to $3,000);
3. a one-time volunteer service incentive payment based on the number of volunteers
that provide services (ranging from $2,000 to $10,000);
4. an additional rate of $2,000.00 per month to help cover additional costs that rural
areas experience, including but not limited to, increased transportation costs; and
5. a new program add-on of $2,000.00 per month to cover the transition expenses, such
as additional training, additional staff, purchase of computer programs, or additional
The Agreement further requires the Regional Sponsor to provide its services free of
charge for those with limited available income. However, for those with enough available
income, the Agreement states the Regional Sponsor can charge “the fee set by the Social
The Region X Center for Disability and Program Support (CDPS) is concerned about whether
the compensation paid by Oregon DHS to a representative payee organization/Regional
Sponsor under the payment provisions affects the representative payee organization’s
ability to collect a fee from the beneficiary for providing representative payee services.
CDPS is further requesting a review of the Agreement’s fee-related provisions.
A. The Compensation Paid by the State of Oregon to a Representative Payee Organization
Under the OMMP Agreement Affects the Payee’s Ability to Collect a Fee From the Beneficiary
Under the Social Security Act (the Act), an authorized “qualified organization” can
collect a monthly fee from a beneficiary for expenses incurred by the organization
in providing services as a representative payee. 42 U.S.C. §§ 405(j)(4)(A)(i), 1383(a)(2)(D)(i).
Fees for performing payee services must not “exceed the lesser of (I) 10 percent of
the monthly benefit involved, or (II) $[41.00] per month.” Id. An authorized organization can collect a fee for providing representative payee services
from another source so long as the total amount collected from both the beneficiary
and the other source does not exceed the amount authorized by the Agency. 20 C.F.R.
§§ 404.2040a(g)(7), 416.640a(g)(7).
In other words, where a representative payee is collecting at least $41.00 per month
per beneficiary (or, if less, 10% of the monthly benefit amount) for its representative
payee services from another source, that payee cannot also collect the fee from the
beneficiary. Indeed, internal policy reiterates that a fee “cannot be collected from
a beneficiary” if the organization is “receiving compensation…for performing any representative
payee services for the individual from another source (that equals or exceeds the
payee’s allowable fee).” POMS GN 00506.220(A). The payee can collect the fee from another source and from the beneficiary only
if the total amount does not exceed the amount authorized by the Agency. Id. Agency policy recognizes that allowing the payee to collect the fee from another
source is “favorable to the recipient since it will be less money being taken from
his/her benefits.” Id. Thus, the law, regulations, and internal guidance establish that the limitation
on fees for providing representative payee services is designed to preserve funds
by restricting the amount of money a representative payee can collect from the beneficiary.
Against this backdrop, the relevant question is whether any of the compensation paid
from Oregon DHS to the representative payee under the OMMP program is for providing
representative payee services. After reviewing the Agreement, the monthly base rate
payment appears to be, at least in part, compensation for representative payee services
According to the language of the Agreement, the initial six-month period of base payments
is intended to allow sufficient time for the Regional Sponsor to plan and fully implement
a regional money management program. Subsequent monthly base payments represent compensation
for enrolling and providing money management services. As currently drafted, one of
those money management services is “Payee services,” which is compensation for representative
payee services work. In the current Agreement, the base rate payment is set at $3,000.00
Because the Regional Sponsor is providing “Payee services,” at least some portion
of the $3,000 monthly base payment is compensation for representative payee services
work. Such compensation could exceed the statutory limitation on fees that is currently
set at $41.00 per month per beneficiary, making the collection of any fee from the
beneficiary’s funds a potential violation of the Social Security Act, as well as regulations
and Agency policy. 42 U.S.C. §§ 405(j)(4)(A)(i), 1383(a)(2)(D)(i); 20 C.F.R. §§ 404.2040a(g)(7),
416.640a(g)(7); POMS GN 00506.220.
However, it is important to note that neither the Social Security Act, the regulations,
nor Agency policy restrict Oregon DHS from compensating representative payees. Rather,
representative payees are simply restricted from collecting any fee from the individual
beneficiaries that exceeds the statutory allowance of $41.00. The representative payee
organization and/or Oregon DHS could clarify the issue by submitting documentation
to the Agency specifying what portion of the monthly base rate is compensation for
providing representative payee services. If the specified amount is less than $41.00
per month per beneficiary, then an Agency-authorized fee-for-service representative
payee organization could collect some or the entire fee from the beneficiary, per
regulatory and policy guidance.
B. The Agreement Provision Allowing the Collection of SSA Fees for Providing Payee
Services is Void
Under the Act, the Agency may select a qualified organization to serve as a representative
payee to receive benefits on behalf of a beneficiary. 42 U.S.C. §§ 405(j)(1)(A), 1383(a)(2)(A)(ii)(I).
The Act also provides that a qualified organization may collect a monthly fee for
providing representative payee services. 42 U.S.C. §§ 405(j)(4)(A)(i), 1383(a)(2)(D)(i).
However, Agency regulations specify that an organization “must request in writing
and receive an authorization from [the Agency] before it may collect a fee” for providing
payee services to a beneficiary. 20 C.F.R. §§ 404.2040a(d)(1), 416.640a(d)(1) (emphasis
The OMMP Agreement contains a clause (SSA fee clause or provision) that allows the
representative payee to charge “the fee set by the Social Security Administration.”
This provision appears to permit the State of Oregon to authorize a representative
payee organization to collect a fee for providing representative payee services. However,
only SSA can authorize a “qualified organization” to collect such a fee. 20 C.F.R.
§§ 404.2040a(d)(1), 416.640a(d)(1) (“An organization must request in writing and receive
an authorization from us before it may collect a fee.”) (emphasis added). Because
the OMMP provision indicates the State of Oregon can authorize a Regional Sponsor/representative
payee organization to collect a fee without requisite authorization from SSA, it violates
Agency regulations and is, therefore, void and unenforceable. See, e.g., Resolution Trust Corp. v. Home Sav. of Am., 946 F.2d 93, 96 (8th Cir. 1991) (“In general, a contract entered in violation of
federal statutory or regulatory law is unenforceable.”) (citation omitted); Compton
v. Compton, 187 Or. App. 142, 146 (Or. Ct. App. 2003) (“An agreement is illegal if
it is contrary to law, morality or public policy.”) (internal quotation marks and
We understand the State of Oregon is working on an updated Agreement and is agreeable
to revising the current contract language to comply with Agency regulations. To that
end, all future Agreements should omit the provision authorizing the representative
payee to charge the fee set by SSA.
The compensation paid from the State of Oregon to representative payee organizations
under the payments provisions of the OMMP Agreement is, at least in part, compensation
for representative payee services under the monthly base rate category. Therefore,
regulations restricting the amount of fees a representative payee can collect from
a beneficiary’s funds for providing representative payee services apply. The payee
organization is restricted from collecting monies from the beneficiary unless it can
specify to the Agency that it receives less than $41.00 per month per individual for
providing representative payee services.
The provision in the Agreement that allows the representative payee to charge “the
fee set by the Social Security Administration” violates Agency regulations and is,
therefore, void and unenforceable. Any future agreements between Oregon DHS and a
representative payee should omit this provision.