TN 2 (12-08)

PR 07210.029 Montana

A. PR 09-036 Court Directing Representative Payee on Use of Benefits: Y~

DATE: December 18, 2008


The opinion in this case examines whether a state court has the authority to override Social Security regulations concerning the use of Social Security funds paid to a representative payee, specifically, who should receive Social Security funds and how they should be used. This opinion finds that the Social Security Administration has not relinquished its authority to select a representative payee and advise that payee on how Social Security funds should be used. Therefore, the orders issued by the state court in this case violate section 207 of the Social Security Act which prohibits the assignment of benefits. The opinion also finds that the representative payee in this case should take action to request that the state court modify its order for the transfer or assignment of Social Security funds. If the payee is unwilling or unable to do so, SSA should terminate the payee's services.



You requested an opinion as to whether a state court "has the authority to override Social Security regulations concerning the use of funds paid to a [representative payee] . . . ."

Short Answer

No. A state court cannot override an Agency regulation where the Federal Government, as sovereign, has not consented to submit itself to the jurisdiction of the court. The court orders at issue direct the use of Social Security benefits paid to a representative and, therefore, violate section 207 (the anti-assignment provision) of the Social Security Act (the Act). See 42 U.S.C. § 407(a).


According to information that you provided, on March 4, 1998, the Montana Eighth Judicial District Court for Cascade County issued an order establishing a Final Parenting Plan for George Y~, the father of Landen and Cameron Y~, and Gale W~, the children's mother and current representative payee. The parties stipulated to a modification of child support, and on January 31, 2002, the court approved the stipulation. The order clarified that auxiliary Social Security benefits for the children had to be used first to pay health insurance premiums for the children; thereafter, the parties had to share the balance equally.

The court reiterated these instructions in the Findings of Fact, Conclusions of Law and Order Establishing Child Support dated October 20, 2006. The court also directed that the parent responsible for paying the children's insurance premium would receive money from the auxiliary Social Security benefits to cover that cost. At the time of the order, Mr. Y~ was not the representative payee but was responsible for paying the children's insurance costs. The court directed that "he should receive money from the auxiliary Social Security benefit to cover that cost." While the information you provided suggests that Ms. W~ has been the children's only representative payee, the October 2006 order indicates that Ms. W~ received checks for both children for some period after the January 2002 order; that Mr. Y~ received both checks for one month in 2002; that for some period beginning in 2002 and ending in 2005, each parent received one check; and that after Mr. Y~'s accident in 2005, Ms. W~ received both checks.

The October 2006 order also directed that "[b]oth parties shall use all auxiliary Social Security benefits on behalf of the two minor children." In July 2007, Mr. Y~ petitioned the court for past due child support and past due sums due for costs of health insurance premiums.

Legal Analysis

The Commissioner determines who should manage a beneficiary's benefits and how they should be managed

Congress granted the power to determine who should manage a beneficiary's benefits and how they should be managed to the Commissioner in section 205(j) of the Act. Such power includes the rights to appoint or remove a representative payee and to direct them. See Social Security Act § 205(j); 20 C.F.R. §§ 404.2025 (stating what information a representative payee must report to the Agency); 404.2035 (directing the use of benefits by and specifying the reporting responsibilities of a representative payee); 404.2040 (specifying how a representative payee should use the beneficiary's benefits); 404.2045 (directing the investment of conserved funds by a representative payee); 404.2050 (stating circumstances under which the Agency will remove a representative payee and appoint a successor payee); 404.2065 (requiring a representative payee to account for the use of benefits and provide information to the Agency regarding the beneficiary).

The Supremacy Clause of the Constitution, Article VI, cl. 2, states that the "Constitution, and the laws of the United States which shall be made in Pursuance thereof ... shall be the supreme Law of the Land, and the Judges in every State shall be bound thereby, anything in the Constitution or Laws of any State to the Contrary notwithstanding." The Supreme Court has recognized it "is a seminal principle of our law that the constitution and the laws made in pursuance thereof are supreme; that they control the constitution and laws of the respective States and cannot be controlled by them."

Memorandum from OGC Policy and Legislation Division to Office of Disability Division of Medical and Vocational Policy, Issues Related to Disability Examiners Ordering Consultative Examinations and Tests and Medical and Psychological Consultants Developing Cases for Disability Determination Services (DDS) in Other States (August 21, 1998) (citing Hancock v. Train, 426 U.S. 167, 178 (1976)) (internal quotation marks omitted).

The Agency has not relinquished its sovereignty. That is, the Agency has not consented to the jurisdiction of the state court. "[I]t is well-established that the Federal Government, as sovereign, is immune from suits in and the orders of state courts, unless the sovereign has consented to submit itself to the jurisdiction of such court, which in the present case, it has not." Memorandum from Regional Chief Counsel, Chicago, to Manager, Cleveland Downtown Field Office, Charles C~, Advice About State Court Order to Appoint Representative Payee (October 4, 2002) (citing United States v. Sherwood, 312 U.S. 584 (1941)). Sovereign immunity in concert with the Supremacy Clause of the Constitution and the Act, supports our position that the Agency controls who should manage a beneficiary's Social Security benefits and how they should be managed. Because the Agency has not consented to submit itself to jurisdiction of the state court, the Montana Eighth Judicial District Court cannot override the Agency's regulations that direct how representative payees manage the benefit payments they receive.

B. The anti-assignment provision of the Act

Section 207 of the Act protects a beneficiary's right to receive Title II benefits directly and to use them as he or she sees fit by prohibiting the assignment of benefits. See Social Security Act § 407(a) (The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.). Section 1631(d)(1) of the Act, 42 U.S.C. § 1383(d)(1), incorporates section 207 to similarly protect Title XVI (SSI) payments. See also 20 C.F.R. §§ 404.2001(b), 416.601(b); POMS GN 02410.001.

"Under the Act, therefore, Social Security benefits and the associated rights under the Social Security Act are generally neither assignable nor subject to legal process. Indeed, section 207's broad bar against the use of any legal process to reach Social Security benefits includes not only all claimants or creditors, but also states." Memorandum from Regional Chief Counsel, Philadelphia, to Regional Commissioner, Philadelphia, Pennsylvania Support Decree Assigning Social Security Payments - Rachel R. M~ (March 25, 1994) (citing Philpott v. Essex County Welfare Bd., 409 U.S. 413, 416-17 (1973)). In sum, section 207 of the Act is intended to protect the rights and benefits arising under the Act "from all attempts to use legal process to alienate them, unless Congress has specifically indicated otherwise." Memorandum, Pennsylvania Support Decree, supra.

"Federal courts have generally interpreted section 207 broadly. Courts have upheld the bar of section 207 when attempts have been made to alienate Social Security benefits from both recipients and representative payees." Id. (citing Tidwell v. Schweiker, 677 F.2d 560, 566-68 (7th Cir. 1982) (holding that a consent form, which a state psychiatric facility asked those seeking hospitalization to sign authorizing the facility to reimburse itself for the cost of hospitalization from the Social Security benefits of the individual, violated section 207); Woodall v. Bartolino, 700 F. Supp. 210, 219-20 (S.D. N.Y. 1983) (holding that court orders may not properly be entered against Social Security benefits when they are managed by representative payees in order to enforce the application of the benefits to the care and maintenance of an institutionalized individual).

C. Both court orders violate the anti-assignment provision of the Act

We believe the January 2002 and October 2006 court orders violate section 207 of the Act, because both constitute legal processes that seek to affect rights arising under the Act. The Supreme Court in Washington Dep't of Social and Health Servs. v. Guardianship Estate of Danny Keffeler, 537 U.S. 371 (2003), explained that, for the purpose of section 207, "other legal process" should be understood to be process much like the processes of execution, levy, attachment, and garnishment, and at a minimum, would seem to require utilization of some judicial or quasi-judicial mechanism, though not necessarily an elaborate one, by which control over property passes from one person to another in order to discharge or secure discharge of an allegedly existing or anticipated liability.

Keffeler, 537 U.S. at 385. The Keffeler court also pointed to the Agency's own POMS, which define "legal process" as used in section 207(a) of the Act as "the means by which a court (or agency or official authorized by law) compels compliance with its demand; generally, it is a court order." Id. (citing POMS GN 02410.001 (2002)).

The orders at issue can be construed as assigning control of Landen and Cameron's Social Security benefits to someone other than the representative payee, i.e., to the court. "Identifiable Social Security benefits cannot be taken by judicial order, and in this case it appears that they have been." Memorandum, Pennsylvania Support Decree, supra (citing Woodall, 700 F. Supp. at 221). The state court has assumed the authority to decide who shall manage the children's Social Security benefits, and how they shall be managed. However, as noted above, Congress has granted the power to make that selection exclusively to the Commissioner in section 205(j) of the Act, and the Commissioner's regulations and decisions issued thereunder are clearly to be given deference. See Keffeler, 537 U.S. at 382. Both the January 2002 and October 2006 orders constitute legal processes to which the children's benefits have been subjected because both orders state, with specificity, how the children's parents are to spend the auxiliary Social Security benefits.

D. Possible termination of benefits to representative payee

Under the Agency's regulations, a representative payee has the responsibility to ensure that Social Security benefits are used only for the benefit of the beneficiary in the manner the representative payee determines to be in the best interests of the beneficiary. See 20 C.F.R.

§ 404.2035 (emphasis added). Even when a representative payee enters into a stipulation that the court approves, as is the case here, "it could be said that by complying with the court order, [the individual] has allowed [his or] her rights and responsibilities as a representative payee to be usurped: [the individual] is not making the decisions about the use of the funds . . . ." Memorandum, Pennsylvania Support Decree, supra.

Currently, Ms. W~ is the children's representative payee. There is no question that Ms. W~ is in a difficult legal predicament. By abiding by the state court's orders, she does not have unfettered discretion to satisfy her obligations as a representative payee. Conversely, by attempting to satisfy her obligations as a representative payee, Ms. W~ would place herself in legal jeopardy for failing to comply with the state court's orders. If she complies with the court's order, the Agency may determine she is no longer willing or able to carry out her responsibilities as payee, see 20 C.F.R. § 404.2050, and consider terminating her as representative payee and appointing a successor payee, see 20 C.F.R. § 404.2050, other than Mr. Y~, who is also bound by the state court's order. As a matter of litigation policy, the Agency does not get involved in section 207 issues that arise after the Agency has completed payment to the beneficiary. As an alternative to removing Ms. W~ immediately as representative payee, however, the Agency could advise her in writing of section 207's prohibition on assignment or alienation of Social Security benefits. If Ms. W~ wants to avoid being terminated as the representative payee after the date determined by the Agency, she may choose to seek legal representation to petition the court to rescind, vacate or amend its orders, whichever is appropriate pursuant to the court's local rules, directing the use of the children's auxiliary Social Security benefits.

This matter is complicated further by a motion filed by Mr. Y~ dated July 16, 2007, for past due child support and health insurance premiums in the amount of $7,387.22. Thus, it appears Ms. W~ may not have complied with the state court orders, at least for some period of time. Ironically, if Ms. W~ never complied with the court orders, and there is no evidence of misuse, the Agency would have no cause to terminate her as representative payee.

SSA must be mindful to take appropriate action in a case such as this to avoid liability for potentially misused benefits. 20 C.F.R. § 404.2041 (Agency will repay benefits if the Agency's negligent failure in investigating or monitoring the representative payee results in the misuse). Because of the shifting representative payee responsibilities from 2002 to 2005, we recommend the Agency request an accounting from Ms. W~ and Mr. Y~ to determine how they used the benefits in their care.


The state court's orders cannot override the controlling Federal statute and the Agency's implementing regulations. The orders violate section 207 of the Act, which prohibits assignment of an individual's Social Security benefits. The Agency determines who can manage a beneficiary's benefits, who can be a representative payee, and how the benefits can be managed. If Ms. W~ is unwilling or unable to request that the court modify the court orders to eliminate language regarding assignment or transfer of the children's benefits, the Agency should terminate Ms. W~ as the representative payee.

Deana R. E~-L~
Regional Chief Counsel
By: _______________

Stephanie F. K~
Assistant Regional Counsel

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PR 07210.029 - Montana - 12/23/2008
Batch run: 04/25/2016