You requested an opinion as to the propriety of Indiana state court orders brought
to SSA’s attention by the Indiana Department of Child Services (DCS). These orders
either: (a) mandate a representative payee to use benefits for only certain expenditures
(e.g. a restricted savings account for educational use), or (b) change the appointed
representative payee. These orders are not consistent with Federal law and do not
override Agency regulations where the Federal government has not submitted to the
sovereignty of the state court. Furthermore, the court orders violate section 207
of the Social Security Act (the Act) (the anti-assignment provision). See 42 U.S.C. § 407(a). Lastly, if the representative payees were to follow the court
orders, they would be in violation their duty to spend the benefits for only the use
and purpose of the beneficiary (i.e. current maintenance) and would be held personally
liable for repayment of any misused benefits. See 20 C.F.R. §§ 404.2035(a), 404.2041(a). We have attached some suggested language to
send to DCS, informing them of the basis for SSA’s position and reminding DCS of its
responsibilities as a representative payee.
DCS has been receiving orders from Indiana state courts which they believe to be problematic.
Typically, DCS is appointed representative payee by SSA for all children that are
wards of the state and receive Social Security benefits, meaning DCS receives the
child beneficiary’s benefits and determines how these benefits are to be disbursed.
Recently, however, Indiana state courts have begun issuing court orders which purport
to require any combination of the following: to change the representative payee to
a party other than DCS, to redirect part of a child beneficiary’s Social Security
benefits to a party other than DCS, or to stipulate how a child beneficiary’s Social
Security benefits are to be used.
For example, a recent Indiana state court order changed a child beneficiary’s representative
payee to her foster mother and stated that the foster mother must place the child’s
Social Security benefits in a restricted savings account. The court order mandated
that the foster mother be allowed to remove $50.00 per week for “use and benefit”
of the child, but the remainder of the money was only to be used for the child to
“further her education and support herself after her eighteenth (18) birthday.”
DCS finds such orders problematic because they do not believe that a state court can
remove DCS from its role as representative payee or require a representative payee
to use Social Security benefits in a certain manner for a child beneficiary.
SSA appoints a representative payee to receive a child’s benefits if the child beneficiary
is unable to manage or direct the management of benefits payments in his or her interest.
See 20 C.F.R. § 404.2001. Congress granted the Social Security Administration the power
to determine who should manage a beneficiary’s benefits and how they should be managed
in section 205(j) of the Social Security Act. Such power includes the power to appoint
or remove a representative payee when necessary, and the power to direct how the representative
payee uses the benefits. See 42 U.S.C. § 405(j); 20 C.F.R. §§ 404.2025; 404.2035 (directing use of benefits and
responsibilities of representative payee); 404.2045 (instructing investment of conserved
funds); 404.2050 (providing circumstances for removal of representative payee and
appointment of new representative payee); 404.2065 (requiring representative payee
to account for use of benefits).
Moreover, it is well established that the federal government, as sovereign, cannot
be subjected to suits in state courts, unless the sovereign has consented to submit
itself to the jurisdiction of the state court. 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, 586 (1941)). Indeed, in State ex rel. W.B., 755 So. 2d 281 (La. App. Ct. 1999), a Louisiana state court ordered the Louisiana
Department of Child Services, which was appointed representative payee for a minor
child, to pay a monetary award to the child’s mother that represented 10 months of
benefits. Upon review, the appellate court found that the state court lacked jurisdiction
to order Child Services to pay benefits to the child’s mother, as this effectively
changed the representative payee to the child’s mother during that time period. The
court reasoned that “[t]he SS benefits program is a federal program…[so] the decision
to appoint, and the designation of a ‘representative payee’ is made by the [SSA]”
and “[a] request to change the ‘representative payee’ is a question for the federal
agency, the [SSA], with possible review by the federal courts.” Id. at 282. Accordingly, the court found that the state court did not have the “authority
or power to change the ‘representative payee,’ or order an award of benefits that
effectively changed the ‘representative payee.’” Id. See also MacGilvray v. Kanarskee, 196 Misc. 2d 469 (N.Y. Spec. Term 2003) (holding that, while the representative payee
appointed by the state court might be treated as a “nomination,” the “final determination
of who shall be the representative payee, however, remains within the province of
the Social Security Administration”).
Here, the SSA has not relinquished its sovereignty and submitted to the jurisdiction
of Indiana state courts. Because the SSA has not consented to submit itself to jurisdiction
before state court, Indiana state courts cannot override the Agency’s regulations.
Therefore, SSA is not required to obey court orders which attempt to appoint new representative
payees or prohibit a representative payee from using funds in a certain way. SSA,
not state courts, appoints representative payees and SSA requires those representative
payees to comply with the federal statutes and SSA regulations.
The state court orders here also violate section 207(a) of the Social Security Act.
42 U.S.C. § 407(a). Section 207(a) states:
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…
Therefore, under the Act, Social Security benefits are generally neither assignable
nor subject to legal process. Federal courts have interpreted Section 207 broadly,
meaning the bar against legal process includes not only claimants and creditors, but
also States. See Memorandum from Regional Chief Counsel, Philadelphia, to Regional
Commissioner, Philadelphia, Pennsylvania Support Decree Assigning social Security
Payments (March 24, 1994) (citing Philpott v. Essex County Welfare Bd., 409 U.S. 413, 416-17 (1973)). Courts have upheld the anti-assignment provision 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)).
Court orders that direct a representative payee to use Social Security benefits in
a certain way or change representative payees violate the anti-assignment provision
in Section 207 of the Act, because such orders constitute “other legal process.” As
the Supreme Court stated in Washington Dep’t of Social and Health Servs. v. Guardianship Estate of Danny Keffeler, 537 U.S. 371, 385 (2003), “‘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” (emphasis added). The Court then pointed to the POMS, which
defines “legal process” in Section 207 as “the means by which a court (or agency or
official authorized by law) compels compliance with its demands; generally it is a
court order” (emphasis added). Id. (citing POMS GN 02410.001). The Court held that the POMS’s definition of legal process “confirmed” its definition.
Id. (citing POMS GN 02410.001).
A state court order certainly fits within the definition of “other legal process”
as defined by the Court in Keffeler. By either changing the representative payee or dictating how benefits must be used,
the state courts are attempting to utilize court orders (“judicial mechanisms”) to
assign control of Social Security benefits (“property”) to someone other than the
assigned representative payee. Furthermore, the POMS advises that court orders are
most typically what constitute “other legal process.” POMS GN 02410.001 (2002). Thus, the state court orders constitute “other legal process” and violate
the anti-assignment provision in Section 207(a). 42 U.S.C. § 407(a). SSA is not bound
by state court orders which attempt to either order a representative payee to use
Social Security benefits in a particular way or change the representative payee.
Additionally, if the representative payee were to obey a court order that instructed
the representative payee to use Social Security benefits in a manner inconsistent
with SSA policy, then that representative payee would be violating his or her duty
to the beneficiary. See 42 U.S.C. § 405(j); 42 U.S.C. § 1383(a)(2). Under the regulations, a representative
payee must ensure that Social Security benefits are used only for the “use and benefit”
of the beneficiary and in the manner and for the purposes that the representative
payee determines to be in the “best interests” of the beneficiary. 20 C.F.R. § 404.2035(a).
SSA will consider payments given to the representative payee to have been used for
the “use and benefit of the beneficiary” if they are used for the beneficiary’s “current
maintenance.” 20 C.F.R. § 404.2040(a)(1). Current maintenance is defined as “costs
incurred in obtaining food, shelter, clothing, medical care or personal comfort items.”
Id. If any amount remains after the representative payee has used the benefits for the
beneficiary’s current maintenance, then the representative payee can conserve or invest
the remaining funds on behalf of the beneficiary. 20 C.F.R. § 404.2045(a). Conserved
funds are to be “invested in accordance with the rules followed by trustees” and invested
funds must “show clearly that the payee holds the property in trust for the beneficiary.”
The regulations provide that only the representative payee has the discretion to determine
how to best use the benefits in the beneficiary’s best interests. 20 C.F.R. § 404.2035(a).
Therefore, a representative payee could be in violation of SSA regulations if he allowed
another entity, including a court or a bank, to determine what is in the best interest
of the beneficiary. See Kriegbaum v. Katz, 90 F.2d 70,74 (2nd Cir. 1990) (“[T]he Social Security Administration alone has the
power to enforce the duties of a representative payee through the appointment of a
new payee when the current payee has not used the benefit payments on the beneficiary’s
behalf in accordance with the guidelines.”). Therefore, an order that prohibits the
representative payee from deciding how to best use the benefits for current maintenance
puts the payee in the position of being unable to comply with both the court order
and federal law.
In addition, if DCS, as representative payee, were determined to have misused Social
Security benefits, perhaps by allowing another party to obtain and use even part of
Social Security, for something other than what DCS deems to be the “use and benefit
of the beneficiary,” then DCS could be responsible for paying back the misused benefits.
20 C.F.R. § 404.2041(a). Furthermore, even if DCS were not forced to pay back these
benefits, SSA would be required to reimburse the child beneficiary for all benefits
paid out that are deemed misused. 20 C.F.R. § 404.2041(b).
DCS expressed concern over In the Matter of J.G., 652 S.E.2d 266, 273 (N.C. Ct. App. 2007), a North Carolina court of appeals case.
In that case, the lower court ordered the Department of Social Services, the representative
payee for a minor child, to use the child’s Social Security benefits to pay the monthly
mortgage on his home, $2,800 in past-due mortgage payments, and $1,000 in home repairs.
The court of appeals noted that it had previously held a trial court did not have
jurisdiction to direct the representative payee to make payments to the mother of
the beneficiary in Brevard v. Brevard, 328 S.E.2d 789, 792 (N.C. Ct. App. 1985). Id. However, the court attempted to distinguish this case from Brevard and upheld the lower court’s order. The court held that 42 U.S.C. § 407(a) (the anti-assignment
provision) applied only to actions brought by creditors or claimants, and the guardian
ad litem had brought the action in this case. Id. The court then went on to reason that it was necessary for state courts to have concurrent
jurisdiction over Social Security benefits because the state has the best interest
of the child in mind. Id.
SSA is not bound by state court rulings in cases where SSA was not a party. But in
any event, in O’Connor v. Zelinske, 668 S.E.2d 615, 621 (N.C. Ct. App. 2008), the court overturned J.G. while upholding Brevard. In this case, the trial court ordered the plaintiff to transfer the Social Security
benefits he received as representative payee for a minor child. Presumably, the trial
court had found the authority to do this from the court’s holding in J.G. On review, this court held that “to the extent, if any…the holding in J.G. is in contravention to the holding in Brevard, [it]…must follow the earlier precedent set in Brevard.” Id. The court noted that, although some jurisdictions determined that state courts had
concurrent jurisdiction to make decisions concerning Social Security benefits and
representative payees, they could not overturn the holding in Brevard. Therefore, the court vacated the trial court’s order for lack of subject matter jurisdiction
and overturned part of the holding in J.G. that gave the trial court concurrent jurisdiction over Social Security benefits.
Accordingly, J.G. should no longer provide support for state court orders requiring a representative
payee to use Social Security benefits in a certain way.
The state court’s orders cannot override the federal statute and Agency regulation’s
controlling the rights and duties of representative payees. Additionally, the state
court orders violate the anti-assignment provision in Section 207. See 42 U.S.C. § 407. We recommend you use the attached draft language to inform DCS of
Donna L. C~
Regional Chief Counsel
By: __ _________
Assistant Regional Counsel