PR 07211.028 Missouri

A. PR 04-096 Your request for legal opinion regarding the Circuit Court of Franklin County Missouri attempt to direct payee use of benefits; Timothy R~, ~

DATE: March 10, 2004

1. SYLLABUS

A State court may not direct the disposition of Social Security or SSI benefits according to Social Security regulations. The Franklin County Court may not direct the payment of Federal social security or SSI benefits or name a representative payee.

2. OPINION

You have asked whether a state court may direct the disposition of Social Security benefits. The answer is no. Although the court order directs Lawrence R~ to pay the balance of Timothy R~ retroactive benefits over to Elizabeth B~, he properly returned the balance of the retroactive benefits to SSA. In addition, the order could not direct that SSA pay Timothy's R~ monthly benefit to Mrs. B~. However, because Mrs. B~ was made a representative payee pursuant to Social Security regulations, she will be the recipient of the balance of Timothy R~ retroactive benefits and his monthly benefit.

Factual Background

Your memorandum indicates that Lawrence R~ was appointed as a representative payee for his brother Timothy R~. Lawrence R~ received $30,698 in retroactive benefits. These funds were deposited in a checking account at First Bank in Washington, MO. Timothy R~ mother, Elizabeth B~, was later granted custody of Timothy and was appointed as the representative payee by SSA.

On August 11, 2003, the Franklin County Court issued an order concerning the retroactive benefits paid to Lawrence R~ on Timothy's behalf. The Court ordered that the conserved funds consisting of "$30,900 more or less" be paid to Mrs. B~. The order further directed that the funds be placed in a restricted bank account that could not be accessed by Mrs. B~ until Timothy turns 18 years old. The order also directed that Timothy R~ monthly benefit be redirected to Mrs. B~.

Based on this court order, Lawrence R~ contacted the Union, Missouri field office for guidance. Mr. R~ requested reimbursement for expenses he provided for the support of Timothy out of his own funds. Mr. R~ submitted documentation of these expenses and a payee accounting was completed. The field office determined that Mr. Lawrence R~ used $12,655 of his own funds for Timothy's support and maintenance. Lawrence R~ returned the remaining balance of $18,043 to the Agency. Mr. R~ has applied to be Timothy's legal guardian, but as of the time of this opinion, there was no evidence that Mrs. B~ did not have custody of Timothy R~.

Analysis

The issue in this case is the jurisdiction of the Franklin County Court over the disposition of Social Security funds. Congress enacted the Social Security Act (Act), granting the Commissioner of SSA the "full power and authority to make rules and regulations and establish procedures" consistent with the Act to carry out the provisions thereof. See 42 U.S.C. 405(a). As the United States Supreme Court recently stated, "when a statute speaks clearly to the issue at hand we 'must give effect to the unambiguously expressed intent of Congress.'" See Barnhart v. Thomas, 124 S.Ct. 376, 380 (2003), citing Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 104 S.Ct. 2778 (1984). In this case, Congressional intent was clear, the Commissioner of SSA may promulgate regulations and establish procedures to carry out the provisions of the Act.

Pursuant to the Commissioner's established regulations, because the child's representative payee was changed to the mother, Lawrence R~ was required to transfer all conserved benefit payments "to either a successor payee or to [SSA], as [SSA] will specify." See 20 C.F.R. § 404.2060 (2003). In this case, Lawrence R~ contacted Social Security for guidance regarding the transfer of retroactive benefits to Mrs. B~. In accordance with the regulations governing retroactive benefits and the changing of representative payees, Lawrence R~ returned the balance of retroactive benefits to the Agency after an accounting. See 20 C.F.R. §§ 404.2060, 404.2065, 416.660, 416.665; Program Operations Manual System (POMS) GN 00602.110, GN 00603.055. Pursuant to Agency policy, Mrs. B~ was named the new representative payee. See 20 C.F.R. §§ 404.2050, 416.650. The regulations direct that she will be provided the balance of Timothy's retroactive benefits to be held until he can become his own payee. See 20 C.F.R. §§ 404.2060, 416.660; POMS GN 00603.055.

Because the federal supremacy clause prohibits a state court from imposing its will over federal law based upon the clear intent of Congress, in this case the disposition of Social Security funds, the portion of the Franklin County Court's order requiring that "Timothy R~ funds consisting of$30,900 more or less" is without effect as the money was properly returned to SSA pursuant to Social Security regulations. See U.S. Const., Art. 6, cl. 2. Similarly, the portion of the Court order indicating that Timothy R~ monthly benefit payment must be paid to Elizabeth B~ is also not binding on SSA. However, because Mrs. B~ was selected as Timothy R~ new representative payee pursuant to SSA's regulations, she will receive the remaining balance of Timothy R~ retroactive benefits and his monthly child benefit. See 20 C.F.R. §§ 404.2001, 404.2060, 416.601, 416.660; POMS GN 00305.055

Conclusion

The Franklin County Court may not direct the payment of federal benefits or name a representative payee. Lawrence R~ properly returned the balance of retroactive benefits to SSA. However, SSA regulations direct that Elizabeth B~ will serve as the representative payee for Timothy R~ and the disposition of his retroactive benefits and his monthly benefits should be made consistent with SSA regulations.

Frank V. S~ III
Acting Regional Chief Counsel, Region VII

By ______________
Sean N. S~
Assistant Regional Counsel

B. PR 03-155 Court Order Directing Use of Monthly Social Security Benefits - John A. H~(Revised)_11

DATE: July 15, 2003

1. SYLLABUS

Under section 207 of the Social Security Act, social security benefits and the associated rights under the SS Act are generally neither assignable nor subject to legal process. Section 207 prohibits attempts to direct the disposition of benefits certified to a representative payee. SSA does not get involved in section 207 issues that occur after payment to a beneficiary has been completed. If a court order directs a payee how to use an individual's benefits, the payee can use sectin 207 as a defense against such action.

2. OPINION

Your office has requested our assistance in reviewing a court order, issued by the Montana Thirteenth Judicial District Court, Carbon County, to determine whether the order is contrary to Social Security Administration (SSA) regulations and policy. The court order directs the guardian/conservator and representative payee, Tracy J. R~, to deposit the future Social Security benefits of John A. ~H (John), a minor child, in a restricted guardian/conservator account at Edward Jones, an investment company in Red Lodge, Montana. The court order further provides that Ms. R~ shall be paid a monthly stipend of $548 from the restricted account for John's care and support, i.e., current maintenance. You have informed us that John's monthly Social Security benefits amount is $1095. For the reasons set forth below, we believe the court order violates section 207(a) of the Social Security Act (Act), 42 U.S.C. § 407(a).

Section 207(a) of the Act 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, or to the operation of any bankruptcy or insolvency law.

42 U.S.C. § 407(a). See also 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~, SSN: ~ (March 25, 1994) (citing Philpott v. Essex County Welfare Bd., 409 U.S. 413, 416-17 (1973).

"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).

"Furthermore, it 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~, SSN ~, Advice About State Court Order to Appoint Representative Payee (October 4, 2002) (citing United States v. Sherwood, 312 U.S. 584 (1941)).

Moreover, if Ms. R~ "complies with the court's order, she may violate her responsibilities as a representative payee." Memorandum, Pennsylvania Support Decree, supra (citing 42 U.S.C. § 1383(a)(2)). "Under the regulations, a representative payee has the responsibility to ensure [that Social Security] benefits are used only for the use and benefit of the beneficiary in the manner she determines to be in the best interests of the beneficiary." Id. (citing § 416.635); see also 20 C.F.R. § 404.2035. "In this case, it could be said that by complying with the court order, [Ms. R~] has allowed her rights and responsibilities as a representative payee to be usurped: she is not making the decisions about the use of the funds, but has turned them over to [the court and to Edward Jones] in accordance with the court order." Id.

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." Id. We believe the court's order, which can be construed as assigning control of John's Social Security benefits to another, is violative of section 207 because it constitutes legal process that seeks to affect rights arising under the Act. "Identifiable Social Security benefits cannot be taken by judicial order, and in this case it appears that they have been." Id. (citing Woodall, 700 F. Supp. at 221). Moreover, in the state court process used here, the state court has taken upon itself the authority to decide who shall manage the child's Social Security benefits, and how they shall be managed. However, 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 Washington Department of Social and Health Services v. Guardianship Estate of Danny Keffeler, 123 S.Ct. 1017 (2003). Because the state court's actions are contrary to the controlling Federal statute and the decision of the Commissioner issued thereunder, the state court's attempt to assume such authority must fail under the Supremacy Clause of the United States Constitution._22

As a matter of litigation policy, SSA does not get involved in section 207 issues that arise after payment to the beneficiary has been completed. Therefore, if any court action is to be taken at this time, Ms. R~, the person subject to the court's order, through her attorney, should take it.

Yvette G. K~
Acting Regional Chief Counsel, Region VII

By ______________
Thomas H. K~
Assistant Regional Counsel

_11 On November 5, 2002, we issued an opinion stating the court order did not contravene SSA regulations.

_22 "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 of 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).


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PR 07211.028 - Missouri - 08/04/2008
Batch run: 01/27/2009
Rev:08/04/2008