PR 07211.055 Wisconsin

A. PR 11-103 SSI – Wisconsin – Review of State Court Decree Regarding Child’s Benefits for Alex M~

DATE: May 10, 2011

1. SYLLABUS

A court order directing how a representative payee uses a beneficiary's social security benefits is not binding on the payee. Section 207 of the Social Security Act prohibits attempts to direct the disposition of benefits certified to a representative payee. If a court order directs a payee how to use an individual's social security benefit, the payee can use section 207 as a defense against such action.

2. OPINION

You asked us to review an order issued by the Circuit Court of Milwaukee County (Wisconsin), Family Court Branch; to determine whether the court has improperly directed the use of Social Security benefits; and to provide appropriate language for any letters with which to respond, if necessary, to the order. The order directs John M~, who served as representative payee for his son Alex from February to October 2010, to deposit a sum of money equal to the benefits he received on Alex’s behalf into a trust account, as well as any additional Social Security benefits he received on Alex’s behalf after October 2010, and not to spend the money until further order of the court. In addition, Mr. M~ claims that the court has instructed that his son cannot give any of his benefits to Mr. M~. We have attached proposed language that can be used in a letter to John M~ so that he can better explain SSA’s program responsibilities to the court. Below we explain the basis for that proposed language. While the court cannot direct the use of Social Security benefits, the court’s order in this case would not necessarily result in an improper direction of benefits.

BACKGROUND

John A. M~ (the NH) began receiving Social Security disability benefits in January 2010. In February 2010, M~ applied for auxiliary benefits on behalf of his son Alex M~, who was seventeen years old at the time. SSA appointed the NH as Alex’s representative payee, with an effective date of January 2010. The NH served as Alex’s representative payee through October 2010, during which he received $9400 in benefits for Alex. In October 2010, Alex turned eighteen and SSA placed Alex in direct payment. Prior to Alex’s eighteenth birthday, the NH spent all of Alex’s benefits on Alex’s current maintenance and support. Alex continues to live with the NH and, according to the NH, has agreed to share in the household expenditures.

The NH and Sandra A. M~, Alex’s mother, have divorced. The NH has filed a motion for support from Sandra with the Family Court Branch of the Milwaukee County (Wisconsin) Circuit Court. In November 2010, a state Circuit Court judge issued an order that the NH’s attorney set up a trust account, and that NH place in the account a sum representing the amount of money that he received in Social Security benefits on Alex’s behalf from January through October 2010. The Order also directed the NH to place into the trust account any additional Social Security benefits that he received on Alex’s behalf after October 2010. The money is to remain in the trust account until further order of the court. The November 2010 Order stated that if the NH failed to comply with the Order, he faced sanctions including dismissal of his motion for support, contempt, possible incarceration, and the assessment of attorney fees and costs against him. The Order also indicates that the court has appointed a guardian ad litem in the case. The NH has reported that the court informed him that the guardian ad litem will decide whether the NH should have given part of the benefits he received as Alex’s payee to his ex-wife, and how the money in the trust account should be distributed between the NH and his ex-wife. According to the NH, because he spent all of Alex’s benefits on Alex’s support and maintenance, he complied with the Order by placing his own money, in an amount equivalent to the benefits he received on Alex’s behalf, in the court-ordered trust account.

According to the NH, Judge G~ has also informed him that Alex may not give the NH any of the benefits that Alex is receiving in direct payment. The NH states that Alex still lives with him at least half the time, and wishes to use his benefits for household expenses such as food, clothing, and shelter.

 

DISCUSSION

The Act protects a beneficiary’s right to receive Social Security by prohibiting the assignment or attachment of benefits:

The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or the operation of any bankruptcy or insolvency law.

42 U.S.C. §§ 407(a), 1383(d)(1). “Legal process” means any “judicial or quasi-judicial mechanism . . . by which control over property passes from one person to another[.]” Washington Dep’t of Social and Health Services v. Guardianship Estate of DA.y Keffeler, 537 U.S. 371, 385 (2003). That includes court orders. POMS GN 02410.001. The anti-assignment provision thus constitutes a “broad bar against the use of any legal process to reach all social security benefits,” and is intended to protect the rights and benefits from all attempts to use legal process to alienate them, unless Congress has specifically indicated otherwise. Philpott v. Essex County Welfare Board, 409 U.S. 413, 417 (1973).

However, it is not clear that the order to place in trust an amount equal to the amount the NH received on Alex’s behalf constitutes an order to pay over Social Security benefits themselves. Indeed, the NH has indicated that he complied with the Order by placing the requisite sum of his own money into the court-ordered trust account, because Alex’s benefits were spent and not conserved. In addition, the NH is no longer Alex’s representative payee, and SSA records establish that he has not received any benefits on Alex’s behalf since October 2010. Thus, although court order improperly orders the NH to turn over any benefits received after that time, the NH did not actually receive any such benefits.

The NH has reported that the state court intends to have the court-appointed guardian ad litem decide whether the NH should have handed over to his ex-wife some of the benefits certified to the NH as Alex’s payee, and determine how the money in the trust account should be distributed between the NH and his ex-wife. A state court has the authority to take into account the fact that a parent, custodial or non-custodial, has a child’s benefits certified to him as representative payee in determining whether, or how much, maintenance and support the parent should or should not give or receive. The court may not, however, order a payee to spend the benefits certified to him in a particular manner. Although the direction of Social Security benefits does not appear to be directly at issue in this case, we believe it is appropriate to provide the NH with a letter that may help describe the program responsibilities of a representative payee. In the letter, we state that SSA approved the NH’s use of Alex’s benefits when he was the representative payee. You should verify that this is true before including this language.

CONCLUSION

The Milwaukee County Circuit Court has no authority to direct the use of Social Security benefits. However, it is not clear that the court’s order requires that any benefits paid prior to October 1, 2010 be paid over to the attorney’s trust fund. In fact, the NH has advised that he paid over his own funds, rather than Social Security benefits. Although the court improperly orders the NH to pay over any benefits he received on Alex’s behalf after October 1, 2010, he did not actually receive any such benefits. To the extent that the court has advised that Alex cannot pay any of his benefits to the NH, this would violate the Social Security Act at 42 U.S.C. § 407.

Donna L. C~
Regional Chief Counsel, Region V

By ______________
Julie L. B~
Assistant Regional Counsel

B. PR 10-056 Wisconsin: Court Order Directing Representative Payee’s Handling of Funds Concerning Trina J~ – REPLY Your Reference: S2D5G6 Our Reference: 10-0048

DATE: January 27, 2010

1. SYLLABUS

A court order directing representative payee’s disposition of benefits on behalf of beneficiary is not binding on the payee. Section 207 of the Social Security Act prohibits attempts to direct the disposition of benefits certified to a representative payee. If a court order directs a payee how to use an individual's social security benefit, the payee can use section 207 as a defense against such action.

2. OPINION

You have asked us for an opinion regarding a representative payee, the Bureau of Milwaukee Child Welfare (BMCW), which has been ordered by a Wisconsin state court in a number of cases to use a recipient’s benefits in a certain way. The specific example you gave to us was a case in which BMCW was ordered to pay $250.00 per month to Cindy M~, mother of Social Security beneficiary Trina J~, in order to provide for Trina’s care, food, clothing and shelter during home passes. The payee has requested a statement from Social Security that it can present to the court so as to avoid having to pay the ordered amount. We conclude that the court order, along with any other court orders of this nature, would be inconsistent with the agency’s rules governing representative payees. We have included a draft letter which you may send to the representative payee which explains Social Security’s position so that BMCW may inform the court of its responsibilities and of Social Security’s position that the state court order is not binding and does not relieve the representative payee of its responsibilities.

BACKGROUND

In the example you gave us, BMCW is the representative payee for the minor, Trina J~, who receives child’s insurance benefits. Trina currently lives in an out-of-home placement but apparently is able to visit her mother, Ms. M~, during “home passes.”

On November 17, 2009, the Circuit Court of Milwaukee County, Children’s Division, entered an order directing BMCW to pay Ms. M~ $1,100.00 per month for the months of October and November 2009 and to pay her $250.00 per month beginning December 1, 2009, in order to provide for Trina’s care, food, clothing, and shelter during home passes. This disbursement is to continue for the remainder of Trina’s out-of-home placement.

BMCW has requested a statement from Social Security so that it will not have to send the money to Ms. M~.

 

DISCUSSION

As an initial matter, a state court lacks the authority to direct the disposition of benefits that are paid to a representative payee. Aside from some exceptions not pertinent here, Social Security benefits are exempt from any legal process by 42 U.S.C. 407(a), which provides that:

The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title 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 POMS GN 02410.001. The Supreme Court has stated that this section imposes a broad bar against the use of any legal process to reach all Social Security benefits. Philpott v. Essex County Welfare Board, 409 U.S. 413, 417 (1973). For example, in Tidwell v. Schweiker, the court held that, where an individual was asked to turn over her rights to Social Security benefits upon entering a state institution, this violated section 407. 677 F.2d 560, 566-68 (7th Cir. 1982). Similarly, the court in Woodall v. Bartolino, a class action involving representative payees, held that county officials may not use the power of the state courts to enforce the application of Social Security benefits to the care and maintenance of an institutionalized individual. 700 F.Supp. 210, 220 (D. N.J. 1985). The Woodall Court added, “[I]t is the responsibility of the federal government, not the state, to enforce the duties of a representative payee . . . .” Id. at 218 (emphasis original).

Pursuant to the foregoing authority, SSA has issued a precedential POMS on the issue of whether a state court may direct a representative payee to pay SSI to a parent who is not the representative payee but who retains partial custody of the child. See POMS PR 07211 Wisconsin (PR 03-159 SSI – Wisconsin – Court Order for Payment of Funds by Gregory S~ to Susan M. S~) (July 22, 2003). SSA concluded that this type of arrangement violates section 207. Accordingly the court’s order in this case, which also attempts to direct a representative payee to use SSA benefits to pay a fixed amount to a non-custodial parent for care of her daughter, violates section 407.

We also conclude that the court’s order directing the payment of SSI funds impermissibly interferes with the discretion of a representative payee. A representative payee has a responsibility to use benefits for the use and benefit of the beneficiary in a manner and for the purposes he or she determines to be in the beneficiary’s best interests. 20 C.F.R. § 404.2035(a); POMS GN 00602.001(A)(1). If BMCW complies with the court order, it may no longer be using its discretion to determine what is in Trina’s best interests. Rather, it may have effectively delegated a portion of its representative payee duties to the state court. This is inconsistent with the rule that only SSA may select a representative payee, not a state court. 42 U.S.C. § 405(j); 20 C.F.R. §§ 404.2001-404.2024. Moreover, to the extent a state court orders payment in a way that is not for the use and benefit of the beneficiary, BMCW may be responsible for repaying those benefits. See 20 C.F.R. § 416.641; POMS GN 00604.060.

Accompanying this opinion, we have included a draft letter which you may send to the representative payee regarding this issue. This letter explains generally Social Security’s position so that BMCW may inform the court of its responsibilities and of Social Security’s position that the state court order is not binding and does not relieve the representative payee of its responsibilities.

CONCLUSION

For the above reasons, we conclude that the court order, along with any other court orders of this nature, would be inconsistent with the agency’s rules governing representative payees. We have also provided a draft letter explaining Social Security’s position, as you have requested.

Donna L. C~
Regional Chief Counsel, Region V

By ______________
Anne M~
Assistant Regional Counsel

C. PR 03-172 Creditor Seizure Of SSI Benefits In Representative Payee's Bank Account - Gabrielle E. and Aaron B. M~

July 31, 2003

1. SYLLABUS

Section 207 of the Social Security Act prohibits attempts to direct the disposition of benefits certified to a representative payee. If a creditor attaches a beneficiary's account, for which a representative payee has only a fiduciary interest, the creditor's action violates section 207. A representative payee has no ownership interest in the benefits received on behalf of beneficiary and must use such benefits for the current needs of the beneficiary. Failure to do so constitutes misuse and is grounds for a change of representative payee. A representative payee can use section 207 as a defense against attachment by creditors.

2. OPINION

You have asked for our opinion as to whether a creditor has the right to seize Title XVI benefits from a bank account that only contains Title XVI funds that belong to two children Gabrielle E. M~, ~ and Aaron B. M~, ~. Their mother, Chris D. N~, is their representative payee; therefore, her name is on the account as their payee. A collection agency (creditor) is automatically withdrawing the benefits because Ms. N~ has a debt with them. A Justice of the Peace in Great Falls, Montana, ruled that the funds were not Social Security funds, but a personal loan to the mother because she was on the account as representative payee. For the reasons set forth below, we believe the creditor's action violates section 207 of the Act. We also believe the court erroneously considers the children's SSI benefits to be property of their mother.

Section 207(a) of the Act, 42 U.S.C. § 407, states that:

(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.

42 U.S.C. § 407(a). "This section is specifically incorporated into the statutory provisions pertaining to the SSI program by section 1631(d)(1) of the Act, 42 U.S.C. § 1383(d)(1)." Memorandum from Regional Chief Counsel, Philadelphia, to Regional Commissioner, Philadelphia, Pennsylvania Support Decree Assigning Social Security Payments - Rachel R. M~, SSN: ~ (March 25, 1994). "Section 207(a) applies not only to funds in the hands of SSA that have not yet been paid out, but also to funds that have been disbursed." Id. (citing 42 U.S.C. § 407(a) ("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 . . . .")). Indeed, the protections of section 207 continue to apply to the proceeds of a social security benefit or supplemental security income payment that is held in a bank account, so long as the funds can be traced to the Federal payment. See Philpott v. Essex County Welfare Bd., 409 U.S. 413, 416-17 (1973); Dean v. Fred's Towing, et al., 245 Mont. 366, 371-372 (1990).

"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." Memorandum, Pennsylvania Support Decree, supra (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)).

"Federal courts have also enforced the protection of section 207 from post-judgment garnishment procedures that allowed the garnishment of bank accounts containing social security funds, where the procedures did not clearly distinguish these funds." Memorandum, Pennsylvania Support Decree, supra (citing Finberg v. Sullivan, 634 F.2d 50, 63 (3d Cir. 1980) (holding that bank accounts may not be attached without regard to whether they contain social security funds); Reigh v. Schleigh, 595 F. Supp. 1535, 1555 n.15 (D. Md. 1984) (holding that notice to debtors must inform them of the exemption of social security benefits from attachment); Deary v. Guardian Loan Co., Inc., 534 F. Supp. 1178, 1187-88 (S.D. N.Y. 1982) (holding that judgment debtors were entitled to notice of both the exemptions to which they may be entitled and the procedures for assessing those exemptions).

The cases cited above "demonstrate how clearly and carefully courts have followed the language of section 207. As section 207 sets forth, 'none of the moneys paid . . . shall be subject to legal process.'" Memorandum, Pennsylvania Support Decree, supra (quoting 42 U.S.C. § 407). Thus, we believe the creditor's seizure of the children's SSI benefits constitutes an attachment that violates section 207.

Moreover, Gabrielle and Aaron, the two children, are the individuals that SSA had found eligible for SSI payments, not Ms. N~, their mother. See Memorandum, Pennsylvania Support Decree, supra (citing 42 U.S.C. § 1382 (for definition of eligible individual)). Because the children are the individuals eligible for SSI payments, those payments are their property, not their mother's, who is simply their representative payee. See id. Representative payees have no ownership interest in the SSI payments. They must use the payments for the use and benefit of the eligible individual. See 42 U.S.C. § 1383(a)(2)(ii)(I). Failure to do so constitutes misuse and is grounds for a change of representative payee. See 20 C.F.R. § 416.650(a); POMS GN 00604.001. "Although we have found no [Montana] cases precisely on point, we have found authority in other jurisdictions that support this proposition." See Memorandum, Pennsylvania Support Decree, supra (citing Miller v. Shapiro, 225 A.2d 644, 646 (Conn. Cir. Ct. 1966) (holding that child's insurance benefits are the child's property and not the parent's or the representative payee's)). Because the children's SSI benefits are not their mother's property, they may not be seized to discharge Ms. N~'s debt. See id.

In conclusion, "section 207 is intended to protect social security benefits from all attempts to use legal process to alienate them, unless Congress has specifically indicated otherwise." Memorandum, Pennsylvania Support Decree, supra. However, if any court action is to be taken at this time, Ms. N~ should take it, through her attorney. If Ms. N~ does not take action to stop the seizure of her children's benefits, SSA should appoint a new representative payee for Gabrielle and Aaron. Then the creditor will not have access to the children's funds.

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

By ______________
Thomas H. K~
Assistant Regional Counsel

D. PR 03-159 SSI - Wisconsin - Court Order for Payment of Funds by Gregory S~ to Susan M. S~ - REPLY Our Ref. No.: 03-P-063

DATE: July 22, 2003

1. SYLLABUS

A court order directing how a representative payee uses a beneficiary's social security benefits is not binding on the payee. Section 207 of the Social Security Act prohibits attempts to direct the disposition of benefits certified to a representative payee. If a court order directs a payee how to use an individual's social security benefit, the payee can use section 207 as a defense against such action.

2. OPINION

Pursuant to the direction of POMS § GN 00602.120(2), you have requested our opinion regarding an order issued by the Barron County Circuit Court Family Court Branch, Wisconsin requiring Gregory S~ to pay funds to his ex-wife Susan M. S~. We conclude that the Agency is not bound by the court order, and does not need to take any legal action with respect to the order. However, the Agency may wish to send a letter to Gregory S~ and/or the court explaining the court's lack of authority on this issue and a representative payee's responsibilities with respect to the benefits.

BACKGROUND

As we understand the facts, Gregory S~ is currently serving as the representative payee for their minor child, Robert's SSI benefits. At the time of the initial application, both parents were living together but Susan S~ was not made the representative payee because she was known to the field office as a recipient of SSI benefits and may have not been competent to serve as representative payee.

On March 24, 2003, pursuant to divorce proceedings, Barron County Circuit Judge James E~ issued an order. The order directs that both Gregory S~ and his ex-wife Susan S~ be awarded joint legal custody and share physical custody of their minor child, Robert. The order also directs that Susan S~ be awarded specific placement including alternating weekends, every Tuesday, Monday, Wednesday, Thursday and alternating Fridays from after school until the conclusion of Gregory S~'s workday, school snow days and Robert's sick days during Gregory S~'s work hours. Gregory S~ has placement at all other times. The court order further directs that "[n]either party shall pay child support to the other. If the Social Security Administration continues to pay SSI for Robert, Susan S~ shall receive such payment."

DISCUSSION

It is well established that the Social Security Administration is not bound by a state court order. See United States Const. art. VI, Cl. 2 (the Supremacy Clause); Hercules Inc. v. United States, 516 U.S. 417, 422-23 (1996). However, in this situation, the Agency is not a party to this order and has not been asked or ordered to take any action. The issue is whether the provision in the court order that Robert's SSI benefit payments be made to Susan S~ is an improper assignment of benefits.

Section 407 of Title 42 of the United States Code provides:

The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or the operation of any bankruptcy or insolvency law.

42 U.S.C. §§ 407(a), 1383(d)(1) (emphasis added).[1]

The Agency is not being directed to pay the amount to the mother but the court order is directed to Gregory S~, Robert's father. See Rose v. Rose, 481 U.S. 619, 635 (1987) ("Thus, while it may be true that these funds are exempt from garnishment or attachment while in the hands of the Administrator, we are not persuaded that once these funds are delivered to the veteran a state court cannot require that veteran to use them to satisfy an order of child support.").

It is unclear whether the court is ordering Gregory S~ to release Robert's funds to the mother for child support as the order specifically references the payment of SSI benefits to Susan S~ under the "Child Support" section of the order. This is somewhat confusing since the court order specifically directs that "[n]either party shall pay child support to the other." It appears that the court order is based on the grounds that Susan S~ will require money to provide for Robert's needs when she has physical custody of him and presumably, will use the money for Robert's basic needs while he is in her care.

However, Susan S~ is not the representative payee. As representative payee, Gregory S~, still retains the obligation to ensure that all funds, including those given to the mother, are used for Robert's needs, i.e., for food, shelter, clothing, medical care, and personal comfort items. See 20 C.F.R. §§ 416.635, 416.640, 416.665. A court cannot assign a representative payee for a Social Security claimant or direct the disposition of benefits certified to a representative payee. Designation of a representative payee is reserved solely to the Agency, which may also change the rep payee. 42 U.S.C. § 1383(a)(2); 20 C.F.R. §§ 416.601-416.665.

Even if the court's direction of the benefits in this case is intended to benefit Robert, it is still invalid. Id. The court does not have authority to direct that Susan S~ receive Robert's SSI funds. 42 U.S.C. § 407(a). See Washington State Department of Social and Health Services v. Guardianship Estate of Keffeler et. al., 123 S.Ct. 1017, 1027-28 (2003) (section 407(a) barred State's legal action when not acting as a representative payee despite providing for the care and maintenance of a beneficiary); Philpott v. Essex County Welfare Bd., 409 U.S. 413, 416-17 (1973) (section 407 "imposes a broad bar against the use of any legal process to reach all social security benefits."). The court's direction of Robert's SSI funds is thus directing benefit monies by a "legal process" and is prohibited by statute.

We recommend that the Agency consider sending a general informational letter to Gregory S~ and/or the court to clarify that the Agency is not bound by a state court order because, generally, state courts do not have jurisdiction and are prohibited under 42 U.S.C. § 407 from directing to whom benefits will be paid. This letter would also clarify that the representative payee Social Security selects to receive the benefits retains responsibility to ensure that the funds he receives as representative payee are properly spent. A representative payee is obligated under federal law to properly use the funds only for the recipient's use and benefit. See 20 C.F.R. §§ 416.635, 416.640, 416.665. The Agency is not liable if the representative payee breaches his obligation to ensure proper use of all of the SSI recipient's benefit payments. See 20 C.F.R. § 416.641. However, the representative payee can be held personally liable for misuse of benefits. The Agency may change the representative payee or take any other action allowed under the regulations if the representative payee pays the benefits to another, including another parent, and cannot establish that the funds were expended for the SSI recipient's needs. See 20 C.F.R. § 416.650.

CONCLUSION

In sum, we conclude that we should not take any court action regarding the order. However, we suggest sending an informational letter to Gregory S~ and/or the Court as outlined above.

Kim L. B~
Acting Regional Chief Counsel, Region VII

By ______________
Thomas H. K~
Assistant Regional Counsel

 

E. PR 03-155 Court Order Directing Use of Monthly Social Security Benefits - John A. H~(Revised) On November 5, 2002, we issued an opinion stating the court order did not contravene SSA regulations.

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 J~, 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 J~] 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 ~(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. [3]

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


Footnotes:

[1]

There is a statutory exception to provide garnishment from social security payments to fulfill child support obligations, which is not at issue in this case since these benefits are for the child, who does not owe any child support obligation. 42 U.S.C. § 659.

[2]

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

[3]

"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).


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/1507211055
PR 07211.055 - Wisconsin - 06/02/2011
Batch run: 04/25/2016
Rev:06/02/2011