This revised memorandum responds to your request for our opinion on the question of
whether Texas state law prohibits a representative payee that is also a court-appointed
guardian from collecting guardianship fees from Title II or Title XVI Social Security
Benefits. In addition, if Texas state law permits the collection of guardianship fees
from Social Security payments, does Texas state law limit the amount of guardianship
fees that may be collected for from individuals receiving Title II or Title XVI benefits?
This memorandum replaces the earlier version. We conclude that Texas state law does
not prohibit the collection of guardianship fees from Title II or Title XVI benefits.
Although Texas state law ordinarily limits guardianship fees to five percent, state
judges are permitted to award fees in excess of five percent if the court finds the
amount to be unreasonably low considering the services rendered.
You requested this opinion to resolve a dispute between the Office of Inspector General
(OIG) and the Harris County Guardianship Program (HCGP) regarding the appropriateness
of collecting guardianship fees from SSA's beneficiaries' funds under Texas state
law. HCGP (formerly Harris County Community Development - Guardianship) is a Harris
County governmental entity that was established to provide guardianship and related
services to indigent adults deemed incapacitated by one of Harris County's four probate
courts.
In 1998, HCGP began collecting guardianship fees as a method of supplementing their
program's income. An OIG audit revealed that HCGP reported that 88 of 571 beneficiaries
were assessed guardianship fees of $127,710 between May 1, 2000 and April 30, 2001.
OIG cites to the Texas Probate Code when asserting that guardianship fees are prohibited.
See Texas Prob. Code Ann. § 665(h)(1). HCGP disagrees with OIG that the Probate Code prohibits
collecting guardianship fees for these payments. HCGP denies that any limitations
as to guardianship fees in the Probate Code apply to them. Rather, they argue that
the Texas Administrative Code gives probate judges the authority to establish any
reasonable fee without limitation. However, as will be seen, we believe that the Texas
Probate Code controls.
As an introductory issue, we note that Federal law provides that qualified organizations
may collect a fee for their service as representative payee for Social Security beneficiaries
and Supplemental Security Income recipients. This includes any state or local government
agency whose mission is to carry out income maintenance, social service, or health
care-related activities. See Social Security Act (the Act) §§ 205(j)(4)(B) and 1631(a)(2)(D), 42 U.S.C. §§ 405(j)(4)(B)
and 1383(a)(2)(D). HCGP manages and monitors the beneficiaries' personal care, such
as placement in a residential facility and appropriate medical treatment. HCGP employs
approximately twenty-four caseworkers and three supervisors who also manage the financial
affairs of the beneficiaries and make personal decisions including living arrangements,
education, medical care, and social activities among others. Therefore, HCGP also
appears to satisfy the requirements to serve as a fee for service organizational representative
payee.
The Act expressly provides that a qualified organizational representative payee may
collect from an individual a monthly fee for expenses, including overhead, incurred
in providing services performed as representative payee. The fee is limited to the
lesser of either ten percent of the monthly benefit or $25 per month._11 See
Washington State Department of Social And Health Services, et al.,
v. Guardianship Estate Of Danny Keffeler, et al., 537 U.S. 371 n. 13 (2003). This limitation applies to organizational representative
payees who act on a fee for service basis. It does not address organizational representative
payees serving as court-appointed guardians. SSA has a practice of allowing use of
Title II and Title XVI benefits for computation of guardianship fees in some circumstances,
e.g., See POMS GN00602.40; GN 00506.210.
Under the Act, organizational payees who collect a fee for their service may not exceed
the Federal limits under any circumstances. Consequently, fee for service organizational
representative payees who exceed the federal limits in charging fees, are subject
to civil and criminal penalties. See Social Security Act §§ 205(j)(4)(C), and 1631(a)(2)(D)(iii), 42 U.S.C. §§ 405(j)(4)(C)
and 1383(a)(2)(iii).
However, your inquiry concerned assessment of fees by an appointed guardian who has
not qualified under the fee for services provisions discussed above, but under state
probate law.
As part of your inquiry, you requested our opinion on the issue of whether Texas state
law permits guardianship fees to be assessed against Social Security benefits. The
language of the Texas statute is arguably ambiguous by stating that, gross income
"does not include Department of Veterans Affairs or Social Security benefits received
by a ward." We believe that Texas law does not prohibit the collection of guardianship
fees from Social Security payments. See Texas Probate Code Ann. § 665(h)(1). This provision of the Probate Code merely prohibits
collection of guardianship fees, or the counting of Social Security income for that
purpose, when Social Security payments are given directly to the ward rather than
indirectly through a guardian.
We interpret the above-cited statute to prohibit a guardian from assessing fees for
income paid directly to the ward when the guardian had no control or responsibility
for that portion of the ward's income. Thus, a guardian is unable to include Social
Security payments that are made directly to the ward as part of the ward's gross income.
By excluding this income from the guardianship, the guardian cannot increase his fees
based on income that did not pass through his care or control. Tharp v. Blackwell, 570 S.W.2d 154 (Tex.Civ.App.-Texarkana Jul 31, 1978) (no. 8511)._11
Texas Probate Code § 665(a) governs the fees a guardian may charge in Texas. However,
HCGP maintains that there is no limitation with respect to the fees they may charge
for providing guardianship services, as long as the fees were approved by a Texas
judge. HCGP maintains that their authority to charge fees is derived solely from the
Administrative Code which contains no express fee limitations. However, that interpretation
is fundamentally at odds with Texas state law on statutory interpretation which provides
that statutes relating to the same class of things or purpose are to be construed
together. State of Texas v. William Owen Juvrud, 96 S.W.3d 550, 557 - 558 (Tex.App.-El Paso Nov 07, 2002) (No. 08-02-00064-CR). The
Texas Probate Code specifically provides for the appointment of guardians and the
fees they may charge. The Texas Administrative Code allows "a guardianship" to charge
to clients, but requires that any fees charged to an incapacitated person's funds
must receive prior approval from the judge having jurisdiction over the guardianship.
See Texas Admin Code Ann. § 381.323. This is plainly a more general rovision. Consequently,
the specific provisions of the Texas Probate Code on guardianship fees prevail over
other general statutes. Although the Texas state Probate Code provisions govern the
award of guardianship fees, HCGP is correct when they maintain that a state judge
has the authority to depart from the ordinary fee limitation.
The Texas Probate Code provides that the court may set fees "not to exceed five percent"
of the ward's gross income. This represents the maximum fee ordinarily permitted for
guardians under Texas law. The fee is granted only after the court finds the guardian
has properly taken care of and managed the ward's estate. See Texas Prob. Code Ann. § 665(b).
In very rare circumstances, the Texas Probate Code § 665(c) permits an interested
person to seek an exception to the maximum fee if the court finds that the amount
is unreasonably low when considering the services rendered as guardian. Therefore,
Texas state law governs the fees that a representative payee that performs guardianship
services may charge for its services as a guardian.
In conclusion, as an appointed guardian HCGP is not prohibited under state law from
charging guardianship fees. However, there is a statutory limit to such charges. You
may wish to undertake additional development to determine if the fees were within
the limits established by the Probate Code and/or whether HCGP obtained the requisite
findings to exceed the statutory maximum fees.
Tina M. W~
Acting Regional Chief Counsel, Region
By _______________________
William W. N~
Assistant Regional Counsel
_11The provision establishing a $25.00 limit also indicates that the Commissioner
will raise the amount annually in the same manner and to the same extent as adjustments
are made for other payable social security benefits. See Social Security Act § 205(j)(4)(A)(I)(II), 42 U.S.C. § 405 (j)(4)(A)(I)(II).
_22Certain civil procedure provisions of this case have been superseded by statute.
Nevertheless, the dicta in Tharp illustrates the Texas common law understanding of how Social Security benefits are
treated for purposes of calculating guardianship fees. Tharp
v. Blackwell, 570 S.W.2d 154, 160 - 161 (Tex.Civ.App.-Texarkana Jul 31, 1978) (no. 8511).