PS 01210.019 Kansas

A. PS 00-465 Tracy A. M~ Overpayment; State Court Authority to Discharge Federal Debt

DATE: April 16, 1999


Federal statue and regulations impose liability on those who receive an overpayment in Social Security payments. The supremacy clause of the United States Constitution denies a state court judge the power to exempt a representative payee from liability for an overpayment. Accordingly, an Order of Discharge from a Kansas District Court does not discharge the representative payee's liability for repayment of an overpayment.


You have asked for legal advice on whether a state court has authority to discharge liability for repayment of an overpayment, which is a federal debt.


According to the documentation submitted to our office, Tracy A. M~, now Tracy A. O~, began receiving social security child's benefits in June 1993. Benefits were being paid to her representative payee, First National Bank of Winfield, Kansas ("First National Bank"), who had previously been appointed to be Ms. M~'s conservator by the District Court of Cowley County, Kansas. In March 1998, Ms. M~ was married. During the months of March and April 1998, First National Bank received benefits on behalf of Ms. M~ in the amount of $1,549.60. Because of Ms. M~'s marriage, her benefits should have ceased effective March 1998. Thus, the $1,549.60, which First National Bank received on Ms. M~'s behalf in March and April of 1998, amounted to an overpayment. By letter dated July 7, 1998, the Social Security Administration ("SSA") advised First National Bank of the overpayment and requested repayment. On May 22, 1998, the Honorable J. M. S., judge for the District Court of Cowley County, Kansas, entered an Order of Discharge which discharged First National Bank from its duties as conservator for Ms. M~ and released the bank from any and all further liability. Based on Judge S. Order of Discharge, First National Bank contends that it is not liable for the overpayment it received on behalf of Ms. M~.


The Supremacy Clause of the United States Constitution provides:

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

U.S. Const. Art. VI, cl. 2 . Thus, the United States Constitution, together with federal statutes and regulations made in pursuance of the Constitution, are the supreme law of the land. Carter v. Carter, 298 U.S. 238, 296 (1936). See also Geier, et al. v. American Honda Motor Co., et al., 166 F.3d 1236, 1242 (D.C. Cir. 1999); In re Cook, et al., No. 98-10039, §F.3d, 1999 WL 123931 at *5 (5th Cir. 1999). Accordingly, state courts are bound to recognize the supreme authority of federal law. Harlan Sprague Dawley, Inc. v. Ind. Dept. of Revenue, 583 N.E.2d 214, 226 (Ind. T.C. 1991). In other words, "'the Supremacy Clause imposes on state courts a constitutional duty to proceed in such a manner that all the substantial rights of the parties under controlling federal law [are] protected.'" Id. (quoted citations omitted). "But as to persons that Congress [has] subjected to liability, individual States may not exempt such persons from federal liability by relying on their own [laws]. . . . States would then be free to nullify for their own people the legislative decisions that Congress has made on behalf of all the People." Howlett v. Rose, 496 U.S. 356, 383 (1990).

The statutory provision which governs with respect to recovery of Title II benefits, which includes child's benefits, provides in pertinent part: "Whenever the Commissioner of Social Security finds that more . . . than the correct amount of payment has been made to any person, . . . proper adjustment or recovery shall be made . . ." 42 U.S.C.A. § 404(a)(1) (West Supp. 1998). The statute further provides that the Commissioner of Social Security shall require such overpaid person to refund the amount in excess of the correct amount. Id. at § 404(a)(1)(A). See 20 C.F.R. § 404.501 et. seq. (1998). In the event that a representative payee is involved, as in this case, the Program Operations Manual System ("POMS") and case law permit SSA to seek recovery of an overpayment from the representative payee. POMS GN 02205.007 (March 1989); Corr ex rel. Corr v. Sullivan, 725 F. Supp. 413, 414 (N.D. Ind. 1989); Abrams v. Schweiker, 543 F. Supp. 589, 592 (N.D. Ga. 1982). Because the foregoing federal statute and regulations impose liability on those who receive an overpayment in Social Security benefits, the supremacy clause of the United States Constitution denies a state court judge the power to exempt a representative paye