TN 3 (10-16)

PS 09905.007 Dallas Region

A. PS 16-185 Request to Vacate Texas State Court Order-SSI Recipient

Date: September 2, 2016

1. Syllabus

This opinion addresses a Texas state court order that selected a representative payee different from the one selected by SSA. The state court order is contrary to controlling federal law. The state court order conflicts with the Social Security Act Sections 205(j) and 1631(a), and with regulations, which provide that SSA is exclusively responsible for selecting a representative payee, and which set forth the rights and responsibilities of representative payees with regard to use of the Social Security benefits they receive on a beneficiary’s behalf. Sections 207(a) and 1631(d)(1) of the Social Security Act (Act) provide that Title XVI SSI payments are not subject to legal process and that the right to such benefits may not be assigned or transferred.

2. Opinion

QUESTIONS PRESENTED

This memorandum is in response to your request for a review of whether a March XX, 2016, Texas state court order directing the Texas Department of Family and Protective Services (TDFPS), the current representative payee for the number holder A~ (NH), a minor child, to send the NH’s Supplemental Security Income (SSI) payment of benefits (payments or benefits) to the NH’s attorney ad litem conforms with Social Security law. In addition, you asked for our assistance in preparing a letter to assist TDFPS in responding to this state court order.

ANSWER

A state court order cannot supersede federal law, and this Texas state court order attempts to do so by essentially selecting a different representative payee and directing how SSI payments are to be managed for the NH. The March XX, 2016 Texas state court order directing TDFPS, the current SSA selected representative payee, to send the NH’s SSI payments violates sections 207(a) and 1631(d)(1) of the Social Security Act (Act), which provide that Title XVI SSI payments are not subject to legal process and that the right to such benefits may not be assigned or transferred. See 42 U.S.C. §§ 407(a), 1383(d)(1). The state court order also provides that the NH’s guardian ad litem is to be responsible for directing disbursements of the SSI funds to the child. In doing so, the state court order conflicts with the Act and regulations, which provide that SSA is exclusively responsible for selecting a representative payee, and which set forth the rights and responsibilities of representative payees with regard to use of the Social Security benefits they receive on a beneficiary’s behalf. See 42 U.S.C. §§ 405(j), 1383(a)(2); 20 C.F.R. §§ 416.601 – 416.665. Consequently, the state court order is contrary to controlling federal law.

Regarding your request for assistance in responding to the state court order, we have provided language for you to send to TDFPS explaining the controlling federal law regarding management of Social Security payments and a representative payee’s responsibilities. Without addressing the specifics of the court case, which SSA is not a party to, in this letter we explain that under the supremacy of federal law, the Act does not permit a state court to direct a representative payee how to manage a number holder’s SSI payments.

BACKGROUND

According to the information provided in your request, effective May 22, 2014, SSA selected TDFPS as the representative payee for the NH, a minor child and SSI recipient. On March XX, 2016, an associate judge in the 315th Judicial District Court in Harris County, Texas (state court) issued an Order Regarding Child’s Social Security Benefits (state court order) in the case, In the Interest of A~, Child. The state court noted that the NH, a child, was in the permanent managing conservatorship of TDFPS, and that all parental rights had been terminated. The state court order also noted that TDFPS received $733.00 each month in SSI benefits from the agency for the NH’s benefit. The state court determined that “these funds have not been specifically dedicated to be used for the benefit of the child.” The state court also referenced an earlier state court order dated August XX, 2015 (not included with the information provided) that found it was in the NH’s best interest for Social Security to disburse benefits to the NH and entered specific orders regarding the how to disburse these benefits.

With regard to the NH’s SSI benefits, the state court ordered that within ten days of receiving the NH’s SSI payments, TDFPS must send those SSI payments to the NH’s attorney ad litem to deposit into the attorney ad litem’s Interest on Lawyers’ Trust Account (IOLTA) for the NH’s benefit. In addition, the state court directed the attorney ad litem to disburse the SSI payments to the NH from the IOLTA account as the NH’s guardian ad litem directs. The state court order directed the attorney ad litem to provide monthly statements to the NH by the tenth day of each month setting out all deposits and disbursement of the NH’s SSI payments. The state court order further set forth specific hearing procedures for resolving disagreements between the child and the NH’s guardian ad litem as to disbursement of the NH’s SSI payments

ANALYSIS

I. The State Court Order Conflicts with Federal Law Prohibiting the Transfer or Assignment of the Right to Social Security Benefits and Improperly Subjects the Social Security Benefits to Legal Process

The state court order, which directs TDFPS to send the NH’s SSI payments to the NH’s attorney ad litem, violates sections 207(a) and 1621(d)(1) of the Act. Section 207(a) provides that “[t]he 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.” See 42 U.S.C. § 407(a); see also 20 C.F.R. § 404.1820(a). For purposes of the SSI payments at issue here, section 1631(d)(1) of the Act incorporates section 207(a) by reference and applies it to Title XVI of the Act. See 42 U.S.C. § 1383(d)(1). Thus, under the Act, Social Security benefits are generally neither assignable nor subject to legal process. See 42 U.S.C. §§ 407(a), 1383(d)(1); Washington Dept. of Social and Health Services v. Guardianship Estate of Danny Keffeler, 537 U.S. 371, 385 (2003). In other words, the Act “prohibit[s] the transfer of control over money to someone other than the beneficiary, recipient, or the representative payee.” Program Operations Manual System (POMS) GN 02410.001A (noting that SSA’s responsibility for protecting payments against legal process and assignment ends when we pay the beneficiary or recipient, but once paid, sections 207 and 1631(d)(1) of the Act continue to protect the Social Security payments as long as we can identify them as SSI payments).

Here, because the state court order directs TDFPS to send the NH’s SSI payments to the NH’s attorney ad litem, it is attempting to assign control of the NH’s SSI payments to someone other than TDFPS, the NH’s SSA selected representative payee, in violation of the Act. As such, the state court order conflicts with federal law governing the management of Social Security benefits.

A state court order cannot supersede federal law. See U.S. Const. Art. VI, cl. 2 (the Supremacy Clause declares the Constitution and the laws of the United States as the supreme law of the land and that judges in every state are bound by federal law); Bush v. Vera, 517 U.S. 952, 991-992 (1996) (“The Supremacy Clause obliges the States to comply with all constitutional exercises of Congress’ power.”). Therefore, the state court order directing TDFPS to send the NH’s SSI payments to the NH’s attorney ad litem is in clear conflict with federal law.

II. The State Court Order Conflicts with Federal Law Governing Representative Payees

By instructing that the attorney ad litem is to receive all of the NH’s SSI payments and that the guardian ad litem is to determine how to disburse the NH’s SSI payments, in essence, the court is trying to select a new representative payee. In doing so, the state court order conflicts with the Act and agency’s regulations giving SSA the exclusive right to select the representative payee and controlling the rights and responsibilities of representative payees in how they use Social Security benefits. See 42 U.S.C. §§ 405(j), 1383(a)(2); 20 C.F.R. §§ 416.601 – 416.665. The Commissioner’s regulations provide that SSA will select a representative payee to receive benefit payments in certain situations if the agency believes that the interest of a beneficiary will be served by a representative payment rather than direct payment of benefits. See 20 C.F.R. §§ 416.601, 416.610 (generally, if a beneficiary is under age 18, the agency will pay benefits to a representative payee). The term “representative payee” refers to the receipt of a beneficiary’s Social Security benefits by a third party consistent with an agreement that the funds will be used for the beneficiary’s current maintenance and reasonably foreseeable needs. See 20 C.F.R. §§ 416.635, 416.640. The regulations also set forth an order of preference in who the agency is to select as a representative payee for a beneficiary under age 18, which includes a natural or adoptive parent, a guardian, a relative, a stepparent, a close friend, and an authorized social agency or custodial institution. See 20 C.F.R. § 416.621(c). Thus, SSA has exclusive authority to select the representative payee, and here, SSA selected TDFPS to serve in this role. However, the state court has directed that the attorney ad litem is to receive all of the NH’s SSI payments and the guardian ad litem is to determine how to disburse the NH’s SSI payments. As such, the state court has essentially attempted to usurp SSA’s authority by selecting a different representative payee contrary to federal law giving SSA exclusive authority to select the representative payee.

Furthermore, the state court is attempting to order TDFPS as to how it should use the NH’s benefits, which is also contrary to federal law giving representative payees the discretion to manage the use of a beneficiary’s Social Security benefits. The Social Security regulations set forth specific responsibilities that the representative payee must abide by and explain how the representative payee is to use the benefit payments. See 20 C.F.R. §§ 416.635, 416.640. The regulations require that the representative payee use his or her discretion in using the benefit payments for the “use and benefit of the beneficiary” and in the beneficiary’s best interest. See 20 C.F.R. § 416.635; see also POMS GN 00602.001 (a representative payee has the “full right and duty to spend [the benefits] in the best interest of the beneficiary, according to his/her best judgment.”). The regulations further provide that the representative payee is presumed to use the benefits properly if the payments are used for the beneficiaries’ current maintenance. See 20 C.F.R. § 416.640(a). Current maintenance includes costs incurred in obtaining food, shelter, clothing, medical care, and personal comfort items. Id.

Here, the state court order directing TDFPS, the representative payee, to send the NH’s SSI payments to the NH’s attorney ad litem conflicts with federal law giving the responsibility to the representative payee to use discretion in determining the use of the NH’s benefit payments for the NH’s best interests. See 20 C.F.R. § 416.635 (noting that only the representative payee has the discretion to determine how to best use Social Security benefits in the beneficiary’s best interest). Thus, the state court order conflicts with federal law. As noted above, a state court order cannot supersede federal law. See U.S. Const. Art. VI, cl. 2 (federal supremacy clause prohibits a state court from imposing its will over federal law). As such, the state court did not have the authority to order TDFPS, as representative payee, to send the NH’s SSI payments to the NH’s attorney ad litem or to give the guardian ad litem the authority to determine how to disburse the SSI payments.