Opinion ID: 775595
Heading Depth: 2
Heading Rank: 1

Heading: Violation of &#167 5301(a)

Text: 12 Section 5301(a) was designed to protect veteran's benefits against their creditors so that the veterans themselves could spend those funds as they saw fit when they actually got them, and not before. Thus, it reads, in pertinent part: 13 Payments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. 14 As far as we know, this provision has not been construed previously, but it is not overly murky. Had Congress said much more, it would probably have had to resort to pleonasm. Still, in practice it does seem rather technical to hold that a prisoner like Nelson cannot be given the benefit of an early draw on his funds, which suggests that we should say a bit more on this subject. 15 Perhaps the best thing to say is that this looks very much like the provision that protects Social Security benefits, and the courts have had much to say about that congressional declaration. Congress provided that: 16 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. 17 42 U.S.C. &#167 407(a). While the language is somewhat different from &#167 5301(a), its reach is essentially the same. 18 The Supreme Court has had occasion to visit that Social Security provision. See Bennett v. Arkansas, 485 U.S. 395, 108 S. Ct. 1204, 99 L. Ed. 2d 455 (1988) (per curiam). When it did so, it dealt with an Arkansas statute that authorized the state to seize a prisoner's property in order to help defray the cost of maintaining its prison system. Id. at 396, 108 S. Ct. at 1205. The Court was not impressed with the argument that the state was supplying all of the prisoner's needs. Id. at 398, 108 S. Ct. at 1205-06. Instead, it said, Section 407(a) unambiguously rules out any attempt to attach Social Security benefits. The Arkansas statute just as unambiguously allows the State to attach those benefits. As we see it, this amounts to a `conflict' under the Supremacy Clause -a conflict that the State cannot win. Id. at 397, 108 S. Ct. at 1205; see also Philpott v. Essex County Welfare Board, 409 U.S. 413, 415-17, 93 S. Ct. 590, 591-92, 34 L. Ed. 2d 608 (1973). We have followed that lead and have declared that a state cannot pay for a prisoner's maintenance costs by attaching his Social Security benefits. Brinkman v. Rahm, 878 F.2d 263, 265-66 (9th Cir. 1989). And we have gone on to declare that a district court properly ordered that Social Security benefits `are exempt from legal process and cannot be used to pay the plaintiff's cost of care without the patient's knowing, affirmative and unequivocal consent.'  Crawford v. Gould, 56 F.3d 1162, 1167 (9th Cir. 1995). 19 We have not overlooked the consent language which we have just quoted, but that cannot be deemed to mean consent to withdrawal of funds that accrue in the future. 5 If it did, it would be directly contrary to the provision that a right to future payment shall not be transferable or assignable. 42 U.S.C. &#167 407(a). That spendthrift provision precludes consent to a taking of future benefits. Of course, &#167 5301(a) also declares that benefits to become due . . . shall not be assignable. Thus, to the extent that the Prison Officials consider Nelson's drawing on his account when it has insufficient funds to be consent to a hold on, and assignment of, future veteran's benefits, they cannot deflect his disavowal of that by chanting overdraft protection. 20 But, the Prison Officials now argue, the amounts they put a hold upon and removed from the account are for maintenance and care 6 and in 1937 the Supreme Court said that veteran benefit payments are for that very purpose. See Lawrence v. Shaw, 300 U.S. 245, 249-50, 57 S. Ct. 443, 445, 81 L. Ed. 623 (1937). What they overlook is the fact that the Court was dealing with a situation where the state sought to tax bank accounts, including those which held veteran's benefits, and the Court said that could not be done. Id. Even after receipt and deposit, the funds remained subject to the call of the veteran, or his guardian, and could not be touched. Id.; see also District of Columbia v. Reilly, 249 F.2d 524, 525 (D.C. Cir. 1957) (per curiam). That does not offer much solace to the Prison Officials. 21 Reasonably enough, the Prison Officials then argue that a number of state courts have allowed the taking of funds for maintenance and care purposes. See Cruce v. Ark. State Hosp., 241 Ark. 680, 691-92, 409 S.W.2d 342, 349 (1966); Gundry v. Wiarda (In re Lewis' Estate), 287 Mich. 179, 186, 283 N.W. 21, 24 (1938); Okla. ex rel. E. State Hosp. v. Beard, 600 P.2d 324, 325-26 (Okla. 1979) (per curiam); State Dep't of Pub. Welfare v. DeBaker (In re Guardianship of Bemowski), 3 Wis.2d 133, 142, 88 N.W.2d 22, 27 (1958). We cannot blame the Prison Officials for citing those state cases, but must point out that neither we nor the other federal courts have accepted that approach. In a chimerical search for some kind of purpose, those cases overlook the words of the statutory provision by claiming that Congress could not have meant what it said. But if Congress wanted to create exceptions to the language, it knew how to do so. In fact, it did provide for some in &#167 5301(a) itself, as well as in &#167 5301(c) & (d). 22 Therefore, we agree with the district court that &#167 5301(a) precludes the Prison Officials from placing holds on Nelson's account. Of course, notwithstanding the Prison Officials' jeremiad to the contrary, this does not preclude Nelson from directing that payments be deducted from funds which exist in his account at the time that he issues the direction. Nothing we say here precludes him from currently spending the benefits he has received. 7 In fine, Nelson's statutory rights under &#167 5301(a) were violated.