Court Opinion

ID: 4712130
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:37:52.392228+00
Date Added: 2024-06-11T08:07:12.271223
License: Public Domain

Bridge, J.
(concurring in part/dissenting in part) — I agree with the majority that the Washington State Department of Social and Health Services (DSHS) impermissibly used social security funds to reimburse itself for past due foster care payments. However, the majority goes too far in concluding that any use of social security funds by DSHS violates the antiattachment rule. Under a fair reading of the controlling federal statute and regulatory authority, DSHS is entitled to use the funds to pay for current maintenance costs, provided that any special needs of the children are satisfied first.
The federal law governing the appointment of representative payees and the use to which funds received on behalf of beneficiaries can be put is 42 U.S.C. § 405(j). RCW 74.13.060 allows DSHS to become the custodian (i.e., representative payee) “without compensation” of social security funds17 payable to foster children:
The secretary or his designees or delegatees shall be the custodian without compensation of such moneys and other funds of any person which may come into the possession of the secretary during the period such person is placed with the department of social and health services pursuant to chapter 74.13 RCW.
Tracking federal law, state law provides that once DSHS becomes the custodian (“representative payee”) of the funds, DSHS is permitted to spend these funds only for the child’s “personal needs” or to reimburse the state for “the amount of public assistance otherwise payable to” the child during the period for which the benefits were paid. RCW 74.13.060(1), (2). Former WAC 388-70-069 (1983), repealed by St. Reg. 01-08-047 (Apr. 30, 2001), specifically allowed the social security funds to be used on behalf of the child to help defray the state’s cost for foster care:
(1) If a child in foster care is entitled to financial benefits the income received shall be used on behalf of the child to help pay for the cost of the foster care received, except for resources held *28in trust for an American Indian child according to provisions in WAC 388-28-650.
(a) Income includes SSI, RSDI [retirement survivors disability insurance], veteran’s benefits, railroad retirement benefits, inheritances, or any other payments for which the child is eligible, unless specifically exempted by the terms and conditions of the receipt of the income.
The majority concludes that “If DSHS’s reimbursement scheme is that of a creditor, the antiattachment provisions of § 407(a) [of the Social Security Act] apply and DSHS’s cost recovery policy runs afoul of a federal statute which preempts state law.” Majority at 17-18. This statement is misleading in its scope. The Social Security Act, chapter 7, 42 U.S.C., does not rule out appointment of a creditor as representative payee in all situations. One of the exceptions to the antiattachment provisions of the act allows the appointment of “an individual who is determined by the Commissioner... to be acceptable to serve.” 42 U.S.C. § 405(j)(2)(C)(iii)(V). Thus, even if DSHS is characterized as a creditor, the commissioner of social security may find, and here has found, DSHS acceptable to serve as a representative payee for these children in foster care.18 The determination of the Social Security Act should control. The real issue, in my view, is the conflict of interest that arises when DSHS serves both as a representative payee and as a creditor for the same funds (which funds belong to the eligible child, the beneficiary) and the permissible uses of such funds.
Federal regulations not only govern the selection of a representative payee, but also define the lawful uses to which a representative payee may put the social security funds entrusted to its care. Specifically, a representative payee has a responsibility to “[u]se the payments he or she receives only for the use and benefit of the beneficiary in a manner and for the purposes he or she determines, under *29the guidelines in this subpart, to be in the best interests of the beneficiary.” 20 C.F.R. § 416.635(a). Current maintenance, including the cost of food, shelter, clothing, medical care, and personal comfort items, is deemed to be for the use and benefit of the beneficiary. 20 C.F.R. § 416.640(a).
An example in the regulations clarifies the definition of “use and benefit” in the context of payments to an institution for current maintenance of the beneficiary and indicates a clear intent that special needs of the beneficiary should take precedence over general maintenance or reimbursement for care.19 The example states that the representative payee should deduct the cost of special needs items from the amount paid to the institution, and also makes clear that any remaining money may be used for current maintenance.
The majority relies on four federal cases to assert that DSHS may not use social security funds for current maintenance: Philpott v. Essex County Welfare Board, 409 U.S. 413, 93 S. Ct. 590, 34 L. Ed. 2d 608 (1973) (holding that New Jersey may not attach social security benefits to reimburse itself for welfare benefits); Bennett v. Arkansas, 485 U.S. 395, 108 S. Ct. 1204, 99 L. Ed. 2d 455 (1988) (holding that Arkansas may not attach federal benefits for care and maintenance of prisoners); Brinkman v. Rahm, 878 F.2d 263 (9th Cir. 1989) (forbidding Washington State *30from attaching federal benefits for the care of involuntarily committed mental health patients); and Crawford v. Gould, 56 F.3d 1162 (9th Cir. 1995) (holding that California may not deduct the costs of caring for psychiatric inpatients from a trust account to which social security payments were deposited).
These cases are readily distinguished from the DSHS practice at issue here. Critically, none of the cited federal cases involve the expenditure of social security benefits by a state that was designated as a representative payee. In fact, the class certified in Brinkman specifically excluded patients for whom the state served as representative payee. Brinkman, 878 F.2d at 264. As explained above, under federal regulations a representative payee has considerable authority to spend the funds entrusted to its control, provided the expenditures are for the best interests of the beneficiary. 20 C.F.R. § 416.635(a).
Thus, the issue as I see it is not whether DSHS may spend the funds for current maintenance, provided it gives priority to special needs of the foster children, but whether it may use those funds to reimburse itself for past maintenance or for its own administrative services, such as mileage reimbursements for social workers. The fact that DSHS in the context of reimbursing itself for past care of the beneficiary puts its need for reimbursement ahead of the needs of the foster children further demonstrates the fundamental conflict between its roles as representative payee and creditor.
The federal mandate to give priority to the special needs of the beneficiary directly conflicts with the express policy of DSHS to conserve the expenditure of public assistance funds on foster care and thereby lighten the burden on the taxpayer. See chapter 74.20 RCW (Support of Dependent Children):
It is the responsibility of the state of Washington through the state department of social and health services to conserve the expenditure of public assistance funds, whenever possible, in order that such funds shall not be expended if there are private *31funds available or which can be made available by judicial process or otherwise to partially or completely meet the financial needs of the children of this state.
RCW 74.20.010. The state aggressively pursues this recovery policy, not only seeking money for current maintenance but also sweeping lump sum payments into the treasury to prevent a child’s account from exceeding the $2,000 resource limit imposed by the Social Security Administration (SSA).
In order to provide states with an incentive to provide financial assistance to needy individuals awaiting disposition of their Supplemental Security Income (SSI) applications, Congress provided that back payments made at the time the secretary makes the first payment would be exempt from the general antiattachment rule. 42 U.S.C. § 1383(g)(2). However, a recent case held that a retroactive payment after a period of denial is not the same as an initial payment and therefore does not fall under the exemption to the antiattachment rule that is found in 42 U.S.C. § 1383(g)(2). Catarine v. Wing, 274 A.D.2d 310, 710 N.Y.S.2d 569 (2000). Accord Conaway v. Soc. Servs. Admin., 298 Md. 639, 471 A.2d 1058 (1984) (holding that the use of conserved social security benefits to reimburse the cost of past foster care is prohibited). Thus, the lump sums that DSHS “sweeps” into the treasury to reimburse the state for past foster care expenses cannot fall under the initial payment exception. There is no other exception which would validate DSHS’s action.
This sweeping of lump sums is not only unauthorized under any exception to 42 U.S.C. § 407(a), but also often constitutes double reimbursement. The sums “swept” to the treasury frequently reimburse the state for amounts already paid by the federal government under Temporary Assistance for Needy Families or paid by parental support. DSHS apparently keeps no accurate record to allow tracing of the “swept” sums.
Under § 407(a), rights to future payments are not transferable or assignable.
*32The 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). DSHS receives the payments not on its own behalf, but on behalf of the beneficiaries, and is not permitted to assign pending (i.e., future) payments to the reimbursement of its expenditures on behalf of the foster children. Where an agency puts reimbursement to itself ahead of the best interests of the child, ignoring the policy expressed in the federal regulations to prioritize the child’s special needs, it effectively transfers the payments to its own use. This transfer from the state in its role as representative payee to the state in its role as guardian of the public purse is contrary to § 407(a). Where the agency pursues that policy to the extent of double reimbursement, the conflict of interest is egregious.
To the extent that RCW 74.20A.010 encourages the state to “sweep” a child’s benefits into the treasury to repay past-due foster care, I agree with the majority that the statute is incompatible with § 405(j), which forbids any “substantial conflict of interest” between the payee and the beneficiary. 42 U.S.C. § 405(j)(2)(C)(iv)(II). See also 42 U.S.C. § 405(j)(l)(A) (mandating removal of a representative payee if the commissioner or a court of competent jurisdiction later determines that it has misused any individual’s benefit.) It is also incompatible with § 407(a), which prevents transfer of the benefits. Under the Supremacy Clause of the United States Constitution, federal law takes precedence. Thus, any use of social security funds for purposes other than current care and maintenance is unlawful, as is giving priority to maintenance over the children’s special needs.
Remedies
I agree with the majority that in relying on RCW 74.20A.010, DSHS has given preference to the interests of *33the taxpayer over the special needs of foster children and has acted as creditor by reimbursing itself for past payment of foster care, directly contrary to §§ 405(j) and 407(a) of the Social Security Act. But for reasons already set forth in this opinion, I would remand this matter to the trial court with directions to modify the injunction to prevent DSHS from using social security payments to reimburse the costs of past due foster care or other expenses not directly related to current maintenance, and to require DSHS give special needs a higher priority than current maintenance. On remand, the trial court should order DSHS to produce an accounting of social security fund disbursements for all children that had been in the custody of DSHS for the purpose of receiving foster care, establish restitution of social security funds used to reimburse DSHS for past due foster care expenses, other expenses not directly related to current maintenance, and unmet special needs, and determine appropriate attorney fees.
I thus respectfully concur in part and dissent in part from the majority opinion.
Ireland, J., and Guy, J. Pro Tern., concur with Bridge, J.
Reconsideration denied December 14, 2001.

 Social Security (SSA) and Supplemental Security Income (SSI) benefits.

 If the commissioner may find an individual acceptable to serve, he may presumably find an entity acceptable to serve. This interpretation is reinforced by the fact that the commissioner routinely appoints entities such as DSHS to serve as representative payees.

Example: An institutionalized beneficiary is entitled to a monthly Social Security benefit of $320. The institution charges $700 a month for room and board. The beneficiary’s brother, who is the payee, learns the beneficiary needs new shoes and does not have any funds to purchase miscellaneous items at the institution’s canteen.
The payee takes his brother to town and buys him a pair of shoes for $29. He also takes the beneficiary to see a movie which costs $3. When they return to the institution, the payee gives his brother $3 to be used at the canteen.
Although the payee normally withholds only $25 a month from Social Security benefit for the beneficiary’s personal needs, this month the payee deducted the above expenditures and paid the institution $10 less than he usually pays.
The above expenditures represent what we would consider to be proper expenditures for current maintenance.
20 C.F.R. § 404.2040(2)(b).