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C.G.A. & I. Jousma v. State & C.G.A. (1/10/92), 824 P 2d 1364
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Notice: This is subject to formal
correction before publication in the Pacific
Reporter. Readers are requested to bring
typographical or other formal errors to the
attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska
99501, in order that corrections may be made
prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
C.G.A., )
) Supreme Court No. S-3476
Appellant, )
)
v. )
) Superior Court No.
STATE OF ALASKA, ) 3AN-87-388 CP
)
Appellee. )
_________________________)
)
IDA JOUSMA, ) O P I N I O N
)
Appellant, )
) Supreme Court No. S-3477
v. )
)
STATE OF ALASKA and )
C.G.A., ) [No. 3795 - January 10, 1992]
)
Appellees. )
_________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
Victor D. Carlson, Judge.
Appearances: R. Scott Taylor and Linda
Beecher, Assistant Public Defenders, and John
Salemi, Public Defender, Anchorage, for
C.G.A. Carol Daniel, and Michael Gershel,
Alaska Legal Services, Anchorage, for Ida
Jousma. Teresa Williams and Joseph Cooper,
Assistant Attorney Generals, Anchorage, and
Douglas B. Baily, Attorney General, Juneau,
for State of Alaska.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton, and Moore,
Justices.
RABINOWITZ, Chief Justice.
I. FACTS AND PROCEEDINGS
C.G.A. is a minor who has received social security
survivor's benefits from the time of his father's death. Social
security regulations require that a representative payee
("payee") be appointed for most minors who receive survivor's
benefits. 20 C.F.R. 404.2010(b) (1990).1 Here, the Social
Security Agency ("SSA") originally designated C.G.A.'s mother,
Ida Jousma, as C.G.A.'s payee. While serving as C.G.A.'s payee,
Jousma received $150 per month from SSA for the benefit of C.G.A.
In December of 1987, when he was fifteen, C.G.A. was
placed on probation for several counts of third degree criminal
mischief and placed in foster care pending placement in the Jesse
Lee Home, a home for troubled youths. On January 25, 1988, he
was formally committed to the custody of the Alaska Department of
Health and Social Services ("DHSS").
In May of 1988, C.G.A. was implicated for school
vandalism and apprehended while driving a stolen car. As a
result, he was adjudicated a delinquent and placed in McLaughlin
Youth Center ("McLaughlin").
C.G.A.'s probation officer informed the superior court
that C.G.A.'s mother was receiving $150.00 per month from SSA as
C.G.A.'s payee. Thereafter the superior court entered a child
support order requiring Jousma to pay $150.00 per month to the
state, effective June 1, 1988. This order specified that the
amount of $150.00 was "[t]he sum of payments received as Social
Security benefits of a deceased parent."
Jousma then moved to vacate the child support order.
C.G.A. joined this motion, asking that his benefits be held in
trust for him. Thereafter, Jousma voluntarily relinquished her
payee status. The SSA then held C.G.A.'s funds pending
designation of a new payee. That same month, the state garnished
$610.50 from Jousma's permanent fund dividend to partially
satisfy the accrued unpaid child support obligation.
Subsequently, the superior court determined that
Jousma, as a poverty level parent, should pay $40 per month child
support to the state, pursuant to AS 47.23.120(c)2 and Alaska R.
Civ. P. 90.3.3 Additionally, the court found that the state was
entitled to use the $150 monthly social security funds for the
care of C.G.A. The court based its determination on federal
regulation 20 C.F.R. 404.2040(a) & (b) (1990).4 The superior
court also found that Jousma had not previously spent the social
security survivor's benefits on maintenance of C.G.A., as she was
required to do under the applicable federal regulations. The
superior court further ordered Jousma to remit those funds which
she had received as payee since June 1, 1988 to the state. The
court also observed that the state could apply to become the
payee for C.G.A., and recommended that the state do so.
On May 18, 1989, the superior court entered the
following order:
1. The State of Alaska may apply to be
the representative payee of [C.G.A.'s] social
security survivor's benefits. The state may
use these funds to pay for his institutional
and other care.
2. Pending the designation of the state
as the representative payee of the minor's
benefits, Mrs. Jousma, the minor's mother,
will remit the funds she receives as repre
sentative payee to the state.5
Both Jousma and C.G.A. appeal. In their combined
brief, they raise the following issues:
1. Whether the Alaska Department
of Health and Social Services may obtain
a minor's social security survivor's
benefits to reimburse itself for the
cost of his incarceration.
2. Whether the trial court erred
in compelling a parent to pay over a
child's social security survivor's
benefits to the Alaska Department of
Health and Social Services as payment
for cost of the minor's incarceration.
3. Whether the trial court erred
in making findings concerning the
mother's use of C.G.A.'s social security
benefits.6
II. DISCUSSION
Both Jousma and C.G.A. argue that federal law preempts
the superior court's May 18, 1989 order. We uphold the superior
court's determination that the state may apply to become the
payee for C.G.A.7 However, we reverse the superior court's
ruling that the state may order Jousma to remit funds which she
lawfully received as representative payee to the state. We
retain jurisdiction of the question whether the state, as
designated representative payee, may apply C.G.A.'s benefits
toward the cost of his care at McLaughlin in order to afford the
parties the opportunity to obtain an initial determination of
this issue from the Social Security Agency.
A. Jousma's Appeal.8
Federal social security law unequivocally states that
"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. . . ." 42 U.S.C. 407(a)
(1983) ("section 407(a)"). Both Jousma and C.G.A. argue that,
under the supremacy clause of the United States Constitution,
section 407 preempts the state from appropriating C.G.A.'s SSA
benefits. See U.S. Const. art. VI.
Jousma's appeal is controlled by Bennett v. Arkansas,
485 U.S. 395 (1988) (per curiam). That case "involve[d] an
attempt by the State of Arkansas to attach certain federal
benefits paid to individuals who are incarcerated in Arkansas
prisons," pursuant to an Arkansas statute which authorized the
state to seize a prisoner's property in order to reimburse the
state for the cost of maintaining the prisoner. Id. at 396. The
Supreme Court of the United States held that section 407(a)
"unambiguously rules out any attempt to attach Social Security
benefits." Id. at 397. The Court also rejected the argument
that section 407 contained an implied exception when the state
has provided the recipient with care and maintenance. Id.
The child support order was a "legal process" which
attached C.G.A.'s social security benefits. So long as someone
other than the state was designated as payee for C.G.A., the
state had no legal right to C.G.A.'s funds. See Brinkman v.
Rahm, 878 F.2d 263 (9th Cir. 1989) (section 407 preempts state
from attaching involuntary mental patients' Social Security Old
Age Survivor's and Disability Insurance benefits).9
The state correctly notes that this interpretation
would prevent the state from ordering a noncustodial payee to pay
a child's social security benefits over to a custodial parent.
This could lead to an inequitable result if the appointed payee
was inappropriately spending the beneficiary's funds. However,
federal law provides a remedy when the appointed payee abuses her
fiduciary duty. See 42 U.S.C. 408(a)(5) (1991 Supp.);10 20
C.F.R. 404.2041 (1990).11 The very existence of a federal
remedy preempts state interference with an appointed payee's
decision to spend the social security benefits. See Brevard v.
Brevard, 328 S.E.2d 789, 792 (N.C. App. 1985). Therefore, the
superior court's order requiring Jousma, as representative payee,
to remit C.G.A.'s benefits to the state conflicts with federal
law.
Moreover, we disagree with the state's contention that
survivor's benefits can be distinguished from other social
security benefits. The state believes that C.G.A.'s survivors
benefits were to "replace the decedent's support, which has been
lost through his death"and that the state has merely "stepped
into the role of parens patriae."
In making this argument, the state relies on Rose v.
Rose, 481 U.S. 619 (1987). In Rose, the United States Supreme
Court upheld a state's contempt proceeding against a veteran for
unpaid child support, even though the veteran's only source of
income was federal veteran's benefits. Veterans' benefits are
protected by 38 U.S.C. 3101(a) which has an anti-attachment
provision similar to section 407(a). Id. at 630. The Court
found that state contempt proceedings would not impose on the
policy against placing the Veterans' Administration in the
position as a collection agency. Id. at 630, 635. More
importantly, the Court distinguished other cases in which it had
found preemption: in veterans' benefit cases, Congress clearly
intended that the benefits support not only the veteran, but the
veteran's family as well. Id. at 633-34. In Bennett, however,
the Supreme Court limited Rose to cases where the state is acting
on behalf of a beneficiary of the protected federal funds. 485
U.S. at 398. As the Court said in Bennett, "[h]ere, in contrast,
the State cannot be said to be a 'beneficiary' of petitioner's
Social Security benefits." Id.
B. C.G.A.'s Appeal12
C.G.A. raises two preliminary arguments to overturn the
superior court's order which provided that the state is
authorized, as representative payee, to use C.G.A.'s social
security benefits to pay for his institutional care provided by
the state. First, C.G.A. asserts that DHSS has no authority to
expend these funds for reimbursement purposes, and hence such
spending constitutes an abuse of agency power. Second, C.G.A.
contends that the state is preempted by federal law from spending
C.G.A.'s funds to reimburse itself for institutional care
furnished to C.G.A. We conclude that statutory authority exists
for the state to be designated C.G.A.'s representative payee, and
that, as payee, the state can devote C.G.A.'s benefit funds to
authorized expenditures. However, we conclude that the question
whether the state may apply C.G.A.'s SSA benefits towards the
cost of his care at McLaughlin should, under the doctrine of
primary jurisdiction, be submitted to the Social Security Agency
for initial determination.
1. DHSS has statutory authority to utilize
federal funds provided for C.G.A.'s care.
C.G.A. argues that "[n]o state statute or regulation
authorizes [DHSS] to utilize C.G.A.'s social security benefits to
pay for the cost of his institutionalization." However, AS
47.10.230(b) states, in part,
The department may pay the costs of
maintenance which are necessary to assure
adequate care of the child, and may accept
funds from the federal government that are
granted to assist in carrying out the
purposes of this chapter, or that are paid
under contract entered into with a federal
department or agency.
This statute allows DHSS to accept funds from the
federal government. Under the terms of the statute, DHSS's use
of these funds must comport with federal law. As C.G.A.
concedes, federal statutes and regulations allow states to act as
payee for social security beneficiaries. See 20 C.F.R.
404.2021(b)(7) (1990).13 Given the clarity and specificity of AS
47.10.230(b) and 20 C.F.R. 404.2021(b)(7), we find no merit to
C.G.A's argument that DHSS may only proceed pursuant to
regulations adopted under the Administrative Procedure Act.
Under the terms of AS 47.10.230(b), however, DHSS may only make
such use of C.G.A.'s funds as authorized by federal law.14
2. Federal regulations do not categorically
prevent states from reimbursing themselves for
institutional care provided to beneficiaries.
The superior court's order of May 1989 provides that
"[t]he state may use these funds to pay for [C.G.A.'s]
institutional and other care." C.G.A. argues that this portion
of the order is preempted by section 407 because his funds are
being spent in a manner contrary to his wishes. He contends that
the state "may not seize his benefits even if [it] were selected
as his payee." In other words, C.G.A. seems to argue that any
use of his funds by the state is preempted, even though there
have been no formal attachment proceedings. We reject this
argument. Social security regulations allow a state to become a
representative payee. 20 C.F.R. 404.2021(b)(7). The
regulations also allow representative payees to use some or all
of the benefits to pay for appropriate institutional care.15 The
regulations do not require that the representative payee consult
with the beneficiary before spending the funds. Thus, so long as
the state agency performs its duties as representative payee and
spends the funds only on authorized expenses, it would not
violate the prohibition on attachment found in section 407(a)'s
ban on attachment.
3. Did the superior court err when it held
that the state may spend C.G.A.'s benefits on the
cost of his care at McLaughlin?
We have previously determined that both federal and
state law allow the state to become the representative payee for
C.G.A. and allow the state to spend his social security
survivor's benefits on any expense authorized by federal law. We
must now address the question whether federal law authorizes the
state to spend C.G.A.'s funds on his care at McLaughlin.
C.G.A. argues that 42 U.S.C. 407(a) precludes DHSS
from seizing his social security benefits over his objection,
even under circumstances where DHSS acts as his representative
payee. C.G.A. further argues that while 20 C.F.R. 404.2040
provides that benefits may be used for maintenance and
institutional care, the regulations do not address the question
of whether a court may compel payment of benefits to a state
agency for the costs of incarceration over the beneficiary's
objection.16 In opposition the state argues that the cost of
institutional care is reimbursable, regardless of the type of
institution, because the component of maintenance is separable
from the component of detention.
Whether the state can obtain reimbursement for
incarceration costs from C.G.A.'s social security benefits is a
question which we believe should initially be determined by the
Social Security Agency.17 Thus, while retaining jurisdiction over
the issue, we conclude that the parties should be afforded the
opportunity to obtain an initial determination of this question
from the Social Security Agency.
Our decision to afford the parties an opportunity to
obtain an initial decision from the Social Security Agency rests
upon application of the doctrine of primary jurisdiction.18 As
noted by Professor Davis:
Primary jurisdiction is a doctrine
of common law, wholly court-made, that is
designed to guide a court in determining
whether and when it should refrain from or
postpone the exercise of its own jurisdiction
so that an agency may first answer some
question presented.19
G & A Contractors, Inc. v. Greenhouse, Inc., 517 P.2d 1379, 1382,
1383 (Alaska 1974) contains the following discussion of the
doctrine of primary jurisdiction:
The legal theory which forms the
touchstone of appellants' arguments is
founded on the administrative law doctrine of
primary jurisdiction. We are instructed by
Professor Davis that the doctrine of primary
jurisdiction deals with the question of
whether a court or an administrative agency
should make the initial decision on a given
issue. 3 K. Davis, Administrative Law
Treatise 19.01 at 2 (1958). Its purpose is
to help a court decide whether it should
refrain from exercising its jurisdiction
until after the agency has determined some
question or an aspect of some question
arising in the proceedings before the court.
The operational concept underlying the
doctrine is the need for an orderly and
reasonable coordination of the work of
agencies and courts. Whatever the agency's
expertise, opines Davis, the court should not
act on a subject peculiarly within the
agency's specialized field without first
taking into account what the agency has to
offer. Otherwise, litigants who are subject
to the agency's continuous regulation may
become victims of uncoordinated and conflict
ing requirements.
This, of course, is hardly to say
that the courts must in each and every case
defer to an agency determination. For
implicit in the concept of orderly and
reasonable coordination is the requirement
that the question of deferring to agency
expertise be decided with reference to the
unique facts of each case.20
(Footnote omitted.)
In accordance with the foregoing, we conclude that the
particular circumstances in the instant case require that the
issue in controversy be referred to the Social Security Agency
for initial determination.21
III. CONCLUSION
The superior court's order requiring Jousma to remit to
the state the funds which she received as representative payee is
reversed. The question of whether the state as representative
payee may apply C.G.A.'s social security benefits toward the cost
of his care at McLaughlin is referred to the Social Security
Agency for initial determination.22
_______________________________
1. While we recognize the relevant federal regulations were
amended in 1989, the relevant provisions have remained constant
before and after the changes. Therefore, we quote to the more
recent regulations.
2. AS 47.23.120 (now AS 25.27.120) states in part,
Obligor liable for public assistance
furnished obligee. (a) An obligor is liable
to the state in the amount of assistance
granted under AS 47.25.310 - 47.25.420 to a
child to whom the obligor owes a duty of
support except that if a support order has
been entered, the liability of the obligor
may not exceed the amount of support provided
for in the support order.
(b) An obligor is liable to the
state in the amount of the cost incurred if
the state is maintaining a child to whom the
obligor owes a duty of support in a foster
home or institution, except that if a support
order has been entered, or an agreement for
payment of that cost executed between the
obligor and the state, the liability of the
obligor may not exceed the amount provided in
the support order or agreement.
(c) Within 30 days after the agency
knows the identity and address of an obligor
who resides in the state and who is liable to
the state under this section, the agency
shall send written notification by certified
mail to the obligor parent of the obligor's
accruing liability. The notice required
under this subsection must be in clear,
concise, and easily readable language. The
notice may accompany other communications by
the agency.
3. Jousma does not appeal this order.
4. 20 C.F.R. 404.2040 (1990) reads in part,
Use of benefit payments:
(a) Current Maintenance. (1) We
will consider that payments we certify to a
representative payee have been used for the
use and benefit of the beneficiary if they
are used for the beneficiary's current
maintenance. Current maintenance includes
cost incurred in obtaining food, shelter,
clothing, medical care, and personal comfort
items. . . .
(b) Institutional care. If a
beneficiary is receiving care in a Federal,
State, or private institution because of
mental or physical incapacity, current
maintenance includes the customary charges
made by the institution, as well as
expenditures for those items which will aid
in the beneficiary's recovery or release from
the institution or expenses for personal
needs which will improve the beneficiary's
conditions while in the institution.
5. On March 23, 1989, SSA designated the Division of Family
and Youth Services as the payee for C.G.A. The social security
survivor's benefit amount had increased to $209 per month. There
is no indication in the record or briefs as to who received the
benefits during the period from September, 1988 to March, 1989.
The funds received by the state on C.G.A.'s behalf have been paid
into the general fund of the state. C.G.A. has a severe hearing
loss problem and a vision problem. As of November 1988, these
needs had not been attended to at McLaughlin.
6. The parties agree that the first two issues involve the
interpretation of statutes. The proper standard of review is the
substitution of judgment test. Norton v. Alcoholic Beverage
Control Bd., 695 P.2d 1090, 1092 (Alaska 1985). Because we
decide this case on the statutory issues, we do not reach the
disputed findings of fact.
7. Appellants agree that SSA may select the state to become
payee.
8. At the outset, we note that Jousma's appeal relates back
to any funds that the state obtained from Jousma as a result of
the June 1988 child support order. While Jousma did not appeal
that order, she did move to vacate it in August 1988 on
preemption grounds.
9. The court in Brinkman did not decide whether benefits
might be lawfully counted for the purpose of computing the
patients' liability to the state, because that issue was not
properly raised. Similarly, the issue of whether funds retained
by Jousma may be counted in calculating her liability under AS
47.23.120 is not presented in this case. The trial court's order
was specifically tied to Jousma's receipt of the $150 per month
from SSA and not to her general financial ability.
10. 42 U.S.C. 408(a)(5) states in relevant part,
Whoever . . . having made application to
receive payment under this subchapter for the
use and benefit of another and having
received such a payment, knowingly and
willfully converts such a payment, or any
part thereof, to a use other than for the use
and benefit of such other person . . . shall
be guilty of a felony. . . .
11. 20 C.F.R. 404.2041 reads in relevant part,
The payee in his or her personal
capacity, and not SSA, may be liable if the
payee misuses the beneficiary's benefits.
We have previously recognized that federal regulations
take on the character of law. State v. Alaska Land Title Ass'n,
667 P.2d 714, 725 (Alaska 1983), cert. denied, 464 U.S. 1040
(1984).
12. While C.G.A. joined in Jousma's motion to vacate the
child support order, we have already determined that all funds
received by DHSS pursuant to that order must be returned to
Jousma for Jousma to spend on C.G.A.'s behalf. What we are
designating as "C.G.A.'s appeal"covers that period of time after
Jousma relinquished her payee status.
13. 20 C.F.R. 404.2021(b) enumerates the categories of
preferred payees for beneficiaries under the age of eighteen.
The list includes "An authorized social agency or custodial
institution." 20 C.F.R. 404.2021(b)(7).
14. The state's authority to spend these funds is limited to
spending on maintenance that does not conflict with social
security laws and regulations. Thus, the state could
legitimately apply C.G.A.'s benefits toward foster care, but not,
as explained below, towards the cost of juvenile detention.
Additionally, DHSS could legitimately establish a children's fund
account for C.G.A. See 20 C.F.R. 404.2045; 7 AAC 52.085.
15. 20 C.F.R. 404.2040 reads in part,
(b) Institutional care. If a
beneficiary is receiving care in a Federal,
State, or private institution because of
mental or physical incapacity, current
maintenance includes the customary charges
made by the institution, as well as
expenditures for those items which will aid
in the beneficiary's recovery or release from
the institution or expenses for personal
needs which will improve the beneficiary's
conditions while in the institution.
See also 42 U.S.C. 405(j) (1983 & Supp. 1991), which states in
part,
(3)(A) In any case where payment
under this subchapter is made to a person
other than the individual entitled to such
payment, the Secretary shall establish a
system of accountability monitoring . . . .
. . . .
(C) Subparagraph (A) shall not
apply in any case where the other person to
whom such payment is made is a State
institution. In such cases, the Secretary
shall establish a system of accountability
monitoring for institutions in each State.
Clearly, federal law contemplates state institutions as payees
and does not prohibit states from reimbursing themselves.
16. See supra, n.15 for the text of 20 C.F.R. 404.2040(b).
17. The Social Security Agency should be requested to
determine whether 20 C.F.R. 404.2040(b) is limited to the costs
of mental or physical care institutions; whether the state as a
representative payee must first conduct an individual assessment
of the beneficiary's needs before using the benefits to reimburse
itself for the costs of C.G.A.'s incarceration; and whether
reimbursement in this context is violative of 42 U.S.C. 407(a).
18. In Oil Heat Institute, Inc. v. Alaska Pub. Serv. Corp.,
515 P.2d 1229, 1233 n.2 (Alaska 1973) we observed that:
The doctrine of primary
jurisdiction only governs whether a court or
the agency makes the initial decision on an
issue, not whether a court or an agency will
finally decide the issue. See 3 K. Davis,
Administrative Law, Sec. 19.01, 3 (1958).
19. 4 K. Davis, Administrative Law, Sec. 22:1, 81 (1983).
Professor Davis further explains that:
The doctrine of primary
jurisdiction usually does nothing more than
allocate power between courts and agencies to
make initial determinations. It usually does
not allocate power to make final
determinations, although it occasionally
does. When a court holds that an agency has
primary jurisdiction to decide a particular
question, the power of that court or of
another court to review the agency's
determination usually continues.
Id. at 82 (emphasis in original).
20. See also, State v. Zia, Inc., 556 P.2d 1257, 1262, 1263
(Alaska 1976); Stock v. State, 526 P.2d 3, 13, 14 (Alaska 1974).
21. See 3 K. Davis, Administrative Law, Sec. 19.07, 42
(1958).
22. As indicated previously, this court will retain
jurisdiction over the issue while affording the parties the
opportunity of obtaining an initial determination from the Social
Security Agency.
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