Conaway v. Social Services Admin.

• Decision Date: 08 March 1984
• Docket Number: No. 149,149
• Citation: 471 A.2d 1058,298 Md. 639
• Parties: Crystal CONAWAY v. SOCIAL SERVICES ADMINISTRATION. Sept. Term 1982.
• Court: Maryland Court of Appeals

Page 639

298 Md. 639

471 A.2d 1058

Crystal CONAWAY v. SOCIAL SERVICES ADMINISTRATION.

No. 149 Sept. Term 1982.

Court of Appeals of Maryland.

March 8, 1984.

Ethel Zelenske, Baltimore, for appellant.

Margaret E. Rawle, Asst. Atty. Gen., Baltimore, (Stephen H. Sachs, Atty. Gen., Baltimore, on brief), for appellee.

Argued before MURPHY, C.J., and SMITH, ELDRIDGE, COLE, DAVIDSON, RODOWSKY and COUCH, JJ.

COLE, Judge.

The issue presented in this case is whether the Baltimore City Department of Social Services may use federal benefits conserved for a foster child as reimbursement for the cost of past care. The facts can be recounted briefly.

Crystal Conaway was committed to the custody of the Baltimore City Department of Social Services ¹ (DSS) and placed in the foster care program in 1967 at the age of six. Conaway resided in the foster home of Ms. Evelyn Walker until he reached the age of majority. During this period Ms. Walker received foster care payments from DSS.

Because his father was a veteran and also fully insured under the Social Security Act, Conaway became entitled to certain benefits when his father became totally disabled. In 1967 Conaway began receiving veterans' benefits, and in 1970 he also began to receive social security benefits on his father's account. These benefits varied in amount over the years, ranging from a total of approximately $73.00 to $83.00 per month. All payments ended in 1979, when Conaway reached the age of eighteen.

Federal regulations provided that Conaway's benefits could be used as payment for the cost of his care. ² Because Conaway was a minor, the director of the local Department of Social Services was named as the representative payee for these benefits. Thus, the checks were deposited in the account of DSS. However, State regulations provided that such benefits could be conserved for the foster child beginning at the age of twelve to be used for the child's future educational or vocational needs. ³ In 1975 DSS began conserving Conaway's federal benefits in a trust fund account established in his name. ⁴ Disbursements from this account were made to Conaway for various educational programs including driving school, modeling school and music schools.

In September 1981, the State proposed amendments to COMAR 07.02.11.07 providing that benefits received by foster children could no longer be conserved in total but would be applied toward the cost of foster care. Only money in excess of the cost of foster care would be conserved. Funds already conserved under the prior policy would be retained as long as the child continued in foster care and held to the original plan. Under that policy, if the child remained in foster care and was still attending school after reaching age eighteen the funds would be used to pay for his educational needs. If the child was not in school, the account would be applied toward the cost of foster care.

In line with the new emphasis of its regulations, the State issued Circular Letter No. 82-11 directing local department directors to recoup immediately all conserved funds of foster children age eighteen and over not attending school on September 1, 1981. Conaway was warned of the consequences of not continuing school in May 1980, and after turning eighteen, he received a notice of intended action from DSS in November 1981, which informed him that:

Your conserved funds will be reverted back to this agency to pay for the cost of your foster care, because you were not enrolled in an educational or training program as of September 1, 1981. This is the money that had been conserved for your education, from your benefits from the Veterans' Administration and the Social Security Administration.

Conaway appealed this decision and a hearing was held on January 7, 1982, before a Department of Human Resources hearing examiner. Conaway testified that he planned to continue with his training and had been accepted at a data processing institute. He also raised several legal arguments, namely that he was not financially liable for the cost of his foster care in the absence of statutory authority and that DSS's intended seizure of his conserved funds violated provisions of the Social Security Act and the Veterans' Benefits Act and their implementing regulations. However, the hearing examiner concluded that the local department could apply conserved funds as reimbursement for the cost of prior foster care. ⁵

Conaway appealed to the Baltimore City Court (now and hereinafter Circuit Court for Baltimore City), raising the same legal arguments he had asserted below. That court affirmed the hearing examiner's decision. Conaway entered a timely appeal; we granted certiorari before a decision was reached in the Court of Special Appeals. We now reverse the judgment of the Circuit Court for Baltimore City.

Conaway first argued in the proceedings below that he was not financially liable for the cost of his foster care in the absence of statutory authority creating such liability. Because no Maryland statute created liability, he maintained that as a matter of State law he could not be compelled to reimburse the State for payments properly made on his behalf.

Several courts have held that unless authorized by law individuals are not required to reimburse a state for public assistance. See Ogdon v. Workmen's Comp. A.B. San Bernardino Cty. W.D., 11 Cal.3d 192, 113 Cal.Rptr. 206, 520 P.2d 1022 (1974); State Department of Social Welfare v. Dye, 204 Kan. 760, 466 P.2d 354 (1970); In re Estate of Colon, 83 Misc.2d 344, 372 N.Y.S.2d 812 (1975); Neunz v. Summit Cty. Children Services Bd., 54 Ohio St.2d 218, 8 Ohio Ops.3d 193, 375 N.E.2d 798 (1978); Spokane County v. Arvin, 169 Wash. 349, 13 P.2d 1089 (1932). Article 88A of the Maryland Code does not establish a child's liability to reimburse the State for foster care payments made on his behalf, even though liability is created for welfare benefit recipients. See Md.Code (1957, 1979 Repl.Vol., 1982 Cum.Supp.), Art. 88A, §§ 63 et seq. Therefore, a beneficiary of foster care payments should not be required to reimburse the State for the costs of his assistance after he has reached the age of majority and has been able to accumulate assets. As we see it, obtaining reimbursement from subsequently acquired assets is by implication unauthorized by this statute.

However, the situation presented in this case is quite different. The State is not seeking to recoup benefits from the recipient's subsequently acquired assets. Rather, the State seeks to use funds that it previously acquired (which it could have used when first received) to reimburse itself for the cost of care. This procedure is authorized by regulation and does not otherwise violate State law.

As noted above, the State followed the procedure outlined in COMAR 07.02.11.07. Furthermore, the relevant statute authorizes the procedure as having the force of law. Article 88A, § 5(a) provides that the State Director of Social Services may "adopt from time to time such rules and regulations as may be necessary to carry out any of the duties imposed upon him by law, and when adopted, ... such rules and regulations shall have the force and effect of law." Article 88A, § 60 authorizes various payment rates for foster care; however, it does not delineate the source(s) of the funds to be used. The State Director of Social Services is responsible for administering these aspects of the foster care program. Therefore, regulations about foster care payment rates and the source of funds to make these payments are necessary to carry out duties imposed by law. The regulation at issue in this case has accomplished precisely that. COMAR 07.02.11.07 is entitled "Resources for Reimbursement towards Cost of Care." Federal benefits were paid to the State and could have been used to pay for the cost of the child's care. These benefits were committed to the department for the child's benefit. As resources that could offset the cost of care, their use was a proper subject for regulation. Because these regulations were within the statutory authority, they had the force of law; thus, they provided an adequate legal basis for the local department's actions.

However, Conaway argues that federal statutes and regulations prohibit DSS from seizing his benefits to reimburse itself for past care. 38 U.S.C. § 3101(a) (1976) dealing with veterans' benefits provides:

Payments of benefits due or to become due under any law administered by the Veterans' Administration 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.

A similar provision applies to social security benefits. 42 U.S.C. § 407 (1976) provides that:

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.

We have not previously determined whether these provisions of federal law prohibit the State from using federal benefits that it has conserved to reimburse itself for past care. However, in State, Central Collection v. Stewart, 292 Md. 255, 438 A.2d 1311 (1981), this Court did consider whether the State could obtain a judgment against persons found not guilty of crimes by reason of insanity for the cost of care and treatment rendered in the State mental hospital to which they were committed. These patients received social security benefits and the State subsequently sought reimbursement. We concluded that 42 U.S.C. § 407, as...