French v. Director, Michigan Dept. of Social Services

• Decision Date: 01 October 1979
• Docket Number: Docket No. 78-5301
• Citation: 92 Mich.App. 701,285 N.W.2d 427
• Parties: Lucille FRENCH, Plaintiff-Appellant, v. DIRECTOR, MICHIGAN DEPARTMENT OF SOCIAL SERVICES, Defendant-Appellee. 92 Mich.App. 701, 285 N.W.2d 427
• Court: Court of Appeal of Michigan — District of US

Page 427

285 N.W.2d 427

Lucille FRENCH, Plaintiff-Appellant, v. DIRECTOR, MICHIGAN DEPARTMENT OF SOCIAL SERVICES Defendant-Appellee.

Docket No. 78-5301.

92 Mich.App. 701, 285 N.W.2d 427

Court of Appeals of Michigan.

Oct. 1, 1979.

Released for Publication Nov. 29, 1979.

[92 MICHAPP 703] Ronald B. Eskin, Midland, for plaintiff-appellant.

Frank J. Kelley, Atty. Gen., Mark S. Meadows, Asst. Atty. Gen., for defendant-appellee.

Before ALLEN, P. J., and T. M. BURNS and HOLBROOK, ^* JJ.

ALLEN, Presiding Judge.

This appeal is taken as of right by plaintiff-appellant, Lucille M. French, from a judgment and order entered by the circuit court affirming the decision of the administrative law judge who ruled that the defendant-appellee, Department of Social Services, was required to return $759.18 to the Social Security Administration of the United States Government, which money the defendant received from the plaintiff pursuant to a "reimbursement authorization agreement".

On December 17, 1976, plaintiff signed an agreement[92 MICHAPP 704] with the Michigan Department of Social Services in Clare County to reimburse the state for general assistance funds to be paid to plaintiff as temporary relief pending her application for supplemental security income (SSI) benefits under subchapter XVI of the Social Security Act. ¹ The text of the agreement, entitled "Reimbursement Authorization" and completed in accordance with the defendant Department's guidelines, states:

"FOR AND IN CONSIDERATION of the prompt payment of State interim assistance, (assistance furnished to or on behalf of applicants for Supplemental Security Income financed from State or local funds for basic needs during the period in which applications are pending) I hereby authorize the Secretary of Health, Education, and Welfare to make the first payment of Supplemental Security Income benefits for which I am determined to be eligible to receive, for and on my behalf, to the County of Clare, State of Michigan.

"I further authorize the county to deduct from such first payment an amount sufficient as reimbursement for interim assistance paid to me; and after making such deduction, the County shall promptly pay the balance, if any, to me.

"If I receive directly the first payment of Supplemental Security Income benefits for which I am determined eligible, I agree to promptly reimburse the County of Clare, State of Michigan for any duplicated interim assistance advanced while the application for Supplemental Security Income was pending.

"It is understood that in the event of disagreement, I shall have the right to a hearing from the county with respect to such apportionment of such first payment."

The defendant did not sent a copy of this reimbursement authorization agreement to the Secretary[92 MICHAPP 705] of Health, Education and Welfare pursuant to 42 U.S.C. § 1383(g)(1). ²

Thereafter, commencing January 4, 1977, until sometime in March, 1977, plaintiff received periodic payments of temporary relief from the defendant totalling $759.18. On April 4, 1977, plaintiff received an SSI lump sum benefit check in the amount of $768.22. She brought the check into the local office of the department and indorsed it over to the defendant's agent, of which $9.22 was returned to the plaintiff. Plaintiff testified that she repaid the advanced payments out of her SSI check "because I was obligated to do it. Because that was their request."

Plaintiff apparently decided that defendant improperly accepted the SSI benefit check and requested a refund of the portion of the lump sum payment which was kept by the defendant. A general assistance hearing was held before an administrative law judge after defendant refused to refund the money claimed by the plaintiff.

At the hearing it was determined that according to Department of Social Services' policy, when a client has a pending SSI claim with the Federal government, the defendant furnishes interim assistance payments while the client is waiting for a decision on the claim. At the same time, the client signs a repayment agreement, promising to repay the local county when the first SSI lump sum check is received by the client.

[92 MICHAPP 706] At the conclusion of the hearing, the defendant was ordered to return the entire amount of the reimbursement to the Social Security Administration in order to allow that agency to determine whether, and in what amount, it should be repaid to the claimant or to the defendant, or Clare County. The circuit court affirmed this decision on the basis that it was "not unfair to either party". We affirm in part and reverse in part.

The issue presented is one of first impression in this state. It raises the question of whether the defendant's procedure of having a welfare claimant agree to reimburse the state, when she receives her first SSI benefit check for advance temporary relief, as a condition of eligibility for such relief, violates 42 U.S.C. § 407.

That section states:

"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." 42 U.S.C. § 407.

This provision was made applicable to SSI benefits. 42 U.S.C. § 1383(d)(1).

On its face, the all inclusive § 407 appears to bar defendant from reaching plaintiff's SSI lump sum benefit check. The first clause of § 407 is a limitation on the power of the recipient: his right to any future payment "shall not be transferable or assignable". In re Vary Estate, 401 Mich. 340, 355, 258 N.W.2d 11, 17 (1977) (LEVIN, J., dissenting). With the exception of a particular statutory modification inapplicable in the instant case, ³ it is clear [92 MICHAPP 707] that the plaintiff is prohibited from agreeing to transfer or assign her SSI lump sum benefit check to any creditor, including the defendant Department of Social Services. Philpott v. Essex County Welfare Board, 409 U.S. 413, 93 S.Ct. 590, 34 L.Ed.2d 608 (1973). The second clause of § 407 is a limitation on the remedies available to a creditor of the plaintiff to proceed against the money paid to a recipient of social security benefits: defendant cannot reach plaintiff's SSI lump sum benefit check by subjecting it to "execution, levy, attachment, garnishment, or other legal process". We have carefully reviewed the "reimbursement agreement" and the applicable law and conclude that under the circumstances presented there was nothing impermissible about either the execution or the fulfillment of the reimbursement agreement between the plaintiff and defendant.

In general, plaintiff claims that her SSI benefits were improperly subject to "legal process" by the Department of Social Services because it conditioned payment of plaintiff's interim benefits on her acceptance of the reimbursement agreement. In particular, plaintiff contends that the agreement is not legally enforceable, and the requirement that she sign it as a condition for receiving interim benefits misleads recipients into believing that they have a legal obligation to turn over their SSI lump sum benefit check to the defendant. Plaintiff bases her argument on two Pennsylvania decisions which held under facts similar to those in the case at bar that the failure of the state welfare department to inform the recipients of their right under Philpott to avoid using their social security benefit to repay the state "while not achieved through 'legal process', was certainly involuntary and not obtained through 'fair means' ". Wohlgemuth v. Armacost, 18 Pa.Cmwlth. [92 MICHAPP 708] 394, 400, 336 A.2d 455, 457-458 (1975), St. Clair v. Commonwealth, 29 Pa.Cmwlth. 150, 152-153, 370 A.2d 751 (1977).

Defendant responds by claiming that its actions were not coercive and that the mere nondisclosure of the plaintiff's Philpott rights is not equivalent to the state's use of "legal process" to reach the plaintiff's social security benefits. Moreover, defendant correctly observes that the cases relied on by plaintiff in support of her position on appeal have recently been overruled by the Pennsylvania Supreme Court in Tunnicliff v. Commonwealth, Dep't of Public Welfare, 483 Pa. 275, 396 A.2d 1168 (1978).

The third paragraph of the reimbursement authorization agreement is the critical passage. It states:

"If I receive directly the first payment of Supplemental Security Income benefits for which I am determined eligible, I agree to promptly reimburse the County of Clare, State of Michigan for any duplicated interim assistance advanced while the application for Supplemental Security Income was pending."

It is to be noted that this provision does not require the plaintiff to transfer or assign her SSI check to the defendant. Rather, the agreement, simply stated, requires the plaintiff to repay the defendant in "consideration of the prompt payment of state interim assistance" once she receives her SSI check. The plaintiff's receipt of the check from the Federal government is a condition precedent to her obligation to repay the defendant's cash advances. If she never receives the SSI check, or is deemed to be disqualified from receiving such benefits, the plaintiff would have no duty to repay the defendant. M.C.L. § 400.77; M.S.A. § 16.477. The requirement that the reimbursement be tied to the [92 MICHAPP 709] plaintiff's receipt of her SSI benefit check refers only to the Time of repayment, not the Source of the payment. Tunnicliff v. Commonwealth, supra, 396 A.2d at 1171, fn. 5. Plaintiff's commitment to repay Clare County became binding upon her receipt of her first SSI check. The reimbursement agreement does not state where plaintiff is to obtain the money to meet this...