In re Interest of Battiato
| Decision Date | 23 June 2000 |
| Docket Number | No. S-99-1120.,S-99-1120. |
| Citation | 259 Neb. 829,613 N.W.2d 12 |
| Parties | In re Interest of Charlene R. BATTIATO, an incapacitated person. Nebraska Department of Health and Human Services Finance and Support, appellant, v. Mary L. Wilson, successor conservator and successor guardian, appellee. |
| Court | Nebraska Supreme Court |
Don Stenberg, Attorney General, Royce N. Harper, Lincoln, and Gerald W. Pankonin, Special Assistant Attorney General, for appellant.
Richard S. McMillin, P.C., of Marks, Clare & Richards, Omaha, for appellee.
Charlene R. Battiato, an incapacitated person, has a monthly income of $814.99, derived entirely from Supplemental Security Income and Railroad Retirement Act benefits. The cost of Charlene's nursing home care exceeds her entitlement income, so the Nebraska Department of Health and Human Services Finance and Support (the Department) compensates Charlene's nursing home for the remaining expenses. The primary question presented in this appeal is whether attorney fees incurred on behalf of Charlene may be paid from her federal entitlement income.
Charlene is a severely mentally retarded spastic quadriplegic with seizures, who cannot talk, is visually and hearing impaired, and cannot care for or feed herself. In 1989, the county court appointed Charlene's parents, Charles and Rose Battiato, to be Charlene's conservators and guardians. In 1993, Charlene was transferred from her parents' home to the Maple Crest nursing home (Maple Crest) in Omaha, Nebraska. In 1996, Charles died, and Rose, due to physical infirmity, resigned as Charlene's conservator and guardian.
Attorney Joseph P. Inserra was appointed by the county court as Charlene's successor conservator and guardian. In 1998, Donna J. Compau was appointed by the county court as successor conservator and guardian to Inserra. Shortly thereafter, the county court entered an order disposing of moneys paid into the court from a bank account held in Charlene's name. The county court ordered that the bulk of the moneys be paid to Maple Crest to settle outstanding debt and that the remaining moneys be paid to Inserra in partial satisfaction of outstanding legal expenses. The county court ordered that the balance of Inserra's attorney fees should be the subject of a plan to be presented to the county court.
Compau filed a plan with the county court recommending that the attorney fees be paid from Charlene's entitlement income and that while such payments were being made, the Department should allow the expense and provide additional compensation to Maple Crest for the expense of Charlene's care. Compau later filed a "Notice of Petition for Approval of Account of Conservator," stating that the Department had declined to approve Compau's plan for payment of attorney fees and requesting the county court to enter an order directing that the attorney fees be paid from Charlene's entitlement income and that in the interim, the Department be ordered to pay a corresponding increase in the cost of Charlene's care at Maple Crest.
The Department filed an objection to the allowance of attorney fees. The county court overruled the objection and entered an order directing the Department to "develop a budgetary plan and implement the plan ... setting aside at least one half of the ward's monthly income to pay the attorney fees and costs to said attorneys with the plan to remain in effect until the fees and costs are paid in full." The county court ordered that the fees to Inserra be paid, as well as additional attorney fees claimed by Richard S. McMillin, Compau's attorney. The county court further ordered that the Department "shall pay the increased costs of the ward's nursing home care for the duration of reduction of ward's income while said attorney fees and costs are being paid under the plan." The Department appeals. We note that in September 1999, the county court discharged Compau of her duties as successor conservator and successor guardian and appointed Mary L. Wilson in her stead.
The Department assigns, restated, that the county court erred in determining that federal anti-attachment statutes did not apply to the payment of attorney fees and that the doctrine of "primary jurisdiction" should have been applied to the case.
When an appeal calls for statutory interpretation or presents questions of law, an appellate court must reach an independent, correct conclusion irrespective of the determination made by the court below. Cole v. Loock, 259 Neb. 292, 609 N.W.2d 354 (2000); Schrader v. Farmers Mut. Ins. Co., 259 Neb. 87, 608 N.W.2d 194 (2000).
FEDERAL ANTI-ASSIGNMENT STATUTES
The Social Security Act provides:
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.
Similarly, the Railroad Retirement Act states in relevant part that "no annuity or supplemental annuity shall be assignable or be subject to any tax or to garnishment, attachment, or other legal process under any circumstances whatsoever, nor shall the payment thereof be anticipated." 45 U.S.C. § 231m(a) (1994).
Boersma v. Karnes, 227 Neb. 329, 336-37, 417 N.W.2d 341, 347 (1988). See, also, generally, Bennett v. Arkansas, 485 U.S. 395, 108 S.Ct. 1204, 99 L.Ed.2d 455 (1988); Philpott v. Essex County Welfare Board, 409 U.S. 413, 93 S.Ct. 590, 34 L.Ed.2d 608 (1973); Havelock Bank v. Hog Confinement Systems, 214 Neb. 783, 335 N.W.2d 765 (1983).
There is no dispute that the federal benefits received by Charlene in this case are within the scope of §§ 407 and 231m(a). The critical issue presented by the Department's assignment of error, then, is whether the county court's order, in response to the motion made by Compau, constituted "legal process" within the meaning of §§ 407 and 231m(a).
Authority from federal and state courts indicates that § 407 does not apply to voluntary payments made by a recipient of Social Security benefits. See, e.g., Johnson v. Wing, 178 F.3d 611 (2d Cir. 1999), cert. denied ___ U.S. ___, 120 S.Ct. 1177, 145 L.Ed.2d 1085 (2000); Fetterusso v. State of N.Y., 898 F.2d 322 (2d Cir.1990); Moore v. Colautti, 483 F.Supp. 357 (E.D.Pa.1979), affirmed 633 F.2d 210 (3d Cir.1980); C.G.A. v. State, 824 P.2d 1364 (Alaska 1992); Tunnicliff v. Com., Dept. of Public Welfare, 483 Pa. 275, 396 A.2d 1168 (1978); Russo v. Russo, 1 Conn.App. 604, 474 A.2d 473 (1984); French v. Dep't of Soc. Serv., 92 Mich.App. 701, 285 N.W.2d 427 (1979). But see U.S. v. Univ. Hosp. of State Univ. of New York, 575 F.Supp. 607 (E.D.N.Y.1983), affirmed 729 F.2d 144 (2d Cir.1984).
The Second Circuit has stated:
Congress intended the words "or other legal process" to embrace not only the use of formal legal machinery but also resort to express or implied threats and sanctions.... Thus, section 407(a) is violated when the state places itself in the position of a preferred creditor or coerces payment from protected benefits. Philpott [v. Essex County Welfare Board, supra,] and the statute, however, do not eliminate the underlying debt but merely preclude states from enforcing an obligation against protected federal funds.
Fetterusso v. State of N.Y., 898 F.2d at 328. The Second Circuit concluded in that case that § 407 had not been violated by New York's collection of Social Security benefits to pay for the care and treatment of individuals in state institutions, as there was "no basis for concluding that any of the appellants did not voluntarily agree to the use of their social security benefits to pay the costs of their care and treatment." Id.
This reasoning regarding § 407 is persuasive and applies equally to the interpretation of the similar language of § 231m(a). In the instant case, the payment of Charlene's attorney fees has been volunteered, not by Charlene, but by Compau as Charlene's conservator and guardian.
The appointment of a conservator vests in him or her title as trustee to all property of the protected person, presently held or thereafter acquired, including title to any property theretofore held for the protected person by custodians or attorneys in fact. Neb.Rev.Stat. § 30-2649 (Reissue 1995).
Neb.Rev.Stat. § 30-2653(c) (Reissue 1995) provides, in relevant part:
Neb.Rev.Stat. § 30-2654(a) (Reissue 1995) further provides, in relevant part:
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