A-81484, NOVEMBER 30, 1936, 16 COMP. GEN. 539

A-81484: Nov 30, 1936

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ARE NOT INTENDED TO COVER AMOUNTS TO BE PAID TO THE FEDERAL GOVERNMENT UNDER SECTION 2 (A) (7) REPRESENTING ONE-HALF OF THE NET AMOUNTS COLLECTED BY A STATE FROM THE ESTATE OF ANY RECIPIENT OF STATE OLD-AGE ASSISTANCE AND SUCH AMOUNTS ARE TO BE ACCOUNTED FOR SEPARATELY. IF THEY ARE NOT PAID OVER BY THE STATE. IN SEVERAL OF THE STATES WHICH HAVE PUBLIC ASSISTANCE PLANS IN OPERATION. WHICH WERE APPROVED UNDER TITLES I. THE SECRETARY OF THE TREASURY IS AUTHORIZED AND DIRECTED TO PAY FEDERAL FUNDS TO EACH STATE FOR REIMBURSEMENT ON EXPENDITURES FOR ASSISTANCE MADE BY THE STATE FOR REIMBURSEMENT ON EXPENDITURES FOR ASSISTANCE MADE BY THE STATE AS ASSISTANCE UNDER AN APPROVED PLAN. FEDERAL FUNDS ARE PAID UPON CERTIFICATION BY THE BOARD.

A-81484, NOVEMBER 30, 1936, 16 COMP. GEN. 539

STATES - FEDERAL AID - SOCIAL SECURITY PAYMENTS AND STATE COLLECTIONS FROM ESTATES OF BENEFICIARIES THE TERM "ESTATE" AS USED IN SECTION 2 (A) (7) OF THE SOCIAL SECURITY ACT, APPROVED AUGUST 14, 1935, 49 STAT. 620, REQUIRING THE PROMPT PAYMENT TO THE UNITED STATES OF ONE-HALF OF THE NET AMOUNT COLLECTED "FROM THE ESTATE OF ANY RECIPIENT OF OLD-AGE ASSISTANCE" UNDER A STATE PLAN, MEANS THE ESTATE OF A LIVING RECIPIENT AS WELL AS ONE SINCE DECEASED. THE ADJUSTMENTS IN FEDERAL PAYMENTS TO STATES BECAUSE OF PRIOR EXCESS OR SHORT PAYMENTS, REQUIRED BY SECTION 3 (B) (2) OF THE SOCIAL SECURITY ACT, APPROVED AUGUST 14, 1935, 49 STAT. 621, ARE NOT INTENDED TO COVER AMOUNTS TO BE PAID TO THE FEDERAL GOVERNMENT UNDER SECTION 2 (A) (7) REPRESENTING ONE-HALF OF THE NET AMOUNTS COLLECTED BY A STATE FROM THE ESTATE OF ANY RECIPIENT OF STATE OLD-AGE ASSISTANCE AND SUCH AMOUNTS ARE TO BE ACCOUNTED FOR SEPARATELY, BUT, IF THEY ARE NOT PAID OVER BY THE STATE, THEY MAY BE PROPERLY DEDUCTED FROM THE NEXT FEDERAL PAYMENT WITH CORRESPONDING TRANSFER TO THE PROPER APPROPRIATION, IF NECESSARY.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CHAIRMAN, SOCIAL SECURITY BOARD, NOVEMBER 30, 1936:

THERE HAS BEEN CONSIDERED THE QUESTIONS PRESENTED IN YOUR LETTER OF NOVEMBER 2, 1936, REFERENCE JBT:16:M., AS FOLLOWS:

IT HAS COME TO THE ATTENTION OF THE BOARD THAT, IN SEVERAL OF THE STATES WHICH HAVE PUBLIC ASSISTANCE PLANS IN OPERATION, WHICH WERE APPROVED UNDER TITLES I, IV, AND X OF THE SOCIAL SECURITY ACT, MONIES MAY BY RECEIVED BY THE STATE IN CONNECTION WITH THE PLAN, BY RECOVERIES FROM RECIPIENTS OF ASSISTANCE, OR THEIR PROPERTY, OR OTHERWISE.

SECTION 2 (A) (7) OF THE SOCIAL SECURITY ACT REQUIRES AS A CONDITION OF APPROVAL BY THE BOARD THAT A STATE PLAN FOR OLD-AGE ASSISTANCE PROVIDE THAT, IF THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS COLLECTS FROM THE ESTATE OF ANY RECIPIENT OF OLD-AGE ASSISTANCE ANY AMOUNT WITH RESPECT TO OLD-AGE ASSISTANCE FURNISHED HIM UNDER THE PLAN, ONE-HALF OF THE NET AMOUNT SO COLLECTED SHALL BE PROMPTLY PAID TO THE UNITED STATES.

THE BOARD HAS ADOPTED THE INTERPRETATION THAT THIS REQUIREMENT DOES NOT EXTEND TO AMOUNTS COLLECTED FROM THE RECIPIENT HIMSELF, OR BY PROCEDURE AGAINST HIS PROPERLY DURING HIS LIFETIME. BY THE SAME REASONING AS THAT LEADING TO THIS INTERPRETATION THE REQUIREMENT WOULD NOT EXTEND TO COLLECTIONS MADE AFTER RECIPIENT'S DEATH FROM POVERTY WHICH DID NOT BECOME A PART OF HIS ESTATE FOR PROBATE PURPOSES.

UNDER SECTIONS 3 (B), 403 (B), AND 1003 (B), THE SECRETARY OF THE TREASURY IS AUTHORIZED AND DIRECTED TO PAY FEDERAL FUNDS TO EACH STATE FOR REIMBURSEMENT ON EXPENDITURES FOR ASSISTANCE MADE BY THE STATE FOR REIMBURSEMENT ON EXPENDITURES FOR ASSISTANCE MADE BY THE STATE AS ASSISTANCE UNDER AN APPROVED PLAN. FEDERAL FUNDS ARE PAID UPON CERTIFICATION BY THE BOARD. IT WOULD SEEM THAT, UPON THE THEORY OF REIMBURSEMENT IMPLICIT IN THE ACT, THE MONIES WHEN PAID BECOME STATE MONIES. THE EXPENDITURES BY THE STATE, UPON FRAUDULENT REPRESENTATIONS OF APPLICANTS OR BY MISTAKE, MIGHT PROPERLY, UPON RECOVERY, BE CONSIDERED REASONS WHY FUTURE ESTIMATES SHOULD BE INCREASED OR DECREASED IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 3 (B) (2), 403 (B) (2), OR 1003 (B) (2) OF THE ACT; BUT NEITHER THESE SECTIONS NOR ANY OTHER PROVISIONS OF THE ACT MAKE SPECIFIC PROVISION FOR PAYMENTS TO THE UNITED STATES OR FOR ADJUSTMENTS ON ACCOUNT OF ANY OTHER MONIES RECEIVED BY THE STATE.

THUS, TWO QUESTIONS ARE RAISED IN CONNECTION WITH THESE PROVISIONS: (1) DOES SECTION 2 (A) (7) OF THE SOCIAL SECURITY ACT APPLY TO ANY COLLECTIONS MADE BY A STATE OTHER THAN COLLECTIONS FROM A DECEDENT'S ESTATE, FOR EXAMPLE, RECOVERIES FROM RECIPIENTS OF OLD-AGE ASSISTANCE, OR FROM THEIR PROPERTY, DURING THEIR LIFETIME, OR RECOVERIES FROM THE PROPERTY OF RECIPIENTS AFTER THEIR DEATH WHERE SUCH PROPERTY DID NOT BECOME A PART OF THE ESTATE? (2) IS THE UNITED STATES ENTITLED EITHER TO RECEIVE AN ACTUAL PAYMENT OR TO MAKE AN ADJUSTMENT DOWNWARD IN THE STATE'S QUARTERLY ESTIMATE (IN CASES OTHER THAN THOSE WHERE PAYMENT TO THE RECIPIENT WAS INDUCED BY FRAUD OR MISTAKE) ON ACCOUNT OF ANY COLLECTIONS BY THE STATE OR OTHER FUNDS RECEIVED BY THE STATE IN CONNECTION WITH THE PLAN, IN SPITE OF THE FACT THAT THERE IS NO SPECIFIC PROVISION UNDER TITLES I, IV, AND X FOR SUCH PAYMENTS OR ADJUSTMENTS?

WE WOULD APPRECIATE AN EARLY OPINION FROM YOU ON THESE QUESTIONS.

SECTION 2 (A) OF TITLE I OF THE SOCIAL SECURITY ACT, APPROVED AUGUST 14, 1935, 49 STAT. 620, PROVIDES, IN PART:

A STATE PLAN FOR OLD-AGE ASSISTANCE MUST * * * (7) PROVIDE THAT, IF THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS COLLECTS FROM THE ESTATE OF ANY RECIPIENT OF OLD-AGE ASSISTANCE ANY AMOUNT WITH RESPECT TO OLD-AGE ASSISTANCE FURNISHED HIM UNDER THE PLAN, ONE-HALF OF THE NET AMOUNT SO COLLECTED SHALL BE PROMPTLY PAID TO THE UNITED STATES. ANY PAYMENT SO MADE SHALL BE DEPOSITED IN THE TREASURY TO THE CREDIT OF THE APPROPRIATION FOR THE PURPOSES OF THIS TITLE.

SECTION 3 (A) AND (B) (1) AND (2) OF THE SAID ACT FURTHER PROVIDES:

(A) FROM THE SUMS APPROPRIATED THEREFOR, THE SECRETARY OF THE TREASURY SHALL PAY TO EACH STATE WHICH HAS AN APPROVED PLAN FOR OLD AGE ASSISTANCE, FOR EACH QUARTER, BEGINNING WITH THE QUARTER COMMENCING JULY 1, 1935, (1) AN AMOUNT, WHICH SHALL BE USED EXCLUSIVELY AS OLD-AGE ASSISTANCE, EQUAL TO ONE-HALF OF THE TOTAL OF THE SUMS EXPENDED DURING SUCH QUARTER AS OLD-AGE ASSISTANCE UNDER THE STATE PLAN WITH RESPECT TO EACH INDIVIDUAL WHO AT THE TIME OF SUCH EXPENDITURE IS SIXTY-FIVE YEARS OF AGE OR OLDER AND IS NOT AN INMATE OF A PUBLIC INSTITUTION, NOT COUNTING SO MUCH OF SUCH EXPENDITURE WITH RESPECT TO ANY INDIVIDUAL FOR ANY MONTH AS EXCEEDS $30, AND (2) 5 PERCENTUM OF SUCH AMOUNT, WHICH SHALL BE USED FOR PAYING THE COSTS OF ADMINISTERING THE STATE PLAN OR FOR OLD-AGE ASSISTANCE, OR BOTH, AND FOR NO OTHER PURPOSE: PROVIDED, THAT THE STATE PLAN, IN ORDER TO BE APPROVED BY THE BOARD, NEED NOT PROVIDE FOR FINANCIAL PARTICIPATION BEFORE JULY 1, 1937, BY THE STATE, IN THE CASE OF ANY STATE WHICH THE BOARD, UPON APPLICATION BY THE STATE AND AFTER REASONABLE NOTICE AND OPPORTUNITY FOR HEARING TO THE STATE, FINDS IS PREVENTED BY ITS CONSTITUTION FROM PROVIDING SUCH FINANCIAL PARTICIPATION.

(B) THE METHOD OF COMPUTING AND PAYING SUCH AMOUNTS SHALL BE AS FOLLOWS:

(1) THE BOARD SHALL, PRIOR TO THE BEGINNING OF EACH QUARTER, ESTIMATE THE AMOUNT TO BE PAID TO THE STATE FOR SUCH QUARTER UNDER THE PROVISIONS OF CLAUSE (1) OF SUBSECTION (A), SUCH ESTIMATE TO BE BASED ON (A) A REPORT FILED BY THE STATE CONTAINING ITS ESTIMATE OF THE TOTAL SUM TO BE EXPENDED IN SUCH QUARTER IN ACCORDANCE WITH THE PROVISIONS OF SUCH CLAUSE, AND STATING THE AMOUNT APPROPRIATED OR MADE AVAILABLE BY THE STATE AND ITS POLITICAL SUBDIVISIONS FOR SUCH EXPENDITURES IN SUCH QUARTER, AND IF SUCH AMOUNT IS LESS THAN ONE-HALF OF THE TOTAL SUM OF SUCH ESTIMATED EXPENDITURES, THE SOURCE OR SOURCES FROM WHICH THE DIFFERENCE IS EXPECTED TO BE DERIVED, (B) RECORDS SHOWING THE NUMBER OF AGED INDIVIDUALS IN THE STATE, AND (C) SUCH OTHER INVESTIGATION AS THE BOARD MAY FIND NECESSARY.

(2) THE BOARD SHALL THEN CERTIFY TO THE SECRETARY OF THE TREASURY THE AMOUNT SO ESTIMATED BY THE BOARD, REDUCED OR INCREASED, AS THE CASE MAY BE, BY ANY SUM BY WHICH IT FINDS THAT ITS ESTIMATE FOR ANY PRIOR QUARTER WAS GREATER OR LESS THAN THE AMOUNT WHICH SHOULD HAVE BEEN PAID TO THE STATE UNDER CLAUSE (1) OF SUBSECTION (A) FOR SUCH QUARTER, EXCEPT TO THE EXTENT THAT SUCH SUM HAS BEEN APPLIED TO MAKE THE AMOUNT CERTIFIED FOR ANY PRIOR QUARTER GREATER OR LESS THAN THE AMOUNT ESTIMATED BY THE BOARD FOR SUCH PRIOR QUARTER.

PROVISIONS SUBSTANTIALLY IDENTICAL WITH THOSE QUOTED ABOVE FROM SECTION 3 APPEAR IN SECTIONS 403 AND 1003 OF THE ACT, 49 STAT. 628 AND 646, RESPECTIVELY.

THE TERM "ESTATE" APPEARING IN SECTION 2 (A) (7), SUPRA, IS NOT DEFINED BY ANY PROVISIONS OF THE ACT. ITS MEANING IS NOT ALWAYS UNIFORM IN THE LAW IN THAT IN CERTAIN CASES IT HAS BEEN HELD TO REFER TO THE ESTATE OF A DECEDENT AND IN OTHERS TO THE ESTATE OF A LIVING INDIVIDUAL. IN VIEW OF THESE FACTS THE PRECISE MEANING OF SAID TERM CAN BE ASCERTAINED ONLY FROM THE CONTEXT, OR THE CIRCUMSTANCES UNDER WHICH IT IS USED, AND SAID TERM, THEREFORE, SHOULD BE CONSTRUED IN A SENSE WHICH WILL TEND TO ACCOMPLISH RATHER THAN TO DEFEAT THE PURPOSE OF THE ACT. THE BROAD PURPOSE OF THE GRANTS TO STATES FOR OLD-AGE ASSISTANCE IS TO ENABLE THE STATE TO FURNISH FINANCIAL ASSISTANCE TO AGED NEEDY INDIVIDUALS WHO BECAUSE OF THEIR IMPECUNIOSITY MAY BE RECEIVING AID FROM THE STATE UNDER AN APPROVED STATE- AID PLAN. WHERE IT DEVELOPS, THEREFORE, THAT AN INDIVIDUAL IN RECEIPT OF SUCH AID POSSESSES AN ESTATE OF SUCH AMOUNT AS WOULD, UNDER THE STATE-AID PLAN, CONSTITUTE A BAR TO OLD-AGE BENEFITS, IT FOLLOWS THAT PAYMENTS RECEIVED BY THE BENEFICIARY IN SUCH CIRCUMSTANCES CONSTITUTE IMPROPER PAYMENTS THUS GIVING RISE TO A RIGHT IN THE STATE TO RECOVER BACK SUCH PAYMENTS. THE EVIDENCE PURPOSE, THEREFORE, OF SECTION 2 (A) (7) OF THE STATUTE, SUPRA, IS TO PROVIDE FOR PAYMENT TO THE FEDERAL GOVERNMENT OF A SHARE OF ALL SUCH RECOVERIES, BECAUSE A PORTION OF THE AMOUNT OF THE IMPROPER PAYMENTS ON ACCOUNT OF WHICH THE STATE EFFECTS A RECOVERY FROM THE ESTATE OF THE RECIPIENT WAS PAID FROM FEDERAL FUNDS GRANTED TO THE STATE. THAT APPEARS AN EQUITABLE ADJUSTMENT AND FOR THE PURPOSES OF THE ACT IT BECOMES IMMATERIAL WHETHER THE ESTATE FROM WHICH COLLECTION IS MADE BE THAT OF A LIVING RECIPIENT OR OF ONE SINCE DECEASED.

WITH RESPECT TO YOUR SECOND QUESTION, A CAREFUL READING OF THE ACT DISCLOSES THAT THE ADJUSTMENT PROVIDED FOR UNDER SECTION 3 (B) (2), SUPRA, IS NOT INTENDED TO COVER THE MATTER OF REIMBURSEMENT TO THE FEDERAL GOVERNMENT PROVIDED FOR UNDER SECTION 2 (A) (7) OF THE ACT. THE ADJUSTMENT PROVIDED FOR UNDER SAID SECTION 3 (B) (2) RELATES ONLY TO ESTIMATES FOR THE "PRIOR QUARTER" AND, OF NECESSITY, MUST HAVE REFERENCE TO ESTIMATES FOR THE "PRIOR QUARTER" IN RESPECT OF ERRORS IN CALCULATIONS, CORRECTION OF DATA, SUCH AS THE NUMBER OF RECIPIENTS, AMOUNTS PAYABLE TO EACH AND SUCH LIKE, WHEREAS THE COLLECTIONS AUTHORIZED UNDER SECTION 2 (A) (7) WOULD NOT NECESSARILY RELATE TO THE "PRIOR QUARTER" BUT TO OTHER QUARTERS AS WELL. THE PROVISIONS OF SECTION 2 (A) (7) ARE MANDATORY IN THAT "ONE-HALF OF THE NET AMOUNT SO COLLECTED SHALL BE PROMPTLY PAID TO THE UNITED STATES" AND THAT ANY PAYMENT SO MADE "SHALL BE DEPOSITED IN THE TREASURY TO THE CREDIT OF THE APPROPRIATIONS FOR THE PURPOSES OF THIS TITLE.' THESE MANDATORY PROVISIONS MUST BE TAKEN AS REQUIRING A SEPARATE AND DISTINCT ACCOUNTING TO THE FEDERAL GOVERNMENT FOR ITS SHARE OF THE COLLECTIONS MADE BY THE STATE UNDER SAID SECTION 2 (A) (7) OF THE ACT. SUCH ACCOUNTING, UNQUESTIONABLY, WILL AFFORD A BETTER RECORD THAN IF THE COLLECTION WERE CONSIDERED AS A BASIS FOR ANY ADJUSTMENT UNDER THE PROVISIONS OF SECTION 3 (B) (2) OF THE ACT SUCH AS THAT SUGGESTED IN YOUR LETTER.

OF COURSE IF DATA HAS BEEN OBTAINED OF STATE COLLECTIONS WHICH HAVE NOT BEEN ACCOUNTED FOR, THE SHARE OF THE UNITED STATES IN SUCH COLLECTIONS WOULD BE PROPERLY FOR DEDUCTION FROM THE NEXT PAYMENT TO THE STATE AND THE AMOUNT SO COLLECTED BE TRANSFERRED TO THE CREDIT OF THE PROPER APPROPRIATION IF NECESSARY.