The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site -



Opinion No. 5345

August 2, 1978


Reimbursement agreement to repay the State from federal benefits

A provision of the Federal Social Security Act prohibits the Department of Social Services from requiring an applicant for or recipient of assistance to reimburse the department from social security benefits that have been received or may be received in the future.

John T. Dempsey


Michigan Department of Social Services

300 South Capitol Avenue

Lansing, Michigan 48926

You have requested my opinion as to whether the policy of requiring reimbursement from Title II benefits for general assistance given is prohibited by the decision of the United States Supreme Court in Philpott v Essex County Welfare Board, 409 US 413; 93 S Ct 590; 34 L Ed 2d 608 (1973).

Currently, it is the policy of the Department of Social Services to require all general assistance applicants or recipients to apply for any federal assistance benefits for which they may be eligible. The applicant then signs a reimbursement agreement with the department to repay the state from any federal benefits which the applicant subsequently receives for the amount of general assistance received. One of the federal assistance programs that applicants are required to apply for and from which reimbursement is required to be made if the applicant subsequently receives benefits, is federal old-age, survivors, and disability insurance paid under Title II of the Social Security Act, 53 Stat 1372 (1939), 42 USC 401 et seq.

The Philpott decision interprets 42 USC Sec. 407, supra, which presently states:

'The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.'

In Philpott, as a result of permanent and total disabilities, the recipient received state assistance. As a condition for eligibility for such assistance, the State of New Jersey required that the recipient sign a reimbursement agreement which assigned his right in future personal property (retroactive federal insurance disability benefits) to the welfare agency. Thereafter, the recipient received a retroactive Title II disability benefit payment which was deposited in a bank account and the welfare agency brought suit to reach the bank account. The United States Supreme Court interpreted 42 USC Sec. 407 as a bar to the suit thus brought. The court said that the retroactive Title II benefits were 'moneys paid' within the meaning of 42 USC Sec. 407 of the Social Security Act, that the suit brought was an attempt to subject the money to 'levy, attachment . . . or legal process' and, that 42 USC Sec. 407 was a broad bar against the use of any legal process to reach the Title II funds by all claimants, 'including a State.'

The principles expressed in Philpott as applied in subsequent court decisions, lead to the conclusion that 42 USC Sec. 407, supra, prohibits any mandatory requirement of reimbursement out of Title II monies received by a general assistance recipient. Only wholly voluntary reimbursement agreements can be made. In Wohlgemuth v Armacost, 336 A2d 455; 18 Pa Commw Ct 394 (1975), the court stated:

'Turning to the merits of the case, the Department argues that Philpott, supra, only held that payment such as the one involved in the instant case are immune from legal process. We agree with this interpretation of Philpott, as we noted in Good v Wohlgemuth, ---- PA. Cmwlth. ----, 327 A.2d 397 (1974). In Good Judge Rogers observed that Philpott does not bar the Department from asking for reimbursement by fair means other than legal process, and, of course, a subsequent complaint to a truly voluntary repayment would be without merit.

The problem with the instant case is that we doubt that Armacost's payment was truly voluntary.' 336 A2d 455, 457

The court therefore ordered a refund where the recipient volunteered payment upon the belief it was required and the department accepted the money without first informing the recipient that there was no legal obligation to pay.

To require mandatory reimbursement of general assistance advances from Title II monies would also conflict with the purpose of Congress in providing protection from 'any legal process' as that purpose was recently stated in Department of Treasury v Ivy, 65 Mich App 447, 452; 237 NW2d 498 (1975):

'This protection from 'any legal process' for accumulated social security benefit goes to the underlying principle of the social security system. The underlying principle of the system is to protect the social security beneficiaries from some of the hardships of existence. United States v Silk, 331 US 704, 711; 67 S Ct 1463; 91 L Ed 1757 (1947). It simply does not comport with the philosophy of the Social Security Act to allow a creditor to take what is necessary for bare existence at the current time for past debts. Even allowing a creditor to reach accumulations of benefits does not comport with this philosophy since at any time the accumulation may be necessary for the recipient's current needs. Algier Estate, 43 PA D & C2d 351, 357 (Orphan's Court, 1967).' 65 Mich App 477, 453.

Therefore, it is my opinion that no reimbursement agreement may be required as an eligibility requirement for general assistance which forces an applicant to repay the amount of general assistance actually awarded from any Title II Social Security benefits that he has received or may receive in the future. To the extent that the present department policy requires reimbursement from such Title II Social Security benefits as an eligibility requirement for general assistance, it conflicts with the law as stated in 42 USC Sec. 407, supra. However, this is not to say that the department is prohibited from requiring a reimbursement agreement from other funds of the applicant, or from considering the Title II Social Security benefits in determining eligibility or state level of assistance, if any.

Moreover, excepting applications for temporary and emergency benefits, the Department would not be prohibited from adopting a policy that requires applicants to apply for and receive a determination of eligibility for Title II benefits prior to receiving general assistance from the state.

Frank J. Kelley

Attorney General