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State can keep foster child’s survivor benefits, CSA holds

The state can keep a foster child’s Social Security survivor’s benefits to pay for money it spent on his care, a Maryland appeals court held this week.

The Court of Special Appeals overturned a decision by a juvenile court judge, which ordered the Baltimore City Department of Social Services to hold the benefits of about $32,000 in trust for the teen.

The Department of Social Services received Ryan W.’s Social Security Old-Age, Survivors and Disability Insurance benefits for three and a half years after his parents’ deaths. It used them to offset the money it spent on his foster care services, which the state estimated at more than $220,000 for the same period.

The lower court had ruled in June 2011 that the state violated Ryan’s constitutional rights by accepting the benefits and not informing Ryan of their use. It also declared invalid two sections of the Code of Maryland Regulations that authorized the department’s actions.

The Court of Special Appeals, however, found the offsets were allowed by law. It also ruled that the Juvenile Court did not have authority to declare a state regulation void and its order to create a trust is barred by sovereign immunity.

“I am disappointed with the opinion,” Ramesh Kasarabada, an attorney at Maryland Legal Aid who represented Ryan, said in a statement. “My client and I will be weighing our options.”

The Office of the Maryland Attorney General, which represented the Department of Social Services, declined to comment Tuesday.

Elissa Garr, executive director of First Star Inc., a Washington-based nonprofit that advocates for children who have been abused or neglected, said the money in cases like Ryan’s should be saved for children to use after they transition out of state care. The money could be used to pay for college or an apartment, Garr said.

“The state would take care of them whether they are entitled to monetary benefits or not,” Garr said. “Consider the fact that the state, when children do age out, does not provide the kinds of preparation and financial help these kids need to make it in the world, generally speaking. It would help if they had some sort of trust fund where money was put aside for them.”

Daniel L. Hatcher, an associate professor of law at the University of Baltimore School of Law, represented a former foster child in a similar case against the Baltimore County Department of Social Services. The Court of Special Appeals also ruled in favor of the state in Myers v. Baltimore County Department of Social Services, an unreported opinion issued Aug. 29.

“Foster children are among the most vulnerable citizens in our society and also are most in need of assistance and services,” Hatcher said. “The Social Security benefits are their assets.”

Hatcher said he and his client will petition for the decision to be reviewed by Maryland’s highest court, the Court of Appeals. In a similar case in 2008, the North Carolina Supreme Court ruled in favor of the foster child, saying the state did not have the right to divert the funds to reimburse itself for the child’s care.

“Why would a foster care agency work against the best interests of children and why would our state condone that practice?” Hatcher said.

While Hatcher said he understood many foster care agencies are low on funding, especially during the economic downturn, foster children should not be obligated to pay for their care.

“There is not a law that says children have to pay for foster care,” Hatcher said. “That makes no sense because they are not the ones who put themselves there in the first place. … The answer is not to take money from the very children they are supposed to be helping.”

Notice to guardian

Ryan, now 19, entered foster care in June 2002 at the age of 9. His parents were drug addicts and both died a few years later. Since then, Ryan has bounced around between foster families and group homes.

In 2009, the Department of Social Services asked to be the representative payee of Ryan’s OASDI benefits and began receiving $771 per month in benefits — collecting $31,693 total.

Ryan filed a motion to control conduct in April 2011. Ryan said he had not known that the department was receiving benefits on his behalf. Ryan told the court that he would have invested the money and wanted to go to college to be a park ranger.

Baltimore City Circuit Judge Stephen Sfekas, sitting as a juvenile court judge, held a hearing in May 2011 and ultimately ruled in Ryan’s favor.

The Court of Special Appeals reversed. Under the Social Security Act, a child under the age of 18 cannot directly receive OASDI benefits and has to receive them through a representative payee. Federal law allows a local social services department to act as payee.

The court also said Ryan was not deprived of due process because the only notice required under federal law was to Ryan’s legal guardian — in this case, the Department of Social Services.

The court ruled that the Juvenile Court had no jurisdiction to declare state regulations void and that the Juvenile Court’s order to create a trust is barred by sovereign immunity.

“It follows that no equitable remedy was necessary because there was no wrong to be corrected,” Judge Deborah S. Eyler wrote for the appellate court.

WHAT THE COURT HELD

Case:

In re: Ryan W., September Term 2011, No. 1503. Argued May 4, 2012. Decided Sept. 5, 2012. Opinion by Eyler, D., J.

Issue:

Can the state use a foster child’s Old-Age, Survivors, and Disability Insurance benefits to pay towards the child’s care?

Holding:

Yes, reversed. Under the Social Security Act, a child can receive OASDI benefits only through a representative payee. Federal law allows a local social services department to act as payee. Notice was properly given to the DSS as Ryan’s legal guardian. Furthermore, the juvenile court lacked authority to invalidate COMAR regulations providing for the offset.

Counsel:

Julia Doyle Bernhardt, Office of the Attorney General, for appellant; Ramesh Kasarabada, Maryland Legal Aid, for appellee.

RecordFax #12-0905-00 (69 pages).