Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

Washington State Department of
Social and Health Services, Et Al.
Guardianship Estate of Danny Keffeler,
By Wanda Pierce, Guardian,
and Other Persons Similarly Situated

Children in Washington who are abused, abandoned or neglected are frequently placed in the care of the state Department of Social and Health Services. Children who are dependents of deceased or disabled parents or who are low-income and disabled are eligible to receive Social Security payments to help cover the cost of their food, clothing and shelter. In situations where eligible children have no suitable parents or guardians to act on their behalf, the Commissioner of Social Security appoints DSHS as "representative payee" for purposes of receiving the Social Security money. Under a regulation adopted by the Secretary of DSHS, this money is used on behalf of the children to help pay for the cost of their foster care. Public agencies in all states similarly use Social Security funds to meet the needs of foster children. In addition, the legal principles of this case apply when a parent or other guardian is appointed as representative payee for a child who is eligible for Social Security payments.

Case Background

In 1989, Danny Keffeler was voluntarily placed in state foster care by his mother, Mary Lou Pierce. Ms. Pierce died in an automobile crash the following year. The Okanogan County Superior Court then appointed Danny's grandmother, Wanda Pierce, guardian of his estate. Although Mrs. Pierce was appointed guardian, she did not care for Danny. The court placed Danny in the care of DSHS, and he was left in foster care.

Danny was awarded Social Security benefits, and Mrs. Pierce was appointed his representative payee. Mrs. Pierce did not provide any of the benefits to the Department to pay for the cost of Danny's foster care. The Social Security Administration removed Mrs. Pierce and appointed DSHS as representative payee, and for the next two years DSHS served as Danny's representative payee. During this time, DSHS applied the benefits to Danny's cost of care. Mrs. Pierce objected to her removal as Danny's payee, and after several hearings before federal administrative law judges, her objection was sustained and she was reinstated as payee.

Legal History

In 1995, Mrs. Pierce filed suit against DSHS on behalf of the Estate of Danny Keffeler to recover the benefits the department used to pay for Danny's care during the time when the Department was his payee. The action was also brought on behalf of a class of foster children in the Department's care who receive Social Security benefits. The complaint alleged that the Department's use of the benefits violated the Social Security Act.

In 1997, the Okanogan County Superior certified the class to include all past, present, and future foster children in Washington who receive Social Security payments for whom the Department acts or has sought to act as representative payee.
In 1998, the trial court ruled in favor of the plaintiffs. The court's order enjoined the DSHS from using Social Security benefits to pay for the cost of a foster child's care and "from in any way administering the funds to offset the State's cost of maintaining a child in foster care." The order required the Department to provide an accounting of the benefits received and spent on class members since April 18, 1975. Based on this accounting, plaintiffs were authorized to file claims. The trial court also awarded the Estate of Danny Keffeler $4,998, which was the amount of the benefits the Department had used to pay for Danny's care.

DSHS appealed the trial court's injunction to the Washington Court of Appeals, which certified the case to the Washington Supreme Court. The state did not appeal the financial award, and paid the money to Danny Keffeler's estate. The state Supreme Court accepted the case and stayed the trial court's injunction pending review. Subsequently, the U.S. Department of Justice filed a friend of the court brief in support of DSHS and participated in oral argument before the Court. The Supreme Court returned the case to the trial court for additional fact-finding, and then held a second oral argument. The Department of Justice also participated in this argument in support of the Department.

On October 11, 2001, the state Supreme Court entered its judgment in the case. A five-justice majority opinion affirmed the trial court's decision. In December, the state Supreme Court denied DSHS's motion for reconsideration. In January, U.S. Supreme Court Justice Sandra Day O'Connor granted a temporary stay of the state Supreme Court order, thus keeping the program in place for the time being. Among other things, the state argued that if the program were suspended while the case is on appeal, many children would lose their benefits because their individual Social Security accounts would accumulate more than the $2,000 maximum allowed by federal law. The stay was supported by U.S. Solicitor General Theodore Olson in a brief filed at the Supreme Court's request. On March 13, 2002, the U. S. Supreme Court ordered that the stay remain in effect pending the high's court's disposition of the case.

Status of case:

On March 14, 2002, a Petition for a Writ of Certiorari asking the U.S. Supreme Court to reverse the Washington Supreme Court decision was filed by Attorney General Christine Gregoire at the request of DSHS. A decision by the Supreme Court whether to hear the state's appeal is expected by the end of the Court's current term on June 30. If the case is accepted, oral argument will likely occur next fall, with a decision in the spring of 2003.

Summary of Issue Before the U.S. Supreme Court:

The Court has been asked to decide whether a representative payee violates the Social Security Act when the payee uses the benefits to pay for the beneficiary's current care.