JAMES L. HAMILTON v. BIG SANDY COMMUNITY ACTION PROGRAM and TAMMY HANEY
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RENDERED: June 26, 1998; 2:00 p.m.
NOT TO BE PUBLISHED
NO. 97-CA-1750-MR
JAMES L. HAMILTON
APPELLANT
APPEAL FROM PIKE CIRCUIT COURT
HONORABLE CHARLES E. LOWE, JR., JUDGE
ACTION NO. 96-CI-001806
v.
BIG SANDY COMMUNITY ACTION PROGRAM
and
TAMMY HANEY
APPELLEE
OPINION
AFFIRMING
* * *
BEFORE:
ABRAMSON, HUDDLESTON, AND KNOX, JUDGES.
KNOX, JUDGE:
This appeal is from a summary judgment in favor of
appellees, Big Sandy Community Action Program and Tammy Haney,
dismissing them from appellant Hamilton's action alleging breach
of contract and negligence.
Following review of 20 C.F.R. §
416.601 (1995) et seq., which controls the parties' conduct in
this matter, we affirm the Pike Circuit Court.
In August 1995, Herbie A. Bailey (Bailey) entered into
a written contract with appellant, James L. Hamilton (Hamilton),
for the purpose of employing Hamilton to represent Bailey and his
family before the Social Security Administration (SSA).
Bailey
sought to obtain social security disability and/or supplemental
security income benefits.
In the event that any benefits were
awarded, the contract provided for Hamilton to be compensated by
the lesser of 25% of the total award or $4,000.00.
Additionally,
the contract required Bailey to reimburse Hamilton for reasonable
costs incurred in effecting his representation, such as expenses
for medical reports, telephone charges, postage and mileage.
As far as the record indicates, Hamilton succeeded in
procuring $11,766.00 for Bailey in back supplemental security
income benefits.
Likewise, Bailey's ex-spouses collected a total
of $9,759.00 in back benefits on behalf of themselves and their
children. The Administrative Law Judge's December 1995 order
found Bailey incompetent of managing his financial affairs and,
presumably under 20 C.F.R. § 417.610, directed that Big Sandy
Community Action Program (Big Sandy) be appointed representative
payee on Bailey's behalf. It is undisputed that Big Sandy
commenced officially acting as Bailey's representative payee on
January 17, 1996.
Sometime between January 1996 and July of that year,
the SSA located a more suitable representative payee.
It is
standard procedure for the SSA to select a new representative
payee should it find a preferable person to act in that capacity.
20 C.F.R. § 416.650.
Pursuant to the criteria set forth in 20
C.F.R. § 416.620, the SSA considers the relationship, legal
authority, and familiarity between the beneficiary and the
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representative payee, relevant information to be considered in
the selection of a representative payee. 20 C.F.R. § 416.620.
The SSA determined Ira Bailey, appellant's mother, to be a more
appropriate representative payee and directed that she replace
Big Sandy in this capacity.
It is the effective date of Ira
Bailey's replacement that remains the core issue in dispute and
which resolves whether summary judgment was appropriate in this
case.
Appellant states that he contacted Big Sandy regarding
possible payment of his representation fee shortly following Big
Sandy's being appointed representative payee in January 1996.
Appellee, Tammy Haney (Haney), was acting as Big Sandy's social
security benefits bookkeeper during this time.
Hamilton contends
Haney assured him that Big Sandy was withholding 25% of Bailey's
benefits payable toward a representative fee.
Apparently, in July 1996, Ira Bailey notified Big Sandy
that she had assumed the role of Herbie Bailey's representative
payee.
On August 6, 1996, Haney contacted the local social
security office to ascertain what procedure need be followed
regarding the transfer of Bailey's benefits.
Kim Thompson, of
the local social security office, confirmed Ira Bailey's
replacement of Big Sandy and directed Haney to turn over the
funds to the new representative.
The sum of $3,940.00, embodying
the total amount of funds held by Big Sandy on Bailey's behalf,
was turned over to Ira Bailey on August 12, 1996. However,
written confirmation of this administrative directive was not
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received by Big Sandy until sometime toward the end of August
1996.
Appellant argues that the trial court erred in granting
summary judgment as there exists a genuine issue of material fact
concerning Big Sandy's legal authority to transfer the subject
funds to Ira Bailey on August 6, 1996.
The gist of appellant's
argument remains that Tammy Haney, as Big Sandy's agent, had
notice that appellant lay claim to that portion of the benefits
being withheld for possible payment of a representative fee.
Further, appellant contends that on August 6, 1996, the
Administrative Law Judge (ALJ) authorized the payment of the
representative fee, obligating appellees to conserve these funds
separately from any disbursement made to the new representative
payee.
Under these premises, appellant claims entitlement to
relief since: (1) appellant retained third party beneficiary
status under an alleged contract between Bailey and Big Sandy;
(2) appellant detrimentally relied on statements attributed to
Haney regarding the 25% withholding, and collection thereof; and,
(3) appellee was negligent in releasing all of Bailey's funds to
the new representative payee.
Our review of summary judgment is limited to whether
the facts alleged by appellant and the evidence contained in the
record fail to support a claim. Capitol Holding Corp. v. Bailey,
Ky., 873 S.W.2d 187, 189 (1994) (citations omitted).
As such,
without reaching the merit of appellant's arguments, we, as did
the trial judge, must adhere to the application of the proper
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federal regulation when reviewing administration of the federal
code.
Accordingly, 20 C.F.R. § 416.660 states:
A representative payee who has conserved
or invested benefit payments shall transfer
these funds, and the interest earned from the
invested funds, to either a successor payee,
or to us, as we will specify. If the funds
and the earned interest are returned to us,
we will recertify them to a successor
representative payee or to the beneficiary.
The language of the regulation, specifically, directs the
representative payee to follow the instruction of the social
security administration in the payment of conserved or invested
benefits.
By affidavit, Tammy Haney described the instructions
the SSA provided to her concerning the transfer of Bailey's
benefit funds, as stated above.
Moreover, James Kelly, manager
of the social security office administering the Bailey file,
provided an affidavit reflecting that Big Sandy was removed as
representative payee on July 22, 1996.
At this time no
representative fee had been authorized by the ALJ.
Rather, Mr.
Kelly's affidavit further explained that the August 6, 1996,
authorization to pay a representative fee was erroneously
entered, in that the ALJ had mistakenly assumed Hamilton's
assistant, Nancy Bolton, to be an attorney.1
A corrective order
was issued on September 16, 1996, approving a non-attorney fee
for both Hamilton and Bolton.
It is this subsequent order which,
1
The August 6, 1996 order authorized Nancy Bolton, as an
attorney at law to receive a representative fee. Ms. Bolton is
appellant's non-attorney assistant.
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according to Mr. Kelly's affidavit, the SSA considers controlling
with respect to the effective date of the representative fee
authorization.
The date of the accurate authorization order
succeeded the date of transfer by more than one month.
As such,
appellees properly released the benefit funds as directed by the
SSA.
There remains further force negating Hamilton's
argument that the ALJ's order of August 6, 1996, controls with
respect to the date of fee authorization, hence precluding the
release of representative fee funds.
With respect to fees for a
non-attorney, the "Authorization To Charge and Collect A Fee,"
Social Security Administration Form 99A-1560A-U5 provides:
The representative should look to the
claimant for payment of the fee in this case.
The law does not permit direct payment of a
fee by us when there are no past due
benefits, when the representative is not an
attorney, or when the representative provided
services in connection with a claim for
Supplemental Security Income.
The second and third factors eliminating the authorization of fee
compensation by the SSA are applicable to appellant in this case.
First, payment is precluded as Hamilton is a non-attorney.
Second, the record reflects the scope of Hamilton's
representation included obtaining supplemental security income.
While in the process of preparing a fee petition,
Hamilton sought the ALJ's advice in how to calculate his fee
amount and applicable proportions of same.
In a letter dated
July 16, 1996, Hamilton's assistant wrote, "I have not collected
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any fee at this time, because I have not received a letter
stating the amount of Mr. Bailey's Title II back-benefits.
However, I did receive a letter stating that Mr. Bailey was
entitled to $11,766.00 SSI back-benefits."
Other than this
letter to the ALJ from appellant's office, the record is void of
the type and extent of benefits awarded to Bailey.
Nonetheless,
Hamilton's letter clearly concludes that representation before
the SSA included providing services in connection with a claim
for supplemental security income.
The obvious result is that
appellant is precluded from receiving payment from Big Sandy
since as of July 22, 1996, it no longer acted in the capacity of
representative payee.
As can be seen, Big Sandy and its employee are
compelled to follow the instruction of the Social Security
Administration with respect to allocation of conserved benefits
funds.
The Social Security Administration directed Big Sandy's
employee to transfer Bailey's funds to a new representative
payee, Ira Bailey.
Big Sandy complied with this instruction.
Further, according to the local Social Security Administration
office manager, Big Sandy was removed as representative payee on
July 22, 1996, and, therefore, had neither the right nor duty to
withhold any sums from the new representative payee.
Lastly,
regardless of the ALJ fee authorization, appellant is precluded
from claiming a fee award under the order since (1) he is a nonattorney; and, (2) the scope of his representation encompassed
obtaining supplemental security income.
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There is no genuine
issue of material fact, and appellant must look to the claimant,
Herbie Bailey or his replacement representative, for payment of
the fee.
The judgment of the trial court is affirmed.
ALL CONCUR.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
James L. Hamilton, pro se
Pikeville, Kentucky
John David Preston
Paintsville, Kentucky
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