Weaver v. State

91 A.D.3d 758, 939 N.Y.2d 64
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJanuary 17, 2012
StatusPublished
Cited by2 cases

This text of 91 A.D.3d 758 (Weaver v. State) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Weaver v. State, 91 A.D.3d 758, 939 N.Y.2d 64 (N.Y. Ct. App. 2012).

Opinion

Sherrie Weaver, on behalf of herself, and David Sheps, on behalf of himself and all others similarly situated (hereinafter together the claimants), commenced this claim against the State of New York, alleging that, while they were patients at mental health facilities operated by the New York State Office of Mental Health (hereinafter OMH), the directors of those mental health facilities (hereinafter the facility directors) — who acted as representative payees for the claimants’ Social Security benefits— breached fiduciary duties owed to the claimants. Specifically, [759]*759the claimants alleged that, by applying a portion of the claimants’ Social Security benefits to pay the facilities’ hospital charges, and by failing to seek the appointment of a guardian of the claimants’ property for money received in excess of $5,000, the facility directors violated Mental Hygiene Law former §§ 29.23 and 33.07 (e). The claimants sought to recover the benefits that were applied to the cost of their care allegedly in violation of these sections of the Mental Hygiene Law.

In March-2011 this Court affirmed an order of the Court of Claims, which granted the State’s motion to dismiss the class action claims asserted in the amended claim on the ground that they did not satisfy all of the substantive pleading requirements set forth in Court of Claims Act § 11 (b) (see Weaver v State of New York, 82 AD3d 878, 879 [2011], lv dismissed 17 NY3d 778 [2011]). While the appeal from that order was pending before this Court, the State moved for summary judgment dismissing the amended claim on the ground that the restrictions on the receipt of a patient’s personal property by a facility director, as set forth in Mental Hygiene Law former § 29.23, did not apply to Social Security benefits. The State also contended that the use of the claimants’ Social Security benefits to pay a portion of their hospital charges did not violate the representative payees’ fiduciary duties, as articulated in Mental Hygiene Law former § 33.07 (e). The State asserted that, consistent with federal law and regulations, the facility directors properly applied the claimants’ Social Security benefits toward the cost of their care and maintenance. In response, the claimants relied upon the interpretation of these provisions of the Mental Hygiene Law given by the Appellate Division, Fourth Department, in Muller v State of New York (280 AD2d 923 [2001], affg without opinion 179 Misc 2d 980 [1999]). The claimants argued that, in Muller, the Court of Claims properly held that Social Security benefits fall within the ambit of Mental Hygiene Law former § 29.23, that facility directors had a conflict of interest when they acted as representative payees in connection with those benefits, and that facility directors breached their fiduciary duty under Mental Hygiene Law former § 33.07 (e) when they applied such benefits to defray the cost of a beneficiary’s care. The claimants noted that the Court of Claims’ order in Muller was affirmed without opinion by the Fourth Department, and contended that, since Muller was the only appellate authority on point, the Court of Claims was bound to follow Muller’s interpretation of the relevant sections of the Mental Hygiene Law.

While the State’s motion for summary judgment was pending, the Legislature amended Mental Hygiene Law § 29.23 to provide [760]*760that its restrictions “shall not apply to any federal or state benefits received by the director as representative payee, which benefits shall be handled in accordance with section 33.07 of this title and regulations promulgated thereunder” (Mental Hygiene Law § 29.23, as amended by L 2010, ch 111). The Legislature also amended Mental Hygiene Law § 33.07 (e) by, inter alia, adding that the application of federal or state benefits received by the director as representative payee “to the cost of care and treatment of such person shall not, in and of itself, be a violation, of such fiduciary obligation if such director acts in accordance with federal law and regulations” (Mental Hygiene Law § 33.07 [e], as amended by L 2010, ch 111). The Legislative history for these amendments indicates they were intended to “clarify” a facility director’s authority under Mental Hygiene Law §§ 29.23 and 33.07 (e) (see Senate Introducer Mem in Support, Bill Jacket, L 2010, ch 111).

In an order dated September 27, 2010, the Court of Claims granted the State’s motion for summary judgment dismissing the amended claim. The Court of Claims concluded that Mental Hygiene Law former § 29.23 did not apply to Social Security benefits since “the entire section, read in context, cannot be interpreted as advanced by claimants, i.e., as an implied mandate that all funds received, including those received pursuant to federal law which are intended to meet the basic needs of persons covered by the Social Security Act, must be used in the first instance for luxuries, comforts, necessities and burial expenses.” The Court of Claims also explained that this reading of the statute is confirmed by the Legislative history of the recent amendments to Mental Hygiene Law §§ 29.23 and 33.07 (e), which indicates that the amendments were intended merely to “clarify” a director’s authority under those sections, and not to alter existing substantive law.

The Court of Claims further determined that the application of the claimants’ benefits to their facility charges did not violate the representative payee’s fiduciary duty under Mental Hygiene Law former § 33.07 (e). In this regard, the Court of Claims reasoned that application of the claimants’ Social Security benefits to the cost of their care and maintenance was consistent with federal law, and served the purpose for which the benefits were intended. In this regard, the Court of Claims relied on Washington State Dept. of Social & Health Servs. v Guardianship Estate of Keffeler (537 US 371 [2003]). In Keffeler, the Washington State Department of Social and Health Services (hereinafter DSHS) acted as the representative payee for children in foster care receiving Social Security benefits. DSHS ap[761]*761plied some of the children’s benefits to reimburse itself for the cost of foster care (id. at 378-379). The children commenced an action against the State of Washington, asserting that such use of their benefits violated 42 USC § 407 (a), which provides, in part, that “none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.” The United States Supreme Court, in Keffeler, determined that 42 USC § 407 (a) did not prohibit DSHS from using some the children’s Social Security benefits to reimburse itself for the cost of their care, since such use did not involve “execution, levy, attachment [or] garnishment,” and could not be considered a “legal process” (42 USC § 407 [a]). The United States Supreme Court also held that DSHS did not violate a fiduciary duty by using the beneficiaries’ benefits to reimburse itself for the cost of their care and maintenance, and that such use is not contrary to the beneficiaries’ best interests (see Washington State Dept. of Social and Health Servs. v Keffeler, 537 US at 389-391).

The Court of Claims concluded that Keffeler undermined the reasoning and holding of Muller. It also determined that the Muller

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Cite This Page — Counsel Stack

Bluebook (online)
91 A.D.3d 758, 939 N.Y.2d 64, Counsel Stack Legal Research, https://law.counselstack.com/opinion/weaver-v-state-nyappdiv-2012.