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decided: July 5, 1983.


Appeal from the Order of the Board of Finance and Revenue in the case of In Re: Gordon and Teresa Wyatt, Docket No. M-3207.


Donald Marritz, for petitioner.

Jason W. Manne, Assistant Counsel, for respondent.

President Judge Crumlish, Jr. and Judges Mencer, Rogers, Blatt, MacPhail, Craig and Palladino. President Judge Crumlish, Jr. and Judges Rogers, Blatt, Williams, Jr., Craig, MacPhail and Doyle. Opinion by Judge Williams, Jr.

Author: Williams

[ 75 Pa. Commw. Page 348]

Teresa R. Wyatt (petitioner) appeals from a Board of Finance and Revenue (Board) decision denying her petition for refund of $1665.90 paid to the Pennsylvania Department of Public Welfare (Department) as reimbursement for public assistance garnered pending receipt of retroactive, lump-sum Social Security disability insurance benefits payable to petitioner's husband (now deceased).

The facts as stipulated establish that between December 1971 and March 1973, prior to the federal determination of petitioner's husband's eligibility for Social Security disability insurance benefits, the Department provided public assistance to petitioner and family totaling $1665.90. Although petitioner and husband signed the PA9 Reimbursement Agreement*fn1 on November 22, 1972, they did not execute the PA176-K Agreement and Authorization to Pay Claim form*fn2 which provides for the repayment of public assistance monies by recipients upon the availability of funds.

[ 75 Pa. Commw. Page 349]

During late February or early March, 1973, petitioner's husband received a retroactive, lump-sum, disability benefit insurance payment totaling $4000.00 from the Social Security Administration. A Department caseworker visited petitioner and husband on March 2, 1973, and informed them that part of the Social Security disability insurance benefits was owed, and would have to be paid, to the Department. Stipulation of the Record No. 10 states the following:

Mr. Mowery [caseworker] told the Wyatts that part of the lump-sum disability benefits was owed to DPW [Department of Public Welfare] and would have to be paid to the ACBA [Adams County Board of Assistance]. (Emphasis added.)

Believing that they were under an enforceable legal obligation to reimburse the Department from the lump-sum, disability insurance payment,*fn3 petitioner immediately visited the county board of assistance office where she was instructed to, and did tender on March 8, 1973, a cashier's check in the amount of $1665.90. Subsequently, on May 12, 1976, petitioner filed her petition for refund with the Board and appealed the Board's denial to this Court for a proceeding de novo.

Petitioner maintains that she is entitled to a refund pursuant to Section 503(a) of The Fiscal Code (Code), Act of April 9, 1929, P.L. 343, as amended, 72 P.S. § 503(a),*fn4 on the grounds that the Commonwealth is

[ 75 Pa. Commw. Page 350]

    neither rightfully nor equitably entitled to the money collected by the Department. Petitioner argues first that the Department's collection method was tantamount to legal process and therefore violative of Section 207 of the Social Security Act, 42 U.S.C. § 407,*fn5 which provides that disability insurance payments, inter alia, may not be transferred, assigned or reached by legal process; and, alternatively, that the Department failed to employ "fair means other than legal process" in collecting the reimbursement.*fn6

We must address first, however, the Department's assertion that petitioner's refund claim*fn7 is barred by the two years statute of limitations of Section 503(a) of the Code, 72 P.S. § 503(a),*fn8 and that the claim is not subject to the five years limitation period of Section 503(a)(4) of the Code, 72 P.S. § 503(a)(4). As we stated

[ 75 Pa. Commw. Page 351]

    in Dumas v. Board of Finance and Revenue, 29 Pa. Commonwealth Ct. 396, 399, 371 A.2d 539, 540 (1977), aff'd per curiam, 478 Pa. 20, 385 A.2d 976 (1978),

[i]n order to qualify for the extended five years limitation, a petitioner: (1) must have paid money to the Commonwealth pursuant to a provision of an act of assembly or an interpretation thereof; and (2) a court of competent jurisdiction must subsequently hold, by final judgment, said act to be unconstitutional or the interpretation thereof erroneous. (Emphasis in original.)

Since petitioner reimbursed the Department pursuant to Section 4(a) of The Support Law, 62 P.S. § 1974(a),*fn9 the first condition of the statutory requirement and Dumas test is satisfied. The second condition necessary to trigger the five years limitation period is also fulfilled. On January 10, 1973, the Supreme Court in Philpott v. Essex County Welfare Board, 409 U.S. 413 (1973) held that Section 207 of the Social Security Act prohibited states from using legal process to obtain public assistance reimbursement from a recipient's social security benefits. Then pertinent and effective Department regulations implementing and interpreting The Support Law subjected social security benefits to legal process. Thus, in light of Philpott, Department regulations subjecting Social Security benefits to legal process were erroneous interpretations of The Support Law.*fn10 Dumas, 29 Pa. Commonwealth Ct. at 401, 371

[ 75 Pa. Commw. Page ]

Page 352French v. Michigan Department of Social Services, 92 Mich. App. 701, 285 N.W.2d 427 (1979).

Finally, petitioner maintains that the Department's collection practice violated the "fair means" test developed and refined by this Court in Good, Wohlgemuth and St. Clair. This "fair means" test scrutinizes the Department's collection methods and upholds debt collection obtained "by fair means other than legal process." Good, 15 Pa. Commonwealth Ct. at 527 n. 3, 327 A.2d at 399 n. 3.

Although the "fair means" standard is not violated by mere failure to inform recipients of their Philpott rights, Tunnicliff, 483 Pa. at 281-84, 396 A.2d at 1171-73, such standard is contravened when recipients are affirmatively misled into believing that they have a legal obligation to make repayment from Philpott protected funds. Tunnicliff, 483 Pa. at 282 n. 6, 396 A.2d at 1171 n. 6; Moore, 483 F. Supp. at 371; St. Clair, 29 Pa. Commonwealth Ct. at 153, 370 A.2d at 752; Wohlgemuth, 18 Pa. Commonwealth Ct. at 400, 336 A.2d at 458.*fn12 Department caseworkers accordingly may neither misinform nor affirmatively mislead recipients into believing that specific funds expressly protected under Philpott and Section 207 are to be the

[ 75 Pa. Commw. Page 354]

    source of reimbursement. See, Tunnicliff, 483 Pa. at 282 n. 6, 396 A.2d at 1171 n. 6; Moore, 483 F. Supp. at 369.

By denominating as a reimbursement source the protected Social Security disability insurance funds, the Department's caseworker misinformed petitioner and affirmatively misled her to believe that she had a legal duty to make repayment from the insurance monies when no such obligation existed and the Department lacked a valid legal claim to the shielded funds. We therefore conclude that petitioner's reimbursement of the Department, while not achieved through legal process, was not obtained by "fair means" and petitioner is consequently entitled to a full refund from respondent.


And Now, this 5th day of July, 1983, the order of the Board of Finance and Revenue is reversed and judgment is entered for Teresa R. Wyatt and against the Commonwealth of Pennsylvania, Department of Public Welfare in the amount of $1,665.90. Exceptions must be filed hereto within thirty (30) days after entry of this Order.



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