Lockhart v. United States
The federal government has become very active in collecting debts on unpaid federally reinsured student loans. Its practice of withhold-ing a portion of a debtor's Social Security payments to payback the loan has come under legal attack. The Supreme Court, in Lockhart v. United States, ___U.S.___, 126 S.Ct. 699, 163 L.Ed.2d 557 (2005), ruled that this practice was legal and did not violate a set of federal laws governing Social Security and the collection of student loan debt.
James Lockhart, a Washington resident, was laid off of his job in the early 1980s, when he was in his early 40s. He enrolled in four different higher education institutions and accumulated more than $80,000 in student loan debts. Lockhart was never able to find a steady job and his health declined to the point where he could not work. He received $874 in monthly Social Security disability benefits until he reached age 65. At that point he began to receive Social Security old age benefits. In 2002 the federal government began withholding a portion of these benefits to offset his debt. Lockhart filed a lawsuit in federal district court, alleging that the Debt Collection Act of 1982, 31 U.S.C.A. §3716(e)(1), barred the collection of debts more than ten years old. The district court dismissed his action and the Ninth Circuit Court of Appeals upheld this ruling. The Supreme Court accepted Lockhart's appeal to resolve a conflict in the law between the Ninth and Eighth Circuits.
The Supreme Court, in a unanimous decision, upheld the Ninth Circuit ruling. Justice Sandra Day O'Connor, writing for the Court, examined the interplay of various provisions from the Debt Collection Act, the Social Security Act, 49 Stat. 620, and the 1991 Higher Education Technical Amendments, 105 Stat. 123. Under the Debt Collection Act the use by federal agencies of administrative offsets to collect outstanding debt was recognized as a valid tool. However, the Social Security Act states that Social Security benefits generally are not "subject to execution, levy, attachment, garnishment, or other legal process." 42 U.S.C.A. § 407(a). In addition, the act also purported to protect this section from change through the use of language that barred any past or future law from being construed "to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section. 42 U.S.C.A. § 407(b). Though the Debt Collection Act did not authorize the collection of claims more than ten years old, the Higher Education Technical Amendments eliminated time limitations on a number of federal loans. One of the provisions stated that there was no time limitation on the use of offset for the repayment of student loans. 20 U.S.C.A. § 1091a(a)(2)(D). However, this provision did not eliminate the Social Security anti-attachment rule. It was not until 1996 that Congress passed an amendment to the Debt Collection Act that explicitly allowed the use of offset of Social Security benefits to collect federal debts.
Justice O'Connor concluded that the Social Security provision banning the use of benefits for collection efforts, known as express-reference provisions, did not need to be considered in deciding the case because the 1996 amendment provided "exactly the sort of express reference that the Social Security Act say is necessary to supersede the anti-attachment provision." As to the ten-year limit on collecting debt, O'Connor found that the 1991 Higher Education Technical Amendments removed this bar on Social Security benefits. Lockhart had argued that Congress could not have intended this result because it did not allow debt collection by Social Security offset until 1996. The Court rejected this claim, finding that the fact Congress had not foreseen all of the consequences in 1991 was not "a sufficient reason for refusing to give effect to its plain meaning." Though the 1996 amendments retained the 10-year bar on offset authority found in the original Debt Collection Act, the 1991 technical amendments lawfully abrogated this bar "as a limited exception to the Debt Collection Act time bar in the student loan context." Finally, Justice O'Connor declined to consider a failed 2004 effort by some members of Congress to amend the Debt Collection Act to explicitly authorize offset of debts over 10 years old. The courts are wary of interpreting a statute using failed legislative proposals and it was "unclear what meaning we could read into this effort even if we were inclined to do so." Therefore, the Court upheld the debt collection practice.
Justice Antonin Scalia, in a concurring opinion, agreed with the outcome of the case but wished the Court had ruled that the Social Security express-reference provision was not binding; in effect, the debt collection could have been upheld even if Congress had not made the express exception in the 1991 amendments. It was long-held precedent that one legislature cannot limit the powers of a succeeding legislature. In other cases the Court had made clear that an "express-reference or express-statement provision cannot nullify the unambiguous import of a subsequent statute." Scalia urged Congress to refrain from including such provisions in future legislation, as they are ineffective.