VS. ADV. NO. 92-2021







This matter is before the Court upon the motion of the United States for summary judgment.

The facts do not appear to be in dispute in this matter. Defendant applied for social security disability payments in November, 1982. His claim was initially denied but he prevailed in an action in United States District Court which was entered on April 24, 1985. After filing a claim for social security benefits, defendant had gone back to work in January, 1984 and had not informed the Social Security Administration ("SSA") of that fact. Defendant received payments to which he was not entitled totaling $17,133.40 and his dependents received payments totaling $8,515.00 to which they were not entitled, all apparently resulting from the failure of defendant to inform SSA of the fact that he was working which he was required to do.

Defendant was charged and pled guilty in United States District Court for the Eastern District of Kentucky to the criminal offense of failure to report employment and receipt of wages that affected his right to social security benefits. He was sentenced on January 22, 1991 to twelve months in prison with six months to be served in a halfway house and was ordered to pay restitution on the amount of $25,648.40, the sum total of the payments to himself and his dependents that were received in violation of the law.

The defendant and his wife, Terry Anne Beckett, filed their petition in bankruptcy on December 6, 1991 listing the restitution indebtedness as one of his debts. On March 11, 1992 the United States filed this adversary proceeding objecting to the discharge of the restitution indebtedness pursuant to 11 U.S.C. 523(a)(2), (4), (6) and (7). The defendant filed his answer denying that the indebtedness was excepted from discharge on March 27, 1992. On April 24, 1992 the United States filed its Motion for Summary Judgment and the affidavit of Lynn Fuller, an employee of the United States Department of Health and Human Services. The defendant submitted his Response to Motion for Summary Judgment on May 18, 1992. A telephonic pretrial conference was held on July 13, 1992 and the Court heard arguments on the motion for summary judgment. The matter was then submitted to the Court for consideration of the motion and response.

The United States has cited authority for its claim of nondischargeability under each section of 523(a) under which it alleged the nondischargeability in its complaint. The defendant has chosen to address the issue of nondischargeabilty under 523(a)(7). Since the Court need only find the debt nondischargeable under any one of the sections of 523(a) in order for the United States to prevail, the Court will first consider the matter of the dischargeability of the restitution indebtedness under 523(a)(7).

Subsection (7) of 523(a) excepts from discharge any debt which is a fine, penalty or forfeiture payable to or for the benefit of any governmental unit other than certain tax penalties. The United States cites Kelly v. Robinson, 479 U.S. 36 (1986) as authority for its contention that the restitution debt herein involved is not dischargeable. That case involved a state court ordered restitution as a part of a criminal proceeding which was payable to the State of Connecticut upon Robinson's conviction for defrauding the state in connection with welfare benefits. The defendant here counters with the argument that there is a distinction between the Kelly case and the present case since the present case involves a federal criminal conviction and restitution to the United States. He argues that the result in the Kelly case was decided based on principles of rights retained by the states in a federal system. A reading of that case indicates that considerations of federalism were involved but the Court is loath to discover why, under the statutory language of 523(a)(7) the result would be any different here.

Other courts have considered this matter and there appears to be precedent for the United States' position. United States v. Vetter, 895 F.2d 456 (8th Cir. 1990), In re Wright, 87 B.R. 1011 (Bankr.D.S.D. 1988), In re O'Connell, 80 B.R. 475 (Bankr.E.D.Mo. 1987). In these cases the courts have found that restitution obligations to the federal government are nondischargeable pursuant to 523(a)(7). Their reasoning appears sound that, under the principles of Kelly, restitution to the federal government is not dischargeable.

In view of the Court's conclusion that the debt herein involved is not dischargeable pursuant to 523(a)(7), it will not be necessary to consider the other grounds asserted by the government in objecting to the discharge of this indebtedness.

There being no facts in dispute herein, it appears the motion of the United States for summary judgment should be sustained. A separate order will be entered herein.

Dated this ______ day of _________, 1992.


By the Court,





Copies to:

David Middleton, Esq.

Thomas R. Nienaber, Esq.

United States Trustee