The Department of Mental Hygiene of California v. Kirchner case in 1964 revolved around the issue of whether a state could claim reimbursement from an estate for the cost of care and treatment provided to a mentally ill person during their lifetime. The Supreme Court ruled against the State, stating that it was unconstitutional under federal law for states to seek such reimbursements. The court held that this violated Section 202(a)(1) and (10) of the Social Security Act which prohibits claims by any political subdivision against payments made under old-age, survivors, disability insurance programs or public assistance grants. This ruling protected recipients' benefits from being claimed by third parties like states seeking compensation for services rendered.

In the dissenting opinion for the Department of Mental Hygiene of California v. Kirchner case, Justice Douglas argued that a state should not be allowed to claim reimbursement from an estate for care provided to a mentally ill person during their lifetime without first proving that they had made reasonable efforts to collect payment while the patient was alive. He asserted that allowing such claims would essentially make states preferred creditors and could potentially leave other legitimate creditors with nothing. Furthermore, he contended this practice might discourage families from seeking necessary mental health treatment for fear of financial repercussions after death. This ruling, in his view, violated due process rights by failing to provide adequate notice and opportunity for hearing before depriving individuals or estates of property.