OTIS R. BOWEN, SECRETARY OF HEALTH AND HUMAN SERVICES, APPELLANT V. JUDY LESKO, ET AL. No. 86-744 In the Supreme Court of the United States October Term, 1986 On Appeal from the United States District Court for the Eastern District of Wisconsin Jurisdictional Statement PARTIES TO THE PROCEEDING In addition to those named in the caption, the parties are: Linda Reivitz, Secretary, Wisconsin Department of Health and Social Services; and Georgia Mason, Margaret Ryan, their minor children, and all others similarly situated. TABLE OF CONTENTS Parties to the proceeding Opinions below Jurisdiction Constitutional and statutory provisions involved Question presented Statement A. Statutory and regulatory framework B. Proceedings in this case The question is substantial Conclusion Appendix A Appendix B Appendix C Appendix D OPINIONS BELOW The decision of the district court granting appellees a preliminary injunction and declaring the relevant provision of the Social Security Act unconstitutional (App., infra, 1a-18a) is reported at 639 F.Supp. 1152. The amended order of the district court (App., infra, 19a-21a), as well as its order granting a stay pending appeal (App., infra, 22a-23a), are unreported. JURISDICTION The district court's original order was filed on July 16, 1986 (App., infra, 18a), and its amended order was filed on August 4, 1986 (App., infra, 19a-21a). A notice of appeal to this Court was filed on August 6, 1986 (App., infra, 24a-25a). On September 29, 1986, Justice Stevens extended the time for docketing the appeal to and including November 5, 1986. The jurisdiction of this Court is invoked under 28 U.S.C. 1252. CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The Fifth Amendment of the Constitution provides in pertinent part: (N)or shall any person be * * * deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation. Section 402(a)(38) of the Social Security Act, 42 U.S.C. (Supp. II) 602(a)(38), provides in pertinent part: A State plan for aid and services to needy families with children must -- * * * * * provide that in making the determination under paragraph (7) with respect to a dependent child and applying paragraph (8), the State agency shall (except as otherwise provided in this part) include -- (A) any parent of such child, and (B) any brother or sister of such child, if such brother or sister meets the conditions described in clauses (1) and (2) of section 606(a) of this title, if such parent, brother, or sister is living in the same home as the dependent child, and any income of or available for such parent, brother, or sister shall be included in making such determination and applying such paragraph with respect to the family (notwithstanding section 405(j) of this title, in the case of benefits provided under subchapter II of this chapter) * * * . QUESTION PRESENTED Whether Section 402(a)(38) of the Social Security Act, 42 U.S.C. (Supp. II) 602(a)(38), which provides that all parents, brothers and sisters who live together shall constitute a single filing unit for purposes of the Aid To Families With Dependent Children (AFDC) program, is unconstitutional as violative of the Takings Clause, the Due Process Clause or the Equal Protection component of the Fifth Amendment. STATEMENT A. Statutory and Regulatory Framework The statutory and regulatory framework is set forth in our jurisdictional statement in Bowen v. Gilliard, No. 86-509 (filed Sept. 26, 1986), which presents a question identical to that here. Congress established the Aid to Families with Dependent Children (AFDC) program in 1935. Social Security Act, 42 U.S.C. (& Supp. II) 601 et seq. The program is designed to provide financial assistance to families with needy dependent children. See Heckler v. Turner, 470 U.S. 184 (1985). A "dependent child" is a needy child who has been deprived of parental care or support by the death, incapacity or "continued absence from the home" of a parent (42 U.S.C. 606(a)). In order to qualify for AFDC benefits, a family must meet certain standards of financial need, determined by its income and resources. 42 U.S.C. (Supp. II) 602(a). The minimum monetary subsistence levels are established by the states (42 U.S.C. (Supp. II) 602(a)(23)), and the states have "'broad discretion in determining both the standard of need and the level of benefits.'" Heckler v. Turner, 470 U.S. at 189 n.3 (quoting Shea v. Vialpando, 416 U.S. 251, 253 (1974)). A family is generally eligible for AFDC benefits if its countable income is less than the standard of need established by the state. The amount of benefits paid to the family is based upon the difference between the family's income and that standard. Prior to 1984, the statute contained no requirement that all family members residing together be included in the "filing unit" for AFDC purposes. Prior to 1984, therefore, a family applying for AFDC assistance could have excluded from the filing unit those members with income that, if counted in the eligibility determination, would have reduced the amount of the family's AFDC benefits or would have terminated its eligibility entirely. See 1 Senate Comm. on Finance, 98th Cong., 2d Sess., S. Prt. 98-169, Deficit Reduction Act of 1984, at 980 (Comm. Print 1984). Moreover, in anticipation that one of its members was about to receive additional income, a family could have removed that member from the AFDC rolls, thus enabling the remaining family members to continue to quality for benefits. In 1984 Congress amended the statute to set forth an explicit requirement that a parent and all siblings who reside with a dependent child be included in the filing unit when a family seeks or received AFDC benefits. Deficit Reduction Act of 1984 (DEFRA), Pub. L. No. 98-369, Section 2640, 98 Stat. 1145, 42 U.S.C. (Supp. II) 602(a)(38). The Senate Finance Committee explained the purpose of this amendment as follows (S. Prt. 98-169, supra, at 980): Present Law There is no requirement in present law that parents and all siblings be included in the AFDC filing unit. Families applying for assistance may exclude from the filing unit certain family members who have income which might reduce the family benefit. For example, a family might choose to exclude a child who is receiving social security or child support payments, if the payments would reduce the family's benefits by an amount greater than the amount payable on behalf of the child. * * * * * Explanation of Provision The provision approved by the Committee would require States to include in the filing unit the parents and all dependent minor siblings (except SSI recipients and any stepbrothers and stepsisters) living with a child who applies for or receives AFDC. * * * This change will end the present practice whereby families exclude members with income in order to maximize family benefits, and will ensure that the income of family members who live together and share expenses is recognized and counted as available to the family as a whole. The committee estimated that this change would save $455 million during 1984-1987 (id. at 981). See 130 Cong. Rec. S4099 (daily ed. Apr. 9, 1984) (remarks of Sen. Dole). This statutory change reflected Congress's recognition that a family that includes a member with separate income is less needy than a comparable family in which no members has any (or as much) such income. Thus, under the law as amended in 1984, all persons listed in the DEFRA amendment must be included in the filing unit when a family applies for AFDC, and the income received by all such persons must be considered in determining the family's eligibility for benefits, and, if the family is eligible, the level of benefits that it will receive. /1/ In amending the statute in 1984, Congress established a slightly different scheme where a child's separate income is obtained in the form of child-support payments. The effect of this variation was to mitigate the impact of the newly-redefined filing unit. Since 1975, the AFDC program has required, as a condition of eligibility, that an applicant assign to the state any accrued right to child-support payments. Social Services Amendments of 1974, Pub. L. No. 93-647, Section 101(c)(5)(C), 88 Stat. 2359, 42 U.S.C. (Supp. II) 602(a)(26)(A); see Sorenson v. Secretary of the Treasury, No. 84-1686 (Apr. 22, 1986), slip op. 1-2. That assignment provision operated only when a family chose to include in the filing unit the child who received the support payments. /2/ Had Congress in 1984 simply added the requirement, without more, that a child with child-support income be included in the filing unit, the joint operation of DEFRA and the pre-existing assignment provision would have produced a procedure in which the child support was required to be assigned to the state, with the family receiving a somewhat larger AFDC payment to reflect the larger filing unit. Congress recognized, however, that the child support thus assigned might sometimes be greater than the marginal increase in AFDC benefits thus obtained, resulting in a possible economic disadvantage to the family. To alleviate that potential disadvantage, Congress added a companion provision to the statute in 1984. Pub. L. No. 98-369, Section 2640(b)(1), 98 Stat. 1145, 42 U.S.C. (Supp. II) 675(b)(1). That section provides that the first $50 of any monthly child-support payment collected by the state pursuant to the assignment provision is to be paid by the state directly to the child's caretaker relative, and that this $50 is to be disregarded in determining the family's AFDC eligibility and benefits. B. Proceedings In This Case 1. Appellees are a class of mothers and children who comprise families that receive AFDC benefits. The children fall into two groups. The first group consists of "needy children" on whose behalf the AFDC benefits are paid. The second group consists of siblings who receive child-support payments from a non-custodial parent or who receive child's insurance benefits on account of a deceased parent under Title II of the Social Security Act, 42 U.S.C. (& Supp. II) 402(d). For the sake of convenience, we will use the term "appellees" to refer to the appellee-mothers exclusively. Appellees filed this state-wide class action in the United States District Court for the Eastern District of Wisconsin against the Secretary and the state officials responsible for administering the AFDC program in Wisconsin. The complaint challenged the Secretary's regulations implementing the DEFRA filing-unit provision and the State's administrative practice that conforms to those regulations. See App., infra. 5a, 10a. Appellees sought a preliminary injunction to prevent defendants from requiring that children who receive income be included in the AFDC filing unit and to prevent defendants from counting such income in calculating AFDC benefits. Appellees also sought to enjoin defendants from requiring children who receive child-support payments to assign that income to the state as a condition of AFDC eligibility under 42 U.S.C. (Supp. II) 602(a)(26)(A). See Complaint 17. 2. On July 16, 1986, the district court issued its decision granting appellees' motions for class certification and for a preliminary injunction (App., infra. 1a-18a). The court concluded that DEFRA's "legislative history, read as a whole, shows that it was Congress' intent to require state authorities administering the AFDC program to include the child support and Title II benefits of co-resident children as available to their AFDC half-siblings" (App., infra, 11a). The court therefore found it necessary (ibid.) to "consider the constitutional arguments plaintiffs make against Section 2640(a)" of DEFRA. /3/ The court then proceeded to hold that the DEFRA filing-unit provision "violates the plaintiffs' Fifth and Fourteenth Amendment rights to due process, just compensation and equal protection" (App., infra, 11a). Turning first to procedural due process, the court stated that family members have a protected property interest in the continued receipt of their current level of AFDC benefits, and that the needy children's siblings have a protected property interest in their child support or Title II payments. Employing a balancing test derived from Mathews v. Eldridge, 424 U.S. 319 (1976), the court said that the risk that appellees and their children would be erroneously deprived of such property outweighed the burdens on the government of employing additional procedures. "To deprive the 'other children' who reside with AFDC children of their child support payments or Title II benefits which they use for special health needs," the court suggested, "is one of many imaginable errors implicit in such processless deprivations" (App., infra, 12a). The court stated (ibid.) that "plaintiffs are entitled to at least enough process to prevent egregious errors of this kind," and it suggested that such process should take the form of "a predeprivation hearing" at which AFDC families could "show that the reduction of AFDC benefits pursuant to Section 2640(a) creates undue hardship for them" (App., infra, 11a, 13a). The court next concluded that the effect of the DEFRA filing-unit rule, as applied to siblings with independent sources of income, is to deprive them of private property without just compensation, on the theory that such children are "forced to contribute to the support of that family with their own funds" and thus "forced to assume a public burden" (App., infra, 13a-14a). The court also held that children receiving child-support payments or Title II benefits who are affected by the filing-unit rule are denied equal protection because "Congress cannot rationally impose this kind of deprivation on a class of children defined by the indigency of their half-siblings" (id. at 14a). The court regarded this treatment as irrational because under Wisconsin law "there is no duty of support running from a minor child to his half-sibling," so that the statutory scheme assertedly placed the "public burden" of supporting needy children on their housemates (id. at 13a-14a). In its accompanying order, the court preliminarily enjoined defendants from including in a filing unit, as a condition of AFDC eligibility, minor children who receive Title II benefits, child support or other income (App., infra, 16a-17a). The court also enjoined defendants from "assuming that Title II or child support payments of a child who resides with half-siblings who receive AFDC benefits are available to meet the needs of such AFDC children" (id. at 17a). Finally, the court enjoined the Secretary and the state defendants from requiring the assignment of child-support income to the state as a condition of AFDC eligibility, and from "denying, reducing or terminating AFDC benefits on the basis of defendants' rule and policy promulgated pursuant to Section 2640(a) of (DEFRA)" (App., infra, 18a). /4/ THE QUESTION IS SUBSTANTIAL The question here is identical to that presented in Bowen v. Gilliard, No. 86-509 (filed Sept. 26, 1986). Separate jurisdictional statements have also been filed by the state defendants in each case. Reivitz v. Lesko, No. 86-415 (filed Sept. 12, 1986); Kirk v. Gilliard, No. 86-564 (filed Sept. 29, 1986). In each case, a district court, relying on essentially the same theories, has invalidated a key provision of the Social Security Act that was designed to ameliorate what Congress perceived as a serious flaw in the AFDC eligibility scheme. Those decisions, invaliditing a federal statute on grounds of repugnancy to the Constitution, clearly present a substantial federal question meriting this Court's review. /5/ This case and Gilliard arise in somewhat different factual and procedural contexts. The decision below was rendered on a motion for a preliminary injunction, and, although the district court plainly declared the statute unconstitutional, appellees' complaint explicitly challenged the constitutionality only of the regulations. On the other hand, the instant case presents a somewhat more comprehensive factual picture, since the families here include children who receive, not only child-support payments (as in Gilliard), but also Title II social security benefits. Since the mechanics of the statute's application differ slightly depending on the type of payments involved, we think that the instant case represents on balance a somewhat better vehicle for resolving the important constitutional questions presented. CONCLUSION Probable jurisdiction should be noted, and the case should be consolidated for argument with Reivitz v. Lesko, No. 86-415. /6/ Respectfully submitted. CHARLES FRIED Solicitor General RICHARD K. WILLARD Assistant Attorney General ALBERT G. LAUBER, JR. Deputy Solicitor General JERROLD J. GANZFRIED Assistant to the Solicitor General WILLIAM KANTER CARLENE V. MCINTYRE Attorneys NOVEMBER 1986 /1/ To implement the DEFRA amendment, the Secretary of HHS promulgated the following regulation (45 C.F.R. 206.10(a)(1)(vii)): For AFDC only, in order for the family to be eligible, an application with respect to a dependent child must also include, if living in the same household and otherwise eligible for assistance: (A) Any natural or adoptive parent, or stepparent (in the case of States with laws of general applicability); and (B) Any blood-related or adoptive brother or sister. /2/ This typically occurred when the support payment was smaller than the increase in AFDC benefits that the family would realize by applying as a larger filing unit. It also occurred when non-custodial parents were delinquent or irregular in making child-support payments and the family concluded that it could maximize total income by including the child in the filing unit. /3/ Actually, appellees in their complaint had directed their constitutional objections to the federal regulation and to the state's administrative practice, and not specifically to the statute itself. See page 7, supra; Complaint 17. The district court, however, viewed the complaint as at least implicitly challenging the constitutionality of the statute as well. See App., infra, 11a. /4/ The court initially directed that its order be stayed pending appeal (App., infra, 17a). In its amended order filed August 4, 1986, however, the court decided that plaintiffs were entitled to immediate relief and lifted the stay (id. at 20a-21a). Ten days later, the court again reversed itself and granted the State's motion for a stay pending appeal to this Court (id. at 22a-23a). /5/ In our jurisdictional statement (at 12 n.3) in Bowen v. Gilliard, No. 86-509, we canvassed the results of litigation concerning the DEFRA filing-unit rule in the district courts generally. Subsequent to the docketing of that jurisdictional statement, the United States District Court for the Northern District of Georgia issued an opinion invalidating the DEFRA filing-unit rule on some of the same constitutional grounds at issue here. Baldwin v. Ledbetter, No. C85-4340A (filed Oct. 17, 1986). We intend to file a jurisdictional statement in that case. /6/ Alternatively, the Court may wish to consider noting probable jurisdiction of the Secretary's appeals here and in Bowen v. Gilliard, No. 86-509, consolidating those two appeals, and holding the states' appeals in both cases pending disposition herein. APPENDIX