Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Wisconsin Department
of Health and Social Services
Docket No. 91-130
DATE: December 2, 1991
DECISION
The Wisconsin Department of Health and Social Services
(State) appealed a
July 26, 1991, Aid to Families with
Dependent Children (AFDC) quality
control review
determination by the Acting Regional Administrator,
Administration for Children and Families (ACF). ACF
determined
that grant recipients, M.J. and L.J. 1/ had
been overpaid by
$369 for the review month. The State
agreed that there had been an
overpayment, but argued
that the amount of the overpayment was only
$192.
As explained more fully below, we find that the correct
amount of the
overpayment was $369.
Background and Arguments
M.J. had care and control of her grandson, L.J. and
applied for aid under
the AFDC program. Wisconsin's
permissible State practice (as set forth
in its AFDC
handbook) provided that, as the non-legally responsible
relative, the grandmother had the option of including or
excluding
herself and her income from the assistance
unit. The grandmother
included herself in the assistance
unit and the assistance unit received a
$440 grant.
Subsequently, the grandmother started working. While she
reported
her employment to the local agency, the State
acknowledged that the local
agency failed to recalculate
the grant to reflect her earnings.
Consequently, the
$440 grant which the assistance unit continued to receive
resulted in an overpayment. This error was discovered in
a State
Quality Control (QC) review. After making this
discovery, the State QC
reviewer determined that an
assistance unit comprised of the grandson alone,
without
the grandmother's earnings, would be eligible for a $248
grant,
while an assistance unit including both
grandmother and grandson would be
eligible for a $4
grant. 2/ The State QC reviewer,
recognizing that the
grandmother was a non-legally responsible relative,
then
removed her needs and income from the grant computation
thereby
making the grandson eligible for the $248 grant.
The State therefore
determined that the amount of its
error was $192 ($440 original grant minus
$248).
The Federal QC reviewers challenged the State's
conclusion, finding that
the amount of the State's error
was higher. The reviewers contended
that, in removing
the grandmother from the assistance unit, the State had
exceeded the scope of a QC review. The Federal QC
reviewers
reasoned that, since the grandmother had
initially met all non-financial and
financial eligibility
requirements and had sought to be included in the
assistance unit, the State was required to consider her
needs and income
in determining the correct grant amount
for the review month. In
recalculating the grant with
the grandmother's needs and income, the Federal
QC
reviewers determined that, since this case was
retrospectively
ineligible and suspension was not
appropriate under Wisconsin's AFDC
program, Wisconsin
should have assumed termination and reverted to
prospective budgeting using actual review month income.
Following
this procedure, the Federal QC reviewers
determined that an assistance unit
comprised of the
grandmother and her grandson was eligible for a $71
grant. Consequently, ACF found an error of $369 ($440
original
grant minus $71).
ACF maintained that the State's actions in
retrospectively removing the
grandmother from the
assistance unit were an attempt to rewrite an AFDC
application under the guise of "permissible state
practice." ACF
asserted that neither ACF's QC Manual nor
proposed implementing regulations
for the new AFDC QC
program established by Public Law 101-239 supported the
State's action. 3/ ACF argued that the State's actions
were based on a hypothetical situation (i.e., what if the
grandmother's
income had been budgeted and she had been
given the option to drop herself
from the assistance
unit) rather than the reality of the original
application
in which the grandmother chose to be included in the
assistance unit.
ACF contended that in calculating the overpayment it had
adhered to the
definition of that term in the QC Manual,
i.e., the difference between
amount received ($440) and
"the amount for which that unit was eligible"
($71). See
QC Manual, section 3040. ACF argued that the State's
calculation instead sought the difference between what
the assistance
unit received ($440) and what another unit
could have received ($248).
Additionally, ACF cited
section 3120A. of the QC Manual, which states that
"the
case record is the QC reviewer's sole source of
information about
the [state] agency's action. . . ," as
evidence that the State erred in
employing "a
hypothetical application" to redefine the assistance
unit. ACF argued that the State's actions here were
incorrect in
that the QC Manual requires that eligibility
and payment determinations be
factually based. See QC
Manual section 3140. Finally, ACF
contended that its
interpretation here was consistent with its 1982
determination regarding what it described as "a very
similar claim" by
the State of Texas.
The State argued that the QC process is an exercise in
comparing what the
State did to what the State should
have done. This process necessarily
involves evaluating
both information in the case file and additional
information which is gathered in the course of the
review. When
such information requires budgets to be
recalculated, the State incurs an
underpayment or an
overpayment error. The State argued that, in this
review
process, the "assistance unit" upon which the original
budget was
based was not inviolate and might change as a
result of the re-evaluated
information.
The State argued that its permissible state practices
authorized it to
redefine the assistance unit in this
case. In support of its position,
the State submitted
excerpts from its AFDC Handbook which were designed to
show that (1) it is State practice to automatically
determine the
eligibility of a child alone in any case
where a non-legally responsible
relative caretaker is
ineligible, and (2) it is State practice to allow a
household member to exclude him/herself from the
assistance unit at any
time if such exclusion is
permissible. State submission of September
9, 1991, Att.
1 and 2. The State also submitted a statement
signed by
the grandmother in which she indicated that had she been
told
in October 1990 that she would have received a $4
AFDC check, she would have
chosen to take assistance only
for her grandchild. Consequently, the
State reasoned
that there would have been no need to find the case
ineligible in order to have an automatic determination of
the
eligibility of the child alone since the grandmother
would have made the
choice which the State ascribed to
her had she known the correct facts.
Analysis
In the QC process a state is entitled to avoid an error
or mitigate the
amount of an error if it can show that
its payment figure results from a
"permissible state
practice." QC Manual, Appendix W at 1. This
test has
two parts: first, a state must show that its practice
was
"permissible" in relation to its state plan and
federal law; second, a state
must show that in fact this
was its practice and not just an after-the-fact
solution.
In this case, ACF did not argue that the State's practice
of allowing a
non-legally responsible relative to exclude
herself from the assistance unit
was impermissible.
Further, it did not argue that this option was not
one of
the State's practices. Instead, ACF's position was that
this practice of allowing a recipient to redefine the
assistance unit
could not be used in the QC process.
While the issue of whether some permissible state
practices may not be
used in the context of the QC
process is an important one, we do not reach
this issue
in this decision. Instead, we conclude that the ACF's
overpayment determination is correct in this case for two
reasons.
First, the State has been unable to identify
any permissible state practice
which would have resulted
in a redefinition of the assistance unit in this
case.
Second, the State's conduct upon discovering the error
was
not consistent with its claim that its practice would
have resulted in a
redefinition of the assistance unit.
Initially, we look at the State's
permissible practices
as described and documented by the State and then we
look
at what the State actually did in this case.
The State cited two permissible state practices. Under
the first
practice, the State claimed that, where the
inclusion of an non-legally
responsible relative resulted
in an ineligibility determination, its
practice was to
recalculate the budget for the child alone to determine
whether exclusion of the relative would result in a grant
for the
child. 4/ However, under the State's budgeting
rules, the
State determined that the grandmother "met all
of eligibility requirements
as of the review date."
State submission of September 4, 1991.
In fact, under
the State's calculations, the assistance unit with the
grandmother was eligible for a nominal ($4) grant from
State
funds. 5/ Further, ACF's calculation of a grant
for a two
person assistance unit resulted in a $71 grant.
Therefore, this
practice is not applicable to this case
because the grandmother's presence
in the assistance unit
did not result in a finding of ineligibility.
Second, the State relied on its practice of allowing a
household member
to voluntarily exclude his/herself where
such exclusion is
permissible. State submission of
September 4, 1991, Att. 1.
While there is no dispute
that this is the State's practice, there is also
no
showing that the existence of that practice would have
resulted in
the overpayment figure the State adopted. As
described in the State's
letter of October 3, 1991, if
the case had been handled properly, after the
grandmother
reported earned income, the AFDC caseworker would have
calculated a new budget for the two person assistance
unit and notified
the grandmother of the reduced grant.
Under the State's voluntary
exclusion practice, the
grandmother would then have the option of remaining
in
the assistance unit or excluding herself to obtain a
higher
grant. However, the State identified no practice
pursuant to which the
grandmother would have been
informed that she had the alternative of
excluding
herself and the consequences of that decision.
Therefore, upon receipt of the notice of the reduced
grant, the
grandmother may or may not have taken the
initiative to discuss alternatives
with her worker and
the grant may or may not have changed as a result of the
grant reduction notice.
Moreover, the way the State proceeded in handling this
case does not
support a finding the State was complying
with a state practice of giving a
non-legally responsible
relative an informed choice about inclusion in the
assistance unit, or applying any established methodology
for determining
the amount of an administrative
overpayment where a non-legally responsible
relative
could have been excluded. The preponderance of the
evidence in the case record indicates that the State QC
reviewer, rather
than the grandmother, initially
determined that the grandmother should be
excluded from
the assistance unit. 6/ Further, even though
the State
QC reviewer did eventually solicit the grandmother's
opinion
as to whether to exclude herself and even if this
occurred prior to the
federal QC review, there is no
showing in the record that the grandmother
was properly
informed as to her alternatives so that she could make a
choice. 7/ The grandmother's signed statement
indicates that she was offered a choice of a $4 grant or
a $248
grant. There is no indication in the statement
that the Medicaid
consequences of her decision were
disclosed. Further, the correct
choice to have given the
grandmother would have been between a $71 grant
with
Medicaid coverage for herself and the child or a $248
grant with
Medicaid coverage for just the child.
Thus, even assuming that the State's practice of allowing
a non-legally
responsible caretaker to exclude herself
from the assistance unit could have
been applied during
the State QC review, the State's actions here provide an
insufficient basis for reversing ACF's findings. 8/
Conclusion
Based on the facts of this case, we determine that ACF's
determination of
a $369 overpayment was correct.
Sara
Anderson
Carolyn
Reines-Graubard
Carmen
Cafasso
* * * Footnotes * * *
1. The recipient, M.J., and her
grandson, L.J.,
are identified by their initials to protect their
privacy. The State quality control review number is
110121.
2. The State
noted that, although federal
regulations effective in 1983 do not permit
federal
participation in grants under $10, Wisconsin's "high
level of
computerization" makes it more cost effective to
simply award checks under
$10 from State funds than to
not award any check at all.
3. ACF indicated that proposed
regulations to
implement the new AFDC QC program were published in a
Notice of Proposed Rulemaking (NPRM), but have not yet
been
finalized. See 56 Fed. Reg. 27709 (June 17, 1991).
ACF also
noted that, while the previously promulgated
regulations implementing the
prior AFDC QC program may
not be effective at this time, the provisions in
the
former regulations it cited in this case are retained in
both the
current QC Manual and the NPRM.
4. It is not clear that the State was contending
that this
practice was applicable here since the State
indicated that it cited this
aspect of its practice
because ACF had discussed the question of
retrospective
ineligibility in earlier communications with the
State.
5. The State
submitted a portion of budgeting
worksheet from its AFDC Handbook in which
the "group
budget income" (line 13) is subtracted from the
"allowance"
(line 14) to which the assistance unit is
entitled. Since the
"allowance" exceeded the "group
budget income" by $4, the assistance unit
with the
grandmother was eligible and the State's practice of
automatically redetermining a budget for the child alone
(reflected at
section 15.5.0 of its AFDC Handbook) would
not have been
used.
6. There is
conflicting evidence as to when the
grandmother was asked whether she wanted
to be excluded
from the assistance unit. In its Appeal Request, the
State wrote:
The federal reconsideration dated July 26, 1991,
stated that the
decision to be included in the
assistance unit was made by [the grandmother]
and
her needs and income must be considered in
determining the correct
grant amount for the review
month. On August 13, 1991, a State
employee
contacted the client with the aim of determining
what the
client's decision really would have been
given the facts of the case.
A home visit was made
on August 14 and the attached signed statement was
obtained from the client. The statement confirms
that the client's
choice would have been to exclude
herself from the assistance unit.
(Emphasis added.)
In its letter of November 7, 1991, the State indicated
that it actually
contacted the client before the Federal
QC reviewers looked at the case and
only the written
verification of the recipient's position was obtained
after the Federal review. However, given the specificity
of the
initial submission and the generality of the
subsequent submission
concerning when the client was
asked her preference, we find that the
initial statement
is more persuasive.
7. Choosing the larger grant may
not have been in
the assistance unit's best interest. With the smaller
grant, the grandmother would retain Medicaid eligibility.
Depending on her medical condition, the smaller grant
with
Medicaid for the grandmother may have been of more
benefit than the larger
grant.
8. In reaching this
conclusion, we do not find
it necessary to consider the Agency's
interpretation of
the QC Manual contained in its brief. Moreover, we
do
not rely on the Texas case cited by the Agency. ACF
Memorandum
SL-F615, SI-21-4 dated July 27, 1982 attached
as ACF Ex. A. That case
involved fraudulent grant
applications which cannot reasonably be compared
with the
present situation.