Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Virginia Department
of Social Services
Docket No. A-95-31
Decision No. QC75-R
DATE: December 27, 1994
DECISION ON RECONSIDERATION
The Virginia Department of Social Services (Virginia)
requested
reconsideration of the Panel's decision in
Virginia Dept. of Social
Services, DAB QC71 (1994)
(Docket No. A-94-125). In that decision, the
Panel
sustained the quality control (QC) review determination
of the
Regional Administrator of the Administration for
Children and Families (ACF)
that Virginia overpaid an Aid
to Families with Dependent Children (AFDC)
assistance
unit for the review month of November 1991 (State QC
Review
No. 06678).
The Panel's guidelines provide that a party may request
reconsideration
of a Panel decision upon a showing of a
clear error of fact or law.
Virginia asserted that the
Panel committed errors of law by sustaining ACF's
overpayment determination where ACF had failed to respond
to Virginia's
initial review request within the 21-day
deadline provided in the QC
regulations, and because
Virginia, in making the disputed payment, had
relied on
statements and information provided by ACF. For the
reasons explained below, we find that Virginia has not
shown that the
Panel committed any clear errors of law or
fact, and we sustain our original
decision.
The Decision at Issue
Docket No. A-94-125 involved an AFDC recipient (the
mother) who lived
with her minor daughter and her son,
the daughter's half brother. The
son was six months old
at the time of the review month and receiving child
support from his father, who did not live in the
household. The
assistance unit (AU) consisted of the
mother and daughter only. ACF
determined that the son
should have been included in the AU, and that
Virginia
overpaid the AU because it did not consider the child
support
provided by the father in calculating the AU's
award of assistance for the
review month.
The Panel found that section 402(a)(38) of the Social
Security Act (Act)
(the filing unit provision) requires
that an AU include all "dependent"
siblings living in a
household and that any income of such siblings be
considered in determining the AU's award of assistance.
A
"dependent" child is one deprived of parental support
or care by reason of a
parent's continued absence from
the home; a child is deprived of parental
support or care
when the absence either interrupts or terminates the
parent's functioning as a provider of maintenance,
physical care, or
guidance for the child. Section 406(a)
of the Act; 45 C.F.R. �
233.90(c)(1)(iii).
Virginia's AFDC Manual contains definitions of physical
care, guidance,
and maintenance, and provides that
parental functioning must be evaluated to
determine
whether the nature of the parent's absence is such that
their
provision is interrupted or terminated. However,
for separated
parents, the Manual provides an "exception"
to this requirement: if
both parents provide written
statements that the child is not deprived, the
child is
not included in the AU and "[n]o further evaluation of
maintenance, physical care, and guidance is required."
Virginia
AFDC Manual � 201.4.B.7. The parents in this
case had provided the
AFDC eligibility worker with
written statements that the father provided
maintenance,
physical care, and guidance for his son, as well as child
support, and that they did not wish the son to receive
assistance.
The Panel found the parents' written statements
conclusory and not
supported by evidence in the case
record. There was no evidence in the
case record that
the father engaged in activities sufficient to satisfy
the specific definitions of maintenance, physical care,
and guidance in
Virginia's AFDC Manual. The Panel also
found that the father's
financial support did not justify
removing the son from the AU, as courts
interpreting the
filing unit provision have held that a child who receives
financial support from his absent parent must be included
in the AU with
his dependent siblings, even though he
might not be needy. Skidgel v.
Maine Dept. of Human
Services, 994 F.2d 930, 938 (1st Cir. 1993); Gorrie v.
Bowen, 809 F.2d 508, 513-16 (8th Cir. 1987).
The Panel concluded that to the extent the "exception" in
Virginia's AFDC
Manual permitted a child of separated
parents to be excluded from the AU
based on parents'
statements that the child is not deprived, without any
evaluation of whether the absent parent actually provides
maintenance,
physical care, and guidance, it was
inconsistent with the express purpose of
the filing unit
provision: preventing families from excluding children
with income from the family filing unit in order to
maximize AFDC
benefits. Bowen v. Gilliard, 483 U.S. 587
(1987). The Panel
concluded that it was also
inconsistent with Virginia's AFDC state plan and
other
portions of Virginia's AFDC Manual which require an
evaluation of
the circumstances of the case, applying the
definitions of maintenance,
physical care, and guidance.
The Panel further found that there was no
evidence in
the case record that the AFDC eligibility worker ever
conducted such an evaluation, as Virginia contended.
The Panel also rejected Virginia's argument that ACF's
overpayment
determination should have been reversed
because ACF failed to respond to
Virginia's initial
letter requesting review of ACF's QC finding within the
21-day time period specified in the QC regulations. 42
C.F.R. �
205.42(i)(3). The Panel noted that while
section 205.42 states that
the ACF Regional Administrator
shall respond to the state's disagreement
letter within
21 days, it permits the Regional Administrator's response
to be an indication that the decision will be delayed
pending further
review of applicable laws, regulations,
or policies, and provides no
deadline for the Regional
Administrator's subsequent decision. The
Panel also
noted that the regulation provides no sanction for a late
response, and concluded that the Panel lacks authority to
remedy the
procedural delay by reversing ACF's
substantive difference finding.
The Procedural Issue
Virginia argued that the Panel committed an error of law
by sustaining
ACF's overpayment determination because ACF
had failed to respond to
Virginia's letter requesting
review of ACF's initial QC finding within the
21-day time
period specified at 42 C.F.R. � 205.42(i)(3). Virginia
had sought review of the initial federal QC finding by
letter dated
December 8, 1992, and the Regional
Administrator's response (which requested
more time to
consider the legal issues) was dated January 6, 1993.
Virginia asserted that nothing in the regulations
authorized the
Regional Administrator to dispense with
the requirement that it respond to
the review request
within 21 days. Virginia argued that government
agencies
are required to follow their own regulations,
citing
W. G. Cosby Transfer & Storage
Corp. v. Froehlke, 480
F.2d 498, 706 (4th Cir. 1973), and Brooks v.
Clifford,
409 F.2d 700, 706 (4th Cir. 1969). Virginia asserted
that the regulations imposed the 21-day time limit for a
response so
that states could have quick resolution of QC
difference cases, and stated
that ACF could have adopted
a longer time period if it had wished.
Virginia also
argued that the Panel has inherent authority to make
decisions regarding procedural issues.
We find no error in our earlier decision. While the
regulation does
provide for a response to a state's
initial review request within 21 days,
Virginia has not
shown that failure to observe this deadline requires that
ACF's substantive QC finding be reversed. We note that
the
preamble to the QC regulations demonstrates that ACF
considered and rejected
the idea that state QC findings
should be considered correct if deadlines
for federal
action are not met. Specifically, ACF declined to adopt
the suggestion of some commenters that state findings be
considered
correct should the federal QC staff fail to
complete its review of a
subsample of cases within the
time provided in the regulations. 57
Fed. Reg. 46,796
(October 13, 1992). ACF noted that the purpose of the
federal subsample review is to validate the results in
the state sample,
and concluded that upholding the state
findings, where they might not be
correct, would result
in invalid state and national error rates.
Id.
Similarly, ACF rejected the suggestion that a state's QC
finding in a difference case be accepted by default if
the Panel failed
to render a decision within the target
date, on the grounds that there is no
legitimate basis
for accepting by default a state finding simply because
the state's appeal of the federal finding goes beyond the
anticipated
time for a decision. 57 Fed. Reg. 46,798.
The preamble also shows that ACF, while concerned with
timely resolution
of the QC process, was also concerned
with assuring the accuracy of QC
determinations. The
preamble explains that several states had
suggested that
the Regional Administrator be required to respond to a
state's review request within 30 days, instead of the
proposed (and
current) system of permitting ACF to make
an interim response within 21 days
pending review of law
or policy. These states had thought that the
proposed
standard would result in indefinite delays in processing
appeals. 57 Fed. Reg. 46,797. ACF declined to adopt the
states' suggestion, noting that it was essential that the
Regional
Administrators' decisions to sustain or reverse
the initial federal findings
be consistent with national
policy.
We also find that the cases cited by Virginia do not
require a finding
that our decision was erroneous. While
holding that government
agencies are required to follow
their own regulations, these cases do not
state that
reversal of a substantive agency decision is required
when
the agency fails to observe a regulatory deadline,
especially where the
regulations themselves do not
authorize such a remedy. More on point
are the line of
cases construing statutes directing that administrative
action "shall" be completed within a specified time.
These cases
have held that a statutory time period is not
mandatory unless it specifies
a consequence for failure
to comply with the provision. See, e.g.,
Twin Pines Coal
Co. v. United States Dept. of Labor, 854 F.2d 1212, 1216
(10th Cir. 1988); St. Regis Mohawk Tribe, N.Y. v. Brock,
769 F.2d
37, 40-42 (2d. Cir. 1985), cert. denied, 476
U.S. 1140 (1986). We find
that this principle is
especially applicable here, where the deadline was
not
imposed by Congress, through the statute, but rather by
ACF itself
in its regulation.
Accordingly, we find that Virginia has shown no clear
error in our
decision not to remedy ACF's procedural
delay by reversing ACF's QC
determination.
The Substantive Issue
Virginia asserted that the Panel erred by reversing
Virginia's payment
determination because the policy
underlying the payment had been based on
statements and
information provided by ACF. As in its appeal, Virginia
stated that it had worked closely with policy personnel
of the ACF
regional office regarding its AFDC deprivation
policy, and that the regional
staff never indicated a
problem with the provision that is at issue
here.
Virginia further asserted that the Panel erred in its
finding that there was no evidence that FSA (the
organizational
predecessor of ACF) ever responded to,
approved or otherwise commented on
the policy underlying
the payment.
The "exception" in Virginia's AFDC Manual permits a
determination that a
child of separated parents is not
deprived of parental support to be based
solely on
parents' statements. With respect to the exception,
Virginia has not shown that our finding that there was no
evidence that
FSA ever responded to, approved or
otherwise commented on Virginia's policy
was erroneous.
As noted in the decision, the correspondence received
from FSA that Virginia provided with its appeal file,
consisting of
three letters dated from March 1989 through
October 1990, dealt with the
definitions of maintenance
and support in Virginia's AFDC Manual, and not
the
exception in Virginia's AFDC Manual. Furthermore, FSA
sent its
three letters before Virginia provided FSA a
copy of the exception.
FSA's correspondence thus cannot
be construed as having approved the
exception, especially
where applying the exception meant that the
definitions
of maintenance and support, which had been the subject of
the correspondence, would not be utilized.
Additionally, as noted in the decision, section 408(c)(3)
of the Act,
which excuses erroneous payments made in
reliance on incorrect information,
is expressly limited
to payments made solely by reason of a state's reliance
on, and correct use of, erroneous information about
matters of fact or
incorrect statements of federal policy
provided by ACF. The
regulations provide that this
exemption from the error process applies where
the
incorrect payment results from reliance on, and correct
use of,
written information provided about matters of
fact, or incorrect written
statements of federal policy.
45 C.F.R. � 205.42(d)(2)(ii). The
correspondence from
FSA was silent on and predated the exception in
Virginia's AFDC Manual which is at issue here, and thus
does not
comprise incorrect written statements of federal
policy that could excuse
the overpayment.*
We thus conclude that Virginia has shown no error in our
determination
that the policy permitting the payment was
not approved by ACF and that the
payment was not made
based on erroneous advice from ACF.
Conclusion
Virginia has not demonstrated any clear error of fact or
law in the
Panel's decision, and we sustain our original
determination.
Sara Anderson
Leslie A. Sussan
Jeffrey A. Sacks
* * * Footnotes * * *
* Section 408(c)(3) of the Act provides an
exception to the stringent standards that courts have
applied to claims
of estoppel against the federal
government. Such estoppel, if
available at all, is
presumably not available absent affirmative misconduct
by
the federal government. Schweiker v. Hansen, 450 U.S.
785
(1981). See also Office of Personnel Management v.
Richmond, 496 U.S.
414 (1990).
(..continued)