Department of Health and Human Services
Departmental Appeals Board
QUALITY CONTROL REVIEW PANEL
SUBJECT: New York State
Department of Social Services
Docket No. A-95-101
Decision No. QC83
DATE: July 5, 1995
DECISION
The New York State Department of Social Services (New
York) sought to
appeal a decision by the Assistant
Regional Administrator of the
Administration for Children
and Families (ACF) to the Quality Control Review
Panel
(Panel). The decision involved ACF's rejection of New
York's
claim that it was unable to complete its review of
a Quality Control (QC)
case (State QC Review No. 508623)
due to a lack of cooperation on the part
of an assistance
unit (AU) receiving an Aid to Families with Dependent
Children (AFDC) grant. ACF rejected New York's
contention that the
case should be dropped from the
sample of cases reviewed. ACF
then completed the case
for New York, determining that the AU was
categorically
ineligible for AFDC assistance and that New York had made
an overpayment error.
ACF disputed New York's right to appeal ACF's
determination to this
Panel, arguing that the Panel has
jurisdiction only over "difference cases"
and that this
dispute, over whether the case should have been dropped
from the sample, is not a difference case. For the
reasons
discussed below, we agree with ACF and find that
the Panel does not have
jurisdiction over this matter.
Statutory and Regulatory Background
Title IV, Part A of the
Social Security Act (Act)
establishes the AFDC program to provide assistance
to
certain needy children and their caretakers. Under
section
408(a) of the Act, states must establish a
quality control system to
determine the amount of any
erroneous AFDC payments made by a state.
Under this
system, states review a sample of AFDC payments made
during
the review period in order to determine the level
of erroneous
payments. The Act then provides for federal
QC re-review of a
subsample of the cases reviewed by the
state. See section
408(b)(1)(A) of the Act. Pursuant
to this statutory mandate, the
Secretary has issued
regulations for the operation of the federal and state
AFDC QC systems. 45 C.F.R. �� 205.40 through 205.43.
Those
regulations provide that a state agency must
operate its QC system in
accordance with the applicable
regulations and the policies and procedures
prescribed in
the Quality Control Manuals issued by the Department. 45
C.F.R. � 205.40(d)(1).
A. Dropped Cases
In the course of both state and federal QC reviews, some
cases must be
dropped from the sample and subsample. The
QCM states, at section
3200:
Occasionally, a reviewer will find that he/she
cannot complete a
case review because of
circumstances which make it impossible to obtain
enough information to render an eligibility and/or
payment
determination. If a review is not
completed, the case must be dropped
from the sample.
Section 3200 continues:
After the reviewer has verified as many elements as
possible,
he/she completes or drops the case
according to the following criteria:
1. If evidence to verify all elements cannot be
obtained, but
the evidence pertaining to any
completed element establishes ineligibility,
the
case will be considered complete, and the error
coded on the review
schedule.
2. If evidence to verify all elements cannot
be
obtained, and no ineligibility error has been
identified, the case
must be dropped. A finding
of correctly paid, overpaid or underpaid
cannot
be made unless all elements can be verified
because the effect of
unverified elements on the
sample month's payment is unknown.
ACF further notified the states of its QC procedures for
reviewing
dropped cases in a May 12, 1986 Action
Transmittal, FSA-AT-86-4.
Action Transmittal 86-4
provides that the ACF Regional Office examines all
dropped cases prior to the QC subsample selection. If
the federal
QC determines a case to be reviewable, it
will return the case to the state
and explain why the
review can be completed. The state QC will then
have a
specified number of days to complete the required
development of
the case and submit its findings to the
Regional Office. If a state
decides that the review
cannot or should not be completed, it must return
the
case file to the Regional Office with a justification for
not
completing the review. The Regional Office will
evaluate the
justification and determine if the case
review can be completed.
Action Transmittal 86-4 then
provides --
In these cases, the Federal review finding will
become the
"original State finding" and it is not
subject to the formal appeal
process. When
completed, the Federal review finding will be added
to the latest list of disposed of cases and will be
subject to subsample
selection. If selected, the
"original State finding" and the rereview
finding
will be the same.
Thus, if the federal review finding is returned to the
state as the
"original State finding," the case in
included in the completed sample and
is subject to random
selection as part of the federal re-review.
B. The Panel's Jurisdiction
The Panel was established by
the Secretary to review
difference cases. Section 408(b)(4) of the
Act. A state
may seek Panel review of any difference case.
Section
408(b)(5)(A) of the Act.
A "difference case" is defined in the Act as --
any case in the subsample which the Secretary finds
involves
erroneous payments, and which the state's
review determined to be
correct.
Section 408(b)(3) of the Act. The regulations further
define
"difference" as --
a disagreement between State and Federal review
findings that
affect the State's official AFDC
payment error rate (i.e., a difference
between a
State review and a Federal review finding of a
correct
payment, overpayment, underpayment, or a
payment to an ineligible case, or a
Federal finding
that the sample case should be dropped from the QC
review).
45 C.F.R. � 205.42(i) (1993).
Factual Background
The AU in this case consisted of a mother and her two
children, all of
whom were listed on the application for
AFDC. According to New York,
the local agency
incorrectly handled the case in that only the mother was
receiving AFDC benefits. The New York QC found the error
committed
by the local agency and made an interim
determination that all the
individuals in the AU were
eligible for AFDC benefits. Subsequently,
New York
decided that the case should be dropped from its sample
because
it could not determine the amount of the mother's
earned income due to the
mother's failure to cooperate
with the review.
ACF then reviewed New York's decision to drop the case
from the sample
and concluded that the case was in fact
reviewable and should not have been
dropped from the
sample. ACF informed New York that a determination of
ineligible could be made because, during the review
month, the AU
consisting only of an adult was
categorically ineligible. The federal
QC returned the
case to New York for completion in accordance with Action
Transmittal 86-4.
New York, while continuing to maintain that it was unable
to complete the
case because of the mother's non-
cooperation, claimed that the AU was
categorically
eligible because of the absence of the father from the
AU. On March 6, 1995, ACF completed the review of the
case for New
York, determining that the AU was
categorically ineligible. New York
Ex. 3. ACF explained
that the two children were not included in the
AFDC grant
and that federal legislation does not authorize AFDC
payments
to caretaker relatives in a household where the
children residing with the
relatives are not included in
the grant. Id. ACF informed New
York that its finding
of ineligibility became the "original State finding"
and
would not be subject to the difference resolution
process. Id.
at 2.
On March 15, 1995, New York wrote to ACF withdrawing the
state QC's
initial finding of ineligible and submitting a
finding of "Dropped."
New York Ex. 4. New York stated
that the federal QC finding of
ineligibility was based on
only the mother having received an AFDC cash
grant in the
review month. Id. at 2. New York contended that the
federal QC reviewers erroneously assumed that the
children in the AU
were ineligible and, due to their
ineligibility, deemed the mother
ineligible as well. Id.
New York declared, "There is no basis in
the AFDC QC
program for finding a case ineligible because an agency
incorrectly budgeted a case and excluded two eligible
dependent
children." Id.
On March 21, 1995, ACF informed New York that New York
could not withdraw
the "original State finding" because
the case was not disposed of by New
York and, under �
3200 of the QCM, a case may not be dropped where there
has been a finding of ineligibility. New York Ex. 5, at
2.
New York then appealed to this Panel. Before proceeding
further
with the appeal, the Panel directed the parties
to brief the issue whether
the Panel has jurisdiction to
review an ACF determination that a case should
not have
been dropped from a state's sample.
Parties' Arguments
New York maintained that its appeal was properly before
the Panel as it
concerned a difference case within the
meaning of the regulations. New
York contended that the
difference in this case between its and the federal
findings concerns the issue of the AU's AFDC eligibility.
New York
summarized this difference as follows:
o the federal finding was that a determination of
ineligibility should have been made by New York and
therefore the entire
payment to the AU in the review
month was incorrect.
o New York's finding regarding eligibility was that
the local
agency made a mistake regarding the filing
unit, and, when corrected by the
New York QC, the
filing unit, the mother and her two children, was
eligible for AFDC assistance.
According to New York, the difference between these two
eligibility
determinations constitutes the substance of
this case. New York argued
that ACF has not disputed New
York's determination that the mother's earned
income
could not be verified and concluded that the case should
be
dropped. In fact, according to New York, ACF never
reached the issue
of earned income because ACF had
incorrectly found the AU ineligible for
assistance and
did not pursue the case any further. New York insisted
that the present case is not a dropped case as described
in the federal
regulations establishing the revised QC
system at 57 Fed. Reg. 46,782
(October 13, 1992). New
York argued that under these revised
regulations a
dropped case is one which state and federal reviewers
both
find cannot be completed and therefore must be
dropped.
New York argued that if the Panel determines that it does
not have
jurisdiction over this appeal, New York will
sustain an error that affects
its error rate, but without
benefit of an impartial review by the
Panel. This
result, New York contended, would be inconsistent with 45
C.F.R. � 205.42(i) that difference cases are those which
affect a
state's AFDC payment error rate.
ACF disputed New York's characterization of this case as
a disagreement
between New York and ACF over the AU's
eligibility rather than a
disagreement over whether to
drop a case from the sample. ACF
maintained that this
disagreement is not a difference case within the
meaning
of the regulations and is therefore not within the
Panel's
jurisdiction to review.
Analysis
For the following reasons, we conclude the Panel does not
have
jurisdiction over this dispute.
First, the Act establishes the Panel to review difference
cases and
authorizes the Secretary to promulgate
regulations concerning the Panel's
review of such cases.
Under the terms of section 408(b)(3), a
difference case
is "any case in the subsample which the Secretary finds
involves erroneous payment, and which the State's review
determined to
be correct." Therefore, a difference case
involves a dispute which
results from the federal re-
review of a subsample of the state's QC
sample. This
definition would not include disputes which occur prior
to the selection of the subsample, i.e., disputes about
which cases
should be included in the state sample.
Second, in the regulations concerning the Panel's review
of difference
cases, the Secretary sets forth two primary
categories of cases in the
subsample which are to be
considered "difference" cases:
o a difference between a state review and federal
review
finding of a correct payment, overpayment,
underpayment, or a payment to an
ineligible, and
o a federal finding that a sample case should be
dropped from
the QC review.
Therefore, the Secretary's definition of a "difference
case" does not
include a case which ACF completes for a
state and includes as an original
state finding in the
state's QC sample. The Secretary's noninclusion
of such
cases is consistent with the terms of section 408(b)(3).
Third, in the preamble to the revised QC regulations, the
idea that a
dispute involving a federally completed case
in the state sample should be
considered a difference
case was explicitly considered and rejected.
In the
notice of final rulemaking, in response to one
commenter's
proposal that the regulations be amended to
allow a state the opportunity to
seek administrative
relief when the federal finding disagrees with a state
finding that a sample case should be dropped from the QC
review, the
Secretary noted --
the underlying concept of a "difference case" is a
Federal-State
disagreement regarding the amount of
payment made to a case.
However, "dropped cases" are not "difference
cases." We review all
State-dropped sample cases to
ensure that all reviewable sample cases are
included
in the determination of a State's payment error
rate.
When we find that a sample case dropped from
the QC review by a State is
reviewable, the case is
returned to the State to complete the review and
determine the correctness of the payment made. When
we find that a
State-dropped case is not reviewable,
the case is dropped from the sample
because neither
the State nor the federal review can be completed.
57 Fed. Reg. 46,782, at 46,797. Thus, the Secretary
rejected the
commenter's proposal for administrative
relief, i.e., review by the Panel,
of an ACF
determination that a case should not be dropped from a
state's
sample.
Fourth, New York has not provided us with anything that
would indicate
that Action Transmittal 86-4 has been
rescinded or revised. Further,
ACF followed the
procedures set forth in Action Transmittal 86-4 in
returning the case to New York for further action. When
New York
did not respond with a justification that was
persuasive to ACF for not
completing the review, ACF
completed the review and entered its finding as
the
original state finding in accord with the action
transmittal.
New York's assertions that ACF's actions in this case are
an abuse of the
process established by the action
transmittal or that the procedures in the
transmittal are
arbitrary and capricious are not persuasive. Under the
action transmittal, a state is given two opportunities to
persuade the
ACF Regional Office why a case should be
dropped form the sample.
While New York complains that
the process was not followed, the actual
problem is that
ACF refused to accept New York's conclusions about the
eligibility of the case. While we understand why this
type of case
affects a state's error rate and why New
York would prefer another level of
review, the statute
and the regulations simply do not provide it.
In light of the language section 408(b) of the Act and
the regulations
and the clear indication in the preamble
that a dispute over whether to drop
a case from the state
sample is not to be considered a difference case, we
find
no basis for concluding that the Panel has jurisdiction
beyond the
limits set forth in the regulations.
Accordingly, we find the dispute
here between New York
and ACF to be beyond the Panel's jurisdiction.
Conclusion
For the reasons discussed above, we find that the dispute
here between
New York and ACF over whether the case
should have been dropped from New
York's sample does not
constitute a difference case within the meaning of
the
regulations and ACF policy guidelines. Accordingly, the
Panel
does not have jurisdiction over this dispute.
_________________________
Carmen
Cafasso
_________________________
Sara
Anderson
_________________________
Thomas
D. Horvath