Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: North Carolina Department of Human Resources
Docket No. A-96-110
Decision No. QC100
DATE: July 15, 1996
DECISION
The North Carolina Department of Human Resources (North Carolina) appealed the March 8, 1995 quality control (QC) review determination of the Regional Administrator (RA) of the Administration for Children and Families (ACF) in state review number 812058, case 35579838 (federal QC number ANC-512-089). The recipient in this case began receiving Aid to Families with Dependent Children (AFDC) benefits on the basis of her status as a pregnant woman with no other children. Her child was born in October 1994 and, within three days of his birth, she requested AFDC for the child. As of December 1, 1994, the QC review date, North Carolina had failed to include the child in the recipient's assistance unit (AU) and paid the recipient a one-person grant for the month of December.
The RA found that the AFDC payment in this case was a payment to an ineligible. 1/ This finding was based on a determination that the child did not meet all eligibility factors because the case file did not contain a signed state form DSS-1662 or a declaration of citizenship for the child. Because the RA concluded that the child did not meet all eligibility factors, the RA determined that neither the child nor the mother was eligible for AFDC and that North Carolina should have made no AFDC payment to the recipient.
We reverse the RA's finding of a payment to an ineligible and conclude that the error in this case should be classified as an underpayment. As explained below, we conclude that the child did meet all eligibility factors despite the absence of a DSS-1662 and a declaration of citizenship. Therefore, we conclude that the child and the recipient were eligible for AFDC during the review month and that the error in this case was caused by North Carolina's failure to add the eligible child to the AU and to pay the recipient a two-person grant.
Background
In August 1994, North Carolina approved a pregnant woman case for this recipient. At that time, she had no other children. On October 28, 1994, the recipient's child was born. On October 31, 1994, the recipient reported the birth of her child to the local agency and requested assistance for him. On November 14, 1994, the recipient gave the local agency a copy of the child's birth certificate which provided evidence of enumeration pursuant to North Carolina's enumeration at birth process. On November 1 and December 1, 1994, North Carolina paid the recipient a one-person grant. On December 14, the recipient returned a signed state form DDS-1662 to the local agency which contained her declaration of citizenship for the child. On January 30, 1995, payment was authorized to add the child's needs to the grant. Payment was retroactive to the date of birth.
Applicable authority
Title IV, Part A of the Social Security Act (Act) established the AFDC program to provide assistance to needy children and their caretakers. Under section 408(a) of the Act, the Secretary of the Department of Health and Human Services must establish a quality control system to determine the amount of any erroneous AFDC payments made by a state. Pursuant to this statutory mandate, the Secretary 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 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)
QC reviews are conducted against permissible state practice (PSP). 45 C.F.R. § 205.42(b). PSP is defined as "written rules and policies relating to eligibility and payment that are in accordance with existing, approved State plan provisions or with proposed plan amendments submitted to, but not acted upon, by the Department." 45 C.F.R. § 205.40(b)(12).
"Aid to Families with Dependent Children" is defined as money payments with respect to a dependent child or children. Section 406(b) of the Act. However, states have the option of making AFDC payments to --
a pregnant woman but only if it has been medically verified that the child is expected to be born in the month such payments are made or within the three-month period following such month of payment, and who, if such child had been born and was living with her in the month of payment, would be eligible for aid to families with dependent children . . . .
Therefore, a pregnant women with no other children may be eligible for AFDC during the last trimester of her pregnancy. In the month following the birth of her child, the woman is no longer eligible for AFDC based on her status as a pregnant woman. If she is to continue to receive AFDC after the month she gives birth, it must be as the parent of an eligible dependent child.
North Carolina represented that when a child is born to an AFDC recipient, it relies on its inclusion policy to add the child to the mother's AU rather than requiring the mother to file an new application for herself and the child. Further, it represented that it relies on this process even in cases in which the mother has no other children. North Carolina's inclusion policy is set forth in section 2400 of its AFDC Manual. Section 2400 I. provides --
A. When the payee reports to you . . . a change in situation which requires a standard filing unit member to be included in the assistance unit, you must document the change and the actions taken. Use the DSS-1622, Verification of Change in Situation form.
* * *
C. The payee is not required to sign a DSS-8124, Application Form, to include a standard filing unit member to his assistance unit.
North Carolina's AFDC Manual also sets forth the procedures a worker is to follow in adding a newborn child to an AU pursuant to this inclusion policy. North Carolina AFDC Manual, §§ 2400 II-IV.
Analysis
This case is governed by section 3578 of the QCM which addresses errors involving a "proper person in budget." "This element is used when certain persons are improperly included, or excluded from, the AU." QCM, § 3578 (emphasis added). The relevant portion of this section provides that this element applies when:
5. The assistance payment under review is to a pregnant woman with no other children and . . . the payment for the pregnant mother was never terminated even though the child is born, there is no casefile documentation as of the review date confirming that the mother had requested assistance for the newborn once the child was born, and that the child met all eligibility factors.
If there was an application for the newborn as of the review date and the child met all eligibility factors, then an underpayment would be cited.
The RA concluded that the child in this case did not meet all eligibility factors. The RA based her conclusion on two factors: the absence of a signed DSS-1662 form and the lack of a citizenship declaration. In its brief before the Panel, ACF reiterated these points as the basis for the ACF finding that this AU was ineligible rather than underpaid. ACF wrote:
At issue here are (1) whether state form DSS-1662 had to be completed and signed prior to adding [the child] to the grant and (2) whether the failure to meet the citizenship declaration requirement for the newborn renders the subsequent payment erroneous.
ACF Br. at 2.
We conclude that an underpayment should be cited under this section because the recipient requested assistance for this newborn and the newborn met all eligibility factors. Specifically, we conclude that ACF did not show that state form DSS-1662 had to be completed and signed prior to adding the child to the AU and that the absence of a citizenship declaration did not make the AU ineligible for the December 1994 payment. Below we first discuss the declaration of citizenship requirement and we then discuss whether the DSS-1662 was required prior to payment.
A declaration of citizenship in AFDC cases is required by section 1137(d)(1)(A) of the Act. 2/ Effective October 31, 1994, section 1137(d)(1)(A) provides as follows:
The State shall require, as a condition of an individual's eligibility for benefits under [AFDC], a declaration in writing, under penalty of perjury--
(i) by the individual,
(ii) in the case in which eligibility for program benefits is determined on a family or household basis, by any adult member of such individual's family or household (as applicable), or
(iii) in the case of an individual born into a family or household receiving benefits under such program, by any adult member of such family or household no later than the next redetermination of eligibility of such family or household following the birth of such individual, stating whether the individual is a citizen . . . .
Prior to October 31, 1994, section 1137(d)(1)(A) provided:
The State shall require, as a condition of an individual's eligibility for benefits under [AFDC], a declaration in writing by the individual (or, in the case of an individual who is a child, by another on the individual's behalf), under penalty of perjury, stating whether or not the individual is a citizen or national of the United States . . . .
Therefore, as of October 1994, section 1137(d)(1)(A) had been amended to allow a grace period in which to declare the citizenship of a newborn child. 3/ As of the review date of December 1, 1995, this AU was within that statutory grace period and therefore the case file did not have to contain an declaration of citizenship in order for the child to be eligible for AFDC.
The other basis for ACF's determination that this child was not eligible for a December payment was the absence of a signed DSS-1662 in the case file. The DSS-1662 is the form North Carolina uses when it is including an individual in an established AU. It contains such information as the name of the person to be included, the birth date, kinship to the payee, the address, phone, the relevant deprivation factor, enumeration information, and a declaration of citizenship.
For the following reasons, we conclude that a signed DSS- 1662 was not required prior to the review date.
o First, as discussed above, ACF did not take into account that the need for DSS-1662 as a declaration of citizenship has been modified by the amendment of section 1137(d)(1)(A) of the Act. While prior to the amendment of section 1137(d)(1)(A), a completed DSS-1662 may have been required to fulfill the declaration requirement, such a declaration is no longer required during the grace period.
o Second, while the inclusion of a new member of an AU is documented in North Carolina by a DSS-1662, ACF has pointed to no provision in the North Carolina AFDC Manual which requires the completion of that DSS-1662 prior to reconfiguring the AU.
o Third, the error that was made in this case was the local agency's failure to properly process the recipient's request for assistance for her child and to pay AFDC to that child. Part of that failure involved the local agency's not obtaining a DSS-1662. To rely on the absence of a DSS-1662 as the basis for declaring the child and the recipient ineligible would mischaracterize the nature of the local agency's mistake and would be contrary to the programmatic goal of providing aid to eligible children.
ACF's brief before the Panel also questioned whether North Carolina's inclusion policy applies to newborns of mothers with no other children. ACF's argument had two parts. First, ACF questioned whether North Carolina's application of its inclusion process to these newborns was consistent with the Act. Second, ACF questioned whether North Carolina's inclusion process actually applies to these newborns.
Where there are two conflicting interpretations of a statute, both of which are reasonable, the federal agency's interpretation is entitled to deference if appropriate notice of that interpretation has been given to the state. Commonwealth of Pennsylvania, Dept. of Public Welfare v. United States Department of Health and Human Services, 928 F.2d 1378 (3d Cir. 1991). As explained below, we conclude that deference to ACF's position that North Carolina must require applications for newborns with no siblings is not appropriate because (1) North Carolina's interpretation of the Act as allowing inclusion of these newborns is reasonable, (2) there is no indication in the record that North Carolina had adequate and timely notice of any contrary interpretation by ACF, and (3) North Carolina had established its interpretation as a state practice in its AFDC Manual.
The only authority cited by ACF for its position that North Carolina's inclusion policy is not consistent with the Act was FY94-OFA-34. This was a memo from the ACF Office of Family Assistance to the ACF Regional Administrator in Region III concerning the impact of section 402(a)(38) on the eligibility of newborns to mothers with no other children. 4/ Section 402(a)(38) makes certain individuals mandatory or required members of an AU even when no application is filed on their behalf. 5/ The memo discussed Maryland QC cases in which payments to pregnant women with no other children continued after the birth of the child even though the mothers had not notified the local agency of the birth or requested assistance for the child. The Office of Family Assistance informed the Regional Administrator that these babies were not eligible for AFDC pursuant to section 402(a)(38) "since there are no other children and, thus, no unit to consider the child a member of once the child is born."
For the following reasons, we conclude that ACF has not shown that North Carolina's application of its inclusion policy is inconsistent with the requirements of federal law.
First, the memo relied upon by ACF is not dispositive of the issue presented by this case for two reasons.
o The memo addresses the question of whether a child born to a mother with no other children is eligible for AFDC pursuant to section 402(a)(38). However, North Carolina is not relying on the operation of section 402(a)(38) as the basis for this child's eligibility. Therefore, the memo's conclusion that such children are not made eligible by the operation of section 402(a)(38) is not relevant to this case.
o The memo addresses a fact pattern that is materially different that the pattern presented by this case. In the Maryland cases, the mothers had not notified the local agencies of the births or requested assistance for the children. Here, this recipient notified the local agency of the birth of her child and requested assistance. By these actions, she brought herself within North Carolina's inclusion policy. North Carolina's error in this case was its failure to properly follow that inclusion policy by adding this eligible child to the recipient's grant.
Second, North Carolina's assumption that it can rely on its inclusion policy for newborns in pregnant-women cases is a reasonable reading of the Act for the following reasons.
o An AU consisting of a pregnant woman is eligible for month in which the child is born, not just for portion of the month during which the woman is pregnant. Therefore, it is not unreasonable for North Carolina to regard the mother's AU as existing during the month of the child's birth and to then include the child in that AU upon birth.
o A woman's eligibility for AFDC as a pregnant woman is based on a determination of the eligibility of the unborn child. The child must be one "who, if such child had been born and was living with her in the month of payment, would be eligible for aid to families with dependent children." Section 406(b) of the Act. Therefore, North Carolina's inclusion policy reasonably reduces administrative complexity by not requiring an entirely new application for child whose eligibility status has been already been reviewed by a local agency.
o North Carolina's policy furthers the purpose of title IV-A by facilitating the payment of AFDC benefits to eligible newborns whether or not they have siblings who are dependent children.
ACF also questioned whether North Carolina's inclusion policy actually applies to newborns of mothers with no other children. The question was raised because section 2400 I.A-D. of the North Carolina AFDC Manual refers to "standard filing unit members" and such newborns are not "standard filing unit members" as that term is used in connection with the operation of section 402(a)(38). See Colorado Dept. of Human Services, DAB No. QC97 (1996). However, the fact that the initial paragraphs of section 2400 I. use the term "standard filing unit member" does not preclude North Carolina's application of that section to newborns with no siblings since section 2400 I.E. refers expressly to newborns and the immediately following sections (section 2400 II. through VII.) deal expressly with inclusion of newborns. Further, we note North Carolina has an incentive to correctly describe its policy because it will be bound in future QC reviews by its representations that this portion of its manual applies to newborns in pregnant-women AUs. Therefore, in the absence of information in the record to the contrary, we accept North Carolina's representations as to how it applies its state policy: when a woman who is receiving AFDC as a pregnant woman with no other children reports the birth of her child, North Carolina follows its inclusion procedures rather than its initial application procedures in adding that newborn to the mother's grant.
Conclusion
For the preceding reasons, we conclude that the error in this case should be calculated and classified as an underpayment rather than as an overpayment to an ineligible.
__________________________
Sara Anderson
__________________________
Thomas D. Horvath
__________________________
Leslie A. Sussan
* * * Footnotes * * *
1. The Quality Control Manual (QCM) provides for four types of QC findings: correct, payment to an ineligible, overpayment, or underpayment. QCM, § 3040. A state's erroneous payments (payments to ineligibles and overpayments) and its underpayments are used to determine a state's QC error rate. Section 408(d)(2) of the Act.
2. We note that there has never been any question in this case as to whether this baby was a United States citizen. Prior to the QC review date, the case file contained the baby's birth certificate which documented that he was born in Charlotte, North Carolina.
3. In its notice of appeal North Carolina relied on an amendment to section 3534 of the QCM which expressly conformed section 3534 to the present requirements of section 1137(d)(1)(A). The amendment provides:
A delay is permitted in making a declaration on behalf of a newborn child, so long as it is made by the date of the next eligibility redetermination of the AU.
QCM, § 3534, at V-20. However, ACF argued that this QCM amendment was effective only for cases in which the review month was after October 1995 and therefore not relevant to this case. We agree with ACF that, because of the QCM amendment's effective date, North Carolina cannot rely on this amendment. However, the express terms of the prior version of the QCM are not inconsistent with the present requirements of section 1137(d)(1)(A). The prior version of QCM section 3534 provided that verification of the declaration requirement was limited to determining whether a signed declaration was in the case file. This QCM requirement of a signed declaration must be read in conjunction with the applicable provisions of section 1137(d)(1)(A): a declaration for a newborn is required only after a prescribed grace period.
4. Because we conclude that the contents of this memo are not relevant to the dispute in this case, we do not reach the question of whether the memo would constitute adequate and timely notice to North Carolina of ACF's position. We note, however, that since the memo was addressed to the Region III Regional Administrator, it is not apparent from the record that North Carolina, which is in Region IV, would have received this memo prior to the review of this case.
5. Under section 402(a)(38), all AFDC State plans must provide that, in making eligibility and payment determinations with respect to a dependent child,
the State agency shall . . . include [in the AU]--
(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 406(a) or 407(a)
if such parent, brother or sister is living in the same home as the dependent child . . .
In implementing section 402(a)(38), ACF has promulgated a number of requirements. For example, an application on behalf of a dependent child must include a request for assistance for these potentially eligible relatives. 45 C.F.R. § 206.10(a)(1)(vii). A relative who is a mandatory member of an AU "will be considered to be included in the application as of the date he is required to be included in the assistance unit." 45 C.F.R. § 206.10(a)(1)(ii). Further, ACF has interpreted section 402(a)(38) to impose a duty on a state when the state learns of a mandatory member who is in a household but who has not been included in the AU. In such circumstances, a state must redetermine the AU's benefits from the time the mandatory member joined the household. Pursuant to that redetermination, the state must then impose an overpayment or provide a corrective payment for those months in which this individual satisfied all conditions of eligibility and payment. 45 C.F.R. § 233.20(a)(1)(iv).
(..continued)