Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Michigan Department of
Date: May 31, 1990
Social Services Docket No. 89-208
Audit Control No. A-05-86-60500
Decision No. 1162
DECISION
The Michigan Department of Social Services (DSS/State/Michigan) appealed
a disallowance by the Office of Human Development Services (Agency/OHDS)
of $3,535,770 in federal financial participation (FFP) claimed by the
State under Title XX of the Social Security Act. The funds claimed were
for family service workers' salaries and related training costs incurred
during the quarter ending December 31, 1980. 1/ The claim was not filed
until June 28, 1985. Among the reasons for the disallowance raised by
OHDS was that the claim was not filed within the two-year period
established by section 1132(a) of the Act.
Based on the analysis below, we sustain the disallowance in full.
Background
Michigan had been claiming salaries of family service workers under
Title XX (commonly referred to as the social services program) for a
number of years prior to the period in issue. Federal funding for Title
XX services had a dollar ceiling on amounts available to each state,
known as a cap, as distinguished from other open-ended public assistance
programs. Michigan had been spending amounts greater than the cap on
social services, and paying the excess from State funds. In May 1980 a
State Executive Order directed DSS to reduce spending by substantial
amounts. To comply with this Order, DSS decided to achieve "fund
source" savings by charging a portion of Title XX family service
positions, then funded by State dollars, to Title IV-A (Aid to Families
with Dependent Children, or AFDC), which had no State cap. See Michigan
Assistance Payment Manual Bulletin (August 20, 1980), Michigan Exhibit
(Ex.) G. This change would earn "federal matching dollars." Id.
The Bulletin stated that the Michigan Annual Title XX Services Plan
(hereafter Plan) for 1979-80 had been amended to eliminate the federal
goals of self-support and self-sufficiency from the Title XX program.
Family services workers would now perform these services only for those
eligible for Title IV-A. Id.
Although the Bulletin spoke of the change of family service costs from
Title XX to Title IV-A as being effective July 15, 1980, the State
argued that this was an effective date only for the 1979-1980 Plan, and
a proposed date for the 1980-1981 Plan. According to the State, the
effective date for the 1980-1981 Plan was January 1, 1981. In support
of this assertion, Michigan cited the Public Notice of the Final
Amendment to the Michigan Plan for 1980-81 removing the Family Services
Program from the Title XX Plan. Michigan Ex. F.
The significance of this argument is that one basis of the disallowance
was that the services claimed were not in the State's Plan when they
were delivered. Therefore, the costs were not allowable even if they
had been claimed timely. While the State had, at some time during the
proceedings, suggested that it could amend its social services plan
retroactively to include the services, the Agency had pointed out that
the effective date of an amendment could be not earlier than the date of
publication of the final amendment. See Notice of Disallowance, p. 3
(Michigan Ex. A). If the amendment removing the family services from
the Title XX Plan was not effective until January 1, 1981, then the
services were in the Plan for the quarter in issue here.
On February 20, 1981, Michigan filed a Title IV-A claim for $9,939 for
training costs for family service workers for the quarter ending
December 31, 1980. On August 18, 1981, the State filed a Title IV-A
claim for $2,350,554 for family service worker salaries for the same
period. Both before and after the quarter in issue, Michigan filed
similar claims for FFP.
On November 5, 1981 the Acting Regional Commissioner of the Social
Security Administration (which then administered AFDC) disallowed the
entire amount of the State's claims. The disallowance reviewed the
State's reason for filing under Title IV-A -- that its Title XX cap had
been reached and Title XX services were being paid for entirely from
State funds. The disallowance referred to the Bulletin explaining the
change (Michigan Ex. G), but gave the date of the filing of the State's
amendment to the Title XX plan as July 15, 1980.
There were several reasons given for the disallowance. The principal
reason was that section 403(a)(3) of the Act precluded FFP for these
costs. This section provides that no payment may be made for Title IV-A
administration costs "with respect to amounts expended in connection
with the provision of any service described in Section 2002(a)(1) of the
Act" (except for an item not involved here). See Social Security Act,
1978 ed. 2/
The other reasons given for the disallowance were related to this one,
since they referred to transfer of expenditures from one program to
another. One reference was to a section of Office of Management and
Budget Circular A-87 prohibiting the transfer of expenditures between
federal programs by grantees to avoid budgetary ceilings. The other was
to a statute (31 U.S.C. 628) which provided that "sums appropriated for
the various branches of expenditure in the public service shall be
applied solely to the objects for which they are respectively made."
Michigan asked the Commissioner of the Social Security Administration to
review this disallowance, together with others. He upheld the
disallowance, citing the same authorities given by the Region, but
stressing the State's lack of documentation. The Commissioner stated
that Michigan had not demonstrated or documented that the family service
workers were in fact performing Title IV-A administrative activities.
The State did not, therefore, meet its burden to sustain the
allowability of the costs claimed by simply transferring the costs from
Title XX to Title IV-A. Michigan appealed that disallowance to the Board
on August 23, 1983. See Board Docket No. 83-184. The appeal was
dismissed without prejudice on January 31, 1984 so the parties could
pursue settlement negotiations. Michigan stated that a settlement was
reached on February 13, 1987 (although no document was offered which
included this date). Michigan Brief (Br.), p. 8. In any event, on June
28, 1985 Michigan filed a claim under Title XX for the family services
workers' costs for the quarter ending December 31, 1980. 3/ That claim
resulted in this disallowance.
The disallowance was based in large measure on an audit by the Office of
Inspector General, Office of Audit, Department of Health and Human
Services (I.G./auditors), dated March 17, 1989. See Michigan Ex. B
(Audit Report No. A-05-86-60500).
This audit found that family services expenditures paid during the
quarter ending December 31, 1980 were not claimed for Title XX
reimbursement until June 28, 1985, and therefore not filed within the
two-year claiming period. The audit also referred to the lack of
documentation to support the State's claim that the family service
workers' activities were incurred for eligible services included in the
Title XX Plan.
The State did not concur in the audit report because it believed that
negotiations with the Office of Family Assistance and appeal of the
Title IV-A claim to this Board constituted "good cause" for not filing
within the two-year period. As to the lack of documentation, the State
contended that it could amend its Title XX plan retroactively to expand
the covered services.
The I.G. replied that the good cause waiver had not been asked for in
the time required by regulation and that the reasons given did not come
under the good cause provisions. As to the lack of documentation, the
I.G. pointed out that a retroactive amendment of the plan could not be
effective for the time period of the disallowance. Michigan appealed the
disallowance to the Board on October 4, 1989. On January 30, 1990 the
State requested a waiver of the timely filing requirement from the
Regional Administrator of OHDS. Michigan Ex. M. The Regional
Administrator notified the State that the waiver request had been
referred to the Office of General Counsel for reply. Michigan Ex. O.
Counsel for the Agency incorporated a denial of the waiver request in
the Agency's brief. OHDS Br., p. 14. The State questioned counsel's
authority to act on the waiver request. After a telephone conference to
hear the parties arguments on this point, the Presiding Board Member
agreed with the State. The central office of OHDS then formally denied
the waiver request.
Analysis
This decision does not address the merits of the underlying claims.
There is no dispute that the State's claim was filed more than two years
after the end of the quarter in which the expenditures were incurred and
so was, on its face, time-barred. Michigan, however, contended that its
claim was filed within the two-year statutory period under the
particular factual circumstances of this case.
In the alternative, Michigan argued that even if its claim was not filed
within the two-year period, its claim came under the exception in the
statute for expenditures involving an audit exception. Michigan argued,
further, that even if its claim was not filed within the two-year period
and did not come under the audit exception provision, the State had
shown good cause for a waiver of the timely filing requirements.
Finally, Michigan contended that it had submitted sufficient
documentation for its claim. However, we do not reach the documentation
issue since we find below that the claim was not filed timely, it did
not come under any exception, and a waiver for good cause was not
appropriate.
I. THE STATE'S CLAIM WAS UNTIMELY.
The expenditures in the State's claim were incurred during the quarter
from October 1, 1980 through December 31, 1980. The claim was filed on
June 28, 1985, much more than two years after the end of the quarter in
which the expenditures were incurred. However, Michigan argued that its
claim was timely because it was filed within two years after the Board's
January 31, 1984 dismissal of Michigan's appeal from the disallowance of
the State's Title IV-A claim for these same costs (Board Docket No.
83-184). Michigan Br., p. 8.
Michigan based its argument on the fact that it had filed those Title
IV-A claims on February 2 and August 18, 1981. The State asserted that
"the two year period should be tolled from these dates forward while
Michigan and HHS were appealing/settling the disallowance under IV-A."
Michigan noted that a settlement, in what was Board Docket No. 83-184,
was ultimately reached on February 13, 1987. Therefore, Michigan
asserted that it filed its Title XX claim "within two years from the
dismissal of the appeal and even reclaimed the costs under Title XX
prior to the Title IV-A claim settlement." Michigan Br., pp. 9-10.
This last statement by the State may be true but is irrelevant. The
two-year period for filing a claim runs from one date only, and that is
the date the expenditures were incurred. The regulation is clear--
we will pay a State for a State expenditure . . . only if the
State files a claim with us for that expenditure within 2 years
after the calendar quarter in which the State agency made the
expenditure . . . .
45 C.F.R. 95.7.
The two-year period ran from the date the State paid the salaries of the
family service workers. This date was the quarter ending December 31,
1980. The State provided the best evidence on this point. In the
chronology of the disallowance, the following is the listing for
6/28/85:
Title XX claim for the 10/1/80 - 12/31/80 family services workers
costs (this claim is the subject of the 9/6/89 disallowance).
In fact, Michigan emphasizes the point when it states:
It is this 1985 claim under Title XX for 10/1/80 to 12/31/80 family
services workers costs that is the subject of the appeal.
Id. (emphasis added).
The claim being for family services worker costs for the quarter ending
December 31, 1980, it was obviously untimely when filed in June 1985.
Neither the dismissal of the Title IV-A claim nor its settlement affect
the untimeliness of the Title XX claim.
The State's "tolling" argument is based on the fact that the claim
for
the family services workers' costs was originally made under IV-A well
within the two-year period after the quarter ending December 31, 1980.
See Michigan Br., pp. 8-9. The State offered no authority whatsoever
for this position. There is nothing in the two-year statute or the
implementing regulations concerning any "tolling." Apart from that,
it
is not the Title IV-A claims which are before us. It is the Title XX
claims; they were filed more than two years after the expenditures were
incurred. 4/ Unless an exception in the statue applies, the claims are
time-barred. We consider next whether the claim comes within any of the
statutory exceptions.
II. THE EXCEPTIONS TO THE TWO-YEAR FILING REQUIREMENT
On its face, the claim for FFP in Title XX expenditures was untimely.
Section 1132(a) of the Act provides that the two-year filing limit does
not apply to "any expenditure involving court-ordered retroactive
payments or audit exceptions, or adjustments to prior year costs." There
is no issue of court-ordered retroactive payments nor adjustments to
prior year costs.
The State did contend that its claim came within the audit exception
provision. The statute does not define an audit exception. The
regulation defines "audit exception" as a "proposed adjustment
by the
responsible Federal agency to any expenditure claimed by a State by
virtue of an audit." 45 C.F.R. 95.4.
The State outlined its argument on the audit exception issue as follows:
Audit #05-50500 for Title XX caused Michigan's Title XX claim to
fall below the cap. Due to this audit exception, Michigan should
be allowed to make claims for funds that could be legally claimed
under Title XX, especially since it is now evident that this
quarter was in the State's service plan for Title XX. When
Michigan became aware that there was room under Title XX cap to
make its claim, it did so by reclaiming its Title IV-A claim.
Michigan Br., p. 11.
The conclusion Michigan drew from this statement was:
Thus, 45 CFR 95.19(b) allows for a Title XX claim due to there
being room under the cap to claim those funds.
Id.
In addition to its reliance on Audit No. 05-50500 (Michigan Ex. Q), the
State claimed that the November 5, 1981 Title IV-A disallowance met the
audit exception definition in the regulation. This argument was
presented as follows:
The whole appellate/settlement process of the Title IV-A was the
result of an audit of the Title IV-A claims. Since an
appeal/settlement was pending at the time of the Title XX claim,
the disallowance was still active and claim could validly be made
to Title XX because the claim was being made because of that audit.
Id.
The State's argument is, in substance, that the family service workers'
costs for the last quarter of 1980 always belonged under Title XX. They
were mistakenly claimed under Title IV-A and disallowed there. During
the course of the appeal from the Title IV-A disallowance, and the
settlement negotiations pertaining to it, the State realized that there
was now room under the Title XX cap for these costs. Therefore, it took
these costs out of the Title IV-A claim (where they presumably never
properly belonged) and claimed them under Title XX. 5/ The first audit
cited by the State, Audit No. 05-50500, has nothing to do directly with
the claim for the family service workers' costs. 6/ Neither does the
second audit cited by the State, Audit No. 05-10214 (Michigan Ex. R).
7/ This audit, which is only a draft, in fact has nothing to do with
the quarter at issue, since it is identified as covering the period of
October 1, 1975 to September 30, 1978. Id. at 2. (The State never
submitted an audit for the Title IV-A disallowance.)
Attempting to explain the relevance of the audits, Michigan contended
that these "two audits resulted in a direct reduction in Title XX
expenditures which caused there to be sufficient room under the Title XX
cap to make the claim." Michigan Reply Br., p. 4. Michigan also cited
"the Accounting Division's FY 81 Title XX federal claim summary
(handwritten sheet titled 'T/XX Allotment FY 81')" to explain the
"detail of the reduction of Title XX funds under the cap." See Michigan
Ex. S. The State asserted that there was a direct cause and effect
relationship between the two audits and this claim.
The main flaw in the State's reliance on this document (Michigan Ex. S)
is that it is not a federal audit. Even if it were an audit, no agency
of the federal government accepted these computations. The definition
in the regulation requires "a proposed adjustment by the responsible
Federal agency to any expenditure claimed by a State by virtue of an
audit." 45 C.F.R. 95.4. 8/ The expenditures in question were not
claimed by the State "by virtue" of an audit. Even accepting the
State's characterization of the various figures, the particular claim
was not made under Title XX because of any audit. The fact that an
audit may have shown that there was room under the cap for additional
Title XX claims for the year in question does not mean that any audit
directed that the claim be taken out of Title IV-A and transferred to
Title XX. In any event, the computations are the State's and were not
accepted by any federal agency.
We have recognized that a claim results from an audit exception, under
the language of the regulation, if a federal audit (or a state audit
accepted by a federal agency) identifies that a state has in fact
underclaimed for a particular item. See New York State Dept. of Social
Services, DAB No. 521 (1984). Here no federal audit identified any
underclaim by the State in the amount of the family service workers'
costs, nor did any federal agency accept the State's computation. In
fact, the State does not allege that it underclaimed for these
particular costs. Rather, its position is that it claimed them under
the wrong program when it thought there was no room for them under the
Title XX cap. When it realized that there would be room under the cap
it filed its claim. This is not what the audit exception contemplated.
As we have found, the time limitation is program-specific. See
Oklahoma, supra.
Both parties cited our decision in Illinois Dept. of Public Aid, DAB No.
715 (1986), in their arguments on the audit exception issue. See
Michigan Br., p. 12; OHDS Br., p. 7. That decision definitely supports
the Agency view. In Illinois the State learned from an agency review of
the Title IV-A emergency assistance program (EA) that the State had
mistakenly applied a restriction on FFP available for EA payments to
special assistance (SA), a different IV-A program. The State argued
that its claim for the amount by which it had underclaimed in the SA
program was the result of an audit exception.
In Illinois we reiterated that the audit exception argument is a
program-specific one. We said that "even if an audit exception
pertaining to the EA program led the State to discover an underclaim in
its SA program, this did not alter the fact that there was no audit
exception pertaining to the SA program." Illinois, p. 6. So, here, the
fact that an audit of other Title XX programs in which the State had
overclaimed may have led the State to discover that the Title XX cap
would now accommodate the family service workers' costs, would not mean
that a claim for those costs was the result of an audit exception.
The State also relied on another decision involving the State of
Oklahoma, Oklahoma Dept. of Human Services, DAB No. 809 (1986), where we
reversed a disallowance based on the statutory audit exception
provision. We found that certain personnel costs were interrelated with
similar costs of other programs and could be reallocated after the
two-year filing limit because of the audit exception provision. In
Oklahoma, the State had to reallocate certain costs as the result of an
audit or it would not be in compliance with its cost allocation plan.
That is not the case here. Another significant difference between
Oklahoma and this case is that in Oklahoma no new amounts of FFP were
claimed, but as the result of the audit, "a redistribution of costs,
some up and some down, was necessary among various Social Security Act
programs." Id. at 3. Additionally, in Oklahoma the State argued that
"it did not choose unilaterally to shift claims from one program
category to another after claims under one program were denied." Id. at
7. That is exactly what Michigan did here. After its claim for family
service workers' costs under Title IV-A was denied, Michigan chose,
unilaterally, to shift its claim to Title XX. Oklahoma is no precedent
to support such action as being due to an audit exception. 9/ III. THE
WAIVER REQUEST
Section 1132(b) of the Act provides for a waiver by the Secretary of the
two-year filing limit on claims for federal funding on a showing of good
cause. The statute gives no definition of "good cause." It simply
states that failure to file a claim within the time period "which is
attributable to neglect or administrative inadequacies" shall be deemed
not to be for good cause.
The implementing regulations define "good cause" as "lateness
due to
circumstances beyond the State's control." Such circumstances include
acts of God and documented action or inaction by the federal government.
The regulation repeats the language of the statute in stating that
circumstances beyond a state's control do not include neglect or
administrative inadequacy. See 45 C.F.R. 95.22. The preamble to the
final rule states that there might be other situations for waiver other
than those listed under good cause. See 46 Fed. Reg. 3528 (January 15,
1981). The regulations also require that the State request a waiver for
good cause in writing "as soon as the State recognizes that it will be
unable to submit a claim within the appropriate time limit." 45 C.F.R.
95.25.
The first mention of a waiver of the timely filing requirement appears
in Michigan's response to the draft report which preceded the audit on
which this disallowance is based. There, Michigan stated that its
ability to charge the claims to Title XX within the two- year time limit
was restricted by the State's "negotiations" with the Office of Family
Assistance and the State's "appeal of the entire claim to the Grant
Appeals Board." The State asserted that these negotiations constituted
"good cause" for the delay in filing the claim. See Appendix to
Michigan Ex. B.
In the final audit report, the auditors' comments on the State's
response referred to 45 C.F.R. 95.25, which requires a waiver request in
writing "as soon as the State recognizes that it will be unable to
submit a claim within the appropriate time limit." The auditors pointed
out that a written request for a waiver was never made prior to the
Title XX claim. Michigan Ex. B., p. 10.
In addition (without considering whether they could properly act on a
waiver request), the auditors stated that the circumstances did not meet
the regulatory definition of good cause. Their reasoning was--
the Title IV-A claims for family services and the related training
costs were disallowed by SSA's Regional Commissioner on November 5,
1981. Since FFP was denied under Title IV-A, we believe the State
agency was free to claim those costs under any program it believed
was appropriate. The claim under Title XX was not made until June
1985.
Id.
The disallowance repeated, in substance, the language of the final audit
report on the issue of a good cause waiver. Nothing further was done
about a waiver until the State filed a formal waiver request with the
Regional Administrator on January 30, 1990, just prior to filing its
initial brief in this case. See Michigan Ex. M.
Michigan's opening brief outlined its arguments on good cause, which
were in essence the same as those in its request to the Regional
Administrator. The first ground given by the State was that good cause
for the delay was shown by the "documented action of the Federal
government." The action referred to was the "activity" of the
federal
government in processing the Title IV-A disallowance, and the appeal and
settlement. These were all claimed to be "activities on the part of the
parties, including the Federal government" leading to a final resolution
of the IV-A claim. During this entire period Michigan was attempting
"to obtain FFP through Title IV-A and/or an amicable resolution of the
matter." The State contended that "the interaction of Michigan and
the
Federal government . . . continued the claim." Michigan Br., pp. 13-14.
Michigan also asserted that its late filing was due to circumstances
outside of Michigan's control. The first circumstance cited by Michigan
as beyond its control was the denial of FFP under Title IV-A. Michigan
also argued that it was the Title XX audit, revealing room under that
program's cap, which resulted in the voluntary withdrawal of funds from
consideration in the Title IV-A negotiations and the claim for Title XX
funding. Id. Neither party referred to the question of whether the
Board may review the Agency's decision denying a waiver of the two-year
filing limit. We have not reached the question before and we need not
reach it now since, on the facts, the Agency was clearly correct in
denying the waiver. 10/ First, the waiver did not meet the regulatory
filing requirements. Such a request must be made to the appropriate
agency of the Department of Health and Human Services (45 C.F.R. 95.31)
and must be made "as soon as the State recognizes that it will be unable
to submit a claim within the appropriate time limit." 45 C.F.R. 95.25.
See Tennessee, supra, at 5.
While the State cited its response to the Title XX audit as good cause
for a waiver of the two-year filing limit, the actual request for a
waiver was not made until January 1990, four and one-half years after
the claim was filed in June 1985. Clearly, this request was not made as
soon as the State recognized it would be unable to submit a claim within
the appropriate time limits of the statute. On this ground alone, the
request for a waiver was properly denied by the Agency.
Even if the Agency were to overlook the lateness of the waiver request,
the reasons given plainly did not establish that the late filing of the
claim was due to circumstances beyond the State's control. The State
argued that the Title IV-A disallowance and the parties' subsequent
settlement discussions constituted circumstances beyond the State's
control. Accepting the State's argument would make a mockery of the
timely- claiming requirement. The interaction between the parties was
not the kind of action which was ever intended to qualify as a
circumstance beyond the State's control as grounds for a waiver. 11/
We need only examine the chronological scenario to see that there is no
reasonable basis for saying that lateness in filing was due to
circumstances beyond the State's control. The State decided to take its
family service workers' costs out of its Title XX Plan and claim them
under Title IV-A since the State had reached its Title XX cap.
The State's Title IV-A claim, including the costs at issue here, was
disallowed in 1981 and upheld by the Social Security Commissioner in
1983. The State appealed that disallowance to this Board. The appeal
was dismissed without prejudice in January 1984. The State concurred in
the dismissal and the parties discussed settlement. In June 1985,
before the Title IV-A dispute was settled, the State filed its claim
under Title XX, contending that the claim should never have been filed
under Title IV-A in the first place. Michigan argued that the earlier
Title XX audits (Michigan Exhibits Q and R) resulted in a direct
reduction of other Title XX expenditures and resulted in room under the
Title XX cap for the claim before us. Until then, Michigan contended
there was no purpose in filing this claim under Title XX. Accepting the
State's version of the audits as correct, the only way there could be
room under the cap was if other costs which Michigan had claimed under
Title XX were found unallowable as the result of the audits. Certainly,
claiming unallowable costs was not a circumstance beyond the State's
control.
There is, of course, nothing wrong in a State attempting to maximize its
federal funding, but shifting from one program to another in its
claiming is hardly a circumstance beyond the State's control. The State
could have filed its claim under whatever program it wished. Claiming
under the wrong program until it was too late to file under the right
one was something over which the State had control. See Oklahoma (DAB
No. 484), supra.
The Agency was certainly not arbitrary in denying the request for a
waiver, under the circumstances here, so we would uphold the denial.
Conclusion
We find that Michigan did not file its claim for FFP under Title XX
within the time required by statute. The State's claim does not come
within any of the exceptions in the statute or regulation. We do not
reach the question of whether we can review the denial of a good cause
waiver since, in any event, the facts show that the Agency was not
arbitrary in refusing to grant a waiver. Consequently, we sustain the
entire disallowance of $3,535,770.
_____________________________ Judith A. Ballard
_____________________________ Norval D. (John)
Settle
_____________________________ Alexander G. Teitz
Presiding Board Member
1. The amount of training costs in the State's claim was only $9,939
FFP. Since this was but a small fraction of the claim for salaries, we
generally refer hereafter to the claim as if it were entirely for worker
salaries.
2. The social services available for funding under Title XX were
described in detail in section 2002(a)(1) of the Act. The Title XX
program in effect at the time in issue here was later replaced by the
Block Grants to States for Social Services in the Omnibus Reconciliation
Act of 1981. See Pub. L. 97-35, sections 2351-2354.
3. Michigan had claimed $2,350,554 FFP as administration costs for
the family service workers' salaries at 50% under Title IV-A. When
Michigan decided to move the claim after the disallowance, it claimed
$3,525,831 FFP at 75% under Title XX. The training costs of $9,939
remained at 50% under Title XX, making the total claim before us
$3,535,770 in FFP.
4. In Oklahoma Dept. of Human Services, DAB No. 484 (1983), we held
that the timely filing requirements are program-specific. A claim must
be filed timely in a particular public assistance program to be eligible
for FFP in that program.
5. We do not need to determine whether the family service workers'
costs were properly under Title XX for the last quarter of 1980 or
whether a retroactive amendment of the Title XX Plan would be necessary
to put them there. All we decide here is whether the claim was
untimely.
6. Audit Control No. 05-50500, dated November 19, 1984 is entitled
"Report on Audit of Administrative Costs Claimed under the Public
Assistance, Medical Assistance, and Social Service Programs and Related
Allocation of Costs to the Non-Public Assistance Segment of the Food
Stamp Program." It was submitted with the State's reply brief (as
Michigan Exhibit Q) when OHDS in its brief asked Michigan to identify
the audits on which it relied for its audit exception claim. (Michigan
Exhibit R was submitted at the same time.)
7. This audit is entitled "Draft of a Proposed Report on Audit of
Administrative Costs Claimed under the Public Assistance, Medical
Assistance, and Social Service Programs and Related Allocation of Costs
to the Non- Public Assistance Segment of the Food Stamp Program" and is
dated November 28, 1980.
8. In its reply brief, Michigan refers to a letter from the Director
of the Division of Cost Allocation dated March 23, 1983. This letter
stated that the Audit Agency would recompute amounts based on
adjustments due to case counts. The State stressed that this was a
federal document. However, this letter states that it refers to the
audit for the period October 1, 1975 through September 30, 1978 (Audit
No. 05-10214, Michigan Ex. R). As we pointed out above, this audit did
not cover the period in which the costs at issue were disallowed, and
therefore has no bearing here.
9. Michigan also referred to an October 1989 statement by the Health
Care Financing Administration (HCFA) that a claim for personal care
costs in fiscal year 1981 under Title XX could be claimed under Title
XIX as a result of an audit, as an exception to the two-year rule. See
Michigan Reply Br. p. 3; Michigan Ex. P. Apart from the fact that this
was long after the disallowance before us, this was a statement in a
grant award, subject to future audit, by another agency under another
program (Medicaid). There is, in any event, no such statement by the
responsible federal agency here.
10. In Tennessee Dept. of Health and Environment, DAB No. 921 (1987)
we found that the State had failed to meet the preliminary requirements
for a waiver established at 45 C.F.R. 95.25 and 95.28. Tennessee, pp.
2, 5-6. In Hawaii Dept. of Social Services and Housing, DAB No. 662
(1985), we noted that it was unclear if we had "jurisdiction to pass on
the correctness of the Agency's discretion in denying a waiver."
However, based on Hawaii's "own contention", we found that "denial
of a
waiver was clearly correct." Hawaii, p. 4. In Alaska Dept. of Health
and Social Services, DAB No. 1154 (1990), we again stated that we did
not reach the question of whether we can review the denial of a good
cause waiver since the facts showed that HCFA was not arbitrary in
denying a waiver. Alaska, p. 23.
11. Theoretically, it is possible to imagine a situation where a
federal agency might deliberately prolong taking a disallowance, or
extend settlement negotiations, so as to cause the two-year filing limit
to run. No allegation of such bad faith is made here.