Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Illinois Department of Public Aid
DATE: April 1, 1992
Docket Nos. 91-127 91-150 A-92-47 A-92-90
Decision No. 1320
DECISION
The Illinois Department of Public Aid (Illinois) appealed disallowances
by
the Administration for Children and Families (ACF or Agency) of
$12,591,000
in federal financial participation (FFP) claimed under Title
IV-A (Aid to
Families with Dependent Children or AFDC) of the Social
Security Act
(Act). The disallowed claims were one-time $1000 payments
made by
Illinois to certain AFDC applicants and recipients to implement
Doston v.
Duffy, 732 F.Supp. 857 (N.D.Ill. 1988) (Doston). The payments
covered
periods for which Illinois had failed to pay proper levels of
assistance on a
current basis. ACF disallowed the federal share of
these retroactive
payments which Illinois made to eligible members of
the plaintiff
class. ACF determined that the payments had not been
individually
determined for each recipient, and therefore were not
"payments of
assistance" within the scope of the AFDC program. As all
of the appeals
involve the same parties, issues, and facts, they have
been consolidated at
the request of Illinois. 1/
Based on our review of the evidence and arguments in the record and
the
relevant provisions of the Social Security Act and
implementing
regulations, we find that the court ordered payments were
payments of
assistance made within the scope of a Federally aided public
assistance
program. However, we also find that the record does not
sufficiently
demonstrate that the $1000 payment is a valid approximation of
the
amount of assistance lost to the Doston class. Since this issue is
not
fully developed here, we remand this case for the sole purpose
of
permitting ACF to determine what amount, up to the $1000 actually
paid,
qualifies for FFP. ACF is not precluded from accepting the $1000
amount
mandated by the court order, but may require further substantiation
from
Illinois as to what amount best approximates the actual amount
of
assistance lost to the Doston class. We emphasize that it is
Illinois'
burden to provide information adequate to validate the amount of
the
payment. If ACF determines to reinstate a portion of the
disallowance,
Illinois may appeal to the Board within 30 days of receiving
ACF's
determination.
BACKGROUND
The primary purpose of AFDC, a cooperative federal and state program,
is
to encourage "the care of dependent children in their own homes or
in
the homes of relatives by enabling each State to furnish
financial
assistance . . . to needy dependent children . . . ." Section 401
of the
Act; 42 U.S.C. .601. This financial assistance is achieved
through AFDC
payments which are determined and paid for by reference to
federal and
state statutes, regulations, and policy issuances. To
qualify for FFP,
claims must be made pursuant to a federally approved AFDC
state plan
which fulfills these statutory and regulatory requirements.
Section
402(a)(7) of the Act (42 U.S.C. .602(a)(7)) and its
implementing
regulations define the methodology by which states develop and
implement
state plans for aid and services to needy families with
children. For
example, 45 C.F.R. .233.20(a)(1) requires state plans to
provide
determinations of need and amount of assistance "on an objective
and
equitable basis," while (a)(2)(i) requires the states to "[s]pecify
a
statewide standard, expressed in money amounts, to be used
in
determining (a) the need of the applicants and recipients and (b)
the
amount of the assistance payment." State plan provisions on need,
the
amount of assistance, and eligibility then determine the limits on
FFP.
See 45 C.F.R. .233.10(b).
The Illinois State Plan, 2/ provides AFDC benefits to enrolled
caretaker
parents by using set methodologies for calculating need and the
amount
of assistance required. For example, factors such as
geographic
location, number of children, employment of parents, income, and
other
resources are used to measure the individual applicant's need
for
assistance. These are then applied to the Tables of Monthly
Allowances
and Standards of Need in the Illinois State Plan to determine the
amount
of assistance each applicant receives. Pursuant to the Illinois
Child
Support Enforcement Program under Title IV-D of the Act, 3/
caretaker
parents in, or attempting to enroll in, the AFDC program are
required to
cooperate with Illinois in determining or locating an absent or
alleged
parent. This cooperation could include providing Illinois with
known
personal information about the absent or alleged parent such as
name,
address, social security number, or place of work, and attending
court
hearings to establish parentage. 4/ The failure of a client
to
cooperate by providing information or attending appointments or
court
dates could result in sanctions, and Illinois would reduce a
recipient's
pre-determined payments by set amounts. 5/ The affected
portion of any
assistance payment would not be restored or the recipient
enrolled in
the program until he or she cooperated by providing the
information
and/or attending the next meeting or court appearance.
In 1985, a class action was filed against Illinois by applicants
and
recipients of AFDC challenging Illinois' practice of denying
or
terminating plaintiffs' benefits in the AFDC program if it
determined
that they had failed to cooperate. Plaintiffs alleged
violations of
their rights under the Act, its regulations, and the
Fourteenth
Amendment because of Illinois' practice of finding
noncooperation
regarding information concerning an absent parent or alleged
parent even
when information was unknown, or there were valid reasons for
missing an
appointment or court date. Plaintiffs sought injunctive
relief,
attorneys' fees, and costs. The federal district court issued
a
temporary restraining order restoring benefits on April 9, 1985, and
a
preliminary injunction in favor of the plaintiffs on August 1, 1985.
The
class members were certified on June 2, 1986, to include:
All applicants for and recipients of Aid to Families
with Dependent
Children ("AFDC") benefits from the
Illinois Department of Public
Aid whose benefits, on or after March 22, 1980,
have been, are being, or
will be denied or terminated by IDPA [Illinois] on
the ground that they
allegedly failed to cooperate with Illinois in
establishing paternity or
obtaining child support under the State's child
support enforcement
program.
On November 23, 1988, the District Court ruled in Doston that Illinois
had
wrongfully denied or terminated AFDC benefits to plaintiffs and that
class
members were entitled to reimbursement for their losses. Doston
at
870-73.
Illinois and the plaintiffs entered into a consent order on January
17,
1989 (Consent Order), which obligated Illinois to cease
enforcing
policies which the court found violated statutory, regulatory,
and
constitutional standards. Consent Order at 2-6. Illinois agreed
to
reinstate and/or commence AFDC and Medicaid benefits
prospectively,
effective November 23, 1988, to all class members whose
benefits had
been terminated or denied due to their alleged
non-cooperation.
The Consent Order also required Illinois to provide relief notice to
all
Doston class members who were sanctioned during the period March
22,
1980, through December 31, 1989. Illinois was required to pay a
one
time corrective payment of $1000 to each responding member unless
the
identified class member was determined not to have been sanctioned
for
non-cooperation with the child support enforcement program, but
instead
was incorrectly coded RNP (Illinois computer code that identified
AFDC
cases in which the caretaker had been denied benefits for failure
to
cooperate). Illinois sent 56,770 notices, and from the 36,726
class
members that responded to the notice, 25,168 were determined to
have
been sanctioned and were issued the one-time check for atotal outlay
by
Illinois of $25,168,000. 6/ ACF was not a party to any of
this
litigation.
Illinois reported its outlays in its quarterly expenditure reports.
The
Chicago Regional Administrator for the Family Support
Administration
(ACF's predecessor agency) approved the request for FFP in the
amounts
of $175,000 in awarded attorneys' fees and $1,058,241 in
prospective
AFDC payments to class members restored to AFDC
eligibility. However,
the Administrator denied requests totaling
$12,584,000 in FFP for the
$1000 payments on the grounds the payments were
arbitrary, and that FFP
is not available for court-imposed retroactive
payments when a Federally
approved State plan was improperly implemented by
the state and the
Department of Health and Human Services was not a party to
the court
order. 7/
Illinois requested reconsideration of the Administrator's decisions
in
Docket Nos. 91-127 and 91-50, and on July 15 and August 2, 1991,
the
Assistant Secretary for Children and Families upheld the
disallowances.
The Assistant Secretary found that the $1000 payments were
not
individually determined from identifiable standards of need and
payment
as required by the Illinois State Plan and federal regulations.
Thus,
she found that FFP was not available under 45 C.F.R.
.205.10(b)(3)
because the payments did not meet the requirements of 45
C.F.R.
.233.20(a)(2)(i) and were, therefore, not payments of assistance
within
the scope of a federally aided public assistance program or
corrective
payments under .233.10(b)(3). ACF Brief, Exhibits (Exs.) 9
and 10.
Illinois has appealed ACF's determinations to this Board. 8/
ANALYSIS
It is uncontroverted that in accordance with the Doston court
order,
Illinois made retroactive one-time payments of $1000 representing
the
caretaker portion of assistance payments which Illinois had
wrongfully
failed to pay on a current basis. These payments were made
in
approximately 26,000 cases. At issue here is whether FFP is
available
for these retroactive payments under 45 C.F.R. .205.10(b)(3).
That
regulation provides that FFP is available for:
Payments of assistance within the scope of Federally
aided public
assistance programs made in accordance
with a court order.
ACF's primary argument was that payments of assistance within the scope
of
the federal program must be individually determined from
identifiable
standards of need and payment. ACF asserted that while a
state is not
required to participate in the AFDC program, if it does, it must
comply
with all of the statutory and regulatory requirements. ACF
further
argued that even payments made in response to a court order must
be
individually determined in accordance with program requirements.
If
not, ACF maintained, FFP is unavailable because ACF may not issue
funds
in violation of federal law. ACF's position, therefore, was that
FFP
was not available under section 205.10(b)(3) because the $1000
court
ordered payments were not individually determined.
Illinois, on the other hand, argued that these were payments of
assistance
which were determined by reference to the Illinois AFDC
payment level in
effect for the time period covered by the payments and
which corresponded to
the actual lost payment amount for the average
member of the Doston
class. Illinois also asserted that ACF could not
disallow its FFP
claims since it had agreed to participate in other
similar court ordered
payments. 9/
As explained more fully below, we reject ACF's arguments. We
conclude
that as court ordered payments representing assistance which
Illinois
improperly had failed to pay to eligible recipients, these payments
fell
squarely within the ambit of section 205.10(b)(3). The fact that
the
payment amount was not individually determined, as Illinois would
have
done had it made these payments contemporaneously, does not take
the
payments outside the scope of the program. Any limitation created
by
the requirements for individualized payments relied on by the Agency
was
overcome by the court order which took into account all the
relevant
factors. In the context of section 205.10(b)(3), this
record
demonstrates that the remedy fashioned by the Doston court was
a
reasonable substitute which required Illinois to by-pass
an
individualized determination process. We conclude, therefore, that
FFP
is available in these payments to the extent that the amount of
the
payment reasonably approximated the lost assistance payment to
the
Doston class members. Since we find that the issue of the amount
of
lost assistance is not fully developed on this record, and it is
not
clear whether ACF would accept the $1000 amount as reasonable, we
remand
for the sole purpose of permitting ACF to determine what amount, up
to
the $1000 actually paid, qualifies for FFP. Illinois must
present
information adequate to justify a proper payment. We also
conclude that
ACF was not precluded here from applying any applicable
federal
requirements because it had not questioned the availability of FFP
in
certain other court ordered payments.
Below, we first review the history of section 205.10(b)(3) and how it
has
been applied in other cases. We will then consider whether
retroactive
Doston payments were payments of assistance within the scope
of the federal
program as required by the regulation. In this section,
we examine the
authorities relied on by ACF for the proposition that
court ordered payments
must be individually determined to qualify for
FFP. We then assess the
question of whether the $1000 payments
reasonably approximated, for the
purposes of receiving FFP, the amount
of the lost assistance payments.
Finally, we address Illinois'
assertion that ACF was improperly imposing new
restrictions on its
receipt of FFP in court ordered payments since FFP had
been paid in
similar cases.
A. The Intent and Purpose of 45 C.F.R. .205.10(b)(3)
The parties agreed that the key issue here is whether section
205.10(b)(3)
applied to these payments. There was minimal discussion of
this
regulation either when proposed, 35 Fed. Reg. 8448 (May 29, 1970),
or when
finally adopted, 36 Fed. Reg. 3034 (February 18, 1971). It has
remained
unchanged since its origins. This regulation has received
limited
discussion by the courts. Often, it has been the source of a
brief
footnote in which a court noted that even if a state is required
by a court
to make a payment, FFP is available. See, e.g., Edelman v.
Jordan, 415
U.S. 651, 679 n.17 (1974); Jordan v. Weaver, 472 F.2d 985,
995 n.15
(1973). However, in Owens v. Roberts, 377 F.Supp. 45, 57
(1974), a
district court in discussing section 205.10(b) stated that:
[C]ourt-ordered retroactive welfare payments were
clearly
contemplated by Congress in enacting this
federal-state welfare
legislation . . . whenever participating states
misapplied or ignored
existing statutory or constitutional law so as to
wrongfully withhold
public assistance to deserving welfare claimants. 10/
In Georgia v. Heckler, 768 F.2d 1293, 1298 (1985) (Georgia), the
court
noted that "a parallel regulation . . . with nearly identical
wording"
was promulgated in 1980 specifically for the Medicaid program.
42
C.F.R. .431.250, 45 Fed. Reg. 24878 (April 11, 1980). The court
quoted
the explanation in the preamble to the Medicaid regulation that:
[E]ven when there is a court order against a State
to provide
services beyond the limits of the
program, FFP is not available
when there are other regulatory provisions
which impose limitations
[such as separate time limits or limitations on
types of services] upon
the receipt of Federal funds. 45 Fed. Reg.
24878 (April 11, 1980).
The court, in analyzing the regulation's history, stated that the
Medicaid
regulations clearly intended to provide FFP where a court had
ordered a state
to provide benefits, and federal funds would have been
available had the
state, in implementing its program, provided the funds
on its own
initiative. The Georgia court continued, however, that in
the case at
hand, a federal appropriations statute specifically
prohibited the payment of
FFP. Therefore, the statutory limitation
removed the court ordered
payments from the scope of the program and
they could not be considered
"payments of assistance." Id. at 1297-8.
11/
This Board has also considered both the AFDC and Medicaid
regulations
regarding FFP for court ordered payments. In Louisiana
Dept. of Health
and Human Resources, DAB No. 188, at 8 (1981), we stated:
Underlying .205.10(b)(3) is a recognition that FFP
should be made
available in the situation where a
State, through no fault of its
own, is forced to pay for costs which would
not normally meet program
requirements. . . . A court order, however, acts to
overcome the program
limitations and to make FFP available, so long as
payments are otherwise
within the scope of the program.
Similarly, we have interpreted these two regulations as providing
limited
exceptions to program limitations to the extent the exceptions
are the
subject of the court order, while retaining other program
limitations. 12/
California Dept. of Health Services, DAB No. 1139
(1990), is
particularly instructive on this point. There, we determined
that FFP
was available in payments made to individuals improperly found
ineligible
under Title XIX of the Act (Medicaid) to reimburse those
individuals for
payments for medical services made by them which would
have been covered by
Medicaid. The court order had directed California
"to provide
reimbursement for those of plaintiff's bills which have been
paid and to pay
the providers for those bills which remain unpaid . . .
." Id. at 4. We
found that "the [court] order necessarily requires that
individuals be
reimbursed to the full extent of any payments made by
them for such
services." We concluded, therefore, that FFP was
available in the
payments to individuals so long as the payments were
for covered services by
participating providers, "regardless of whether
those payments exceeded the
applicable upper limits" on the amount of
payments for such services under
Medicaid. Id. at 9. We also concluded
that payments to providers
under the court order were subject to the
applicable upper limits since there
was no reasonable basis for a
Medicaid provider to expect a higher payment
than permitted by the upper
limits. Id. at 9-10. This case is
significant here because under the
terms of the court order, FFP was
determined to be available in payments
to individual recipients (who do not
ordinarily directly receive
payments in the Medicaid program) in amounts
higher than would
ordinarily be paid under the program.
To summarize, this regulation applies to make FFP available for
court
ordered payments which substitute or replace a payment of
assistance
erroneously not made, so long as the court order overcomes any
program
limitations which would otherwise take a payment outside the scope
of
the program, and there are no other limiting statutes or regulations.
B. The Doston Payments Were Payments of Assistance Within the
Scope of
a Federally Aided Public Assistance Program Made in Accordance with
a
Court Order
ACF argued that the Doston payments were not based upon the scheme
set
forth by Congress and the Secretary for AFDC. We disagree.
The primary
purpose of AFDC is to provide support to needy children.
See sections
401 and 402 of the Act. Illinois failed to make payments
that it was
legally required to make to caretaker parents for needy children
due to
its erroneous and unconstitutional application of federal
requirements.
The Consent Order required Illinois to make up payments
which it had
failed to make on a contemporaneous basis. Contrary to
ACF's
allegations, we conclude that the Doston court took AFDC
program
requirements into consideration in fashioning the remedy since
the
retroactive payments were made only to eligible individuals for
whom
Illinois had either improperly denied or terminated assistance.
ACF does not dispute the eligibility of the Doston class members for
AFDC,
or their right to receive assistance payments as caretakers. The
Doston
class members were defined pursuant to the Consent Order as AFDC
eligible
recipients. 13/ First, the Consent Order required Illinois to
accept or
reinstate the class members for Medicaid and AFDC. The 1950
eligible
Doston class members who were wrongfully removed from the
program from
November 23, 1988, forward received prospective assistance
payments (which
were paid retroactively) based on individual
calculations. Illinois was
then ordered to pay each of the over 25,000
other eligible Doston class
members a payment of $1000 for the
retroactive relief. It is clear that
the court and the parties intended
the $1000 retroactive payment to
substitute for the lost AFDC payments
which would have been made pursuant to
Illinois' State Plan for the time
the recipients and applicants were
improperly sanctioned.
In determining the amount of the $1000 payment, the court also
considered
the length of the improper sanctions and the amount of
caretaker benefits
lost. The payments were calculated by reference to
the Illinois AFDC
payment level in effect at the time. The parties to
the Consent Order
used, as the basis for determining the liquidated
figure, the average amount
of monthly AFDC assistance that the AFDC
caretaker relatives lost when
removed from the grant for child support
enforcement noncooperation.
The Court made this determination based on
the average length of the sanction
being five to six months and the loss
of benefits averaging $150 to $155 per
month. See discussion infra at
Part 3 of the Analysis.
As Illinois noted, it is uncontested that had it made
"individualized"
payments after the Doston decision, FFP would have been
available. As a
practical matter, the $1000 payments were intended by
the Consent Order
to compensate for and approximate the originally wrongfully
denied
payments to the eligible AFDC applicants and recipients. In
another
case, this Board has dealt with a contrasting situation. In
Georgia
Dept. of Human Resources, DAB No. 995, 12-14 (1988), we concluded
that
section 205.10(b)(3) did not apply to make FFP available because
the
court-order payments were substantively unsound from the standpoint
of
federal law. Thus, the court order could not override
certain
substantive requirements. Here, however, the court ordered
payments
represented assistance payments which would have been made by
Illinois
had it properly implemented its program.
As discussed previously, ACF has argued that to qualify for FFP, a
state's
claims must be made in accordance with an approved AFDC state
plan which
fulfills certain statutory and regulatory requirements. ACF
asserted
that several sections of the Act and the implementing
regulations require
individualized determinations of need, and that this
requirement cannot be
overcome by a court order. ACF cited in
particular: (1) section
402(a)(7) of the Act which details the
methodology by which the standard of
need should be calculated; (2) 45
C.F.R. .233.20(a)(1), which requires that a
state's manner of
calculating need and the amount of assistance must be made
in an
objective and equitable manner; and (3) 45 C.F.R. .233.10(b),
which
dictates that the above state plan provisions on need, the amount
of
assistance, and eligibility then determine the limits on FFP.
While the regulations cited by ACF, like the state plan, provide
for
case-by-case determinations, these are general requirements
governing
usual program operations. Section 205.10(b)(3) governs the
availability
of FFP for court ordered payments which might not otherwise be
in accord
with the requirements of the state plan and regulations. Here, we
find
that the Doston court did specifically consider the issue of whether
or
not to require individualized determinations. As noted, there were
two
distinct original Doston classes -- the smaller class of 7292
members
who were entitled to receive prospective individualized payments
upon
being determined eligible, and the larger class of 56,770 notice
relief
members potentially entitled to the $1000 payment. Because of
their
different treatments, it is apparent that the court found it
necessary
to differentiate between the two classes because of their
size. The
fact that the Consent Order by-passed a process of
determining the
actual benefit amount per class member in the larger class
was
reasonable since this avoided substantial hardship and provided
some
assurance that the wrongfully denied payments would be made in
a
feasible manner.
The Doston court's rationale for this approach is bolstered, and
perhaps
was driven by, the practicalities inherent in a class action of
this
size. The Court was faced here with more that 56,000 identified
members
with a potential right to claim and receive retroactive payments
for
several months each during a ten year time span. Illinois asserted,
and
ACF did not deny, that to have provided individual hearings
and
determinations to each of the class members who responded to the
notice
relief and were determined eligible within a reasonable amount of
time
would have been administratively impossible. 14/
In addition, as noted by Illinois, the delays caused by the extra
workload
occasioned by individualized determinations for these thousands
of Doston
class members would have had an adverse effect not only on the
members but
other recipients of AFDC. For example, Illinois noted that
to have
required individual determinations in each of the over 25,000
eligible cases
would have resulted in hardships caused by lengthy delays
in receipt of
payments already wrongfully delayed. Also, it is possible
that many of
the Doston class members would not have subjected
themselves to the hearing
procedures, nor been able to accurately
reconstruct evidence to meaningfully
participate in the hearings.
Further, there appears no reason to question
Illinois' assertion that
this disruption would have seriously impaired
Illinois' ability to serve
its other AFDC clients. 15/ The Doston
court's rationale, which
emphasizes regard for the recipients and applicants,
is not a new
concern of either the courts or this Board. For example,
in Missouri
Dept. of Social Services, DAB No. 193 (1980), we found that
section
205.10(b)(3) applied to make FFP available for court ordered
retroactive
payments to cover the costs of medical services for individuals
that
Missouri had initially found ineligible for Medicaid. Missouri
conceded
that it was obliged to document individual determinations
of
eligibility, and that the payments were for covered services.
Although
the state had originally required the individuals to seek
reimbursement
for the costs of medical services from the providers, the court
issued a
contempt order directing the state to pay the claimants
directly. We
concluded that FFP was available in payments which covered
time periods
where the state plan did not provide for the eligibility of
these
claimants, but could have under federal policy. We also concluded
that
the payments were not outside the scope of the Medicaid program
simply
because the court had ordered Missouri to pay individual
claimants
directly. We noted that the court had taken this step, in
part, to
by-pass "a time consuming and burdensome procedure for the
recipients."
Id. at 7.
The record here shows that the Doston court reasonably fashioned
a
realistic remedy for restoring the lost payments of assistance on
an
expeditious basis. We conclude that the Doston court
specifically
considered the program requirements for individualized
determinations in
its decision to order the one time $1000 payments.
Thus, while the
Doston court may not have specifically considered each
regulation cited
by ACF, the program and the regulations were considered and
taken into
account in the Consent Order. Therefore, to the extent
individualized
determinations may have been required, the program limitations
were
overcome by the terms of the court order and section 205.10(b)(3).
As support for the proposition that even court ordered payments must
be
individually determined, ACF relied on the previously discussed
Georgia
v. Heckler, 768 F.2d 1293 (1985) (Georgia) and the preamble to
the
Medicaid regulation, 45 C.F.R. .431.250, 45 Fed. Reg. 24878 (April
11,
1989) (Medicaid Preamble), providing FFP for court ordered
payments. As
discussed supra, in Georgia, the court held that an
appropriations
statute specifically prevented the application of the
regulation, and
thus FFP was not available. ACF asserted that other
language in
Georgia, which discussed section 205.10(b)(3), required
individualized
determinations. The language cited reads as follows:
45 C.F.R. .205.10, read as a whole, is intended to
sanction the
payment of federal funds where a state
has made payments "within
the scope of Federally aided public assistance
programs" upon court
order after judicial review of agency decisions made
after hearings.
See id. . 205.10(a). In 1970, when the current
version of section
205.10 was proposed, a stated purpose of the regulation
was that it
provide "[an] opportunity for fair hearing, with continuation
of
assistance in cases involving issues of fact or judgment
regarding
termination or reduction of assistance."
Id. at 1298 citing 35 Fed. Reg. 8448 (May 29, 1970).
We see nothing in this language to support ACF's assertion. The
court
merely quoted the preamble language which described the impact of
the
regulation on an individual claimant. The quoted discussion
occurred in
the context of the court's conclusion, referenced earlier, that
FFP was
clearly available in circumstances such as those here -- where a
state
was obliged to make payments that it properly could have made on
its
own. The issues before the Georgia court did not involve
requirements
for individualized payment determinations. That court was
in no way
concerned with the mechanics of assuring payment to a large
class. To
that extent, we have adequately discussed above the
implications
regarding the use of individualized payments and their effects
on the
application of section 205.10(b)(3) on the instant case.
Likewise, we dismiss ACF's argument regarding the Medicaid Preamble
which
stated that FFP was not available where program limitations
applied that were
not overcome by the court order. See 45 Fed. Reg.
24878 (April 11,
1980). As noted previously, ACF's objections go to the
lack of
individualized determinations, which it alleged were required by
certain
regulations. We have already determined that the court ordered
payments
were made within the framework of AFDC requirements, and the
issue of
individualized determinations was specifically covered by the
Consent
Order. ACF did not assert that there were other applicable
limitations,
and we do not find any other specific regulatory
limitations left uncovered
by the Consent Order (such as the separate
time limits or limitations on
types of service mentioned in the Medicaid
Preamble which would otherwise
prevent FFP).
ACF relied on Illinois v. U.S. Dept. of Health and Human Services,
772
F.2d 329 (1985), as support for its contention that FFP here
would
violate federal law since such payments were required to be
individually
determined. We see no parallels, however, between the
Doston case and
the abortion/Hyde Amendment cases like Illinois. There,
the courts
applied a specific statutory prohibition in concluding that
this
regulation did not apply to make FFP available. Those cases
provide no
support for ACF's contentions here.
As we noted earlier, we conclude that the Doston payments fall
squarely
within the ambit of section 205.10(b)(3) since those payments
represent
assistance payments erroneously not paid by Illinois on a current
basis.
C. We are Unable to Determine From the Record Whether the
$1000
Payments Reasonably Approximated the Amount of the Lost
Assistance
Payments
The issue remains, however, whether Illinois has shown that its method
of
determining the $1000 payment amount was accurate. As discussed
below,
we determine that ACF reasonably questioned its obligation to pay
FFP in an
amount that represents a "best judgment" as to the proper
payment
amount. We have concluded, therefore, that FFP is available in
whatever
amount (up to the $1000 actually paid) reasonably approximates
the amount of
the lost assistance payment to the Doston class. We have
remanded this
case to ACF to make this determination.
As ACF asserted, a state is required to document its claims. It is
well
settled that the burden to document that expenditures are
allowable
ultimately rests with the state. See, e.g., Ohio Dept. of
Human
Services, DAB No. 858, at 8 (1987); New Jersey Dept. of Human
Services,
DAB No. 416, at 7 (1983). While the amount actually expended
by
Illinois has not been challenged, we believe that the amount of
the
payment eligible for FFP has not been fully developed on this record
and
that Illinois bears the burden to justify a proper payment amount.
Illinois stated that the $1000 payments were based on the average
monthly
payments lost to a caretaker relative being $150-$155 and that
the average
amount of time the payments were discontinued or suspended
was 6-7
months. However, no documentation other than Illinois'
statements has
been submitted to support the use of these averages. The
Joint Status Report
Explaining Proposed Consent Order and Fairness
Hearing, which Illinois and
the plaintiffs submitted in response to the
court's request for information
regarding the settlements, merely states
"The $1,000 figure represents the
actual damages for roughly a six-month
sanction." Id. at 7.
Illinois' Brief, at 13-14, expanded on this by
stating that:
Simply put, counsel for the Department and for the
Doston
plaintiffs used the amount of monthly AFDC
benefits an AFDC
caretaker relative lost when removed from her grant for
child support
enforcement non-cooperation as the basis for determining the
liquidated
figure.
The amount of injury in any individual case is a
function of the
monthly reduction of AFDC benefits
for the case and the number of
months the case is sanctioned. When a
caretaker relative is sanctioned
for failure to cooperate with child support,
the caretaker relative's
needs are taken out of the household's AFDC
grant. This results in a
reduction in the AFDC payment level. Due
to the manner in which this is
calculated, the Department knew that the
average reduction in the AFDC
payment level was about $150-155 per month per
case and the only varying
factor in each case was the length of the sanction
16/ (citation
omitted).
Thus the $1,000.00 amount corresponds to the actual
lost benefits a
class member would have had if her
sanction had lasted between six
and seven months (citation omitted).
This figure was the parties' best
judgment of the average sanction; based
upon substantial experience with
the sanctioning process, the parties
believed that most sanctions were
slightly less than seven months, but a
substantial number of sanctions
were much longer than seven months. 17/
The parties agreed that the
$1,000.00 figure on balance would be a fair
result for the majority of
class members.
Illinois also pointed out that the average amount paid to Doston
class
members who received the prospective payments was $1085. These
Doston
class members were also required to respond to relief notice and
be
determined eligible. They were then awarded retroactive corrective
AFDC
payments from November 23, 1988, after individual
determinations.
Consent Order at 7. Illinois states that as of March
1990, it had
issued $2,116,481 in retroactive (prospective) AFDC payments to
the 1950
eligible Doston class members. 18/ Illinois Brief at 5.
We find that ACF reasonably declined to participate in payments based
only
on "a best judgment" even when the payments were made pursuant to
court
order. While it appears that there may be a sound basis for the
use of
the $1000 figure, it is not fully developed in the record.
ACF has also faulted Illinois for not consulting with it to determine
a
method whereby Illinois could achieve the objectives required by
the
court yet still obtain federal funding. While the state would have
been
prudent to seek to involve the agency in this matter, or at least
to
coordinate with it when it engaged in the process of developing
the
manner whereby it would comply with the court's order, this is not
fatal
to the state's claim. ACF pointed to no requirement that the
state
involve it in any way in this matter or even indicated that it
would
have been willing to participate. There is no dispute that FFP
would
have been available in the caretaker portion of the assistance
payments
to these class members had these payments been made
contemporaneously.
However, there is a separate question presented by these
appeals
concerning whether the payment amount selected by the state
was
reasonable. Accordingly, it is not clear whether ACF would accept
the
$1000 payment amount as a reasonable approximation of the
lost
assistance payments. A "best judgment" is not an adequate basis
upon
which to claim FFP. Therefore, FFP is only available in
whatever
amount, up to the $1000 actually paid, that Illinois can document as
a
valid approximation of the amount of the assistance erroneously not
paid
to this class.
We make no finding that the $1000 amount cannot be adequately
justified.
We note that the parties may wish to evaluate the prospective
payment
process whereby retroactive payments were individually determined
for
the 1950 recipients. If the circumstances there were
sufficiently
analogous to those that existed for the Doston class members
who
received the $1000 payments, the process followed by Illinois for
the
payment of the prospective relief may provide information adequate
to
support the payments at issue here. It is also possible
that
statistical sampling techniques could be employed to verify the
amount
of lost assistance payments to the Doston class members receiving
the
$1000 payments. 19/ Finally, ACF and Illinois could also agree
on
another method of verifying an appropriate payment amount as well.
20/
Therefore, we remand this case for the sole purpose of permitting ACF
to
determine what amount, up to the $1000 actually paid, qualifies for
FFP.
The Agency is not precluded from accepting the $1000 amount mandated
by
the court, but may require further substantiation from Illinois. To
the
extent any of the disallowed amount is reinstated, Illinois may
appeal
to the Board within 30 days of receiving the Agency's
determination.
D. Illinois Must Validate the Amount of the Assistance
Payment
Notwithstanding Its Assertion that ACF Was Obliged to Participate in
the
$1000 Payment Since ACF Had Participated in Other Court Ordered
Payments
in Similar Circumstances
Illinois has argued that the disallowances ignore prior practice and
cites
three cases in which it claims FFP was received for liquidated
payments
arising from court orders and/or settlements. Of the three
cases cited,
only Machado v. Miller, 83 C 5795 (1983), appears on point.
21/ In
Machado, the consent order required Illinois to change a policy
which allowed
the state to retain child support amounts above the amount
of the AFDC
grant. Retroactive notice relief was granted to four
different groups
within the member class and liquidated payments were
made available to
qualifying recipients in each group.
ACF argues that in Machado, as opposed to Doston, there was an attempt
to
individualize circumstances, such as whether there was eligibility
for SSI,
eligibility of different children within the household,
stepchildren, and
amount and frequency of child support payments. This
is not enough to
differentiate the two cases; the results were the same,
whether four groups
or one, liquidated payments based on averages rather
than case-by-case
documentation were made.
However, while we are sympathetic to Illinois' reliance on Machado
and
similar cases, they cannot be the basis for overruling
the
disallowances. Even if all three of Illinois' cited cases involved
FFP
for liquidated payments, ACF would not be foreclosed from
disallowing
future payments in appropriate cases. Illinois was
basically making an
estoppel argument here, and, if permitted, would prevent
ACF from
enforcing a requirement because it allegedly failed to enforce it
on
some prior occasion. See Michigan Dept. of Social Services, DAB
No.
1211, at 6 (1990). Estoppel requires misrepresentation of
fact,
reasonable reliance, and detriment to the opposing party. Heckler
v.
Community Health Services of Crawford County, Inc., 467 U.S. 51,
59
(1984); Nisqually Indian Tribe, DAB No. 1210, at 7-8 (1990). The
U.S.
Supreme Court has never decided what type of misrepresentation
or
misconduct by a federal employee would rise to the level of
affirmative
misconduct so as to estop the government from enforcing
valid
regulations regarding welfare benefits. See Schweiker v. Hanson,
450
U.S. 785, 788-89 (1981). In any event, there is no allegation here
of
any affirmative misconduct by ACF. Further, a recent Supreme Court
case
has indicated that it is unclear whether an estoppel claim could
ever
succeed against the Government. See Office of Personnel Management
v.
Richmond, ___ U.S.___,___, 110 S.Ct. 2456, 2470-71 (1990).
ACF has also argued that it is not bound by the Doston Consent
Order
because it was not a party to the case or the order, the order
and
injunction were directed solely at the state, and Illinois neither
asked
ACF to participate nor consulted it prior to agreeing to the
order.
Illinois, in response, notes that it relied on the Agency's payment
of
FFP in Machado and related cases. A court order made without
the
consent and/or participation of the Agency does not, on its own,
require
the Agency to pay FFP. See Georgia, 768 F.2d at 1297. As
discussed
supra, for a state to receive FFP for court ordered payments,
the
payments must qualify under section 205.10(b)(3) and the state must
be
prepared to support the rationale and methodology used to determine
the
amount of the payments.
CONCLUSION
For the foregoing reasons, we conclude that the court ordered payments
to
eligible members of the Doston class were payments of assistance
within the
scope of the AFDC program. However, we also conclude that
ACF cannot be
required to pay FFP in an amount that represents only a
"best judgment" as to
the proper retroactive payment amount.
Accordingly, FFP is available in
whatever amount, up to the $1000
actually paid, ACF determines reasonably
approximates the assistance
payment amount Illinois erroneously failed to pay
the Doston class
members. Illinois bears the burden of presenting
information adequate
to validate such a payment. This proceeding is
remanded for the sole
purpose of permitting ACF to determine what amount, up
to the $1000
actually paid, qualifies for FFP. If ACF determines that
an amount less
than $1000 is properly used as a basis for paying FFP, and
thereby
reinstitutes a portion of this disallowance, Illinois may appeal
that
determination within 30 days of receipt of that disallowance.
Donald F. Garrett
Norval D. (John) Settle
Cecilia Sparks Ford Presiding Board Member
1. Docket No. 91-127 involves claims for $12,577,500 FFP reported
by
Illinois in its quarterly expenditure reports filed on October 31,
1989,
January 31, April 30, July 31, and October 30, 1990, January 31
and
April 30, 1991. Docket No. 91-150 involves a claim for $6500 FFP
for
expenditures incurred during the quarter ended July 31, 1991. Docket
No.
A-92-47 involves a claim for $6500 FFP for expenditures incurred
during
the quarter ended September 30, 1991. Docket No. A-92-90
involves a
claim of $500 for the quarter ending December 31, 1991.
2. Illinois State Plan for Title IV-A of the Social Security
Act:
Financial Aid to Families with Dependent Children. Illinois
Brief,
Exhibit 4.
3. 42 U.S.C. .651 et seq.; section 451 et seq. of the Act.
4. 45 C.F.R. .232.12(b)(1-4).
5. 45 C.F.R. .233.10(a)(l)(ii)(B).
6. The numbers and amounts used here are based on those claimed
in
Docket Nos. 91-127 and 91-150 as set forth in Illinois' Brief,
dated
October 7, 1991, and do not include Docket Nos. A-92-47 and
A-92-90.
7. See Note 6, supra.
8. The disallowances in Docket Nos. A-92-47 and A-92-90 were
appealed
directly to the Board with requests for consolidation.
9. Illinois argued that another applicable regulation is 45
C.F.R.
.205.10(b)(2), which provides for FFP for payments of assistance made
to
extend the benefits of a court order "to others in the same situation
as
those directly affected by the decision or order. . . ." Id.
However,
we agree with ACF that this regulation, by its very terms,
is
inapplicable here where it is clear that the eligible Doston
class
members were directly affected by, and included in, the Consent
Order.
This regulation is meant to permit the extension of court
ordered
payments of assistance to qualified individuals not included in a
court
order.
10. Subsection (2) of section 205.10(b), which specifically referred
to
retroactive payments for indirectly affected recipients, has since
been
amended. See also discussion at Note 9, supra.
11. In Georgia and Illinois v. U.S. Dept. of Health and Human
Services,
772 F.2d 329 (1985), the states brought actions seeking to
overturn
disallowances of FFP for monies spent by the states in providing
certain
medically necessary procedures pursuant to federal court
orders. Both
courts held that the Hyde Amendment, which directed that
no federal
funds be appropriated to pay the federal share of Medicaid
programs were
to be used to finance these procedures, barred the Department
of Health
and Human Services from paying the claims. The court in
Georgia
specifically held that the effect of the Hyde amendment was to make
the
payments not "payments of assistance within the scope of federally
aided
public assistance programs." Id. at 1298. See
Joint
Consideration--Abortion Funding, DAB No. 260, at 13-14 (1982)
(no
interpretation of an agency regulation or policy can overcome a
specific
statutory funding prohibition).
12. Missouri Dept. of Social Services, DAB No. 193, at 7-8 (1981)
(FFP
not available for payments to nonparticipating providers who were
not
specifically included in court order); Ohio Dept. of Public Welfare,
DAB
No. 173, at 11-12 (1981) (FFP available to reimburse a state for
court
ordered payments during provider appeals for up to 12 months
from
termination or nonrenewal of a provider agreement).
13. The $1000 payments were ordered made to "all class members
who
would currently be in 'RPN' status, except that their removal from
their
AFDC cases resulted in the ineligibility of their cases for AFDC for
a
reason other than alleged noncooperation with the child
support
enforcement program." Consent Order at 6-7.
14. The Consent Order gave Illinois 60 days to identify all
defined
class members and 30 days thereafter to send a notice to each
identified
class member on the list. Within 45 days of a returned claim
form,
Illinois was required to determine the member's eligibility and,
if
eligible, send the member the $1000 payment. Consent Order at
12-13,
Para. 10.
15. For example, Illinois stated that it took its staff over a year
to
review the 7,292 prospective cases and reinstate 1950
caretaker
relatives to their AFDC grants. Case-by-case determinations in
the
retroactive payments, Illinois argued, would have involved notices
for
the hearings, calculations of actual lost benefits,
processing
inquiries, and paperwork. Disputed hearing results would
have involved
state court actions to review, the handling of Illinois Court
of Claims
proceedings brought by claimants to collect on favorable
hearing
decisions, and the processing of all of the appeals from the
procedures.
16. For example, a stipulated fact in the Doston case was that in
Cook
County, a sanctioned client's grant since January 1987 dropped
between
$145 and $158 per month depending on the number of children in
the
household. Prior to January 1987, the grants were lower.
Illinois
Brief, Ex. 1, 85 C 2356 at 13. The stipulated findings of fact
are
omitted in the published version. 732 F. Supp. at 863.
17. Illinois stated that the six to seven month figure was based on
the
average amount of time it took a sanctioned class member to
be
reinstated. Recipients, for example, who missed a court date, could
not
be reinstated until they appeared at their rescheduled court date
which
was usually six to seven months later.
18. As of April 1990, Illinois has claimed and received FFP in
these
payments. Illinois Brief at 5.
19. Evidence produced by statistical sampling is a well-established
and
accepted method. See Rosado v. Wyman, 322 F.Supp. 1173, 1180-1
(1977).
We have considered whether statistical sampling may be used in lieu
of
case-by-case determinations in a number of cases. For example, in
Ohio
Dept. of Human Services, DAB No. 900, at 10 (1987), we concluded
that
the Office of Human Development Services had "unreasonably rejected
in
principle the concept of the use of a sampling methodology to
establish
a reasonable disallowance amount." Id. at 12. Ohio
sought to use a
random moment study to distinguish allowable foster care
maintenance
costs (Title IV-E) from social services costs (Tile XX).
The Agency had
argued that statistical methodology could not be used because
it would
be based on an estimate rather than actual expenditures in violation
of
section 474(a)(1) of the Act and its implementing regulations which
it
alleged mandated FFP only for the state's adequately documented
actual
expenditures. We noted there that the Act contains no such
specific
preclusion against the use of statistical sampling. See also New
York
State Dept. of Social Services, DAB No. 1216 (1991); New York State
Dept
of Social Services, DAB No. 1134 (1990).
20. See DAB No. 1139, supra, at 11, where we permitted the state
to
more fully document its FFP claims based on our conclusions
regarding
the court ordered payments in that decision.
21. In Simpson v. Miller, 81 C 2985 (1982), the case was settled
and
Illinois was ordered to provide notice relief to the eligible
class
members. Although, Illinois states that it made retroactive
liquidated
payments, that consent order, as opposed to Doston, does not
appear to
require that any particular amount be paid. Only notice
relief was
ordered. The third case, Berberena v. Miller, 81 C 5776
(1982), was not
provided by