Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Pennsylvania Department DATE: December 1, 1993 of
Public
Welfare Docket Nos. A-93-122
A-93-187
A-93-240 Decision
No. 1450
DECISION
The Pennsylvania Department of Public Welfare (Pennsylvania)
appealed
three determinations by the Administration for Children and
Families
(ACF) disallowing a total of $102,241 in claims for federal
financial
participation (FFP) under Title IV-D (Child Support and
Establishment of
Paternity) of the Social Security Act (Act). 1/ ACF
determined that
court fees collected by Pennsylvania in child support cases
were
required to be treated as income resulting from services under the
child
support enforcement program. Therefore, ACF concluded that this
income
would have reduced Pennsylvania's expenditures eligible for FFP by
the
amount of the disallowances.
For the reasons stated below, we conclude that the Act and the
applicable
regulations require Pennsylvania to credit against its IV-D
program expenses
the court filing fees at issue here. We find that the
language of the
statute is clear and unambiguous and requires
Pennsylvania to exclude from
its expenditures claimed for FFP any fees
which resulted from services
provided under the IV-D state plan,
regardless of which state entity
collected the fees and how the
collected funds are used. Moreover, we
find that the regulation at 45
C.F.R. . 304.50(a) simply restates the
statute's requirement, and that
other regulations on which Pennsylvania
relied are not controlling here.
Accordingly, we sustain the
disallowances.
Background
Title IV-D of the Social Security Act (42 U.S.C. .. 651-669) was
enacted
for the purpose of locating absent parents, enforcing their
support
obligations, establishing paternity, obtaining child and
spousal
support, and assuring that assistance in obtaining support be
available
to all children for whom such assistance is requested. See
section 451
of the Act.
In order to receive grant funding in the form of FFP, a state must
operate
its IV-D program in accordance with a federally approved state
plan and
applicable federal regulations. The state must designate a
single and
separate organizational unit to administer the IV-D plan
(known as the "IV-D
agency"). 45 C.F.R. . 302.12(a). Further, the
state plan must
provide for cooperative agreements with appropriate
courts and law
enforcement officials to assist the agency administering
the plan.
Section 454(7) of the Act.
In Pennsylvania, the Department of Public Welfare is the IV-D agency
and
administers its IV-D program in part through cooperative agreements
with
each of Pennsylvania's 60 judicial districts. Tr. at 14,
27.
Pennsylvania's judicial system is unified and is operated under
the
supervision and control of Pennsylvania's supreme court. The
Domestic
Relations Section (DRS) of the Court of Common Pleas is "the group
of
domestic relations officers who work the court system for the judge
in
each of the 60 judicial districts . . . ." Tr. at 14.
In the mid-1980s, the judicial computerization project (JCP),
a
computerization of Pennsylvania's court system, was initiated
beginning
with the local justices of the peace and the appellate
courts. At
approximately the same time, Congress enacted a law
requiring states to
computerize their IV-D programs. Because of
Pennsylvania's inability to
comply with federal procurement regulations, the
computerization of
Pennsylvania's Title IV-D program was funded separately
through a state
appropriation.
In 1990, the Pennsylvania legislature enacted a law that imposed a
five
dollar fee (the JCP fee) on all initial court filings to provide
a
dedicated funding source for Pennsylvania's computerization project.
The
JCP fees are collected by the DRS in some counties and by the
Prothonotary,
or clerk of the civil record, in other counties.
In 1992, ACF's Office of Child Support Enforcement advised
Pennsylvania
that it would consider the JCP fee program income to the
IV-D program
to the extent that the fee was imposed on IV-D child support
cases.
Ultimately, ACF issued three disallowances. Pennsylvania
appealed ACF's
determinations to the Board.
Relevant Authority
Section 455(a) of the Act provides, in relevant part: 2/
In determining the amounts expended by any State during
a
quarter, for purposes of this subsection, there shall
be
excluded an amount equal to the total of any fees collected
or
other income resulting from services provided under the
plan
approved under this part.
Section 304.50 of 45 C.F.R. (1992) provides, in relevant part:
The IV-D agency must exclude from its quarterly
expenditure
claims an amount equal to:
(a) All fees which are collected during the quarter under
the
title IV-D State plan . . . .
Section 74.41(a) of 45 C.F.R. 3/ provides, in relevant part:
Except as explained in . . . [paragraph] (c) of this
section,
program income means gross income earned by a recipient
from
activities part or all of the cost of which is either borne as
a
direct cost by a grant or counted as a direct cost
towards
meeting a cost sharing or matching requirement of a
grant. It
includes but is not limited to such income in the form
of fees
for services performed during the grant or subgrant period . .
.
.
Section 74.41(c) of 45 C.F.R. provides, in relevant part:
The following shall not be considered program income:
(1) Revenues raised by a government recipient under
its
governing powers, such as taxes, special assessments, levies
and
fines. (However, the receipt and expenditure of such
revenues
shall be recorded as a part of grant or subgrant
project
transactions when such revenues are specifically earmarked
for
the project in accordance with the terms of the grant
or
subgrant.)
Finally, FFP is generally not available for court filing fees with
one
limited exception under 45 C.F.R. . 304.21(b):
Limitations. Federal financial participation is not
available
in:
(1) Service of process and court filing fees unless the court
or
law enforcement agency would normally be required to pay
the
cost of such fees.
Analysis
The amount of the disallowances is uncontested in these appeals.
Instead,
Pennsylvania maintained that the JCP fee is not program income
and should not
be deducted from Pennsylvania's claim for FFP.
Pennsylvania argued that ACF's
reading of section 455(a) of the Act as
requiring treatment of the JCP fee as
program income is too broad in
light of provisions of three different
regulations.
Pennsylvania asserted: (1) that the regulatory requirement at 45
C.F.R.
. 304.50(a) narrowed the statutory requirement by providing that
only
fees which are collected "under the IV-D state plan" are required to
be
counted as program income; (2) that even the generic regulations at
45
C.F.R. . 74.41(c)(1), which provides that "special assessments"
and
"levies" imposed under a state's general governing powers are
not
program income, support its position; and (3) that ACF promulgated
a
specific regulation, 45 C.F.R. . 304.21(b)(1), that
supports
Pennsylvania's position. Pennsylvania contended that this
provision
takes precedence over the generic regulations and recognizes
that
routine court fees charged to all litigants do not become program
income
simply because they are assessed on a child support case. As
discussed
below, we find these arguments unpersuasive. 4/
1. The regulation at 45 C.F.R. . 304.50(a) did
not
narrow the statutory requirement.
Pennsylvania argued that ACF qualified the statutory requirement when
it
promulgated 45 C.F.R. . 304.50(a). Pennsylvania asserted that while
the
statute speaks of fees in a generic sense, section 304.50(a)
requires
only fees "collected under the title IV-D state plan" to be counted
as
program income. Pennsylvania contended that this carefully
chosen
limitation was designed to force states to count income from
application
fees and parent locate fees, but not other fees, as program
income.
Pennsylvania reply brief (br.) at 1 and Tr. at 60.
Specifically, Pennsylvania argued that this language refers to
fees
collected by the IV-D agency and only that agency. Pennsylvania
reply
br. at 3. Pennsylvania maintained that ACF, through promulgation
of
section 304.50(a), disqualified certain fees, such as car
registration
fees and utility bill taxes, which are not collected under the
IV-D
state plan, and that the JCP fee should be similarly disqualified.
Additionally, Pennsylvania contended that a letter sent to it by an
ACF
employee is relevant to the Board's inquiry regarding section
304.50(a).
Pennsylvania maintained that the letter, dated March 27, 1992,
to
Pennsylvania from the then Deputy Director of the Office of
Child
Support Enforcement, Allie Page Matthews (the Matthews letter), was
a
policy interpretation which stated that the JCP fee is collected
under
the IV-D state plan (and therefore considered program income)
if
collected by the DRS but not if collected by the Prothonotary. Tr.
at
61. 5/
We find no support for Pennsylvania's position that the
regulation
qualifies the statutory language. Instead, we find that the
regulation
and statute are consistent. Section 455(a) of the Act
provides that an
amount equal to the total of any fees collected or other
income
resulting from services provided under the plan must be excluded
from
any claim for FFP. 6/ Section 304.50(a) provides that all fees
which
are collected under the IV-D State plan must be excluded from a
state's
claim for FFP. In order to be collected under the plan, fees
must
necessarily be collected from services provided under the plan.
Thus,
the regulation merely restates the statute's requirement. 7/
Moreover, we find here, as we have previously found, that the
plain
language of this statute is clear and there is no reason to go
beyond
that plain language. Tennessee Dept. of Human Services, DAB No.
1054
(1989) at 5. In that case, the Board said:
The plain language of a statute is always the best evidence
of
the meaning of a statute, and there is no reason to go
beyond
that plain language to examine other evidence of
legislative
intent unless the language is unclear or ambiguous.
Caminetti
v. United States, 242 U.S. 470 (1917); Chevron, U.S.A.
v.
Natural Resources Defense Council, Inc., 467 U.S. 836 (1984).
Further, we reject Pennsylvania's argument that the JCP fee should
be
compared to fees such as car registration fees and utility bill
taxes,
which ACF conceded would not be collected under the IV-D state
plan.
Tr. at 71. The latter fees are charged based on factors such as
car
ownership or use of utilities. Thus, they are not clearly generated
by
services provided under the IV-D state plan. In contrast, the JCP
fees
at issue here were charged as initial filing fees in conjunction
with
IV-D child support cases. The JCP fee is directly generated by
IV-D
services.
Pennsylvania had notice that such fees should be treated as
program
income. The Director of the IV-D agency testified as to
his
understanding of federal guidance: "Basically they have said if a fee
is
collected in conjunction with IV-D services, it be declared
program
income." Tr. at 31. Moreover, Pennsylvania treated other
court filing
fees as program income when resulting from IV-D services.
Tr. at 31-32.
The only distinction between those fees and the JCP fee is that
funds
collected as JCP fees are earmarked for a specific purpose. Tr.
at
47-48. This distinction has no relevance for determining whether
the
fees were collected "under the title IV-D state plan." To find that
a
state could circumvent the program income requirement by
simply
earmarking funds for a specific purpose would defeat
congressional
intent.
Finally, we determine that the Matthews letter does not stand for
the
proposition that certain JCP fees are not program income. Contrary
to
what Pennsylvania argued, nothing in the Matthews letter indicated
that
the Deputy Director made a distinction between the collection of the
fee
by the DRS (or a IV-D agency generally) and the.collection of the fee
by
a Prothonotary. In the first sentence of the Matthews letter,
the
Deputy Director stated:
This is in response to your letter of March 3
regarding
classifying any fees collected by the Pennsylvania
Domestic
Relations Sections of the Courts of Common Pleas in IV-D
cases
as "program income" which must be deducted from
expenditures
submitted for Federal funding.
Pennsylvania Hearing Ex. 1 at 1 (emphasis added). The letter refers
to
a DRS as a local IV-D agency (apparently based on
Pennsylvania's
description of a DRS in its inquiry letter). The letter
does not
specifically state that it matters which state entity collects the
fees.
While Pennsylvania submitted the Matthews letter at the
hearing,
Pennsylvania did not submit the correspondence that prompted
the
Matthews letter. It appears, however, that the form of
Pennsylvania's
inquiry prompted the response to be directed only to fees
collected by a
DRS as a IV-D agency. Indeed, the Deputy Director also
stated broadly
that --
the fee, when collected as part of delivering services
through
the IV-D program, must be considered program income.
Pennsylvania Hearing Ex. 1 at 2.
We see no rational basis for distinguishing JCP fees collected in
IV-D
cases based solely on the happenstance of what part of the
judicial
district collects the fee -- which apparently varies "depending on
the
present judge's procedure in each judicial district." Tr. at
28. While
a DRS may have been more directly involved with the IV-D
program than a
Prothonotary, the cooperative agreements were with the
judicial
districts and both DRS and the Prothonotary were part of the
judicial
districts. Other fees collected by Prothonotaries were treated
by
Pennsylvania as program income. Tr. at 49.
We note, moreover, that when Pennsylvania received the Matthews
letter,
Pennsylvania did not rely on the Matthews letter as an interpretation
in
its favor. Instead, Pennsylvania treated the letter as an
adverse
action it sought to appeal. Tr. at 32-34. .Finally, even
if we could
infer from the Matthews letter the interpretation Pennsylvania
advanced
here, we would not apply that interpretation since it could not
override
the statutory and regulatory requirement.
2. The exception to program income in 45 C.F.R. . 74.41(c)
is
not applicable to this case.
Pennsylvania also argued that its position is supported by the
generic
regulations at 45 C.F.R. . 74.41(c)(1), which provide that
"special
assessments" and "levies" imposed under a state's general
governing
powers are not program income. Pennsylvania asserted that
ACF's
interpretation makes the regulatory exception for special
assessments
and levies meaningless, because the JCP fee is specifically the
kind of
special assessment contemplated by this provision.
The Board has previously addressed this issue in another case involving
a
IV-D filing fee. In Tennessee Dept. of Human Services, DAB No.
689
(1989), we said:
There is no substantial basis in the record here for us
to
conclude otherwise than that the statute, on its face,
controls
and is more restrictive than [45 C.F.R. . 74.41(c)].
The
statute simply and specifically requires an offset
against
federal funds of any fees or other income resulting from
Title
IV-D services.
Tennessee at 6 (emphasis in original). Further, we said:
The provisions of Part 74 are general,
Department-wide
provisions designed to give way to the particular
limitations
established for the many different programs under
this
Department's umbrella. Part 74 specifically is not
applicable
"where inconsistent with Federal statutes, regulations, or
other
terms of a grant."
Id. Pennsylvania did not give any valid basis for distinguishing
this
case from Tennessee. Pennsylvania noted that Tennessee involved
a
period of time after the enactment of the statute but prior to
the
promulgation of the regulations at 45 C.F.R. . 304.50. As a
result,
Pennsylvania asserted that the Board did not consider the requirement
in
section 304.50 that fees be collected under the IV-D state plan or
the
effect of the regulation at 45 C.F.R. . 304.21 permitting FFP in
court
fees. Therefore, Pennsylvania maintained that Tennessee must
be
re-evaluated.
We disagree. First, we find that section 455(a) of the Act and
its
implementing regulation at 45 C.F.R. . 304.50 are dispositive of
the
issue in this case. Next, we note that in Tennessee, the
Board
determined only that the statute is more restrictive than the Part
74
regulations, and that the Part 74 regulations are not applicable
where
inconsistent with the terms of the grant.
Therefore, we find that Pennsylvania's reliance on the regulation at
45
C.F.R. . 74.41(c) is misplaced. 8/
3. Section 304.21(b)(1) of 45 C.F.R. is not controlling in
this
case.
Finally, Pennsylvania argued that ACF had promulgated a
specific
regulation regarding the treatment of court fees which takes
precedence
over any generic regulations that would also support its
position.
Pennsylvania relied on 45 C.F.R. . 304.21(b)(1), which provides
that FFP
is not available for payment of court filing fees "unless the court
or
law enforcement agency would normally be required to pay the cost
of
such fees." Pennsylvania argued that since the DRS could be ordered
to
pay the fee if it was not collected from an applicant for IV-D
services
or a IV-D support obligor, the fee can be claimed for FFP under
this
regulation. According to Pennsylvania, this regulation establishes
the
principle that routine court fees charged to all litigants do not
become
program income simply because they are assessed on a child support
case.
Further, Pennsylvania asserted that the same fee cannot
simultaneously
be both a program expense and program income. It must be
one or the
other. Pennsylvania's argument is without merit.
First, Pennsylvania's
argument is only hypothetical (which Pennsylvania
itself appeared to
admit ultimately at the hearing). Although
Pennsylvania first argued
that it simply did not know how much of the
disallowed amounts were JCP
fees paid by the IV-D agency, Pennsylvania failed
to present any
evidence sufficient to show that in fact any part of the
disallowed
amounts were for such fees. Instead, it appears that all of
the fees at
issue here were paid by applicants for IV-D services or by IV-D
support
obligors.
Pennsylvania relied for its argument that the IV-D agency might
be
required to pay the fee on evidence it said showed the court
could
assess the fee to the IV-D agency. We find this evidence
insufficient.
Although the court administrator testified that the fee should
be paid
by whoever the judge determined should pay the fee, the state
law
appears to authorize imposition of fees only on the parties to
the
litigation. See Reply br., Att. A. Pennsylvania did not
explain how
the IV-D agency could be a party in a child support case.
Pennsylvania
also submitted a copy of a court decision requiring the IV-D
agency to
pay for a paternity test in a child support case. Reply br.,
Att. B. 9/
The court's rationale, however, was that paternity testing was a
IV-D
service for which the IV-D agency was required to pay. We do not
see
how that rationale would apply to filing fees, which are not a
IV-D
service. In any event, even if this evidence showed that the
IV-D
agency might be required to pay a JCP fee, it is not sufficient to
show
that it is a fee the DRS would "normally be required to pay" within
the
meaning of the regulation.
Finally, we reject Pennsylvania's reasoning that it is inconsistent
to
treat a fee as a program expense, depending on who pays it, and to
treat
the same fee as program income, regardless of who pays it. If a
fee is
normally required to be paid by the court or law enforcement agency,
the
fee would be a program expense and also program income. This
would
reflect the fact that a state as an entity both paid and collected
the
fee and therefore incurred no net expense related to that fee. If
the
fee is collected from the IV-D applicant or obligor, it would be
program
income, but not an expense. Treating such a fee as program
income
recognizes that it is available to the state to offset other
IV-D
expenditures, and therefore reduces the total net expenditures
resulting
from operation of the IV-D program.
Conclusion
Based on the foregoing analysis, we uphold ACF's determinations.
Cecilia
Sparks
Ford
M. Terry Johnson
Judith
A.
Ballard
Presiding
Board
Member
1. The disallowance amount for Docket No.
A-93-122 is $58,095 for
the quarter ended December 31, 1992; the disallowance
amount for Docket
No. A-93-187 is $15,800 for the quarter ended March 31,
1993; and the
disallowance amount for Docket No. A-93-240 is $28,346 for the
quarter
ended June 30, 1993. In both Docket Nos. A-93-187 and
A-93-240,
Pennsylvania suggested consolidation. However, in Docket No.
A-93-240,
the appellant also raised two jurisdictional issues.
Pennsylvania
argued that under Third Circuit precedent these appeals should
be heard
by an administrative law judge under 45 C.F.R. Part 213.
Additionally,
Pennsylvania argued that a question existed regarding the
Board's
authority. In a ruling dated October 7, 1993, the Board Chair
examined
Pennsylvania's arguments and found them to be without merit.
2. Section 455(a) was added to the Social Security
Act by section
2333(c) of the Omnibus Reconciliation Act of 1981 (Pub. L. No.
97-35).
3. The general provisions of 45 C.F.R. Part 74 are,
with certain
exceptions not relevant here, made applicable to this grant by
45 C.F.R.
. 304.10. Section 74.41 of 45 C.F.R. has been in regulations
in its
present form since at least 1980, and some form of the provision
has
been in existence since at least 1973 (see, e.g., 45 C.F.R. .
74.46
(1974)).
4. We note that the underlying reason for this appeal
appears to be
the IV-D agency's frustration with the fact that the income
from the
fees is not available for use for IV-D program purposes, yet
treating
the fees as income reduces the amount of FFP available. See
Tr. at 32.
This problem results from the Commonwealth of Pennsylvania's own
action
of earmarking the funds for JCP purposes, however, and could be
remedied
by state legislative action.
5. While we reject Pennsylvania's interpretation of
the Matthews
letter, we note that, even under Pennsylvania's reading,
this
interpretation would support a reduction of only part of
the
disallowance (i.e., fees collected by a Prothonotary).
6. The "plan" referred to in the Act is the IV-D
state plan, since
this section is located under Title IV, Part D of the
Act.
7. Contrary to what Pennsylvania argued in its reply
brief (at 3),
the fact that section 304.50 substituted the words "Title IV-D
agency"
for the words "any State" in section 455(a) of the Act does not
suggest
that the regulation was limiting the provision to fees collected by
the
IV-D agency. The substitution was in the part of the
regulation
describing the expenditures to be offset by program income.
Neither the
statute nor the regulation describes which state entity collects
covered
fees.
8. Both Pennsylvania and ACF argued the applicability
of Maryland
Dept. of Human Resources, DAB No. 412 (1983). In DAB No.
412, we upheld
a disallowance related to fees assessed by State Circuit
Courts in two
Maryland counties. A state statute required these courts
to retain
three percent of all sums the courts collected. Our primary
analysis
dealt with the regulations in Part 74, as section 455 of the Act was
not
in effect for the period at issue in that case. Since we find
that
section 455 of the Act and its implementing regulation at 45 C.F.R.
.
304.50 are dispositive of the issue here, we do not discuss the
parties'
arguments about DAB No. 412 in the text. We note, however,
that
Pennsylvania asserted that its case was different because the JCP
fee
was earmarked for a specific purpose not related to the IV-D
program.
We disagree. As we noted in Maryland Dept. of Human Resources,
DAB No.
639 (1985), the proper focus is on the receipt of income
from
grant-related activities, not on how the funds are expended. In
DAB No.
639, the Board upheld a disallowance related to fees imposed by
courts
in three jurisdictions for collecting and processing court-ordered
child
support payments.
9. Counsel referred in argument at the hearing to two
sample court
orders. Tr. at 9. He neither submitted nor cited
such orders at the
hearing, however, and had previously submitted only the
decision
described