Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: New Mexico Human
Services Department
Docket No. 91-117
Decision No. QC5
DATE: December 3, 1991
DECISION
The New Mexico Human Services Department (State) appealed
the
determination of the Acting Regional Administrator
of the Administration for
Children and Families (Agency),
based on a quality control (QC) review of
AFDC payments
1/ made by the State in December 1990, that N.S.
was
overpaid $88. 2/ State QC had previously determined
that the $184 grant to N.S. was correct. However,
federal QC found
that N.S. was not eligible for the
common requirements of shelter and
utilities and that
there was thus an overpayment equal to the amount
budgeted for these items. For the reasons discussed
below, we
conclude that the case was properly budgeted
for shelter and
utilities. Accordingly, we reverse the
Agency's finding of an
overpayment.
Timeliness of Appeal
In its response to the appeal request, the Agency raised
the threshold
issue of whether the appeal request was
timely. The Quality Control (QC) Manual issued by the
Agency
provides for appeals to the Quality Control Review
Panel and states in
pertinent part:
The request must be postmarked or telefaxed to
the QCRP [Quality
Control Review Panel] by the
close of business of the 28th day following the
receipt date of the reconsideration decision
letter sustaining or
modifying the Federal
finding. With the exception of "unusual or
catastrophic occurrences," as previously
defined, requests postmarked or
telefaxed
late will be rejected.
QC Manual, Appendix W, p. 7. The Agency contended that
the appeal
request should be rejected because it was
postmarked more than 28 days after
the Agency telefaxed
its decision to the State. 3/
The State responded that its appeal request was timely
because it was
postmarked within 28 days of the State's
receipt of the same decision
through the U.S. mail. The
decision referred to by the State makes no
reference to a
prior transmission and advises the Secretary of the Human
Services Department, to whom it is addressed, that he has
28 days from
receipt of the letter to file an appeal.
The State asserted that it
determined only after the
Agency raised the timeliness issue here that its
Quality
Control Bureau had received a facsimile of the decision
on June
27, 1991. According to the State, the QC staff
did not notify the
Secretary's office of its receipt
because they believed that it was only a
courtesy
copy. The State also pointed out that the Agency had
historically notified states of its decisions by mailed
letter and that
it was notified by mailed letter dated
June 26, 1991 that the decision in
this case would be
delayed until after June 27, 1991.
We conclude that the appeal was timely filed. 4/ The
QC
Manual indicates that the operative date is the
"receipt date of the
reconsideration letter" but does not
specify
how the reconsideration letter is to be transmitted.
Given this
lack of specificity and the Agency's failure
to notify states that it was
changing its practice of
sending official notice by mail, the State
reasonably
assumed that the receipt date was the date that the
letter
was received through the U.S. mail. 5/ There is
nothing on
the face of the mailed letter from which the
State could have ascertained
that it was not the official
letter. Moreover, since the letter was
addressed to the
Secretary, the QC staff acted reasonably in treating the
facsimile of this letter as a courtesy copy.
Permissible State Practice
The QC Manual states that "[t]he QC review is to be
conducted against
'permissible State practice' (PSP)."
QC Manual, Appendix W, p.
1. Permissible State practice
is defined as "state written policy
instructions that are
consistent with the State plan. . . ." QC
Manual,
section 3130. This case presents the question whether
the
State followed the permissible State practice for
budgeting shelter and
utility expenses set out in section
FA 422.3 of the New Mexico Income
Support Division Manual
(dated December 1, 1987). This section,
entitled
"Budgeting Common Requirements," provides in pertinent
part as
follows:
When the family unit (see definitions) of which the
budget group is
a part must meet the expenses for
shelter or utilities or both, the
standards of need
for shelter, or utilities or both, will be included
in
the budget. The full amount of the standard is
allowed, regardless of
the actual amount of the
expense.
Normally, common requirements are budgeted when the
family unit has
an expense. In some circumstances,
however, the specified relative may
not wish to be
budgeted for common requirements. For example, a
child may live with grandparents who do not want to
charge the child
rent. In such cases the standards
will not be budgeted. The
worker must make it clear
to the specified relative that common requirements
can be budgeted
for the child(ren) and should
document in the record that the explanation
has
been provided.
Appeal request, Exhibit (Ex.) 1, Attachment (Att.) 7,
pp. 1-2.
The State Manual defines the term "Family Unit" as
including, among
others, "the dependent children for whom
assistance is being requested or
rendered" and "the
specified relative." Id., Att. 8.
Factual Background
N.S. lived alone with his grandmother, R.W. In October
1989, the
grandmother applied for AFDC benefits on
behalf of her grandson. On
the application form, the
grandmother listed as expenses a monthly mortgage
payment
as well as several utility payments (electric, gas,
telephone,
and water and sewage), specifying the monthly
amount of each payment as well
as the account number for
three of the utilities. Appeal request, Ex.
1, Att. 1,
pp. 1, 7. An AFDC payment of $184 per month for the
grandson was authorized. This amount consisted of $96
for the
"basic requirements" of a one-person budget
group, a "shelter standard" of
$56 for one person, and
a "utility standard" of $32. Id., Att. 3, p.
21.
State QC determined that this payment amount was correct.
The State
QC review worksheet section on basic budgetary
allowances noted that the
grandmother "said they have
mortgage expense AORD [as of review date] of $98
to
Suburban - & claimed also heating (gas) & elec, water
expenses AORD." The worksheet further noted that the
mortgage
expense had been verified and that the case
reviewer saw a gas bill, an
electric bill, and a water
bill at the home visit. Id., pp. 17-18.
However, federal QC determined that there was an
overpayment consisting
of the $56 budgeted for the
shelter standard and the $32 budgeted for the
utility
standard. This determination was based on a statement
made
by the grandmother to the federal QC reviewer that
she did not charge her
grandson rent or apply any of his
AFDC check toward household costs but
instead used it for
his personal needs, i.e., clothing and school
supplies.
See appeal request, Ex. 2, p. 8. Federal QC
found that
permissible State practice, as set out in section FA
422.3 of
the New Mexico Income Support Division Manual,
did not allow the standards for shelter and utilities to
be budgeted
under these circumstances.
The record before us also includes documents not
referred to in either
the State or federal QC findings
but on which the State relied on
appeal. One document
consists of handwritten notes, identified by the
State
as "QC Field Notes," which state that the grandmother
always
deposited her grandson's AFDC check into her
checking account and that she
paid all bills by check.
6/ Appeal request, Ex. 1, Att.
10. The field notes are
corroborated by bank statements for three
months (ending
4/18/91, 3/20/91, and 10/23/90) which show that a deposit
of $184 was made each month. 7/ Id., Att. 11.
Parties' Arguments
The State asserted that the Agency had misinterpreted
section FA 422.3 of
the Manual. According to the State,
this section provides that the
shelter and utility
standards must generally be allowed where the family
unit, which in this case included both the grandson and
his grandmother,
has a shelter and a utility expense.
In the State's view, the only
instance in which the
standards are not allowed under this provision is
where
the specified relative takes the position that she does
not wish
to be budgeted for the standards and maintains
that position even after
being told by the eligibility
worker that the standards can be
budgeted. The State
contended that the grandmother's statement to the
federal
QC reviewer that she did not charge her grandson rent or
use his
AFDC check to make mortgage or utility payments
was irrelevant since she did
not express a wish that the
shelter and utility standards not be
budgeted. 8/
The Agency did not argue that any federal law or policy
prohibited the
State from adopting a rule which allowed
common requirements such as shelter
and utilities to be
budgeted regardless of whether the child was charged
rent
or otherwise shared in these expenses. However, the
Agency
maintained that, while section FA 422.3 generally
allows shelter and utility
expenses incurred by the
family unit to be budgeted, it contains an
exception
in the case of a child living with grandparents who do
not
want to charge the child rent. The Agency relied
specifically on the
part of this section which states:
In some circumstances, however, the specified
relative may not wish
to be budgeted for common
requirements. For example, a child may live
with
grandparents who do not want to charge the child
rent. In
such cases the standards will not be
budgeted.
The Agency contended that this language required the
State to determine
whether grandparents are actually
charging their grandchildren rent in order
to budget a
grandchild for shelter and utilities, and that the State
was
precluded from budgeting these requirements here in
view of the
grandmother's statement that she did not
charge her grandson rent or use his
AFDC check to make
mortgage or utility payments. Moreover, the Agency
contended that the grandmother's statement rebutted any
presumption that
the AFDC funds commingled in her bank
account were used to make such
payments.
Discussion
In determining whether the State followed section FA
422.3 of its Manual
in budgeting the standards for
shelter and utilities in this case, we are
guided by
the principle that where the law of a state reasonably
encompasses the meaning the state attributes to it, the
state's
interpretation is entitled to deference. See
New York Dept. of Social
Services, Departmental Appeals
Board Decision No. 1112 (1989), p. 19, n. 17,
and cases
cited therein. For the reasons explained below, we
conclude that the State's interpretation is entitled to
deference.
The language on which the Agency relied on its face
merely gives an
example of a situation in which a
specified relative might not want common
requirements
budgeted: a child may live with grandparents who do not
want to charge the child rent. This language does not
expressly
state that the standards will not be budgeted
if the specified relative does
not charge the child rent.
While the State did not clearly explain
what was
actually intended by this language, we conclude that
section FA
433.2 as a whole and the manner in which the
State has implemented it
support the State's
construction: a budget group living in a family unit
which has shelter and utility expenses is entitled to the
shelter and
utility standards whether or not the budget
group (which in this case
consisted of the child) is
charged rent or otherwise contributes to payment
of these
expenses. We look first at the structure of the whole
section and then discuss how the State's implementation
of this section
is consistent with the interpretation
which it advances here.
The State's general rule regarding the budgeting of the
common
requirements of shelter and utilities is stated
twice in section FA
422.3. The first sentence of the
first paragraph of the section states
that "[w]hen the
family unit . . . of which the budget group is a part
must meet the expenses for shelter or utilities or both,
the standards
of need for shelter, or utilities or both,
will be included in the
budget." The first sentence of
the next paragraph similarly states
that "common
requirements are budgeted when the family unit has an
expense." Neither of these statements contain any
reference to the
charging of rent. Instead, both
statements require only that the
family unit incur an
expense for shelter and utilities in order for the
standard of need for these common requirements to be
budgeted.
Moreover, while an exception to the general rule is
created by the
language on which the Agency relied, this
exception is itself qualified by
the next sentence, which
states:
The worker must make it clear to the specified
relative that common
requirements can be
budgeted for the child(ren) and should document
in
the record that the explanation has been
provided.
This sentence clearly refers to the specified relative
who indicates that
he or she does not wish to be budgeted
for common requirements. In
this context, the
requirement that the caseworker explain to him/her that
common requirements can be budgeted (where the family
unit has an
expense) necessarily limits the circumstances
under which his/her wish may
be honored.
Thus, under the structure of the State's AFDC program, a
grant may be
calculated either with or without shelter or
utility expenses. What
section FA 422.3 does is to set
up a rebuttable presumption that where a
budget group is
living in a family unit which has such expenses, the
grant should be calculated to include shelter and
utilities. The
presumption recognizes that a child
living with relatives who have shelter
and utility
expenses benefits from the payment for such common
requirements.
This presumption is, however, subject to an exception.
If,
for whatever reason, the specified relative with
whom the budget group lives
does not want the shelter
or utility allowance, then the specified relative
is
entitled to decline to have it budgeted. Nevertheless,
the
State's presumption of the budget group's entitlement
to these expenses is
so strong that section FA 422.3
requires the caseworker both to explain to
the specified
relative that he/she is entitled to have the standards
budgeted on the basis of the specified relatives own
shelter/utility
expense and to document that the worker
has provided the explanation.
Accordingly, based on the language of section FA 422.3 as
a whole, we
conclude that the State's interpretation of
this section is
reasonable. To the extent that there is
any ambiguity in the language
of this section, it is
clear from the manner in which the State implemented
the
section that the interpretation which the State advanced
in this
appeal is the interpretation which was originally
intended and used in administering its program.
Specifically, the
application form used by the
grandmother to apply for AFDC benefits asks a
number of
questions about the living arrangements and the monthly
expenses for shelter and utilities of the applicant
(here, the
grandmother), but does not contain any
questions concerning whether the
child shares in these
expenses. If the budgeting of shelter and
utilities
was dependent on whether the child was charged rent or
otherwise shared in these expenses, a budget step for
obtaining this
information would have to be built into
the State's application
process. It is also significant
that the section on basic budgetary
allowances for
shelter and utilities in the State QC worksheet does not
include any question about whether the child shared in
these
expenses. Again, if the State viewed the specified
relatives charging
of rent as the determinative factor
in whether shelter and utilities should
be budgeted,
there would have been some provision for checking this
fact
during the State QC review.
We further find that, under section FA 422.3 as
reasonably interpreted by
the State, the standards for
shelter and utilities were properly budgeted in
this
case. The presumption referred to above applies since
the
grandmother not only reported expenses for shelter
and utilities but also
gave the State information to
verify her mortgage payments and documented
her utility
expenses. The exception does not apply: none of
these
expenses would have been reported and documented if the
grandmother was not agreeing that they would be
budgeted.
9/ Consequently, there is no necessity for a
showing that the worker
explained the grandson's
entitlement to the standards for these
expenses. Thus,
even if the grandmother did not charge her grandson
rent
or apply any of his AFDC check toward these expenses,
section FA
422.3 permits these expenses to be budgeted.
Conclusion
For the reasons discussed above, we conclude that the
standards for
shelter and utilities were budgeted in
accordance with permissible State
practice. Accordingly,
we reverse the Agency's finding of an
overpayment in the
case of N.S.
Sara Anderson
Andrea M. Selzer
Carolyn Reines-Graubard
* * * Footnotes * * *
1. AFDC payments are made
pursuant to the Aid to
Families with Dependent Children program established
by
title IV-A of the Social Security Act.
2. We identify the child and his grandmother by
their
initials in order to protect their privacy. The
State quality control
review number is 2122.
3.
The telefax was transmitted on June 27, 1991,
the date of the Agency's
decision. The State's appeal
request was postmarked July 29,
1991.
4. This confirms the
Quality Control Review
Panel's initial determination, upon receipt of the
appeal
request, that it was filed within the requisite 28
days.
5. The State provided
a copy of ACF Regional
Letter No. 14, dated September 10, 1991, which
specifies
that the "receipt date" referred to in the QC Manual is
the
date the reconsideration decision letter is
transmitted by telefax or
received by certified mail.
However, as the State pointed out, the
Regional Letter
was issued after the time period in question
here.
6. There are two
notes, the first undated and
the second dated 5/8/91 (the day after the date
of the
initial federal difference
determination).
7. For the
month ended 3/20/91, there was a
deposit of $185 rather than $184.
There is a handwritten
notation on the statement indicating that the amount
should be $184.
8.
The State argued in the alternative that the
Agency could not properly rely
on the grandmother's
statement to federal QC because it was inconsistent
with
other information in the record. Specifically, the State
asserted that since the grandmother deposited the AFDC
checks into the
checking account from which she paid all
her bills, it was almost certain
that some of the AFDC
funds were used for mortgage and utility payments and
could not in any event be established that this was not
the case.
The State also asserted that the grandmother's
statement was inconsistent
with the State QC review
notes, which state that the grandmother "said they
have a
mortgage expense" and that the grandmother "claimed"
certain
utility expenses. The State further argued that
the federal QC review
was "procedurally defective"
because the Agency ignored these
inconsistencies in
contravention of the requirement in section 3510 of the
QC Manual that QC reviewers evaluate, resolve and
document
inconsistencies in information obtained during
the review. We do not
address these arguments in view of
our conclusion that the State reasonably
interpreted
section FA 422.3 as requiring that shelter and utility
expenses be budgeted in this case.
9. We see no basis for reading the
grandmother's statement
to federal QC that she did not
charge her grandson rent or use his AFDC
check for
mortgage or utility payments as tantamount to a statement
that
she did not wish to be budgeted for shelter and
utilities.
However, even assuming that this was the
import of the grandmother's
statement, these expenses
were properly budgeted under section FA 422.3
because the
grandmother was not given an explanation by the
eligibility
worker that she was entitled to be budgeted
for these
expenses.
(..continued)