Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Colorado Department
of Social Services
Docket No. 91-139
Decision No. QC6
DATE: December 9, 1991
DECISION
The Colorado Department of Social Services (State)
appealed the
determination of the Acting Regional
Administrator of the Administration for
Children and
Families (ACF or Agency) dated August 14, 1991 that M.C.
was underpaid by $50 during the review month of February
1991. 1/ The Agency determined that the recipient
should have received the full grant of $652 because the
State's
reduction of the AFDC grant 2/ to repay General
Assistance (GA)
funds loaned to the recipient was
inconsistent with federal statute and
regulations.
For the reasons discussed below, we conclude that
repayment of GA loans
by deduction from a recipient's
AFDC grant is not authorized by federal
statute and
regulations. In addition, we conclude that reduction of
an AFDC grant for this purpose was not authorized by the
State's title
IV-A plan. We further conclude that the
Agency was not estopped from
finding that the reduction
resulted in an underpayment. Therefore, we
uphold the
Agency's decision.
Relevant Statutory and Regulatory Provisions
Section 406(b) of the Social Security Act (Act) defines
"aid to families
with dependent children" in pertinent
part as either money payments made
directly to recipients
(section 406(b)(1)) or as vendor payments made on
behalf
of a recipient directly to a person furnishing food,
living
accommodations, or other goods, services or items
to or for such recipient
(section 406(b)(2)(1990)).
Vendor payments may be made at the request
of the AFDC
recipient. Section 406(b)(2) and 45 C.F.R.
234.60(a)(14)(1990).
Under section 402(a)(22) of the Act, an AFDC grant may be
reduced
to collect "any overpayment or underpayment of
aid under the State
Plan . . . ." Section
233.20(a)(13)(i) of 45 C.F.R. (1990) implements
this
statutory provision and also defines "overpayment" as a
"financial
assistance payment received by or for an
assistance unit for the payment
month which exceeds the
amount for which that unit was eligible."
Similarly,
section 233.20(a)(12) of 45 C.F.R. provides for the
recoupment of overpayments and correction of
underpayments for "programs
other than AFDC." Section
233.20(a) specifies State plan requirements
for the
following Social Security Act programs in addition to
AFDC:
Old-Age Assistance (OAA), Aid to the Blind (AB),
Aid to the Permanently and
Totally Disabled (APTD), and
Aid to the Aged, Blind and Disabled (AABD).
Factual Background
In November 1990, the AFDC recipient, M.C., received a GA
cash advance of
$250 from the Morgan County Department of
Social Services in Colorado to
prevent eviction. ACF
Exhibit A. M.C. had previously received GA
in the amount
of $200.
M.C. signed a promissory note agreeing to repay $450 to
Morgan
County. She agreed to make a first payment of
$250 and authorized
subsequent payments of $50 to be
deducted from her AFDC grant until the
remaining
indebtedness was paid in full.
During the February 1991 review month, M.C.'s AFDC
payment was reduced by
the $50 loan repayment to $602.
The State Quality Control (QC)
reviewers found the case
was correctly paid during the review month.
The federal
QC reviewers subsequently determined that M.C. was
underpaid
in the amount of $50. They reasoned that only
the Social Security Act
programs listed at 45 C.F.R.
233.20(a) are included in the overpayment
recovery system
authorized by that section. The State appealed and on
August 14, 1991, the Agency upheld the federal QC review
determination
concerning the $50 underpayment.
On appeal to the Panel, the State asserted that in
January 1987 an ACF
program specialist agreed to the
State's practice of allowing recoupment of
GA loans from
AFDC grants if recipients voluntarily agreed to such
recoupment. The State claimed that it was not informed
until July
1991 that its GA loan recovery process was not
permissible. The State
contended that its loan
recoupment policy should constitute permissible
state
practice for the period January 1, 1987 until the policy
is
changed effective March 1, 1992. 3/ In addition,
the State
contended that the GA loan was a vendor payment
to the County Department of
social services.
Discussion
Generally, an AFDC recipient is entitled to the full
amount of the money
payment for which she or he is
eligible. The determinative issue here
is whether the
State's practice of reducing AFDC grants by the amount of
County GA loans is authorized by federal law or by the
State's approved
title IV-A plan. As discussed below, we
find that this practice was
not authorized by federal
statute or regulation and was not provided
for in the
State plan. We also find that the Agency was not
estopped from finding that this practice resulted in an
underpayment.
1. The amount deducted to repay the GA loan was not a
vendor
payment.
The State essentially argued that the amount deducted
from the AFDC grant
to repay the County for the GA loan
constituted a vendor payment. If
it is considered a
vendor payment, then there was no underpayment because
the $50 would have been part of the recipient's AFDC
payment for the
review month.
However, we conclude that there was no vendor payment
within the meaning
of the statute and regulations. As
noted previously, vendor payments
are defined in the
statute as payments made directly to a vendor for
furnishing food, living accommodations or other goods,
services, or
items to or for a recipient. Section
406(b)(2) of the Act. Here,
the County did not provide
any goods, services or items to or for the AFDC
recipient. Instead, the County made a cash payment to
the
recipient. Thus, even if the recipient used the cash
to pay her
landlord, the County was not a vendor.
2. The GA loan cannot be recouped from the AFDC grant.
The State also claimed that its State IV-A plan
specifically authorized
recoupment of the GA loan from
the recipient's AFDC grant, citing a plan
provision which
stated --
2.5 Protective, Vendor, and Two-Party Payments for
Dependent
Children
Protective, vendor and two-party payments are
made:
2. at the voluntary request of the recipient.
State Supplemental response dated September 20, 1991,
Attachment 1.
We disagree with the State's position. The State IV-A
plan provides
for vendor payments at the voluntary
request of the recipient, but does not
refer to voluntary
reductions from the AFDC grant to repay GA
loans. 4/
The State did not identify any other provision
in the
State IV-A plan allowing for such reductions to the AFDC
grant.
Furthermore, the State failed to show that any federal
statutory or
regulatory provision authorized the recovery
of the GA loan from the
recipient's AFDC grant. The
Agency indicated that the only recoupment
permitted from
the AFDC grant under the statute and the regulations is
to recover overpayments and correct underpayments of aid
under the AFDC
program. As previously noted, section
402(a)(22) of the Act
specifically allows reduction of
the AFDC grant to correct an overpayment
"of aid under
the State plan." Here, the GA loan was not aid under the
State plan, but was assistance paid under a wholly
County-funded
program. The regulations also allow
a state to recoup overpayments
"for programs other than
AFDC." 45 C.F.R. 233.20(a)(12).
However, this refers
only to the other Social Security Act programs
specified
at the beginning of section 233.20(a). Consequently, we
conclude that in the absence of a showing that other
provisions apply,
there is no statutory or regulatory
authority for reduction of the AFDC
grant to repay
assistance not provided for under the State title IV-A
plan or other Social Security Act programs specified in
section
233.20(a), even if the recipient voluntarily
requests it.
3. The Agency is not estopped from finding error here.
The State contended that the Agency is estopped from
finding that M.C.
was underpaid because the State
reasonably relied on an ACF regional
employee's
representation in 1986 that the State policy of
recovering GA
loans by voluntary reduction of recipients,
AFDC grants was
acceptable. The State argued that it
relied on this representation in
amending its pending
lawsuit against the Agency which sought to exclude GA
loans from AFDC income. In support of this argument, the
State
submitted a copy of the Settlement Agreement and
Stipulation to Dismiss
Complaint issued in this
litigation. The State also claimed that from
1987 until
the State was informed of the federal QC reviewers'
determination in July 1991, it was never told that ACF
had any objection
to its GA loan recovery practice.
However, the record contains no evidence that the
regional employee ever
said this practice was
permissible. Moreover, the Agency denied that
the State
was advised that this practice would be permissible.
Furthermore, the settlement agreement provided by the
State refers
solely to the issue of whether bona fide
private, nongovernmental loans
shall be considered as
income in determining eligibility and benefits under
the
State's AFDC program.
Consequently, the State's estoppel argument must be
rejected since
estoppel traditionally requires a
misrepresentation of fact, reasonable
reliance, and
detriment to the opposing party. Heckler v. Community
Health Services, 467 U.S. 51, 59 (1984). Moreover,
estoppel
against the federal government, if available at
all, is presumably not
available absent affirmative
misconduct by the federal government.
Schweiker v.
Hansen, 450 U.S. 785 (1981). 5/ There is no
evidence
of any subsequent Agency action which could be construed
as
affirmative misconduct for purposes of equitable
estoppel. Thus, the
State has not satisfied the
necessary elements for estoppel to lie against a
private
party, let alone the federal government.
Finally, section 408(c)(3) of the Act does not support
the State's
estoppel argument. This section provides in
pertinent part that a
payment in error solely by reason
of the State's reliance upon and correct
use of erroneous
factual information or written statements of federal
policy provided to the State by the Secretary shall not
be considered an
erroneous payment. 6/ Pub. L.
101-239, section 8004
(1989). In this instance, no
incorrect factual information was
given. The alleged
advice was given orally and came from a federal
employee
who was not designated to give advice for the Secretary.
Consequently, there is no basis for excluding this
payment error
from consideration as an erroneous payment
under section 408(c)(3).
Conclusion
For the reasons discussed above, we conclude that M.C.
was underpaid by
$50. Accordingly, we affirm the
Agency's determination.
Carolyn Reines-Graubard
Leslie A. Sussan
Andrea M. Selzer
* * * Footnotes * * *
1. We identify the recipient
by initials in
order to protect her privacy. The State quality control
number for this case is 910935.
2. AFDC payments are made pursuant to the Aid to
Families
with Dependant Children program established by
title IV-A of the Social
Security Act.
3. It is
not clear why the State used the
January 1, 1987 date. In response to
the Panel's
inquiry, the State indicated that regulations were
initiated
in November 1987 (to become effective on
January 8, 1988) to allow for a
voluntary repayment of GA
from the public assistance
grant.
4. As we
indicated above, repayment from the
AFDC grant of, a GA loan is not the same
as payment
directly to a vendor from the AFDC grant for a specific
item
of need. Thus, the grant reduction was not
authorized as a vendor
payment under this provision.
5. In the recent case of Office of Personnel
Management v.
Richmond, 110 S.Ct. 2465 (1990), however,
the Court deplored the fact that
its dicta on affirmative
misconduct had "spawned numerous claims for
equitable
estoppel in the lower courts." Id. at 2470. While it
cited with favor the older cases tending to view estoppel
against the
government as impossible (e.g., Utah Power &
Light Co. v. United States,
243 U.S. 389, 408-409 (1917)
and Federal Crop Insurance Corporation v.
Merrill, 332
U.S. 380 (1947)), the Court said it "would leave for
another day whether an estoppel claim could ever succeed
against the
Government." Richmond at 2471.
6. Appendix W of Transmittal No. FSA-AT-90-21,
dated
August 30, 1990, provides the following
interpretation of this statutory
provision. An example
of incorrect factual information received by the
Agency
is Social Security benefit information supplied through
the
Beneficiary and Earnings Data Exchange (BENDEX).
"Written statements"
of policy are defined as meaning
written policy from a federal official in
DHHS
responsible for dissemination of such policy in the AFDC
program
(i.e., the Assistant Secretary, ACF).