Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Missouri Department
of Social Services
Docket No. A-93-46
Reconsideration of
Decision No. QC30
DATE: April 2, 1993
DECISION ON RECONSIDERATION
The Administration for Children and Families (ACF)
requested
reconsideration of the decision of the Quality
Control Review Panel (Panel)
in Missouri Dept. of Social
Services, Decision No. QC30 (1992), reversing a
federal
quality control (QC) review determination regarding State
QC
review number 49223. We agreed to reconsider our
decision since ACF
had alleged that the Panel made an
error of law in applying certain
provisions of the QC
Manual. Letter to parties dated 12/24/92.
Upon
reconsideration, however, we find no error of law and,
accordingly,
we affirm our decision.
Background
ACF determined that there was a $44 underpayment in the
Aid to Families
with Dependent Children (AFDC) grant paid
for May 1991 to the assistance
unit (AU) in question. In
determining the amount of the underpayment,
ACF found an
error in two QC review elements: Element #311 (Wages
&
Salaries) and Element #321 (Earned Income Deductions).
ACF
found with respect to Element #311 that there was a
discrepancy between the
AU's actual income and its
estimated income for the review month due to a
job change
(to a higher paying job) by one member of the AU, M.J.,
which
was not taken into account in making the estimate.
Missouri did not
dispute that this discrepancy existed
but viewed it as a payment adjustment
lag (PAL) error
which did not require a finding of a payment error under
ACF policy. Both parties agreed that there was an error
in Element
#321 due to Missouri's failure to apply the
"$30 and one-third disregard" in
determining the amount
of the AU's income and that this error alone resulted
in
a $75 underpayment to the AU. 1/
In Decision No. QC30, the Panel agreed with Missouri that
the error in
Element #311 constituted a PAL error rather
than a regular error and was not
properly considered in
determining the amount of the underpayment. The
Panel
noted that section 3300 of the QC Manual issued by ACF on
August
30, 1990 defines a PAL error as one which results
from a change in the AU's
circumstances that occurred in
the review month or the month immediately
preceding the
review month. As the Panel noted, that section further
provides that "[i]n ongoing cases involving income, the
change in
circumstance is the date income received first
differs from the income
amount used to compute the review
month's payment." The job change
which resulted in the
discrepant estimate in this case occurred in the month
preceding the review month. Accordingly, under section
3300, there
was a PAL rather than a regular error.
The Panel also found, however, that section 3420.C. of
the QC Manual
contains a special rule for errors which
are based on estimates of an AU's
prospective income,
requiring that an error which results from an inaccurate
estimate be treated as a regular error, even if it would
otherwise be a
PAL error based on the date of the change
in circumstance. The Panel
noted that, under section
3420.A., an accurate estimate is one which
"encompasses
all information which could have been known at the time
the
estimate was made." Decision No. QC30, at 2, quoting
section
3420.A. The Panel nevertheless concluded that
section 3420.C. did not
require the error in Element #311
to be treated as a regular error because
the estimate was
in fact accurate. In concluding that the estimate was
accurate, the Panel relied on section 3300 of the QC
Manual, which
provides that the change in circumstance in
an ongoing case occurs "on the
date that the income
received first differs from the prior income."
The Panel
stated:
In our view, ACF cannot reasonably maintain that
Missouri should
have known of M.J.'s change in
circumstance at the time it made the estimate
on
April 15, 1991 when, applying ACF's own rule, this
change in
circumstance did not occur until April 16,
1991.
Decision No. QC30, at 6.
The Panel also rejected ACF's contention that the
estimate was inaccurate
because Missouri failed to apply
the $30 and one-third disregard to the AU's
estimated
income. The Panel stated that this fact had no bearing
on the question of whether the error in Element #311 was
a PAL or
regular error since ACF treated the failure to
apply the disregard as an
error in a separate QC review
element. See Decision No. QC30, at 3,
n.2.
ACF requested reconsideration of Decision No. QC30 on the
ground that the
Panel incorrectly relied on section 3300
of the QC Manual in finding that
the discrepancy between
actual and estimated income constituted a PAL
error.
According to ACF, section 3300 of the QC Manual is "only
applicable to the after the fact classification of
payment discrepancies
for [quality control] reporting
purposes," and thus has no bearing on
whether an estimate
is accurate under section 3420.A. Request for
reconsideration at 3. ACF asserted that the estimate was
inaccurate under the terms of section 3420.A. because
Missouri could
have discovered that the individual in
question had changed employment by
simply contacting her.
ACF also argued again that the estimate was
inaccurate
because Missouri failed to apply the $30 and one-third
disregard. ACF stated that section 3420.A. provides that
an
accurate estimate is one which is "calculated
correctly," and asserted that
the failure to apply the
disregard resulted in an estimate that was not
calculated
correctly.
Below, we discuss each of ACF's arguments in turn.
Discussion
1. Whether the estimate was inaccurate because
information
concerning the job change could have been
known at the time the estimate was
made.
While ACF's request for reconsideration is broadly
worded, it appears
that what ACF is challenging is the
Panel's reliance on section 3300 of the
QC Manual in
deciding the threshold question whether the estimate was
accurate. ACF does not appear to dispute that, if the
estimate was
accurate, section 3300 rather than section
3420.C. would govern the
determination of whether the
error was PAL or regular, and that, pursuant to
section
3300, there was a PAL error
here.
As indicated previously, ACF argued that the Panel erred
in finding that
section 3300 was the governing provision
for estimating income.
However, the Panel did not find
that section 3300 governed directly.
The Panel merely
used that section's definition of a change in
circumstances to determine what information should be
considered
information Missouri could have known within
the meaning of section
3420.A.
Moreover, even if the Panel had not applied the
definition in section
3300 of a change in circumstances
in concluding that Missouri could not have
known of the
job change when it made the estimate, the same conclusion
would still be justified on the facts of this case.
Missouri's procedures generally required the May 1991
estimate to be
based on an average of the income reported
by an AU on monthly status
reports (MSRs) for February
and March, as well as on any changes that may
have been
reported outside of the MSR system. See IM-#25, dated
3/14/91, attached to Missouri's submission dated 1/15/93.
In cases
where the recipient just started working, the
procedures required the use of
available information to
make the best possible estimate of the recipient's
expected average monthly income. 2/ Id. Consistent
with these procedures (which ACF did not dispute
constituted permissible
state practice), Missouri based
the estimate solely on the March MSR, since
M.J. had no
income in February and the job change was not reported
until
May (the month for which the payment in question
was made).
3/ See Missouri's submission dated 1/15/93:
MSR-1 received
3/5/91, at 2; MSR-1 received 4/8/91, at
2; IM-30 dated 4/15/91. Thus,
in order to obtain
information about the expected earnings from M.J.'s new
job, the state agency would have had to initiate contact
with M.J. after
all the information-gathering required by
state procedures was
completed. Moreover, since the job
change occurred only days before
the estimate was made,
the state agency could not have obtained the
necessary
information unless the contact was initiated within those
few
days. We are aware of nothing in the QC Manual or in
the regulations
governing the AFDC program which requires
that client contact be initiated
immediately prior to the
authorization of payment to ensure that there have
been
no last-minute changes in the wage information used to
determine
the payment amount.
Furthermore, section 3420.A. states that the QC reviewer
must determine
the accuracy of the estimate by
"verify[ing] actual income and circumstances
for the time
period from which the estimate was made. . . ." (Emphasis
added.) As indicated above, the estimate in question
here
reflected all information for the time period on
which Missouri's procedures
required the estimate to be
based. Accordingly, the estimate would
have been
accurate within the meaning of the quoted language even
if
Missouri could have obtained information about the job
change before it made
the estimate.
ACF nevertheless asserted that the Panel's reliance on
section 3300
changed or weakened the requirement for an
accurate estimate. However,
this assertion was based on
the language of the August 1991 revisions to the
QC
Manual, which revised section 3420 to require an estimate
which
"accurately reflects all facts that occurred
(whether known or unknown to
the State) during the time
frame(s) which the state uses to determine the
estimate."
This is a more stringent standard than is set out in the
earlier version of section 3420, since it requires that
the estimate
take into account all facts, whether or not
the state could reasonably be
expected to have known
them. Thus, even if the analysis in Decision
No. QC30 is
inconsistent with the requirements of section 3420 as
revised, that analysis is clearly consistent with the
language of the
earlier version which is applicable to
these facts. 4/
We therefore affirm our conclusion that ACF incorrectly
found that the
estimate was inaccurate because it was not
based on all information which
could have been known.
2. Whether the estimate was inaccurate because Missouri
failed to
apply the $30 and one-third disregard.
After other applicable disregards are applied, an AU is
entitled to have
$30 of monthly earned income and one-
third of the remaining amount
disregarded for purposes of
determining whether the AU meets the standard of
need and
is eligible for AFDC. The requirement for the $30 and
one-third disregard appears at section 402(a)(8) of the
Social Security
Act, and was implemented by ACF at 45
C.F.R. � 233.20(a)(i)(D) as well as in
section 3555.C. of
the August 1990 QC Manual.
As indicated above, Missouri determined that it erred in
failing to apply
the $30 and one-third disregard and
found an error in QC review element
#321, which pertains
specifically to the $30 and one-third disregard.
ACF
agreed that there was an error in Element #321 but took
the position
that the failure to apply this disregard
also resulted in an inaccurate
estimate of the AU's
income, and, consequently, in an error in Element #311
(Wages & Salaries) as well. However, in Decision No.
QC30, the
Panel found that since ACF treated the failure
to apply this disregard as an
error in a separate QC
review element, it was not a basis for finding the
estimate inaccurate.
The only basis for challenging the Panel's conclusion
which ACF advanced
in requesting reconsideration is that
section 3420.A. provides that an
accurate estimate must
be "correctly calculated." However, that
language does
not appear in the August 1990 version of the QC Manual
which was applicable here, but only in the August 1991
revision.
Moreover, the basic function of the disregard
is to lessen the effect of
earned income in determining
whether an AU meets the standard of need.
The disregard
is not applied to determine whether there is a
discrepancy
between actual and estimated income, which
may require a finding of an error
in Element #311. Thus,
we see no reason why failure to apply the
disregard
should render the estimate inaccurate in the absence of a
clear indication to this effect in the statute, the
regulations or the
QC Manual. We therefore affirm our
conclusion that the estimate was
not inaccurate on this
basis.
Conclusion
For the foregoing reasons, we affirm our decision
reversing ACF's
determination that there was a $44
underpayment in State QC review number
49223.
______________________
Carmen Cafasso
______________________
Maxine M. Winerman
_______________________
Carolyn Reines-Graubard
* * * Footnotes * * *
1. The $44 underpayment
found by ACF was the net
of this $75 underpayment and an overpayment
resulting
from the job change.
2. Missouri converted from a retrospective
budgeting
system based on MSRs to a prospective budgeting
system based on change
reporting effective May 1, 1991.
These procedures applied during the
transition. Id.
3. Missouri asserted in its 1/15/93 submission
that the
job change was reported on 5/16/91 on a modified
IM-2.
4. The Panel expressly
stated that its decision
was based on the earlier version of section 3420,
but
noted in passing that the revisions did not appear to
make any
substantive change. See Decision No. QC30, at
2, n.1. As
indicated above, on closer examination, we
conclude that the relevant
provisions of the August 1991
revisions are substantially different from
those of the
earlier version. ACF took the position that the August
1991 revisions merely clarified the earlier version.
However, even
if the policy as clarified was what ACF
originally intended, this is not
apparent from the
language of the earlier version.