Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Missouri Department
of Social Services
Docket Nos. A-93-104
A-93-105
Decision No. QC47-R
DATE: May 26, 1993
DECISION ON RECONSIDERATION
The Missouri Department of Social Services (Missouri)
requested
reconsideration of the Panel's decisions in
Missouri Dept. of Social
Services, DAB QC35 and DAB QC36
(1993), Board Docket Nos. A-93-8 and
A-93-13. In those
decisions, the Panel sustained the Administration
for
Children and Families' (ACF) Quality Control (QC) review
determinations that two Aid to Families with Dependent
Children (AFDC)
payments selected for review and
determined to be correct by Missouri should
have been
dropped from the QC review process. ACF had determined
that Missouri's QC review failed to verify the
recipients' banking
activity during the review months as
required by applicable
policy.
The Panel's guidelines provide that a party may request
reconsideration
of a Panel decision upon a showing of a
clear error of fact or law.
Since there were no facts in
dispute, our analysis is limited to legal
issues. For
the reasons explained below, we find that Missouri has
not shown that the Panel committed any clear errors of
law, and we
sustain our original decisions.
Applicable law, regulations and policy
Section 408 of the Social Security Act (Act) established
the AFDC QC
system to improve the accuracy of payments
and provided for Panel review of
difference cases,
defined as those cases which a state's review determined
to be correct but for which the federal review finds
erroneous
payments. Section 408(b)(3), (4). The
regulations define a
"difference" as a disagreement
between state and federal review findings
that affect a
state's official AFDC payment error rate, including a
federal finding that a sample case should be dropped from
the QC
review. 45 C.F.R. � 205.42(i) (final rule, 57
Fed. Reg. 46,804,
October 13, 1992).
Each state is required to operate its AFDC QC system in
accordance with
the policies and procedures prescribed by
ACF in its AFDC QC Manual
(QCM)*. 45
C.F.R.
� 205.40(d)(1). Section 3200 of the QCM requires that
a
sample case be dropped from the review process if
evidence to verify all
elements cannot be obtained, and
no ineligibility error has been
identified.
Missouri's original appeals to the Panel centered around
application of
section 3544 of the QCM, "Bank Accounts or
Cash on Hand -- Element
211." In relevant portion,
section 3544 instructs QC reviewers to:
Obtain enough information to make a
determination as to whether any
member of the
AU [assistance unit] had available to him/her,
as of the
review month, resources from a
financial instrument. . . .
Bank contact(s) must cover the period of time
necessary to
determine eligibility and payment,
and whether any error is PAL [payment
adjustment lag] or regular. . . . Absent a PSP
[permissable state
practice], the amount of
resources available for a month is determined
by (a) obtaining the bank balance as of the
first day of the month and
adding to it any
deposits made to the account during that month
that
represent a resource or, (b) adding all
deposits in a month to the amount of
resources
carried-over from the previous month,
subtracting from this,
all deposits that
represent part or all of the recipient's
assistance
check paid for this month as well as
any other income. If resources in
excess of
the limit cause a finding of ineligibility, the
reviewer must
determine when resources first
exceeded the limit. . . .
If a bank account is reported by the recipient
or discovered by the
reviewer, the type of
account, account number, type or ownership,
banking activity, as needed (QCM 3557) and
balance for the review month
and previous
months, as required, must also be documented.
Be alert to deposits to bank accounts as an
indication of the
receipt of income, including
interest on the account (see QCM 3553 and
3569)! Document deposits made during the
review period in order to
determine whether
such deposits should have affected eligibility.
Background
In DAB QC35 and QC36, Missouri's QC review determined
that the assistance
units received correct AFDC payments
for the review months of January 1992
and October 1991,
respectively. Information considered in both
Missouri QC
reviews included financial information forms from the
recipients' bank which reported their account balances as
of the review
dates of January 1, 1992 and October 1,
1991, the first days of the
respective review months.
The forms indicated bank balances as of the
review dates
of $7.64 in QC35 and $126.45 in QC36. ACF found that
both cases should have been dropped from the QC review
process because
Missouri had failed to obtain bank
account information, such as deposits and
withdrawals,
for the entire review months.
In its appeals, Missouri argued that it had complied with
the QCM's
requirement that bank contacts cover the period
of time necessary to
determine eligibility and payment.
Missouri noted that the
requirements of section 3544 for
obtaining bank account activity during the
review month
apply only "absent a PSP" (permissible state practice)
and
asserted that it had a PSP which it complied with in
verifying that the
checking account balances were under
the applicable resource limit as of the
review dates.
The Panel determined that section 3544 requires state QC
reviewers to
obtain more information than merely the bank
balance as of the beginning of
the review month. The
Panel noted that Missouri's PSP did not address
the
question of how much time bank account information must
cover, and
did not provide that a review is satisfied by
obtaining a bank balance as of
the first date of the
month. The Panel noted that section 3544 also
requires
the QC review to document deposits made during the review
period, without reference to PSP. The Panel also pointed
out that
other portions of the QCM contemplate that
financial eligibility and payment
determinations, and the
review of those determinations, will be based on
income
and resources during the entire review month, and not
just as of
the review date. Specifically, the Panel
noted that sections 3410 and
3420 of the QCM, which
govern prospective eligibility and payment
determinations, call for the utilization of financial
information from
the entire review month. The Panel
concluded that these provisions
demonstrate the need to
obtain information on income for the entire
month.
Accordingly, the Panel sustained ACF's determinations
that
the cases should have been dropped from Missouri's
QC review sample.
Analysis
In its requests for reconsideration, Missouri provided
lengthy citations
to section 408 of the Act, the
regulations, the QCM, and its own AFDC State
plan.
However, Missouri's arguments were essentially the same
as
those presented in its original appeals to the Panel.
Moreover,
Missouri failed to address the specific
reasoning behind the Panel's
decisions, and failed to
demonstrate that those decisions were based on any
clear
errors of law. While Missouri asserted that the Panel's
decisions presented a narrow interpretation of section
3544 of the QCM,
it did not point to any specific error
of law in our analysis of that
portion of the QCM.
Missouri noted that section 3500 of the QCM,
"verification standards,"
requires only that the
correctness of eligibility and payment determinations
be
verified as of the review date. Therefore, Missouri
asserted,
it was not required to obtain bank information
for the entire review
month. As Missouri reported,
section 3500 does define verification for
QC purposes as
establishing the facts regarding eligibility and payment
as of the review date. However, section 3500 goes on to
note that
minimum verification standards have been
developed for each eligibility and
payment determination
element. Our holdings were based on the
standards for
verification of element 211 contained in section 3544 of
the QCM. Section 3544 requires that states obtain
information
regarding banking activity during the review
month, not just as of the first
day of the review month.
Missouri has not pointed to any specific
errors of law
in our analysis of the plain language of that section.
Similarly, Missouri did not directly take issue with our
analysis of
sections 3410 and 3420 of the QCM which also
call for obtaining financial
information for the entire
review month.
Missouri again argued that it acted consistently with its
PSP on income
and resources, as set forth in its State
plan, noting that it has never been
informed that its
State plan is inconsistent with federal
requirements.
However, as we noted in our original decisions, Missouri
did not point to any specific provisions of its PSP which
conflict with
or differ from section 3544's clear
instruction to obtain information on
bank account
activity for the entire review month. Rather, its PSP is
silent on this question.
Missouri also argued that requiring banking information
for the entire
month will place it at risk of greater
sanctions because over 90% of the
AFDC cases selected for
review will have to be dropped. Missouri
asserted that
it has insufficient resources either to replace those
cases, or to pay fees to banks for providing the
information that ACF is
requiring. These arguments, with
which ACF did not agree, do not
demonstrate any clear
error of law in our earlier decisions. Rather,
Missouri
appears to argue that the verification procedure required
by
ACF differs substantially from its standard practice
and will place a severe
burden on Missouri's resources.
We note that were ACF to find that its
application of
section 3544 indeed differs radically from what states
actually do in the course of their QC reviews, or would
require undue
and disproportionate expenditures by
states, then ACF is free to modify its
verification
procedures as it sees fit. The Panel reconciles
difference cases and does not make policy decisions, and
Missouri's
arguments in favor of changing QC review
policy should be directed to
ACF.
Missouri further noted that receipt of information on
banking activity
during the review month is necessary to
determine if an error is a regular
error, or a "payment
adjustment lag" (PAL) error, which is not included in
determining a state's error rate. Missouri Requests for
Reconsideration, at 9-10. It is not clear what error of
law in our
holdings Missouri was pointing to in making
this argument. However, we
note that the PAL concept
comes into play only after an error has been
identified.
Here, by contrast, Missouri did not identify any error,
but simply failed to obtain the information required by
section 3544 to
verify one of the elements in the QC
review. In the absence of
ineligibility, Missouri was
therefore required by section 3200 of the QCM to
drop the
cases from its QC review.
Conclusion
Missouri has not shown that the Panel's earlier
decisions, which
sustained ACF's determinations that the
sample cases should have been
dropped from the QC review
process, were based on any clear error of fact or
law.
Accordingly, Missouri's requests for reconsideration are
denied, and we sustain our original determinations.
Maxine M. Winerman
Thomas D.
Horvath
Jeffrey A. Sacks
* * * Footnotes * * *
*In this decision, we refer to the version of the
QCM in effect on October 1, 1991.