Department of Health and Human Services
Departmental Appeals Board
QUALITY CONTROL REVIEW PANEL
SUBJECT: Ohio Department of
Human Services
Docket No. A-93-183
Decision No. QC55
DATE: October 21, 1993
DECISION
The Ohio Department of Human Services (Ohio) appealed the
quality
control (QC) review determination of the Regional
Administrator of the
Administration for Children and
Families (ACF). ACF determined that
Ohio overpaid $274
in Aid to Families with Dependent Children (AFDC) to W.B.
because W.B. received a worker's compensation award. 1/
Ohio argued that W.B.'s receipt of the worker's
compensation
should result in a finding of a $75
overpayment.
For the reasons discussed below, we sustain ACF's
determination.
Background
This case involves the application of section 402(a)(17)
of the Social
Security Act, commonly referred to as the
"lump sum rule." Under the
lump sum rule, an AFDC family
receiving non-recurring lump sum income
becomes
ineligible for AFDC benefits for the number of months
that the
income would last if the family spent an amount
equal to the state's AFDC
standard of need each month.
The period of ineligibility is determined
by dividing the
lump sum and other income by the standard of need for a
family of that size. 2/ 45 C.F.R. �
233.20(a)(3)(ii)(F).
W.B. was part of a two person AFDC assistance group
consisting of herself
and her niece. W.B. was included
in the assistance group as a grantee
relative and the
grant was calculated on the basis of her and her niece's
needs. 3/ In December 1991, W.B. received a lump sum
worker's compensation award of $3,342.12. W.B. did not
report the
receipt of this money to her caseworker and
continued to receive a
two-person AFDC grant through
April 1992, the QC review month.
Also living in the household with W.B. were five other
nieces and nephews
who constituted two additional AFDC
assistance groups. These two
assistance groups consisted
only of children and are not at issue
here. W.B. was the
payee relative for those groups, i.e., the grants
were
paid to her for the children's benefit and her needs,
income, and
resources were not considered in calculating
the amount of the grants.
In its QC review, Ohio QC discovered W.B.'s worker's
compensation award
and concluded that it made W.B.
ineligible for AFDC in April. Ohio QC
also found that
the lump sum rule did not apply to the niece and the
worker's compensation award did not affect her continuing
eligibility. Therefore, Ohio QC calculated the error to
be $75 --
the amount which represented W.B.'s portion of
the $274 grant.
In contrast, Federal QC determined that the lump sum rule
applied to both
W.B. and her niece. It calculated the
error by dividing $3,342.12 (the
worker's compensation
award) by $670 (Ohio's standard of need for two
people)
and concluded that W.B. and her niece were completely
ineligible
from January through April. Federal QC
therefore found that the entire
grant ($274) was overpaid
in April 1992.
Analysis
The question presented by this case is whether Ohio's
permissible state
practice (PSP) would have required Ohio
to remove W.B. from the assistance
group and treat the
niece as eligible had Ohio known in April that W.B.
received a lump sum. 4/ Below we summarize Ohio's
arguments concerning its PSP. We then explain why we
conclude that
Ohio failed to show that its PSP would
result in the niece's continuing
eligibility. 5/
Ohio correctly pointed out that W.B. was a grantee
relative who was not
required to be included in the
assistance group. 45 C.F.R. �
206.10(a)(1)(vii). Ohio
argued that under its rule for establishing an
assistance
unit, the eligibility of such a grantee relative is
determined independently from that of the child(ren) and
that only when
the grantee relative is needy, i.e., meets
the eligibility standards for
income and resources, is he
or she entitled to be included in the assistance
group.
Therefore, under Ohio's construction of its PSP, W.B.'s
eligibility to be included in the assistance group with
the niece ended
when W.B. received the lump sum and the
lump sum did not affect the niece's
eligibility.
We reject Ohio's position because it conflicts with
Ohio's rules
concerning lump sums. Ohio's rules
implementing the federal lump sum
requirement are found
at Ohio Administrative Code �� 5101:1-23-07 through
5101:1-23-074. Ohio Administrative Code � 5101:1-23-
072(A), the
most relevant to this case, provides:
Any member of the family who was included in the
ADC
assistance group in the month of receipt of
the lump sum is included in the
period of
ineligibility. After a determination of future
ineligibility is made, a change in family
composition does not alter the
period of
ineligibility. Any member of the original
assistance
group is ineligible until the period
of ineligibility ends UNLESS ONE OR
MORE OF THE
CONDITIONS SET FORTH IN RULE 5101:1-23-073 . . .
EXISTS. (Underline emphasis added.)
Under the plain language of this rule, the niece would be
included in the
period of ineligibility because she and
W.B. constituted an assistance group
in January 1991, the
month W.B. received the worker's compensation award and
none of the conditions in Ohio Administrative Code
� 5101:1-23-073
apply.
Furthermore, Ohio's other rules concerning lump sums
support this
construction of Ohio Administrative Code
�
5101:1-23-072(A).
o Ohio Administrative Code �
5101:1-23-07(B)
defines a lump sum payment as "nonrecurring payments
received by an assistance group." A worker's
compensation award is
specifically identified as a
lump sum payment. Ohio Admin. Code �
5101:1-23-
07(D)(8).
o Ohio Administrative Code � 5101:1-23-07(J) sets
forth
circumstances under which a lump sum is
considered "unavailable to meet
current and future
needs" and therefore excluded from the lump sum
provisions. The circumstances described by that
rule do not
include receipt of a lump sum by a
member of an assistance group who is not
required to
be included in the assistance group or receipt by a
member
who has no independent obligation to support
the other members of an
assistance group.
o The rule describing how a lump sum period of
ineligibility
is calculated uses the assistance
group which received the lump sum as the
basis for
the calculation. The rule does not provide for
excluding
any member of the assistance group. Ohio
Admin. Code �
5101:1-23-071.
o The rule describing lump sum budgeting procedures
states
that the procedures are to be used "[w]hen a
lump-sum payment is received by
any member of an
assistance group . . . ." Ohio Admin. Code �
5101:1-23-074. Again, there is nothing in the
language of this
rule which would support Ohio's
position that lump sums received by grantee
relatives are to be budgeted differently than other
lump sums.
Therefore, we conclude that Ohio's lump sum rules apply
to all members of
an assistance group if one member
receives a lump sum which exceeds Ohio's
standard of need
for that size group.
As authority for its position that its PSP resulted in
the removal of
W.B. from the assistance group and
authorized it to treat the niece as
eligible, Ohio relied
on � 5101:1-21-013 of the Ohio Administrative
Code. That
section provides:
� 5101:1-21-013 ADC; establishing the assistance
group.
* * *
(C) When the grantee relative requests assistance
for himself
and the eligible children, his need must
be verified and his resources
counted in the same
manner as the children's own parent. If the
grantee
relative's own resources . . . exceed the ADC
resource limit,
the grantee relative shall not be
eligible to be included in the assistance
group.
(D) When the grantee relative has a spouse, the
income
of that spouse must be evaluated to determine
the spouse's ability to
support the grantee
relative. If the countable income is sufficient to
meet the need of the grantee relative, the grantee
relative shall not be
eligible to be included in the
assistance group. If the
countable income is not
sufficient to meet the need of the grantee relative,
the grantee relative may be included in the ADC
assistance group and no
portion of the spouses'
income is deducted from the payment standard for the
assistance group. (Emphasis added).
Ohio supported its construction of Ohio Administrative
Code �
5101:1-21-013 by citing section 3000 of its Public
Assistance Manual which
refers to eligibility criteria
that must be met "for financial assistance to
be issued
to children and their needy caretaker relatives."
We conclude that Ohio's arguments concerning Ohio
Administrative Code �
5101:1-21-013 are not persuasive
for the following reasons.
o The heading of section 5101:1-21-013 describes
it as
dealing with "establishing the assistance
group" and the section is placed
with the
regulations governing the eligibility
determination
process. Thus, the section's
relevance to an established assistance
group in
which the grantee relative subsequently becomes
ineligible is
ambiguous. Its questionable
relevance renders it particularly
unpersuasive in
light of Ohio's more definitive lump sum rules.
o In its briefing before the Panel, Ohio
expressly
relied on subsection (C) of Ohio
Administrative Code � 5101:1-21-013.
That
subsection concerns the effect of a grantee's
relative's resources,
not a grantee relative's
income. 6/ However, a lump sum is
income--
i.e., the effect of the lump sum rule is to
prevent lump sums
from ever becoming a resource
by budgeting them as income for a prescribed
period of time. See Ohio Admin. Code � 5101:1-
23-07(I),
(J)(5). Therefore, it is unclear why
the language concerning the
grantee relative's
resources is relevant to Ohio's treatment of a
grantee relative's income or lump sums.
o Subsection (D) of the section deals with the
grantee
relative's income. However, this
subsection only addresses the effect
of income
deemed to a grantee relative because of his or
her spouse's
income. Therefore, the portion of
the rule addressing income does not
address the
issue of a grantee relative's own income.
In further support of its construction of Ohio
Administrative Code �
5101:1-21-013 Ohio cited an
administrative appeal decision in which an aunt
in an
assistance group consisting of herself and her niece
received a
worker's compensation lump sum. The case
worker and subsequent hearing
officer held that receipt
of a lump sum by one member of an assistance group
affected the remaining members and therefore the niece
lost her
eligibility. Subsequently, an administrative
hearing examiner reversed
this decision and held that the
aunt's receipt of a worker's compensation
award made the
aunt ineligible but did not affect the continuing
eligibility of the niece. Administrative Appeal
Decision, Appeal
Nos. 223216, 223217, Attachment to
Ohio's Submission of June 21, 1993.
The examiner
reasoned that upon receipt of the award, the aunt was no
longer eligible to be included in the assistance group
and that "[h]er
removal from the assistance group thereby
negates any effect the receipt of
income might have on
any other member of the assistance group."
We conclude that this administrative hearing decision is
not persuasive
here for the following reasons.
o The hearing decision relies on subsection (D) of
Ohio
Administrative Code � 5101:1-21-013 which
concerns the effect of a grantee
relative's spouse's
income. The decision does not acknowledge that the
plain language of this subsection goes to the issue
of the spouse's
income and does not explain how this
subsection is relevant to the situation
where the
grantee relative receives a lump sum.
o The hearing decision does not address the
apparent conflict
between Ohio's lump sum
regulations and the examiner's application of Ohio
Administrative Code � 5101:1-21-013.
o In the case before the hearing examiner, the aunt
timely
reported her receipt of the lump sum.
Therefore, the hearing examiner
could conclude that
the aunt had requested that a new assistance group
be "established" under Ohio Administrative Code �
5101:1-21-013 to
exclude her as a non-needy grantee
relative. In contrast, W.B. did not
report the
receipt of the worker's compensation award and
continued to
accept payments on behalf of a two
person assistance group. Therefore,
W.B. never
invoked the protection offered by Ohio
Administrative Code �
5101:1-21-013.
Therefore, we conclude that the hearing decision
submitted by Ohio does
not resolve the inherent conflict
between the plain language of its lump sum
rules and its
construction of Ohio Administrative Code � 5101:1-21-013.
Ohio also appeared to argue that it was unfair that the
niece in the
assistance group with W.B. was determined to
be ineligible while W.B.'s
other nieces and nephews who
were part of different assistance groups were
not
affected. The lump sum rule has been repeatedly
challenged on
the grounds that it treats certain groups
of people inequitably. As
ACF pointed out, the judicial
response to such challenges has been to rule
that simply
because the lump sum rule may produce harsh results does
not
make it unlawful. Watkins v. Blinzinger, 789 F.2d
474, 482-83 (7th
Cir. 1986); see also Lukhard v. Reed, at
381. Ohio did not make any
arguments which addressed the
long line of judicial precedent which has
upheld the lump
sum rule.
Conclusion
For the foregoing reasons, we conclude that ACF properly
determined that
W.B. and her niece were ineligible for
assistance in April 1992 and
correctly calculated the
amount of the error.
Peggy McFadden-Elmore
Leslie A. Sussan
Sara Anderson
* * * Footnotes * * *
1. We identify the
recipient by her initials in
order to protect her privacy. The Ohio
quality control
number is 012129.
2. Because of the lump sum rule's effect on
eligibility,
considerable litigation has resulted from
its implementation. Two of
these cases have reached the
Supreme Court: Gardebring v. Jenkins, 485
U.S. 415
(1988) (holding that states did not have to give AFDC
recipients notice of the lump sum rule prior to
implementing it) and
Lukhard v. Reed, 481 U.S. 368 (1987)
(holding that Virginia could treat
personal injury awards
as lump sums under section 402(a)(17)). No
cases appear
to have addressed the question of whether the lump sum
rule
must be applied to all members of an assistance
group where the member
receiving the lump sum has no
independent duty to support the other
members. Because
this decision is based on Ohio's regulations, we do
not
address this question.
3. The Code of Federal Regulations uses the
term
"assistance unit" to describe the group of "all
individuals whose needs,
income, and resources are
considered in determining eligibility for, and the
amount
of, an assistance payment for which Federal participation
is
claimed . . . ." 45 C.F.R. � 205.40(a)(1). Ohio's
administrative
code uses the term "assistance group,"
therefore, we use Ohio's term in this
decision.
4. PSPs are "written
rules that are in
accordance with existing, approved State plan
provisions." QC Manual 3131(B)(1). If a state practice
employed prior to QC review is a PSP, a payment made in
accordance with
that practice should be upheld. See QC
Manual 3130-3131.
5. ACF argued that
Ohio's position violated
Ohio's regulations, its AFDC state plan, and
federal law.
Since we agree with ACF that Ohio's regulations do not
support Ohio's position, we do not reach the issues
concerning Ohio's
state plan or federal law.
6. Prior to the enactment of section 402(a)(17)
of the
Social Security Act, the distinction between
resources and income was ". . .
minimized by an HHS
requirement that States treat any income received in a
given month as a resource the following months." Lukhard
v. Reed,
at 372. However, since section 402(a)(17)
applies only to "income,"
and projects the availability
of that income over future months, the
distinction
between income and resources came to have significant
consequences for determining the period of ineligibility
of an
assistance unit.
(..continued)